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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-K
ANNUAL REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
FOR THE FISCAL YEAR ENDED JUNE 30, 1996 COMMISSION FILE NUMBER 33-88526
GRIFFITH CONSUMERS COMPANY
CARL KING, INC.
FREDERICK TERMINALS, INC.
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN THEIR CHARTERS)
DELAWARE 52-1887726
DELAWARE 04-2941998
MARYLAND 52-1863759
(STATE OR OTHER JURISDICTION OF (I.R.S. EMPLOYER NO.)
INCORPORATION OR ORGANIZATION)
GRIFFITH CONSUMERS COMPANY CARL KING, INC.
FREDERICK TERMINALS, INC. 109 SOUTH MAIN STREET
2510 SCHUSTER DRIVE CAMDEN, DELAWARE 19934
CHEVERLY, MARYLAND 20781 (302) 697-3251
(301) 322-3111
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING
AREA CODE, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
SECURITIES REGISTERED PURSUANT TO SECTION 12(b) OF THE ACT:
NONE
SECURITIES REGISTERED PURSUANT TO SECTION 12(g) OF THE ACT:
NONE
INDICATE BY CHECK MARK WHETHER THE REGISTRANT (1) HAS FILED ALL REPORTS REQUIRED
TO BE FILED BY SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 DURING
THE PRECEDING 12 MONTHS (OR SUCH SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED
TO FILE SUCH REPORTS), AND (2) HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR
THE PAST 90 DAYS. X YES NO
----- -----
INDICATE BY CHECK MARK IF DISCLOSURE OF DELINQUENT FILERS PURSUANT TO ITEM 405
OF REGULATIONS S-K IS NOT CONTAINED HEREIN AND WILL NOT BE CONTAINED, TO THE
BEST OF REGISTRANT'S KNOWLEDGE, IN DEFINITIVE PROXY OR INFORMATION STATEMENTS
INCORPORATED BY REFERENCE IN PART III OF THE FORM 10-K OR ANY AMENDMENT OF THIS
FORM 10-K [ ].
AS OF SEPTEMBER 30, 1996, THE ISSUERS HAD THE FOLLOWING NUMBER OF SHARES OF
COMMON STOCK OUTSTANDING:
GRIFFITH CONSUMERS COMPANY : 1,000 SHARES
CARL KING, INC. : 1,000 SHARES
FREDERICK TERMINALS, INC. : 500 SHARES
AS OF SEPTEMBER 30, 1996, ALL SHARES OUTSTANDING OF GRIFFITH CONSUMERS COMPANY,
CARL KING, INC. AND FREDERICK TERMINALS, INC. WERE HELD BY AFFILIATES.
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The fiscal year of Griffith Consumers Company ends June 30 and unless otherwise
indicated, references to particular years are references to fiscal years ending
June 30 of the year indicated. Unless otherwise specifically stated, all
discussions herein of the operations of the Company (hereinafter defined)
are as of June 30, 1996. For a discussion of additional facts relating to the
operations of the Company after June 30, 1996, see Item 1, which includes a
discussion of the Company's acquisition on July 11, 1996, of a convenience
store and retail gasoline business operated under the "Shore Stop" trade name
and a dealer petroleum delivery business.
PART I
ITEM 1. BUSINESS
Griffith Consumers Company ("Griffith" and together with its wholly-owned
subdsidiaries, the "Company"), a Delaware corporation, is one of
the leading full service, independent retail, petroleum products distributors
operating in the Baltimore/Washington Metropolitan area as well as in portions
of Northern Virginia, Maryland, West Virginia, Delaware, and Pennsylvania.
The Company and its subsidiaries, Carl King, Inc. ("Carl King" or "King") and
Frederick Terminals, Inc., distribute heating oil, gasoline, diesel fuel,
kerosene and heavy oils and sell products and services related to their
business.
In December 1994, Griffith Holdings, Inc. ("GHI"), a corporation previously
unrelated to the Company, acquired all of the 2,360,000 outstanding shares of
common stock of Griffith Consumers Company, a Maryland corporation ("Griffith
Maryland" and together with its wholly-owned subsidiaries, "Predecessor"),
the predecessor to the Company. Pursuant to a merger agreement, ABC
Acquisition Corp., a Maryland corporation ("ABC") and a wholly-owned
subsidiary of GHI, merged with and into Griffith Maryland. As a result of
the merger, the Company became a wholly-owned subsidiary of GHI (the
"Acquisition"). Immediately thereafter, Griffith Maryland merged with and into
Griffith with Griffith as the surviving corporation.
Since 1898, the Company and its predecessors have been in the fuel distribution
business. Griffith Maryland acquired the assets and certain liabilities of its
predecessor from ARCO on July 1, 1985. Since then, management has followed a
program of selective acquisitions of heating oil distributors and motor fuel
marketers to increase the market share in its present market area and to expand
geographically in the mid-Atlantic states. The purchase price of the 32
acquisitions made between July 1, 1985 and June 30, 1995 was $49.5 million. The
four largest acquisitions made since July 1, 1985 were Hessick, Inc. ($5
million), Carl King, Inc. ($14 million), Calotex Delaware, Inc. ($5 million) and
Steuart Heating ($14.9 million).
The Company has its principal offices at 2510 Schuster Drive, Cheverly,
Maryland; its telephone number is (301) 322-3111.
RECENT DEVELOPMENTS
On July 11, 1996, the Company, through its wholly-owned subsidiary Shore Stop
Corporation acquired certain assets used in the operations of a chain of 49
convenience stores and retail gasoline stations within the states of
Maryland, Delaware and Virginia under the "Shore Stop" trade name and a
dealer petroleum sales business supplying 31 dealers from two facilities
located in Virginia and Maryland (the "Shore Stop Acquisition") from Regent
Investments, Inc., Delaware Investments, Inc., and Mid-Atlantic Investments,
Inc., each a Virginia corporation (collectively, the "Sellers"). The Company
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intends to continue using the acquired assets as convenience stores and dealer
petroleum sales business, respectively. The Company paid the Sellers
$17,000,000 (plus the purchase price of certain inventory), subject to certain
adjustments, of which $1,500,000 was in the form of a promissory note secured by
first priority mortgages or deeds of trust on certain stores and assumed
$350,000 of debt. The terms and conditions of the acquisition were determined
upon arms length negotiations between the Company and Sellers. No material
relationship exists between the Company and the Sellers. The acquisition was
financed through an amendment of the existing credit agreement.
MOTOR FUELS
SALES. During 1996, the Company sold 124 million gallons of gasoline and
diesel, representing 63% of the petroleum gallons sold by the Company and
accounting for 58% of the Company's total revenue for the year. In 1995 and
1994, the Company sold 128 million gallons and 120 million gallons,
respectively, of gasoline and diesel, accounting for 63% and 55% of the revenue
for the respective years.
Gasoline and diesel sales were made primarily through 37 Company owned and
Company operated gasoline stations and 81 dealer operated gasoline stations.
No Company owned stations were opened or closed during 1996. The Company
operates convenience stores or sells sundries at all of its Company owned and
operated gasoline stations. Sundry sales accounted for approximately 5% of
total revenues.
COMPANY OPERATED STATIONS. During 1996 the Company operated 37 retail
gasoline stations located in Delaware (29 stations), Maryland (5 stations)
and West Virginia (3 stations). These stations market both branded gasoline
(30 stations) and unbranded gasoline (7 stations). The Company operated
convenience stores with an average of approximately 1,250 square feet of
sales area at 30 stations and small sundry booths at seven stations. The
Company's facilities are generally open 16 hours a day and primarily operated
on a self-service basis.
DEALER SUPPLY ARRANGEMENTS. The Company sells motor fuel to dealers, the
majority of which are supplied pursuant to dealer supply arrangements. These
arrangements, which have a typical term of 5 to 10 years, generally require the
dealer to purchase all of its motor fuel from the Company, at the Company's
dealer price at the time of purchase. In return, the Company generally provides
the dealer with equipment either by advancing funds to the dealer for the
purchase of the equipment by the dealer and/or by leasing equipment to the
dealer. Such equipment is used to upgrade station operations and may include
dispensers, signage and canopies. The dealer supply arrangements generally do
not have specified monthly or yearly maximums or minimums; however, the
arrangements pursuant to which the equipment is provided to the dealer usually
require
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the dealer to purchase a minimum amount in order to reduce its obligation for
the equipment so provided.
During 1996 in approximately 20% of the dealer supply arrangements, the
Company delivered motor fuel to the dealer's station on a consignment basis.
In these cases, the Company pays the dealer a fixed commission for each
gallon of motor fuel sold and the dealer generally does not participate in
the profit generated from motor fuel sales. The Company sets the selling
price, owns the inventory in the tanks at the dealer's station, and receives
the revenue for all gallons sold less the commission.
DELIVERED MOTOR FUEL. The Company also supplies motor fuel to customers who
have their own on-site storage facilities, such as construction sites and fleet
operators.
TRANSPORTATION. The Company's supply of motor fuel is transported by common
carrier to the Company operated stations and dealer stations. Delivered motor
fuel is transported by common carriers and Company operated vehicles.
HEATING FUELS
RESIDENTIAL SALES. During 1996, residential heating oil and kerosene sales
accounted for 19% of total Company revenue. The Company sold 35 million gallons
of residential heating oil and kerosene representing 18% of total petroleum
gallons sold. In 1995 and 1994, the Company sold 30 million gallons and 35
million gallons, respectively, of residential heating oil and kerosene,
accounting for 17% and 20% of the revenue for the respective years.
The Company has two types of residential customers; automatic delivery service
and delivery on demand. Fuel deliveries to approximately 72% of the Company's
total residential customers are made under its automatic delivery service
program. This system is a computerized program which analyzes prevailing
weather conditions and the individual customer's consumption patterns to
determine when each customer needs a delivery. Approximately one-half of the
Company's residential customers also have heating equipment maintenance
contracts with the Company which provide an annual tune-up and cleaning of
equipment, free parts replacements for normal wear and tear, and up to 24 hour
radio dispatched service for routine and emergency calls. During 1996,
maintenance contracts and repair services accounted for approximately 2% of
total revenue. In addition, the Company sells heating and air conditioning
equipment and water heaters, which accounted for another approximately 2% of
1996 revenue.
Approximately 30% of the Company's residential customers use the "Level Payment
Plan", making payments in eleven equal monthly installments starting in August.
Since the heating season begins in October, customers usually have a credit
balance until midwinter. These advance payments also provide a source of cash
that improves the Company's cash flow in the summer and early fall.
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OPERATING STRUCTURE. Heating oil operations are conducted through seven
divisions, which serve as distribution and service centers. Each division
provides heating oil delivery service, heating equipment sales, and during
winter months, up to 24 hour repair service. Each division operates on an
autonomous basis with respect to customer service. Marketing, credit,
purchasing and pricing are centralized at the corporate offices in Cheverly,
Maryland and at the King main office in Camden, Delaware.
COMMERCIAL SALES. During 1996, the Company's commercial heating oil revenue was
14% of the total Company revenue, from the sale of 38 million gallons of
commercial heating oil, accounting for 19% of total petroleum gallons sold. For
1995 and 1994, the Company sold 26 million gallons and 39 million gallons,
respectively, of commercial heating oil, accounting for 10% and 15% of the
revenue for the respective years.
The Company maintains its commercial accounts through its recognition in the
industry as a provider of quality commercial burner service, timely deliveries,
and personalized technical support. Many commercial customers have dual fuel
systems that allow them to switch between oil and gas to the lowest cost fuel.
Also, natural gas suppliers have made arrangements with certain of their
commercial customers that allow the supplier to interrupt the supply of natural
gas to these customers during extended cold periods. Gas interruptions
generated material additional revenue during 1996, due to the colder than normal
weather.
TRANSPORTATION. The Company utilizes a fleet of approximately 252 tank trucks,
service vans and other vehicles to deliver heating oil and to provide service to
commercial and residential customers. Approximately 90% of these vehicles are
owned by the Company with the remainder under operating leases. In addition,
the Company utilizes independent tank truck operators to deliver heating oil.
OPERATING ENVIRONMENT
SEASONALITY AND WEATHER. The weather patterns during the winter months can have
a material effect on the Company's sale of heating oil. Although temperature
levels for the heating season have been relatively stable over time, variations
can occur from year to year, and warmer than normal winter weather will
adversely affect the Company's annual results. The seasonal nature of the
Company's heating oil results in most of the heating oil operation's revenue
being generated in the second and third quarters of each year. Therefore, the
Company generally reports a loss in the first and fourth quarters of each year.
During 1996, the temperature level was 26.3% colder than 1995 and 13.4% colder
than normal. The colder heating season positively affected the number of heating
oil gallons sold during 1996.
When weather conditions are favorable, particularly during the summer vacation
season, customers are more likely to purchase more gasoline. As a result, the
motor fuel operations typically
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generate slightly higher revenues during warmer weather months, which fall
within the Company's first and fourth quarters. If weather conditions are not
favorable during these periods, the Company's operating results and cash flow
from operations would be affected negatively.
INSURANCE. The Company maintains a comprehensive package of insurance policies
including pollution or environmental impairment liability coverage. Further,
state underground storage tank reimbursement programs in Delaware and Virginia
currently provide additional risk transfer mechanisms.
COMPETITION. The heating oil business is highly competitive. The Company
competes with heating oil distributors offering a broad range of services and
prices, from full service distributors, like the Company, to those offering
delivery only. Competition with other companies in the heating oil industry is
based primarily on customer service and price. The Company believes that
commercial customers are somewhat more sensitive to price than residential
customers, but also expect professional and timely service. Long-standing
customer relationships are typical in the retail home heating oil industry. As
a result, it is difficult to acquire new retail customers due to existing
relationships between potential customers and other home heating oil
distributors. Therefore, the Company continues to maintain aggressive and
creative marketing plans to attract new customers. Many companies in the
industry, including the Company, deliver home heating oil to a majority of their
customers based upon weather conditions and historical consumption patterns
without the customer having to make an affirmative purchase decision each time
heating oil is needed. In addition, most companies, including the Company,
provide home heating equipment repair service up to 24 hours per day, which
tends to build customer loyalty.
In all of its heating oil geographic markets, the Company competes for customers
with suppliers of alternate energy products, principally natural gas and
electricity. Over the past five years, the conversion of the Company's
customers from heating oil to other sources, primarily natural gas, has averaged
approximately 1% per annum of the homes served by the Company. This rate of
conversion is largely a function of the cost of replacing an oil-fired heating
system with one that uses natural gas and the relative retail prices of heating
oil and natural gas.
The retail motor fuel industry is highly competitive. The number and type of
competitors vary by location. The Company operated stations presently compete
with dealers supplied by major refiners and marketers, independent gasoline
service stations operators and convenience stores with gasoline operations.
The Company's wholesale/commercial motor fuel operations compete with refiners
and other motor fuel distributors. Key competitive factors include, among
others, location, pricing, brand image, ease of access, hours of operation,
cleanliness, product promotions and marketing.
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SUPPLIERS. The Company's petroleum products are available from numerous
sources, including integrated international oil companies, independent refiners
and independent wholesalers.
The Company generally purchases a majority of its heating oil requirements under
contracts with major oil companies and independent suppliers. These supply
contracts do not fix the purchase price; rather, the price is determined daily.
The Company seeks to minimize its exposure to oil price decreases by maintaining
very low inventories of heating oil and motor fuel, and through buying most
heating oil and motor fuel at current market prices. The Company purchases the
remainder of its requirements from other major oil companies and independent
suppliers on the spot market at current market prices. The Company believes its
policy of contracting supply needs is sufficient to meet sales volume
requirements.
The Company has entered into motor fuel distributor franchise agreements with
Mobil, Texaco, Citgo, Conoco and Chevron, and has a supply agreement with an
Exxon franchise distributor for one station. The distributor franchise
agreements with Mobil, Texaco, Citgo, Conoco and Chevron also permit the
Company to resell motor fuel to dealers under the refiner's brand name. The
Company purchases most of its motor fuel under these contracts with major
refiners. These contracts do not fix the purchase price; rather, the price
is determined daily. The contracts generally specify minimum and maximum
purchase requirements. Although the Company is not required to purchase the
minimum amounts, if the minimum requirements are not met, the suppliers
generally may terminate the contracts. The Company has an agreement with
Global Petroleum Corporation pursuant to which the Company may use the name
"Global" at up to 22 of its unbranded stations.
Motor fuel is purchased on the spot market for the seven unbranded Company
operated stations, the 17 unbranded dealer stations and the delivered motor fuel
business. There are no supply agreements for these stations or delivered motor
fuel customers.
EMPLOYEES. As of June 30, 1996, the Company employed 544 persons, of whom 266
were employed directly by Griffith and 278 by King. Approximately 40
additional employees are hired by the Company during the heating season. The
Company's employees are not represented by any union. Management believes its
relationship with its employees is excellent.
REGULATION; ENVIRONMENTAL. The industry is subject to extensive environmental
regulations, particularly laws regulating underground petroleum storage tanks
("USTs"). Federal, state and local regulatory authorities have adopted
regulations governing USTs, a portion of which are being phased in over a period
extending to December 1998. Approximately 80% of the Company operated stations
are already in compliance. The Clean Air Act dictates that gasoline sold in the
nation's nine smoggiest cities have been blended, or reformulated to reduce
pollutants by January 1995. Kent, New Castle and Sussex Counties in Delaware,
Maryland and
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Northern Virginia are required or have elected to adhere to these new standards.
1988 UNDERGROUND STORAGE TANK REGULATIONS. The U.S. Environmental Protection
Agency's ("EPA") underground storage tank ("UST") regulations (40 C.F.R. Part
280) established standards for new and existing UST systems to prevent, detect
and clean up releases from these systems.
New UST systems are those that are installed after December 1988. These systems
must meet specified performance standards relating to: (i) proper installation
and certification thereof; (ii) spill and overfill protection devices; and
(iii) protection of tanks and piping from corrosion. In addition, new UST
systems must use an approved method of release detection for tanks and piping.
Existing UST systems are those installed before December 1988. These systems
must have had release detection devices installed by December 1993. By
December 1998 (10 years after the UST regulations became effective), all
existing UST systems must either: (i) meet new UST performance standards; (ii)
be upgraded in accordance with specified requirements for corrosion protection
and spill and overflow protection devices; or (iii) cease operations and be
closed using specified procedures.
The Company already meets the 1998 standards for corrosion protection and
requirements for the installation of spill and overfill devices at 30 of the 37
Company operated stations. Piping is being upgraded at needed locations as part
of Stage II vapor recovery ("Stage II") installations. Prior to the 1998
deadline, the Company intends to make capital expenditures to comply with the
1998 UST standards at four locations not currently in compliance and either make
such capital expenditures or vacate or close the remaining three Company-
operated stations (all of which are leased) not currently in compliance with
these standards. The per location cost of upgrades is between $100,000 and
$175,000, while closure costs typically range from $10,000 to $20,000 per
location. Management, therefore, does not believe that these capital
expenditures will materially affect the Company's operations. Management
believes that such capital expenditures can be funded from current operations.
In addition, the Company is subject to regulatory requirements to clean up
releases when they occur, properly close USTs to prevent future releases,
maintain evidence of financial responsibility for taking corrective action and
for compensating third parties for bodily injury and property damage resulting
from releases, and maintain appropriate records. The states in which the
Company operates also have adopted UST regulatory programs. The EPA has
approved Maryland's tank program and has proposed approval of Delaware's
program. Once approved, the State's UST rules substitute for the federal
program.
In the ordinary course of business, the Company maintains a program to routinely
detect releases of gasoline or other regulated
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substances from USTs it owns or operates. The Company employs groundwater
monitoring wells and/or sophisticated in-tank monitoring devices at a majority
of its Company operated stations and this information is available on-line at
the Company's headquarters.
As part of its UST management program, the Company is involved in environmental
assessment and remediation activities with respect to releases of regulated
substances from its existing and previously owned UST systems. Due to the
nature of UST releases, the actual payments for assessment and remediation
activities may vary significantly from year to year.
STAGE II VAPOR RECOVERY. The Clean Air Act of 1990 requires the Company to
comply with the regulations promulgated by the EPA and state governments for
Stage II. The Company has a program to install the equipment necessary to
comply with these regulations, which is designed to capture emissions that
escape from a vehicle's fuel tank during refueling. Delaware and Maryland are
phasing in compliance under their Stage II regulations based on average
throughput, with the higher volume locations complying first. As of June 30,
1996 the Company is in compliance with the State of Delaware and the State of
Maryland regulations.
ENVIRONMENTAL ASSESSMENT. The Company is subject to extensive and changing
federal, state and local environmental laws and regulations, including those
relating to the use, handling, storage, discharge and disposal of hazardous
substances and the remediation of environmental contamination and, as a result,
is from time to time involved in administrative and judicial proceedings and
inquiries relating to environmental matters. During 1996, expenditures in
connection with the Company's compliance with federal, state and local
environmental laws and regulations did not have a material adverse effect on the
Company's earnings or competitive position.
Management believes that the contingent environmental liability recorded as
of June 30, 1996 properly provides for the Company's environmental liability
exposure for future remediation of known contamination which existed at June
30, 1996. The basis for the environmental liability is a comprehensive
environmental assessment that was completed during fiscal year 1995 by an
independent environmental consultant. The management of the Company is not
aware of any new material environmental exposures since the study was
completed in fiscal year 1995.
REFORMULATED GASOLINE. On December 15, 1993, the EPA finalized regulations to
implement the reformulated gasoline ("RFG") program mandated by Section 211 (k)
of the Clean Air Act. RFG is a gasoline that is manufactured to reduce ozone-
forming emissions when burned in motor vehicles.
Under the RFG program, which began on January 1, 1995, only RFG may be sold at
retail gasoline outlets in the nation's worst ozone non-attainment areas and in
ozone non-attainment areas of states that
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choose to comply with the provisions of the RFG program. The parts of the
country in which RFG must be sold are called "covered areas." Kent, New Castle
and Sussex Counties in Delaware, Maryland and Northern Virginia are covered
areas. The RFG program also requires that the gasoline produced by a refiner to
be sold in areas that are not covered areas ("conventional areas") must not
result in higher emissions than the refiner's 1990 gasoline.
The RFG program has a strong enforcement component and establishes a presumption
of liability for all parties in the gasoline distribution system "upstream" from
a location at which a violation of the mandates of the program occurred. Thus,
if a violation is found at a retail outlet, the owner of the retail outlet as
well as all suppliers of that retail outlet are presumed liable for the
violation. This presumption is rebuttable under the RFG program. For gasoline
retailers, this presumption may be overcome by showing that the retailer or its
employees or agents did not cause the violation, that gasoline product transfer
documents certifying all of the gasoline found at the outlet are in the
possession of the owner, and that the owner has conducted a quality assurance
sampling and testing program. A violation of the mandates of the RFG program is
punishable by a fine of up to $25,000 per day of violation.
Company operated stations and dealer stations are located in both covered and
conventional areas. As a result, the Company has implemented quality assurance
and record-keeping programs to assure that it will be able to rebut the
presumption of liability if a violation is found at one of its outlets or at a
dealer outlet. These programs require a modest amount of capital expenditure and
must be continued for as long as the RFG program is in effect. Management
believes that the Company's potential liability for violations of the RFG
program is not material in the aggregate to the Company's consolidated financial
position or results of operations.
THE PETROLEUM MARKETING PRACTICES ACT. The Petroleum Marketing Practices Act
("PMPA"), as amended, is a federal law that prohibits a franchiser engaged in
the sale, consignment or distribution of refiner-branded motor fuel from
terminating or failing to renew a "franchise" or "franchise relationship,"
except on specified grounds and only after compliance with the statute's
notification provisions. PMPA expressly pre-preempts state law concerning the
termination, nonrenewal and notice thereof with respect to gasoline marketing
franchises. PMPA is enforced judicially through cases interpreting the statute.
The Company is a franchiser under the PMPA because it distributes and sells
motor fuel under refiners' trademarks, including pursuant to licensing
arrangements. Thus, the Company is subject to PMPA's termination, nonrenewal
and notice requirements in each of its individual contracts with its retail
dealers. At the same time, the Company is entitled to PMPA's protections in
each of its agreements with its branded suppliers.
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ITEM 2. PROPERTIES AND FACILITIES
The Company's principal office is located at 2510 Schuster Drive, Cheverly,
Maryland 20781, and includes corporate offices and a garage. The building has
approximately 17,138 square feet. The lease for this facility expires on June
30, 2001, with two 5-year options to renew.
King's principal office is located at 109 South Main Street, Camden, Delaware
and includes corporate offices, a warehouse and a 405,000 gallon bulk storage
plant. The facility is leased to King under a lease which expires on December
31, 1996, with a 10 year option to renew.
At June 30, 1996, the Company occupied five additional office facilities.
The Company also owns and/or operates 29 gasoline stations in Delaware, 3
stations in West Virginia and 5 stations in Maryland, of which 30 include
convenience stores and 7 include sundry booths. The stations have a standard
square footage of 1,250 square feet and storage capacity of 30,000 to 50,000
gallons.
At June 30, 1996, the Company had six bulk storage facilities serving all
operating locations; some are at office locations. Two of the bulk storage
plants are leased and the remaining four are owned. The Company feels that
the storage capacity is adequate for serving customers.
ITEM 3. LEGAL PROCEEDINGS
The Company from time to time is involved in various legal proceedings arising
from the ordinary course of its business operations, such as personal injury
claims, employment matters and contractual disputes. Management believes that
the Company's potential liability with respect to proceedings currently pending
is either covered by insurance or is not material in the aggregate to the
Company's consolidated financial position or results of operations.
ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
There were no matters submitted to a vote of security holders during the fourth
quarter of 1996.
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PART II
ITEM 5. MARKET FOR COMMON STOCK
Not applicable.
ITEM 6. SELECTED FINANCIAL DATA
The following selected financial data as of, and for the year ended June 30,
1996 and for the periods December 16, 1994 through June 30, 1995 and July 1,
1994 through December 15, 1994 and the years ended June 30, 1994, 1993 and 1992
is derived from the audited financial statements of the Company. The data
should be read in connection with the Company's financial statements and related
notes and other financial information included elsewhere in this Form 10-K
report.
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
RESULTS OF OPERATIONS
(IN THOUSANDS)
<TABLE>
<CAPTION>
12/16/94- 7/1/94-
1996 6/30/95 12/15/94 1994 1993 1992
<S> <C> <C> <C> <C> <C> <C>
NET SALES $198,017 $104,115 $74,376 $176,938 $146,711 $126,344
COST OF SALES 154,158 80,505 59,739 134,223 118,971 101,268
-------- -------- -------- -------- -------- --------
GROSS PROFIT 43,859 23,610 14,637 42,715 27,740 25,076
SELLING, GENERAL & ADMIN-
ISTRATIVE EXPENSES 29,033 15,359 12,867 28,385 19,693 18,522
AMORTIZATION &
DEPRECIATION 11,189 6,108 3,318 7,315 5,014 4,881
INTEREST 9,398 5,054 1,239 2,526 1,795 2,256
OTHER INCOME 668 851 200 565 410 865
-------- -------- -------- -------- -------- --------
(LOSS) INCOME BEFORE
INCOME TAXES (5,093) (2,060) (2,587) 5,054 1,648 282
INCOME TAX (BENEFIT)
EXPENSE (1,428) (592) (1,004) 1,971 647 159
-------- -------- -------- -------- -------- --------
NET (LOSS) INCOME $(3,665) $(1,468) $(1,583) $ 3,083 $1,001 $123
-------- -------- -------- -------- -------- --------
-------- -------- -------- -------- -------- --------
EARNINGS (LOSS)
PER SHARE(1) (2) (2) (2) $1.31 $0.43 $0.05
</TABLE>
(1) PER SHARE CALCULATIONS HAVE BEEN MADE WITH THE FOLLOWING FOR EACH PERIOD.
AVERAGE SHARES OF
OUTSTANDING COMMON
FISCAL STOCK
------ ------------------
1996 100
12/16/94-6/30/95 100
7/1/94-12/15/94 2,355,000
1994 2,355,000
1993 2,355,000
1992 2,355,000
(2) THE EARNINGS (LOSS) PER SHARE FOR 1996 AND FOR THE PERIOD 12/16/94-6/30/95
ARE NOT COMPARABLE TO THE EARLIER YEARS AND PERIOD DUE TO THE ACQUISITION. IN
ADDITION, THE EARNINGS (LOSS) PER SHARE FOR THE PERIOD 12/16/94-6/30/95 IS NOT
COMPARABLE TO THE EARLIER YEARS AND TO THE PERIOD 7/1/94-12/15/94 DUE TO THE
SEASONALITY OF THE COMPANY'S BUSINESS. THE EARNINGS (LOSS) PER SHARE FOR 1996
IS $(36,650), FOR THE PERIOD 12/16/94-6/30/95 IS $(14,680), AND FOR THE PERIOD
7/1/94-12/15/94 IS $(.67).
11
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
BALANCE SHEET
(IN THOUSANDS)
1996 1995 1994 1993 1992
Current assets $17,711 $15,287 $14,753 $12,820 $11,170
Current liabilities 18,126 15,895 18,263 16,809 12,800
------- ------- ------- ------- -------
Working capital deficit (415) (608) (3,510) (3,989) (1,630)
Total assets 108,570 115,176 51,676 51,700 37,985
Long-term debt and capital
lease obligations 65,351 68,614 24,740 29,813 21,080
Total liabilities 93,012 95,952 43,841 46,948 34,233
Shareholders' equity 15,558 19,224 7,835 4,752 3,752
ITEM 7. MANAGEMENT'S DISCUSSION AND ANALYSIS
OVERVIEW
In analyzing the results of the Company's operations, consideration should be
given to the seasonal nature of the heating oil business and prevailing weather
conditions, growth by acquisition, world oil market conditions and the ability
to pass on variations in wholesale petroleum costs to customers. Financial
results may vary from year-to-year as a result of these factors.
The Company's heating oil business is highly seasonal with approximately 75% of
current fiscal year sales made in the quarters ending December and March. Sales
from the Company's motor fuel operations are more evenly spread throughout the
year with some seasonal increases in the summer months. Also, the Company's
heating oil sales fluctuate depending upon weather conditions. In 1996, colder
than normal winter temperatures significantly increased heating oil volume from
the previous year.
Although the customer base for heating oil is declining industry-wide,
the Company is working to increase sales by attracting new customers to offset
the customers lost through attrition and seeking to acquire other petroleum
distributors.
The consolidated financial statements of the Predecessor for the five and
one-half month period ending December 15, 1994, combined with the
consolidated financial statements of the Company for the six and one-half
month period ending June 30, 1995 are not directly comparable to the
consolidated financial statements of the Company for the year ended June 30,
1996 and Predecessor for the year ended June 30, 1994. The allocation of the
purchase price in connection with the Acquisition and related financings
result in consolidated financial statements that are not directly comparable.
The following discussion and analysis should be read in connection with the
historical financial information included in the consolidated financial
statements of the Company.
In addition, the Company's consolidated financial statements for the years
ended June 30, 1997 and June 30, 1996 will not be directly comparable due to
the July 11, 1996 Shore Stop Acquisition.
12
<PAGE>
The following discussion and analysis of the Company's financial condition and
results of operations covers the period ending June 30, 1996.
RESULTS OF OPERATIONS.
FISCAL 1996 VS. FISCAL 1995
The net loss for 1996 was $3,665,000 compared to net loss of $3,051,000 for 1995
for the reasons outlined below.
Total sales increased $19,526,000, or 11%, to $198,017,000 from 1995. Total
gallons of all petroleum products increased by 8% primarily as a result of
heating oil volume increasing by 30%, which increase was caused by two
factors. One was the cold weather which was 26.3%
colder than last year and 13.4% colder than normal. The second reason was that
for several weeks in 1996, commercial natural gas customers switched to oil
because of interruptions in their natural gas supply, while during 1995 the gas
interruptions were minimal. Motor fuel volume decreased by 1%.
Cost of sales increased to $154,158,000; an increase of $13,914,000, or 10% from
1995. This can be attributed to the increase in the number of gallons of
heating fuel sold and a 1% increase in the average wholesale cost of all
petroleum products purchased.
Gross profit for 1996 was $43,860,000; an increase of $5,612,000, or 15%, from
1995. The gross profit increase was primarily due to the increase in gallons of
heating fuel sold.
13
<PAGE>
Selling, general and administrative expenses for 1996 were $29,033,000, an
increase of $807,000, or 3%, from 1995 This increase was primarily attributable
to the higher expenses as a result of increased petroleum sales due to colder
weather offset, in part, by reductions of administrative expenses attributable
to continued consolidations of operations and general cost savings.
Depreciation and amortization expenses were $11,189,000, an increase of
$1,163,000, or 19%, from 1995. The increase is primarily attributable to the
additional depreciation and amortization on the fixed assets and intangible
assets resulting from purchase accounting adjustments in connection with the
Acquisition.
Interest expense increased by $3,104,000, or 49%, to $9,398,000 from 1995. This
increase resulted primarily from additional indebtedness incurred in connection
with the Acquisition.
Other income for 1996 was $668,000, a decrease of $382,000, or 36%, from 1995.
The decrease results from decreased interest income, partially offset by an
increase in the gain on the sale of fixed assets.
FISCAL 1995 VS. FISCAL 1994
Net loss for 1995 was $3,051,000 compared to net income of $3,083,000 for 1994.
Total sales increased $1,553,000, or 1%, to $178,491,000 from 1994. Total
gallons of all petroleum products decreased by 5%. Heating fuel volume
decreased by 25% as a result of two factors. One was the warm weather which was
16% warmer than 1994 and 10.2% warmer than normal. The second reason was
that for several weeks in fiscal 1994, commercial natural gas customers switched
to oil because of interruptions in their natural gas supply, while during 1995
the gas interruptions were minimal. Motor fuel volume rose by 7% primarily due
to aggressive marketing used to acquire additional contracts to supply
independent gasoline stations.
Cost of sales increased to $140,244,000, an increase of $6,022,000, or 4% from
1994. This can be attributed to the fact that on a per gallon basis, the
average wholesale cost of all petroleum products purchased increased by 6 cents
per gallon, or 9%. The cost per gallon increase was offset partially by a 5%
decrease in the number of gallons sold.
14
<PAGE>
Gross profit for 1995 was $38,248,000, a decrease of $4,468,000, or 10%, from
1994. The gross profit decrease was primarily due to the decrease in gallons of
petroleum products sold and the higher average wholesale cost of sales per
gallon.
Selling, general and administrative expenses for 1995 were $28,225,000, a
decrease of $160,000, or less than 1%, from 1994. This decrease was primarily
attributable to the lower operating expenses as a result of decreased petroleum
sales due to warmer weather offset, in part, by additional operating expenses
related to new company operated stations and increases in insurance expenses.
Depreciation and amortization expenses were $9,426,000, an increase of
$2,111,000, or 29%, from 1994. Most of the increase is related to the
additional amortization on the intangible assets resulting from purchase
accounting adjustments in connection with the Acquisition.
Interest expense increased by $3,768,000, or 149%, to $6,294,000 from 1994.
This increase resulted primarily from additional indebtedness incurred in
connection with the 1995 Acquisition and higher interest rates.
Other income for 1995 was $1,050,000, an increase of $486,000, or 86%, from
1994. The increase results from increased interest income and gains on the sale
of fixed assets.
FINANCIAL CONDITION.
FISCAL 1996 VS. FISCAL 1995
Accounts and notes receivable increased by $2,958,000 from $8,855,000 to
$11,813,000. The
increase was due primarily to the increased volume of heating oil sold in 1996.
Prepaid expenses and other current assets decreased by $366,000 from
$1,686,000 to $1,320,000.
The decrease was primarily attributable to the decreased prepayment of insurance
premiums and the amortization of consulting fees related to the Acquisition.
Refundable income taxes decreased by $1,184,000 due to the receipt of tax
refunds and the utilization of Alternative Minimum Tax credits.
Property, plant and equipment before depreciation increased by $1,563,0000,
or 7%. This increase was due to capital expenditures made to comply with
Stage II Vapor Recovery regulations at some of the company-operated stations,
investments in new dealer supply contracts, and the purchase of, and major
repairs to, tank trucks, service vans and other vehicles to provide service
to customers.
Net intangibles decreased by $6,908,000 , or 9%, from $75,441,000 to
$68,533,000. The decrease is primarily due to the amortization of the
intangibles.
15
<PAGE>
Accounts payable increased by $1,530,000, or 25%, from $6,051,000 to $7,581,000,
due to higher petroleum product costs and timing of payments to vendors at the
end of 1996.
Accrued expenses increased by $1,415,000, or 66%, from $2,145,000 to $3,560,000,
primarily because of additional accrued interest and professional fees.
Deferred income taxes decreased $1,846,000, or 19%, from $9,840,000 to
$7,994,000 because of the amortization of intangible assets relating to the
Acquisition.
LIQUIDITY AND CAPITAL RESOURCES.
The Company's cash requirements consist principally of working capital, payments
of principal and interest on its outstanding indebtedness, capital expenditures
and expenditures for acquisitions.
The Company believes that cash flow from operating activities, cash on hand
and periodic borrowings, if necessary, will be adequate to meet its operating
cash requirements for the foreseeable future. In addition to its existing
working capital facilities, the Company may enter into additional financing
facilities to fund future acquisitions and for other purposes, to the extent
such facilities are permitted under the terms of the Indenture (the
"Indenture") governing the Company's 14 1/2% Senior Subordinated Notes due
December 15, 2004 (the "Notes") and the Company's other then existing
credit agreements.
On July 11, 1996, in connection with the Shore Stop Acquisition, the Company
amended and restated its then existing credit agreement (the "Credit
Agreement"; and as amended and restated, the "Amended and Restated Credit
Agreement") to, among other things, increase the revolving credit facility
thereunder from $12 million to $13,000,000 and the term loan thereunder from
$34,450,000 to $54,450,000. The Credit Agreement had previously been most
recently amended on January 5, 1996, to, among other things, increase the
amount of the revolving credit facility provided thereunder from $12 million
to $16 million during the period from January 5, 1996 through March 31, 1996.
Such increase was necessitated by significant increased demand for heating
oil caused by colder than normal temperatures, which increased the Company's
accounts receivable.
In 1996, the Company's peak usage of the revolving credit facility was
approximately $10,800,000. At September 15, 1996, there was no balance
outstanding with respect to the revolving credit facility. The revolving
portion of the Amended and Restated Credit Agreement expires in 1998 and the
Company may be required to replace the revolving portion at such time.
Prior to the January 1996 amendment to the Credit Agreement, the Company
entered into two amendments to the Credit Agreement and one amendment to the
Indenture that revised certain of the definitions and/or certain financial
covenants contained therein. The Company is in compliance with the financial
covenants contained in such agreements as amended, as of the date hereof.
The Company's operations generate substantial amounts of cash flow relative to
net income, principally because of depreciation of fixed assets and amortization
of customer and service accounts, documents, books and records obtained in
acquisitions. During
16
<PAGE>
1996, 1995, and 1994, net cash provided by operating activities was $5.6
million, $.4 million and $8.9 million respectively. Cash flow from operating
activities in 1996 increased by $5.2 million as compared to 1995 primarily
due to colder winter weather. Cash flow from operating activities in 1995
decreased by $8.5 million as compared to 1994 primarily due to the warmer
winter weather and interest payments on a larger debt balance and higher
interest rates.
The Company had capital expenditures of $2.4 million, $3.6 million, and $2.9
million, during 1996, 1995 and 1994, respectively. Included in capital
expenditures in 1996 were investments in new dealer supply arrangements and
capital expenditures to comply with Stage II Vapor Recovery regulations. The
Company spent $.2 million, and $2.3 million for acquisitions during 1995 and
1994 respectively. The Company acquired one small heating oil company in 1995
and two small heating oil operations in 1994.
The Company believes that cash flow provided by operations, supplemented by
external long-term borrowings, will provide sufficient funds to meet the
Company's liquidity needs for current operations and internal growth and to
finance expansion through acquisitions.
The Company purchases petroleum as necessary to meet the delivery demands of its
customers on a short-term basis. Thus, the Company carries relatively small
amounts of petroleum in inventory and does not require substantial working
capital to finance inventories.
ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
See Page F-1.
ITEM 9. CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND
FINANCIAL DISCLOSURE
At the time of the Acquisition, the Company replaced Ernst & Young LLP ("E&Y"),
the independent accountants for Predecessor, as
of December 15, 1994. E&Y's report on the financial statements for the past two
fiscal years did not contain an adverse opinion or disclaimer of opinion, nor
was it qualified or modified as to uncertainty, audit scope, or accounting
principles.
The decision to change accountants was approved by the Board of Directors.
For the fiscal years ending 1994 and 1993 and for the subsequent interim period
preceding the replacement of E&Y, there were no disagreements with E&Y on any
matter of accounting principles or practices, financial disclosure, or auditing
scope or procedure.
For the fiscal years ended 1994 and 1993 and for the subsequent interim period
preceding the replacement of E&Y, E&Y: (i) did not advise Predecessor that the
internal controls necessary for Predecessor to develop the reliable financial
statements did
17
<PAGE>
not exist; (ii) did not advise Predecessor that information had come to
E&Y's attention that led it to no longer be able to rely on management's
representations or that made it unwilling to be associated with the financial
statements prepared by management; (iii) did not advise Predecessor of the
need to expand significantly the scope of its audit, or that information had
come to E&Y's attention during the fiscal year ended 1994 and 1993 and for the
subsequent interim period preceding E&Y's replacement that if further
investigated might (a) have materially impacted the fairness or reliability of
either the issued audit report or the underlying financial statements or the
financial statements issued or to be issued covering the fiscal period
subsequent to the date of the most recent financial statements covered by an
audit report (including information that may have prevented it from rendering an
unqualified audit report on those financial statements) or (b) have caused it to
be unwilling to rely on management's representations or to be associated with
Predecessor's financial statements, and due to E&Y's replacement, or for
any other reason, E&Y did not expand the scope of its audit or conduct such
further investigation.
Arthur Andersen LLP was engaged as of December 15, 1994 as the Company's
principal accountant to audit the Company's financial statements.
PART III
ITEM 10. DIRECTORS AND EXECUTIVE OFFICERS OF THE COMPANY
The following table sets forth certain information regarding the Company's
Executive Officers and Directors as of September 29, 1996:
Name Age Position with the Company
---- --- -------------------------
Howard B. Schlosberg 52 President, Director
Bruce W. King 49 Vice President, Director
Raymond R. McKenzie, Jr. 41 Chief Financial Officer, Treasurer and
Secretary
W. Randolph Groft 35 Operations General Manager and Assistant
Secretary
Todd R. Berman 39 Chairman of the Board
Barry Lassman 55 Director, Consultant
Neil H. McLaurin, III 52 Director
Walter J. Meighan 71 Director, Consultant
Michael S. Shein 32 Director, Vice President
Howard B. Schlosberg has served as President of the Company since October 1992
and a Director since 1991. He joined the Company in September 1990 and served
as Vice President responsible for retail marketing until August 1991 when he
became the Chief Operating Officer and Director in Charge of Operations. From
1983 to 1989, he served as Vice President and General Manager for Acme Oil
18
<PAGE>
Corporation in New Jersey. He has 22 years of experience in retail petroleum
distribution and marketing.
Bruce W. King has served as Vice President and a Director of the Company since
April 1988. He also served as Acting President from August 1991 until October
1992. He joined Griffith when it acquired King in May 1987 and serves as
President of Carl King. Prior to that time, he was with the predecessor to Carl
King and has 23 years of experience in retail petroleum distribution and
marketing.
Raymond R. McKenzie, Jr. has served as Chief Financial Officer, Treasurer and
Secretary of the Company since March 1991. Mr. McKenzie joined the Company in
November 1990 as the Corporate Controller. He has over 18 years of financial
experience in both public accounting with the big six and in the private
corporate sector. Most recently, he served as Controller for The Milton Company
in Tysons Corner, Virginia from 1989 to 1990 and prior to that as a Senior
Manager with Price Waterhouse, Washington, D.C.
W. Randolph Groft has served as Assistant Secretary of the Company since April
1990. Mr. Groft joined the Company in September 1986 when the Company acquired
John R. Brown, Inc. where he served as Operations Manager. Mr. Groft started
with John R. Brown in 1983, giving him a total of thirteen years experience in
the industry. He has served the Company in various capacities, most recently
appointed to Operations General Manager in March 1994.
Todd R. Berman has served as Chairman of the Board of Directors of the Company
since December 1994. Mr. Berman is the President and founder of Chartwell
Investments Inc. ("Chartwell"), a merchant banking firm. Prior to forming the
predecessor to Chartwell in 1992, Mr. Berman served as a Managing Director of
E.S. Jacobs & Company, an investment firm, from 1984 to 1992.
Barry Lassman has served as a Director of and consultant to the Company since
December 1994. Mr. Lassman has been the Chief Operating Officer of Benzoline
Energy Company, a full service residential and commercial heating oil
distributor in Connecticut, since 1984. Mr. Lassman is also the President of
BJL Holdings, L.L.C. ("BJL Holdings"). Prior to his employment with
Benzoline, Mr. Lassman was the Chief Operating Officer of MacArthur
Petroleum, a New Jersey based distributor of heating oil and gasoline, and
Assistant to the President and Vice President -- Finance of Consolidated
Edison of New York, a major gas and electric utility in New York.
Neil H. McLaurin, III has been a Director of the Company since December 1995.
Mr. McLaurin has been Chairman of the Board of Directors, President, and
Chief Executive Officer of E-Z Serve Corporation ("E-Z Serve"), since October
1990. E-Z Serve operates 706 convenience stores and 11 franchises, and
distributes motor fuels
19
<PAGE>
through 189 non-company operated retail outlets in 20 states, predominantly in
the Sunbelt. From 1989 to 1990, Mr. McLaurin served as a consultant for L.B.
Consulting Co., an investment company in Houston, Texas.
Walter J. Meighan has served as a Director of the Company and as a consultant to
the Company since December 1994. Mr. Meighan has served as Chairman and a
Director of the Board of Directors of the Company since 1985, as President of
the Company from April 1988 to July 1990 and as Director of Acquisitions of the
Company from 1985-1988. From 1979 until June 1985, Mr. Meighan served as
President of the predecessor of Griffith Consumers Company. Mr. Meighan joined
such predecessor in 1962 serving in the following capacities: Executive Vice
President, Vice President of Sales, General Sales Manager and Baltimore Division
Manager.
Michael S. Shein has served as a Director of the Company and Vice President of
the Company since December 1994. Mr. Shein is a Managing Director and co-
founder of Chartwell. Prior to joining the predecessor to Chartwell in 1992,
Mr. Shein served as a Senior Vice President, Vice President and Associate of
E.S. Jacobs & Company from 1988 to 1992. Previously, Mr. Shein was employed by
Goldman, Sachs & Co., an investment banking firm, in the Mergers & Acquisition
Department. Mr. Shein is also a director and Vice President, Treasurer and
Secretary of GHI.
The directors of the Company are elected each year by the shareholder to serve
for a one or two year term and until their successors are elected and qualified.
GHI has agreed to vote all shares of Common Stock of the Company owned by it for
the election of Mr. Meighan to the Board of Directors of the Company. See
"Certain Transactions." The executive officers of the Company are elected by
the Board of Directors to serve at the discretion of the Board.
Members of the Board of Directors, other than Mr. Meighan and Mr. McLaurin do
not receive directors fees, but are reimbursed by the Company for their out-
of-pocket expenses incurred in attending Board of Directors and committee
meetings. Mr. Meighan and Mr. McLaurin receive an annual retainer of
$10,000 plus an additional $1,500 fee for each director's meeting attended.
DIRECTORS AND EXECUTIVE OFFICERS OF CARL KING
The following table sets forth certain information regarding Carl King's
Executive Officers and Directors as of September 27, 1996:
Name Age Position with Carl King
---- --- -----------------------
Todd R. Berman 39 Chairman of the Board
Bruce W. King 49 President, Director
Howard B. Schlosberg 52 Vice President
Michael S. Shein 32 Vice President, Director
Raymond R. McKenzie, Jr. 41 Vice President
Terrence P. Sullivan 42 Vice President
20
<PAGE>
William L. Sanner 43 Secretary and Treasurer
W. Randolph Groft 35 Assistant Secretary
Walter J. Meighan 71 Director
For information with respect to directors and officers of Carl King who serve as
Directors or officers of the Company, see "Directors and Executive Officers of
the Company." The following is a brief description of the business experience
for at least the past five years of the directors and officers of Carl King who
do not have a position with the Company:
Terrence P. Sullivan has served as Vice President of Carl King since
October 1995. He joined the Company in October 1989. Mr. Sullivan is
responsible for the contract dealer class of trade, commercial sales, supply and
distribution. Prior to joining Carl King, Mr. Sullivan held several marketing
and financial analyst positions for Mobil Oil Corporation.
William L. Sanner has served as Controller and Treasurer of Carl King since June
1987. He has seventeen years of accounting, finance and budgeting experience
with Carl King, USAir Inc. and MCI Telecommunications Inc.
The directors of Carl King are elected each year by the shareholder of Carl King
to serve for a one-year term and until their successors are elected and
qualified. The executive officers of Carl King are elected by the Board of
Directors of Carl King to serve at the discretion of the Board of Carl King.
DIRECTORS AND EXECUTIVE OFFICERS OF FREDERICK TERMINALS
The following table sets forth certain information regarding Frederick
Terminal's Executive Officers and Directors as of September 27, 1996:
Position with
Name Age Frederick Terminals
---- --- --------------------
Todd R. Berman 39 Chairman of the Board
Howard B. Schlosberg 52 Director, President
Raymond R. McKenzie, Jr. 41 Director, Treasurer and Secretary
Michael S. Shein 32 Director, Vice President
See "Directors and Executive Officers of the Company" for a description of the
business experience of the executive officers and directors of Frederick
Terminals for the past five years.
The directors of Frederick Terminals are elected each year by the shareholder of
Frederick Terminals to serve for a one-year term and until their successors are
elected and qualified. The executive officers of Frederick Terminals are
elected by the Board of Directors of Frederick Terminals to serve at the
discretion of the Board of Frederick Terminals.
21
<PAGE>
ITEM 11. EXECUTIVE COMPENSATION
Set forth below is the applicable compensation information for the Company's
President and the other most highly compensated executive officers whose annual
paid or payable aggregate cash and non-cash compensation exceeded $100,000 (the
"Named Executives") with respect to the fiscal year ended June 30, 1996.
22
<PAGE>
SUMMARY COMPENSATION TABLE
<TABLE>
<CAPTION>
LONG-TERM
COMPENSATION
AWARDS
FISCAL YEAR ANNUAL COMPENSATION(1) ALL OTHER SHARES OF GHI UNDERLYING
NAME JUNE 30, SALARY BONUS COMP.(2) OPTIONS (#)
- ---- ----------- ------ ----- --------- ------------------------
<S> <C> <C> <C> <C> <C>
HOWARD B. SCHLOSBERG 1996 $158,875 $58,000 $15,200
PRESIDENT 1995 155,000 47,500 9,500 20,400
1994 140,000 50,000 8,500
BRUCE W. KING 1996 158,875 58,000 11,000
VICE PRESIDENT 1995 155,000 47,500 10,500 20,400
1994 140,000 50,000 9,000
RAYMOND R. MCKENZIE, JR. 1996 128,125 52,000 10,800
CHIEF FINANCIAL 1995 125,000 43,750 8,500 10,200
OFFICER, TREASURER 1994 105,600 45,000 7,500
AND SECRETARY
W. RANDOLPH GROFT 1996 85,000 25,000 6,400 5,000
ASSISTANT SECRETARY 1995 N/A N/A N/A
1994 N/A N/A N/A
TERRENCE P. SULLIVAN 1996 75,000 45,000 6,400 5,000
VICE PRESIDENT 1995 N/A N/A N/A
CARL KING (ONLY) 1994 N/A N/A N/A
WILLIAM L. SANNER 1996 75,000 25,000 6,400 5,000
TREASURER AND SECRETARY 1995 N/A N/A N/A
CARL KING (ONLY) 1994 N/A N/A N/A
</TABLE>
(1) COMPENSATION DEFERRED AT THE ELECTION OF EXECUTIVE INCLUDABLE IN
CATEGORY AND YEAR EARNED.
(2) OTHER COMPENSATION CONSISTS OF EMPLOYER MATCHING CONTRIBUTIONS TO THE
401(K) PLAN, ALL OF WHICH ARE 100% VESTED, AUTOMOBILE ALLOWANCES AND
CLUB DUES.
THE FOLLOWING TABLE SETS FORTH THE "IN-THE-MONEY" OPTIONS FOR GHI
COMMON STOCK AT FISCAL YEAR-END WITH RESPECT TO EACH OF THE EXECUTIVE OFFICERS
NAMED IN THE SUMMARY COMPENSATION TABLE:
FISCAL YEAR-END OPTION VALUES
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
NUMBER OF SECURITIES
UNDERLYING UNEXERCISED OPTION
AT FISCAL YEAR-END
NAME (#) EXERCISABLE/UNEXERCISABLE
- ---------------------------------------------------------------------------
HOWARD B. SCHLOSBERG 6,800/13,600
- ---------------------------------------------------------------------------
BRUCE W. KING 6,800/13,600
- ---------------------------------------------------------------------------
RAYMOND R. MCKENZIE, JR. 3,400/6,800
- ---------------------------------------------------------------------------
W. RANDOLPH GROFT 0/5,000
- ---------------------------------------------------------------------------
TERRENCE P. SULLIVAN 0/5,000
- ---------------------------------------------------------------------------
WILLIAM L. SANNER 0/5,000
- ---------------------------------------------------------------------------
- ---------------------------------------------------------------------------
23
<PAGE>
The following table sets forth option grants made with respect to shares of GHI,
the Company's parent, in 1996 with respect to each of the Executive Officers
named in the Summary Compensation Table.
<TABLE>
<CAPTION>
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
OPTION GRANTS OF SHARES OF GHI IN 1996
INDIVIDUAL GRANTS
- ------------------------------------------------------------------------------------------------------------------------------------
NO. OF PERCENT OF
SHARES TOTAL OPTIONS
UNDERLYING GRANTED TO EXERCISE OR POTENTIAL REALIZABLE VALUE
OPTIONS EMPLOYEES IN BASE PRICE AT ASSUMED ANNUAL RATES OF
NAME GRANTED FISCAL YEAR ($/SH) EXPIRATION DATE STOCK PRICE APPRECIATION
--------------------------------
5% ($) 10% ($)
<S> <C> <C> <C> <C> <C> <C>
- ------------------------------------------------------------------------------------------------------------------------------------
TERRENCE P. SULLIVAN 5,000 26% $16.4905 OCTOBER 17, 2005 $51,854 $131,407
- ------------------------------------------------------------------------------------------------------------------------------------
NEIL H. MCLAURIN, III 4,000 22% $16.4905 DECEMBER 19, 2005 $41,483 $105,126
- ------------------------------------------------------------------------------------------------------------------------------------
W. RANDOLPH GROFT 5,000 26% $16.4905 OCTOBER 22, 2005 $51,854 $131,407
- ------------------------------------------------------------------------------------------------------------------------------------
WILLIAM L. SANNER 5,000 26% $16.4905 OCTOBER 22, 2005 $51,854 $131,407
- ------------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------------
</TABLE>
EMPLOYMENT AGREEMENTS
The Company has entered into employment agreements with Messrs. Schlosberg, King
and McKenzie for a period of three years commencing on December 15, 1994 and
with Mr. Sullivan for a period of three years commencing October 18, 1995.
Under the employment agreements the annual base salaries of Messrs. Schlosberg,
King, McKenzie and Sullivan initially are $155,000, $155,000, $125,000, and
$75,000, respectively, subject to an annual cost of living adjustment. They are
also entitled to participate in any bonus plan approved by the Board of
Directors of the Company. They are also entitled to any other benefits
generally available to the senior management of the Company and the use of a
company car or a car allowance. In addition, as described under "Incentive
Equity Plan," GHI has established an incentive equity plan for senior management
of the Company. Pursuant to their employment agreements, Messrs. Schlosberg,
King and McKenzie received under the incentive equity plan options to purchase
(at an exercise price per share of $16.4905) 1.5%, 1.5% and .75%, respectively,
of GHI's common stock, on a fully diluted basis, as of the closing of the
Acquisition. Pursuant to his employment agreement, Mr. Sullivan received under
the incentive equity plan options to purchase (at an exercise price per share of
$16.4905) 5,000 shares of GHI's common stock. If the Company terminates any of
the employment agreements without cause or because the officer has been
incapacitated for three consecutive months, then the terminated officer will be
entitled to continue to receive his salary, plus certain benefits, for twelve
months from the date of the notice of termination. The employment agreements
contain certain customary non-solicitation and non-competition provisions upon
termination of such agreements.
24
<PAGE>
The Company has also entered into employment agreements with Messrs. Berman and
Shein for a period of five years commencing on December 15, 1994. Under the
employment agreements, Messrs. Berman and Shein will receive salaries of $50,000
each year during the term of the agreements plus any other benefits generally
available to senior management of the Company. If the Company terminates either
of their employment agreements, then the terminated officer will be entitled to
continue to receive his salary, plus certain benefits, for the balance of the
term.
INCENTIVE EQUITY PLANS.
GHI has established nonqualified stock option plans to attract and retain key
personnel, including senior management, and to enhance their interest in the
Company's continued success.
ITEM 12. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
The table below sets forth as of September 27, 1996 the number and percentage of
outstanding shares of the Company's common stock, par value $.01 per share (the
"Common Stock"), beneficially owned by (i) each of the named executive officers
of the Company; (ii) each director of the Company, Carl King and Frederick
Terminals who owns Common Stock; (iii) all directors and executive officers of
the Company, Carl King and Frederick Terminals as a group; and (iv) each person
known by the Company to own beneficially more than five percent of the Common
Stock. The Company believes that each individual or entity named has sole
investment and voting power with respect to shares of Common Stock indicated as
beneficially owned by them, except as otherwise noted.
Name Shares Owned %
---- ------------ -----
Griffith Holdings, Inc. . . . . . . . . 100 100
2510 Schuster Drive
Cheverly, MD 20781
King and Frederick Terminals are wholly owned subsidiaries of the Company.
The following table sets forth as of September 27, 1996, the number and
percentage of outstanding shares of the GHI common stock, par value $.01 per
share, beneficially owned by (i) each of the named executive officers of the
Company; (ii) each director of the Company, King and Frederick Terminals; and
(iii) all directors and executive officers of the Company, King and Frederick
Terminals as a group. The Company believes that each individual or entity named
has sole investment and voting power with respect to shares of GHI Common Stock
indicated as beneficially owned by them, except as otherwise noted.
25
<PAGE>
NAME SHARES OWNED %
------------ ---
Todd R. Berman(1) - -
Michael S. Shein(1) - -
Barry J. Lassman(2) 47,458 3.63
Howard B. Schlosberg(3) 9,832 *
Bruce W. King(3) 9,832 *
Raymond R. McKenzie, Jr.(3) 4,916 *
Walter J. Meighan - -
Neil H. McLaurin, III(4) 5,000
All Directors and Officers as a Group (10) 77,038 5.77%
- ---------------------------------
* Less than one percent.
(1) Messrs. Berman and Shein are limited partners of Chartwell, L.P., a Cayman
Islands limited partnership, which is the general partner and a limited
partner of Griffith Partners L.P. and holds approximately 63% of the
partnership interests of Griffith Partners L.P. and, consequently, may be
deemed to beneficially own all of the shares of GHI beneficially owned by
Chartwell Partners L.P. Griffith Partners L.P. beneficially holds 77.03%
of the outstanding shares of GHI.
(2) BJL Holdings holds options to purchase 47,458 shares of the Common Stock of
GHI, which options are immediately exercisable at a price per share equal
to $16.4905. Mr. Lassman may be deemed beneficially to own the shares
owned by BJL Holdings.
(3) Messrs. Schlosberg, King and McKenzie hold options to purchase 20,400
shares, 20,400 shares and 10,200 shares, respectively, of GHI Common Stock
exercisable at a price per share equal to $16.4905, of which options to
purchase 6,800 shares, 6,800 shares and 3,400 shares, respectively, of GHI
Common Stock were exercisable as of June 30, 1996.
(4) Mr. McLaurin holds options to purchase 4,000 shares of GHI Common Stock
at a price per share equal to $16.9905.
ITEM 13. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
GHI, the Company and Carl King entered into a management consulting agreement
with Chartwell pursuant to which Chartwell will provide the Company with certain
management, advisory and consulting services for a fee of $200,000 for each
fiscal year of the Company during the term of the agreement, with up to an
additional $200,000 payable for each of fiscal years 1996 through 2000, provided
that certain financial goals are achieved, plus reimbursement of certain
expenses. Chartwell received an additional $100,000 fee in 1996 based on the
achievement of certain financial goals. The term of the management consulting
agreement is five years commencing on December 15, 1994, with one additional
five year renewal term. Mr. Berman and Mr. Shein are founders and officers of
Chartwell.
26
<PAGE>
BJL Holdings received, at the closing of the Acquisition, options to purchase
47,458 shares of the Common Stock of GHI at an exercise price per share equal to
$16.4905.
Messrs. Schlosberg, King and McKenzie each purchased 3,032, 3,032 and 1,516
shares of Common Stock of GHI, respectively, from Chartwell G.P. Corp. at a
purchase price per share equal to $16.4905 in February, 1995.
Mr. Meighan entered into a consulting agreement, which agreement was extended
until December 15, 1997 with GHI and the Company pursuant to which he is to
receive fees for services rendered to the Company at a rate of $200 per hour.
Such fees are not currently expected to exceed $10,000. Mr. Meighan is also
entitled to the use of a company car. In addition, GHI has agreed to vote its
shares in favor of the election of Mr. Meighan as a director for the term of the
consulting agreement.
Mr. Lassman entered into a one year consulting agreement with GHI and the
Company pursuant to which he received a retainer of $2,500 per month for
services rendered to the Company.
GHI entered into a stock option agreement, in 1994, with each of Howard B.
Schlosberg, Bruce W. King and Raymond R. McKenzie, Jr., pursuant to which
they each received options to purchase 20,400 shares, 20,400 shares and
10,200 shares respectively, of common stock of GHI at an exercise price of
$16.4905 per share.
GHI entered into a stock option agreement, in 1995, with each of Terrence P.
Sullivan, Neil H. McLaurin, III, W. Randolph Groft and William L. Sanner.,
pursuant to which they received options to purchase 5,000 shares, 4,000
shares, 5,000 shares and 5,000 shares respectively, of common stock of GHI at
an exercise price of $16.4905 per share.
27
<PAGE>
PART IV
ITEM 14. EXHIBITS, FINANCIAL STATEMENTS, SCHEDULES AND REPORTS ON FORM 8-K
(a) Documents filed as part of this report:
1. (a) FINANCIAL STATEMENTS OF THE COMPANY
Page
Reports of Independent Auditors. . . . . . . . . . . . . . . . . F-1-2
Consolidated Balance Sheet . . . . . . . . . . . . . . . . . . . F-3-4
Consolidated Statements of Operations. . . . . . . . . . . . . . . F-5
Consolidated Statements of Changes in
Shareholder's Equity . . . . . . . . . . . . . . . . . . . . . . F-6
Consolidated Statements of Cash Flows. . . . . . . . . . . . . . . F-7
Notes to Consolidated Financial Statements . . . . . . . . . . .F-8-22
(b) FINANCIAL STATEMENTS OF THE BUSINESS ACQUIRED
(i) Regent Investments, Inc.
Financial Statements
December 31, 1995 and 1994
(With Independent Auditors' Report Thereon)
(ii) Griffith Consumers Company and Subsidiaries pro forma
statments of operation for the year ended June 30, 1995
and the nine months ended March 31, 1996 and balance sheet
as of March 31, 1996
2. All other schedules for which provision is made in the applicable
accounting regulation of the Securities and Exchange Commission are not
required under the related instructions or are inapplicable, and therefore have
been omitted.
3. EXHIBITS
[c]2.1 Asset Purchase Agreement dated as of November 30, 1989 between
Griffith Consumers Company, a Maryland corporation and predecessor
to the Company ("Griffith Maryland"), and Hessick, Inc.
[e]2.2 Asset Purchase Agreement dated October 3, 1991 between Carl King and
Calotex Delaware, Inc.
[g]2.3 Asset Purchase Agreement dated April 23, 1993 between Griffith
Maryland and Steuart Petroleum Company and Steuart Investment
Company.
[i]2.4 Agreement for Merger dated as of August 26, 1994 among Griffith
Maryland, Griffith Holdings, Inc. ("GHI") and ABC Acquisition Corp.
("ABC") (the "Merger Agreement").
[i]2.5 First Amendment, dated as of October 28, 1994, to Merger Agreement.
[i]2.6 Second Amendment, dated as of November 18, 1994, to Merger
Agreement.
28
<PAGE>
[i]2.7 Third Amendment, dated as of December 12, 1994, to Merger Agreement.
[i]2.8 Agreement and Plan of Merger dated as of December 15, 1994 among
Griffith Maryland and Andrew One Corp.
[i]3.1 Certificate of Incorporation of Griffith Holdings, Inc.
[i]3.2 Certificate of Amendment to the Certificate of Incorporation of
Griffith Holdings, Inc., changing its name to Andrew One Corp.,
dated August 23, 1994.
[i]3.3 Certificate of Merger of Griffith Maryland with and into Andrew One
Corp. and changing the name of Andrew One Corp. to Griffith
Consumers Company, dated December 15, 1994.
[i]3.4 Certificate of Incorporation of CKC Corporation.
[i]3.5 Certificate of Amendment to Certificate of Incorporation of CKC
Corporation, changing its name to Carl King, Inc., dated January 5,
1987.
[i]3.6 Articles of Incorporation of Frederick Terminals, Inc.
[i]3.7 By-laws of Griffith.
[i]3.8 By-laws of Carl King, Inc.
[i]3.9 By-laws of Frederick Terminals, Inc.
[i]4.1 Indenture dated as of December 15, 1994 among Griffith, Carl
King, Frederick Terminals and NationsBank Trust Company of New York,
as Trustee (including form of 14 1/2% Senior Subordinated Notes due
2004).
[i]4.2 Purchase Agreement dated as of December 12, 1994 among GHI, Andrew
One Corp. and Donaldson, Lufkin & Jenrette Securities Corporation
("DLJ").
[i]4.3 A/B Exchange Registration Rights Agreement dated as of December 15,
1994 among Griffith, Carl King, Frederick Terminals and DLJ.
[j]4.4 Form of Letter Agreement dated December 15, 1994 among Griffith,
Sun Life Insurance Company of America, John Hancock Mutual Life
Insurance Co., The Lincoln National Life Insurance Company and Pecks
Management Partners.
[i]4.5 Third Amended and Restated Revolving Credit and Term Loan Agreement
dated as of December 15, 1994 among Griffith, Carl King, and
certain lending institutions,
29
<PAGE>
with The First National Bank of Boston, as Agent (the "Credit
Agreement").
[i]4.6 Fourth Amended and Restated Revolving Credit Note, in the original
principal amount of $9,500,000, dated as of December 15, 1994, made
by Griffith and Carl King in favor of The First National Bank of
Boston.
[i]4.7 Fourth Amended and Restated Revolving Credit Note, in the original
principal amount of $2,500,000, dated as of December 15, 1994, made
by Griffith and Carl King in favor of The Riggs National Bank of
Washington, D.C.
[i]4.8 Term Note A dated as of December 15, 1994 made by Griffith and
Carl King in favor of each of Term Loan A lenders under the Credit
Agreement.
[i]4.9 Term Note B dated as of December 15, 1994 made by Griffith and
Carl King in favor of each of the Term Loan B lenders under the
Credit Agreement.
[i]4.10 Guaranty dated as of December 15, 1994 by Frederick Terminals in
favor of the lending institutions party to the Credit Agreement and
The First National Bank of Boston, as Agent.
[i]4.11 Security Agreement dated as of December 15, 1994 among Griffith,
Carl King and The First National Bank of Boston, as Agent for the
lending institutions party to the Credit Agreement.
[i]4.12 Security Agreement dated as of December 15, 1994 among Frederick
Terminals and The First National Bank of Boston, as Agent for the
lending institutions party to the Credit Agreement.
[i]4.13 Second Amended and Restated Stock Pledge Agreement dated as of
December 15, 1994 among Griffith and The First National Bank of
Boston, as Agent for the lending institutions party to the Credit
Agreement.
[k]4.14 Amendment No. 1 dated as of March 15, 1995, to the Third Amended and
Restated Revolving Credit and Loan Agreement dated as of December
15, 1994 among Griffith, King, and certain lending institutions,
with The First National Bank of Boston as Agent.
[k]4.15 Amendment No. 1 dated as of March 15, 1995, to Indenture dated
December 15, 1994, among Griffith, King, Frederick Terminals and
NationsBank Trust Company of New York, as Trustee.
[n]4.16 Amendment No. 2 dated as of August 11, 1995, to the Third Amended
and Restated Revolving Credit and Loan
30
<PAGE>
Agreement dated as of December 15, 1994, among Griffith, King,
and certain lending institutions, with The First National Bank of
Boston as Agent.
[e]4.17 Amendment No. 3 dated as of January 5, 1996 to the Third Amended and
Restated Revolving Credit Agreement dated as of December 15, 1994
among Griffith, Carl King, Inc., and certain lending institutions,
with the First National Bank of Boston as Agent.
4.18* Fourth Amended and Restated Revolving Credit and Term Loan
Agreement dated as of July 8, 1996 among Griffith, Carl King,
Inc., Shore Stop Corporation and certain lending institutions,
with the First National Bank of Boston as Agent.
4.19* Second Supplemental Indenture, dated as of June 30, 1996 to
Indenture dated as of December 15, 1994 among the Company, King,
Frederick Terminals and The Bank of New York as Successor
Trustee.
[j]5.1 Legal Opinion of Akin, Gump, Strauss, Hauer & Feld, L.L.P.
concerning the legality of the New Notes.
[a]10.1 Purchase Agreement dated June 30, 1986 between Griffith Maryland and
Griffith Consumers Leasing Partnership.
[b]10.2 Lease dated December 30, 1986 between Carl King and CKC.
[d]10.3 Product Sales Agreement between Mobil Oil Company and Carl King,
Inc. dated April 15, 1988.
[d]10.4 Product Sales Agreement between Mobil Oil Company and Griffith
Maryland dated May 29, 1990.
[f]10.5 Product Sales Agreement between Star Enterprise and Carl King, Inc.
dated December 6, 1991.
[f]10.6 Non-compete Agreement dated January 2, 1992 between Griffith
Maryland and Walter J. Meighan.
[g]10.7 Lease dated June 9, 1993 between Griffith Maryland and Steuart
Petroleum Company.
[g]10.8 Non-compete Agreement dated June 9, 1993 between Griffith Maryland
and Steuart Investment Company.
[g]10.9 Non-compete Agreement dated June 9, 1993 between Griffith Maryland
and Steuart Petroleum Company.
[g]10.10 Non-compete Agreement dated June 9, 1993 between Griffith Maryland
and Leonard P. Steuart, II and Guy T. Steuart, II.
31
<PAGE>
[h]10.11 Non-compete Agreement dated July 1, 1993 between Griffith Maryland
and Rockville Fuel and Feed Company.
[h]10.12 Non-compete Agreement dated July 1, 1993 between Griffith Maryland
and James D. Ward.
[h]10.13 Non-compete Agreement dated August 2, 1993 between Griffith Maryland
and Frederick Petroleum Company.
[h]10.14 Non-compete Agreement dated August 2, 1993 between Griffith Maryland
and DeWalt J. Willard, Jr.
[h]10.15 Non-compete Agreement dated March 21, 1994 between Griffith Maryland
and George G. Brown.
[i]10.16 Agreement with Shareholders dated as of August 26, 1994 among
Certain Shareholders of Griffith Maryland, GHI and ABC.
[i]10.17 Consulting, Noncompetition and Indemnity Agreement dated as of
August 26, 1994 among Richard Slifka, Alfred A. Slifka, GHI and ABC.
[i]10.18 Letter Agreement dated as of October 28, 1994 among Richard Slifka,
Alfred A. Slifka, GHI and ABC regarding Consulting, Noncompetition
and Indemnity Agreement dated as of August 26, 1994.
[i]10.19 Consulting and Noncompetition Agreement dated as of August 26, 1994
among Thomas A. McManmon, GHI and ABC.
[i]10.20 Noncompetition Agreement dated as of August 26, 1994 among Global
Petroleum Co., GHI and ABC.
[i]10.21 License Agreement dated as of December 15, 1994 among Global
Petroleum Corp., Griffith and Carl King.
[i]10.22 Advisory Agreement dated as of December 15, 1994 among First
Chartwell Investments Inc., Griffith, GHI, ABC and Carl King.
[i]10.23 Management Agreement dated as of December 15, 1994 among Chartwell
Investments Inc., Griffith and Carl King.
[i]10.24 Consulting Agreement dated as of June 15, 1994 among BJL Holdings,
LLC, GHI and ABC.
[i]10.25 Consulting Agreement dated as of December 15, 1994 among Walter J.
Meighan, GHI and Griffith.
[i]10.26 Employment Agreement dated as of December 15, 1994 among Griffith
and Todd R. Berman.
32
<PAGE>
[i]10.27 Employment Agreement dated as of December 15, 1994 among Griffith
and Michael S. Shein.
[i]10.28 Employment Agreement dated as of December 15, 1994 among Griffith
and Howard B. Schlosberg.
[i]10.29 Employment Agreement dated as of December 15, 1994 among Griffith
and Bruce W. King.
[i]10.30 Employment Agreement dated as of December 15, 1994 among Griffith
and Raymond R. McKenzie, Jr..
[i]10.31 Executive Nonqualified Stock Option Plan dated as of December 15,
1994.
[i]10.32 Grant and Stock Option Agreements dated as of December 15, 1994
among GHI and each of Howard B. Schlosberg, Bruce W. King and
Raymond R. McKenzie, Jr., granting 1/3 of the options to which they
are entitled under the Executive Nonqualified Stock Option Plan.
[i]10.33 Grant and Stock Option Agreements dated as of December 15, 1994
among GHI and each of Howard B. Schlosberg, Raymond R. McKenzie, Jr.
and Bruce W. King, granting 2/3 of the options to which they are
entitled under the Executive Nonqualified Stock Option Plan.
[i]10.34 Amended and Restated Master Lease Agreement dated as of December 15,
1994 among Griffith Consumers Leasing Partnership and Griffith.
[i]10.35 Letter Agreement dated as of December 14, 1994 among Griffith,
The Travelers Insurance Company, The Travelers Indemnity Company,
The Travelers Life and Annuity Company and The Phoenix Insurance
Company.
[i]10.36 Indemnification Agreements between Griffith and each of the
directors and officers of Griffith, Carl King and Frederick
Terminals.
[i]10.37 Guaranty dated as of September 15, 1994 by Duncan O. Thomas in favor
of Griffith Maryland.
[j]10.38 Independent Contractors Nonqualified Stock Option Plan.
[j]10.39 Form of Grant and Stock Option Agreements among GHI and each of
Simon Ramo, Robert Lindsay and William Spencer.
[n]10.40 Non-compete Agreement dated July 26, 1994 between Griffith and
Reed Oil.
[l]10.41 Indemnity Agreement dated December 20, 1995 by and between Griffith
and Neil H. McLaurin III.
33
<PAGE>
[m]10.42 Asset Purchase and Sale Agreement, dated as of April 23, 1996, by
and among Griffith, Regent Investments, Inc., Delaware
Investments, Inc. and Mid-Atlantic Investments, Inc.
10.43* Employment Agreement, dated October 18, 1995 between Griffith and
Terrence P. Sullivan.
10.44* Consulting Agreement, dated December 15, 1995 among Griffith, GHI
and Walter J. Meighan.
[j]12 Computation of Ratio of Earnings to Fixed Charges.
[n]16 Letter from Ernst & Young LLP with respect to disclosure in Annual
Report on Form 10-K (1995) relating to change in accountants.
[i]21 Subsidiaries of Griffith.
[i]25 Form T-1 Statement of Eligibility and Qualification under the Trust
Indenture Act of 1939 of NationsBank Trust Company of New York
relating to the New Notes (bound separately).
27* Financial Data Schedule
[i]99.1 Letter of Transmittal.
[i]99.2 Notice of Guaranteed Delivery.
- ----------------------------
* Filed herewith.
[a] Incorporated by reference to Exhibits to Registration Statement No. 0-
16359 filed by Griffith Maryland.
[b] Incorporated by reference to Exhibits to Griffith Maryland's Report of
Form 10-K for the year ended June 30, 1987.
[c] Incorporated by reference to Exhibits to Griffith Maryland's Report on
Form 8-K dated December 22, 1989 and Form 8-K, Amended dated February 24,
1990.
[d] Incorporated by reference to Exhibits to Griffith Maryland's Report on
Form 10-K for the year ended June 30, 1990.
[e] Incorporated by reference to Exhibits to Griffith Maryland's Report on
Form 8-K dated December 18, 1991 and filed December 19, 1991.
[f] Incorporated by reference to Exhibits to Griffith Maryland's Report on
Form 10-K for the year ended June 30, 1992.
34
<PAGE>
[g] Incorporated by reference to Exhibits to Griffith Maryland's Report on
Form 8-K dated June 9, 1993 and filed June 24, 1993.
[h] Incorporated by reference to Exhibits to Griffith Maryland's Report on
Form 10-K for the year ended June 30, 1994.
[i] Incorporated by reference to Exhibits to the Company's Registration
Statement No. 33-88526 on Form S-4 dated January 13, 1995.
[j] Incorporated by reference to Exhibits to the Company's Amendment No. 1 to
the Registration Statement No. 33-88526 on Form S-4 dated March 31, 1995.
[k] Incorporated by reference to Exhibits to the Company's Report on Form 10-
Q for the Quarter Ended March 31, 1995.
[l] Incorporated by reference to Exhibits to the Company's Report on Form 10-
Q for the Quarter Ended December 31, 1995.
[m] Incorporated by reference to Exhibits to the Company's Report on Form 8-K
dated May 3, 1996.
[n] Incorporated by reference to Exhibits to the Company's Annual Report on
Form 10-K for the Fiscal Year Ended June 30, 1995.
[o] Incorporated by reference to Exhibits to the Company's Current Report on
Form 8-K dated May 3, 1996.
(b) REPORTS ON FORM 8-K
A current Report on Form 8-K was filed by the Company on May 3, 1996 with
respect to the purchase of certain assets of Shore Stop.
35
<PAGE>
SIGNATURES
Pursuant to the requirements of Section 13 or 15 (d) of the Securities Exchange
Act of 1934, each registrant has duly caused this report to be signed on its
behalf by the undersigned, each thereunto duly authorized on the 27th day of
September, 1996.
GRIFFITH CONSUMERS COMPANY
By: /s/ Todd R. Berman
------------------------------
Name: Todd R. Berman
Title: Chairman
CARL KING, INC.
By: /s/ Todd R. Berman
------------------------------
Name: Todd R. Berman
Title: Chairman
FREDERICK TERMINALS, INC.
By: /s/ Todd R. Berman
------------------------------
Name: Todd R. Berman
Title: Chairman
36
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, this report
has been signed below by the following persons on behalf of the registrants and
in the capacities and on the dates indicated.
GRIFFITH CONSUMERS COMPANY
NAME TITLE DATE
/s/ Todd R. Berman Chairman of the September 27, 1996
- -------------------- Board of Directors
Todd R. Berman
/s/ Howard B. President and September 27, 1996
Schlosberg Director (Principal
- -------------------- Executive Officer)
Howard B. Schlosberg
/s/ Bruce W. King Vice President and September 27, 1996
- -------------------- Director
Bruce W. King
/s/ Michael S. Shein Vice President and September 27, 1996
- -------------------- Director
Michael S. Shein
/s/ Raymond R. Vice President, September 27, 1996
McKenzie, Jr. Secretary and
- -------------------- Treasurer (Principal
Raymond R. McKenzie, Financial and
Jr. Accounting Officer)
/s/ Barry J. Lassman Director September 27, 1996
- --------------------
Barry J. Lassman
/s/Walter J. Meighan Director September 27, 1996
- --------------------
Walter J. Meighan
/s/Neil H. Director September 27, 1996
McLaurin, III
- --------------------
Neil H. McLaurin, III
37
<PAGE>
CARL KING, INC.
NAME TITLE DATE
/s/ Todd R. Berman Chairman of the September 27, 1996
- -------------------- Board of Directors
Todd R. Berman
/s/ Bruce W. King President and September 27, 1996
- -------------------- Director (Principal
Bruce W. King Executive Officer)
/s/ Raymond R. Vice President September 27, 1996
McKenzie, Jr. (Principal Financial
- -------------------- and Accounting Officer)
Raymond R. McKenzie,
Jr.
/s/ Michael S. Shein Vice President and September 27, 1996
- -------------------- Director
Michael S. Shein
FREDERICK TERMINALS, INC.
NAME TITLE DATE
/s/ Todd R. Berman Chairman of the September 27, 1996
- -------------------- Board of Directors
Todd R. Berman
/s/ Howard B. President and September 27, 1996
Schlosberg Director (Principal
- -------------------- Executive Officer)
Howard B. Schlosberg
/s/ Michael S. Shein Vice President and September 27, 1996
- -------------------- Director
Michael S. Shein
/s/ Raymond R. Secretary and September 27, 1996
McKenzie, Jr. Director (Principal
- -------------------- Financial and
Raymond R. McKenzie, Accounting Officer)
Jr.
38
<PAGE>
SUPPLEMENTAL INFORMATION TO BE FURNISHED WITH REPORTS FILED PURSUANT TO SECTION
15(d) OF THE ACT BY REGISTRANTS WHICH HAVE NOT REGISTERED SECURITIES PURSUANT TO
SECTION 12 OF THE ACT
No annual report to security-holders or proxy materials has been sent to
security-holders.
39
<PAGE>
EXHIBIT INDEX
Exhibit # Description
- --------- -----------
4.18 Fourth Amended and Restated Revolving Credit and Term Loan Agreement
dated as of July 8, 1996 among Griffith, Carl King, Inc., Shore Stop
Corporation and certain lending institutions, with the First
National Bank of Boston as Agent.
4.19 Second Supplemental Indenture, dated as of June 30, 1996 to
Indenture dated as of December 15, 1994 among the Company, King,
Frederick Terminals and The Bank of New York as Successor Trustee.
10.43 Employment Agreement, dated October 18, 1995 between the Company and
Terrence P. Sullivan.
10.44 Consulting Agreement, dated December 15, 1995 among the Company, GHI
and Walter J. Meighan.
27 Financial Data Schedule
40
<PAGE>
REPORT OF INDEPENDENT PUBLIC ACCOUNTANTS
To the Shareholders of
Griffith Consumers Company:
We have audited the accompanying consolidated statements of operations, changes
in shareholders' equity and cash flows of Griffith Consumers Company and
subsidiaries ("Predecessor") for the period July 1, 1994 through December 15,
1994. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Griffith
Consumers Company and subsidiaries for the period July 1, 1994 through December
15, 1994, in conformity with generally accepted accounting principles.
/s/ Arthur Andersen, LLP
ARTHUR ANDERSEN LLP
New York, New York
September 18, 1996
F-1
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Shareholders of
Griffith Consumers Company:
We have audited the accompanying consolidated statements of operations, changes
in shareholders' equity and cash flows of Griffith Consumers Company and
subsidiaries for the year ended June 30, 1994. 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 audit.
We conducted our audit 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 audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the results of operations and cash flows of Griffith
Consumers Company and subsidiaries for the year ended June 30, 1994, in
conformity with generally accepted accounting principles.
/s/ Ernst & Young LLP
ERNST & YOUNG LLP
August 22, 1994
F-2
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
ASSETS: 1996 1995
- ----------------------------------------- ------------------ -----------------
<S> <C> <C>
CURRENT ASSETS
CASH $ 1,687,443 $ 803,085
ACCOUNTS AND NOTES RECEIVABLE,
LESS ALLOWANCE FOR BAD DEBTS - NOTE K 11,813,211 8,854,865
PETROLEUM PRODUCTS INVENTORY 1,228,347 1,104,087
REPAIR PARTS AND SUPPLIES INVENTORY 1,662,048 1,654,668
PREPAID EXPENSES AND OTHER 1,320,055 1,686,326
REFUNDABLE INCOME TAXES - - - - - 1,184,380
---------------- ----------------
TOTAL CURRENT ASSETS 17,711,104 15,287,411
PROPERTY, PLANT AND EQUIPMENT
- -----------------------------------------
LAND 5,533,870 5,691,704
BUILDINGS 1,844,358 1,849,746
MACHINERY AND EQUIPMENT 16,152,930 14,427,147
---------------- ----------------
23,531,158 21,968,597
LESS: ALLOWANCE FOR DEPRECIATION 6,019,263 2,079,727
---------------- ----------------
17,511,895 19,888,870
INTANGIBLES - NOTE C
- -----------------------------------------
CUSTOMER AND SERVICE ACCOUNTS 37,063,186 37,243,999
COVENANTS NOT TO COMPETE 2,936,824 2,936,823
GOODWILL 39,000,867 39,375,955
OTHER INTANGIBLES 836,344 836,344
---------------- ----------------
79,837,221 80,393,121
LESS: ALLOWANCE FOR AMORTIZATION 11,304,362 4,951,986
---------------- ----------------
68,532,859 75,441,135
LONG-TERM NOTES RECEIVABLE 1,054,816 793,595
DEFERRED DEBT COSTS & OTHER 3,759,756 3,764,930
---------------- ----------------
TOTAL ASSETS $ 108,570,430 $ 115,175,941
---------------- ----------------
---------------- ----------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-3
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JUNE 30, JUNE 30,
LIABILITIES AND SHAREHOLDER'S EQUITY: 1996 1995
- ----------------------------------------- ------------------ -----------------
<S> <C> <C>
CURRENT LIABILITIES:
ACCOUNTS PAYABLE $ 7,581,065 $ 6,050,846
ACCRUED EXPENSES 3,560,374 2,144,619
DEFERRED REVENUE 2,471,880 3,251,038
INCOME TAXES PAYABLE 73,103 - - - -
OTHER TAXES PAYABLE 198,517 523,701
CURRENT PORTION OF LONG-TERM DEBT-
NOTE F 4,240,893 3,924,660
---------------- ----------------
TOTAL CURRENT LIABILITIES 18,125,832 15,894,864
LONG-TERM DEBT, LESS CURRENT PORTION-
NOTE F 65,350,995 68,614,436
DEFERRED INCOME TAXES 7,993,849 9,840,169
POST-RETIREMENT EMPLOYEE BENEFITS
AND OTHER 1,541,330 1,602,916
---------------- ----------------
TOTAL LIABILITIES 93,012,006 95,952,385
SHAREHOLDER'S EQUITY
- -----------------------------------------
COMMON STOCK, PAR VALUE $.01 PER SHARE,
100 SHARES, AUTHORIZED, ISSUED AND
OUTSTANDING 1 1
ADDITIONAL PAID-IN CAPITAL 20,691,323 20,691,323
RETAINED DEFICIT (5,132,900) (1,467,768)
---------------- ----------------
TOTAL SHAREHOLDER'S EQUITY 15,558,424 19,223,556
TOTAL LIABILITIES AND ---------------- ----------------
SHAREHOLDER'S EQUITY $ 108,570,430 $ 115,175,941
---------------- ----------------
---------------- ----------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-4
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
------------------------------------ ------------------------------------
JUL 1, 1995 - DEC 16, 1994 - JUL 1, 1994 - JUL 1, 1993 -
JUN 30, 1996 JUN 30, 1995 DEC 15, 1994 JUN 30, 1994
---------------- ---------------- ---------------- ----------------
<S> <C> <C> <C> <C>
SALES FROM PETROLEUM PRODUCTS $ 178,834,396 $ 94,579,313 $ 65,437,258 159,565,648
SERVICE, EQUIPMENT, AND OTHER SALES 19,182,816 9,535,569 8,939,201 17,372,193
---------------- ---------------- ---------------- ----------------
TOTAL SALES 198,017,212 104,114,882 74,376,459 176,937,841
COST OF SALES 154,157,555 80,504,645 59,739,106 134,222,416
---------------- ---------------- ---------------- ----------------
GROSS PROFIT 43,859,657 23,610,237 14,637,353 42,715,425
SELLING, GENERAL AND ADMINISTRATIVE
EXPENSES 29,032,933 15,358,839 12,866,611 28,384,963
DEPRECIATION EXPENSE 4,124,316 2,136,576 1,304,698 2,853,034
AMORTIZATION EXPENSE 7,065,138 3,970,889 2,013,836 4,461,784
---------------- ---------------- ---------------- ----------------
OPERATING INCOME (LOSS) 3,637,270 2,143,933 (1,547,792) 7,015,644
INTEREST EXPENSE 9,398,476 5,054,455 1,239,657 2,526,247
OTHER INCOME 668,001 850,722 199,747 564,853
---------------- ---------------- ---------------- ----------------
(LOSS) INCOME BEFORE INCOME TAX (5,093,205) (2,059,800) (2,587,702) 5,054,250
INCOME TAX (BENEFIT) EXPENSE - NOTE H (1,428,073) (592,032) (1,004,455) 1,971,187
---------------- ---------------- ---------------- ----------------
NET (LOSS) INCOME $ (3,665,132) $ (1,467,768) $ (1,583,247) 3,083,063
---------------- ---------------- ---------------- ----------------
---------------- ---------------- ---------------- ----------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-5
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
ADDITIONAL RETAINED TOTAL
COMMON PAID-IN EARNINGS SHAREHOLDER'S
PREDECESSOR SHARES STOCK CAPITAL (DEFICIT) EQUITY
----------- ------------ ------------- ------------ -------------
<S> <C> <C> <C> <C> <C>
BALANCE JUNE 30, 1993 2,355,000 23,550 2,849,407 1,879,436 4,752,393
NET INCOME - - - 3,083,063 3,083,063
----------- ------------ ------------- ------------ -------------
BALANCE JUNE 30, 1994 2,355,000 23,550 2,849,407 4,962,499 7,835,456
ISSUANCE OF STOCK 5,000 50 24,950 - 25,000
NET LOSS - - - (1,583,247) (1,583,247)
----------- ------------ ------------- ------------ -------------
BALANCE DECEMBER 15, 1994 2,360,000 23,600 2,874,357 3,379,252 6,277,209
STOCK REDEMPTION (2,360,000) (23,600) (2,874,357) (3,379,252) (6,277,209)
----------- ------------ ------------- ------------ -------------
BALANCE DECEMBER 16, 1994 - - - - -
- ------------------------------------------------------------------------------------------------------------------------------
- ------------------------------------------------------------------------------------------------------------------------------
SUCCESSOR
CAPITAL CONTRIBUTIONS FROM PARENT 100 1 20,691,323 - 20,691,324
NET LOSS - - - (1,467,768) (1,467,768)
----------- ------------ ------------- ------------ -------------
BALANCE JUNE 30, 1995 100 1 20,691,323 (1,467,768) 19,223,556
NET LOSS - - - (3,665,132) (3,665,132)
----------- ------------ ------------- ------------ -------------
BALANCE JUNE 30, 1996 100 1 20,691,323 (5,132,900) 15,558,424
----------- ------------ ------------- ------------ -------------
----------- ------------ ------------- ------------ -------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-6
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
------------------------------------ -------------------------------------
YEAR ENDED DECEMBER 16, 1994 JULY 1, 1994 YEAR ENDED
JUNE 30 THROUGH THROUGH JUNE 30
1996 JUN 30, 1995 DECEMBER 15, 1994 1994
---------------- ----------------- ----------------- ----------------
<S> <C> <C> <C> <C>
OPERATING ACTIVITIES
Net (loss) income $ (3,665,132) $ (1,467,768) $ (1,583,247) $ 3,083,063
Adjustments to reconcile net (loss)
income to net cash provided by
(used in) operating activities:
Depreciation 4,124,316 2,136,576 1,304,698 2,853,034
Amortization 7,065,135 3,970,889 2,013,836 4,461,784
Provision for bad debts 336,000 96,000 92,000 356,000
Amortization of bond discount 182,108 72,264 - - - - - - - -
Gain on sale of property, plant,
equipment, and intangibles (137,772) (6,498) (24,087) (20,689)
Changes in operating assets and
liabilities,
Net of effects of change in
working capital:
Accounts and notes receivable (3,555,567) 1,439,016 (1,571,994) (2,193,749)
Inventory (131,640) 43,919 (175,887) 232,028
Prepaid expenses and other 366,271 951,694 (1,841,787) (166,538)
Refundable income taxes, net 1,257,483 55,411 (1,234,890) 5,467
Other assets (151,688) (1,990,701) (771,997) (321,047)
Accounts payable 1,530,219 (2,770,914) 1,319,125 639,733
Accrued expenses 1,415,755 254,306 (283,208) (545,849)
Deferred revenue (779,158) (1,615,715) 1,822,452 447,344
Other liabilities (2,203,090) (238,900) 392,473 102,852
---------------- ---------------- --------------- --------------
NET CASH PROVIDED BY (USED IN)
OPERATING ACTIVITIES 5,623,243 929,579 (542,513) 8,933,434
INVESTING ACTIVITIES
Purchases of property, plant, and
equipment (2,376,852) (2,061,981) (1,497,243) (2,888,938)
Purchases of intangible assets - - - - - - - - (750,000) (81,632)
Proceeds from sale of property, plant,
and equipment and intangible assets 767,283 89,431 125,545 242,058
Acquisition of business:
Property, Plant and equipment - - - - - - - - - - - - (1,375,400)
Intangibles - - - - (76,650) (142,000) (912,000)
Inventory - - - - - - - - - - - - (8,500)
Purchase of predecessor's stock per Merger - - - - (54,280,000) - - - - - - - -
Acquisition Costs (3,674,391) - - - - - - - -
---------------- ---------------- --------------- --------------
Net cash used in investing activities (1,609,569) (60,003,591) (2,263,698) (5,024,412)
FINANCING ACTIVITIES
Proceeds from line of credit 800,000 (1,850,000) 1,850,000 530,984
Proceeds from bond debentures issuance - - - - 31,196,612 - - - - - - - -
Bond issue costs - - - - (1,473,000) - - - - - - - -
Proceeds from term loans - - - - 40,275,853 - - - - - - - -
Prepaid interest - - - - (1,170,000) - - - - - - - -
Payments on long-term debt (3,929,316) (27,793,692) (1,760,875) (4,281,916)
Capital Contributions from Parents - - - - 20,691,323
Issuance of capital stock - - - - 1 25,000 - - - -
---------------- ---------------- --------------- --------------
Net cash (used in) provided by
financing activities (3,129,316) 59,877,097 114,125 (3,750,932)
---------------- ---------------- --------------- --------------
Increase (Decrease) in cash 884,358 803,085 (2,692,086) 158,090
Cash at beginning of period 803,085 - - - - 2,692,086 2,533,996
---------------- ---------------- --------------- --------------
Cash at end of period $ 1,687,443 $ 803,085 $ 0 $ 2,692,086
---------------- ---------------- --------------- --------------
---------------- ---------------- --------------- --------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
F-7
<PAGE>
Griffith Consumers Company and Subsidiaries
June 30, 1996
Notes to Consolidated Financial Statements
Note A--Introduction
On December 15, 1994, the transaction contemplated by the merger agreement
("Merger Agreement") dated August 26, 1994 between Griffith Consumers Company
("Griffith", and together with its consolidated subsidiaries "the Company")
and Griffith Holdings, Inc. ("GHI"), a corporation previously unrelated to
the Company, closed, whereby GHI acquired all of Griffith's 2,360,000
outstanding shares of common stock (the "Common Stock") for $23.00 cash per
share. Pursuant to the Merger Agreement, ABC Acquisition Corp. ("ABC"), a
wholly owned subsidiary of GHI, merged with and into Griffith, and each share
of Griffith's common stock was converted into the right to receive $23.00 in
cash (the "Acquisition"). As a result of the Acquisition, the Company became
a wholly owned subsidiary of GHI.
The Acquisition has been accounted for under the purchase method of
accounting as of December 16, 1994. Accordingly, GHI has allocated its total
purchase cost of approximately $54,280,000 to the assets and liabilities of
the Company based upon the fair value of these assets and liabilities. The
fair values assigned on the December 16, 1994 balance sheet were adjusted
when valuation studies were completed. Because of this purchase price
allocation, the accompanying consolidated financial statements of the Company
for the periods July 1, 1995 through June 30, 1996 and December 16, 1994
through June 30, 1995 (the "Successor") are not directly comparable to the
consolidated financial statements of the Company for the period prior to
December 16, 1994 (the "Predecessor").
Note B--Business
The Company is engaged principally in the retail sale of home heating oil, the
retail sale of gasoline through Company-owned gas stations, the sale of gasoline
to independent dealer gas stations and the sale of other petroleum products.
The Company is also engaged in the sale of oil heating and air-conditioning
equipment.
Note C--Significant Accounting Policies
PRINCIPLES OF CONSOLIDATION: The subsidiaries' accounts have been included in
the consolidated financial statements. All significant intercompany accounts and
transactions have been eliminated.
REVENUE RECOGNITION: Sales are recognized as deliveries are made or services
are performed. Deferred revenue represents collections from customers who are
on a periodic payment plan and who have made payments in excess of deliveries or
services received.
F-8
<PAGE>
ALLOWANCE FOR BAD DEBTS: A provision for bad debts is provided when the
collection of the account is doubtful.
INVENTORIES: Inventories are valued at the lower of average cost or market.
PROPERTY, PLANT AND EQUIPMENT: Property, plant and equipment are recorded at
cost. Depreciation is recorded using the straight-line method over the
following useful lives:
Buildings 20 years
Dealer equipment and station improvements 5-10 years
Machinery and equipment 3- 5 years
As of December 16, 1994, the remaining useful lives were used to depreciate
property, plant and equipment revalued under purchase accounting.
Maintenance and repairs are expensed as incurred; significant renewals and
betterments are capitalized. Maintenance and repair expense for the year ended
June 30, 1996 and the periods December 16, 1994 through June 30, 1995 and July
1, 1994 through December 15, 1994 and the year ended June 30, 1994 was
$1,159,137, $650,118, $643,655, and $1,591,051, respectively.
INTANGIBLE ASSETS: Customer and service accounts obtained through acquisitions
are amortized over their estimated useful lives of eight years. Other
intangibles are amortized over periods not exceeding ten years. Covenants not
to compete are amortized over the period stated in the agreements. Goodwill was
amortized over a period of fifteen years for the Predecessor and is amortized
over a thirty year period for the Successor. All intangible assets are
amortized using the straight-line method. The Company evaluates the potential
impairment of intangibles and other long-lived assets by comparing the related
discounted cash flow from operations to the net book value of such assets. Any
impairment would be the excess of net book value over discounted future cash
flow from operations. For these purposes, the related cash flow is the earnings
before taxes, depreciation, amortization, and interest attributable to the
intangibles and other long-lived assets whose impairment is being assessed.
BURNER SERVICE CONTRACTS: A contingent liability is provided for labor and
parts given free to customers during the years in which no revenue is received
from the customer.
RECLASSIFICATIONS: Certain amounts in the consolidated balance sheet for the
year ended June 30, 1995 have been reclassified to conform to the June 30, 1996
presentations. Additionally, certain amounts in the consolidated statements of
operations, changes in shareholder's equity and statements of cash flows for the
year ended June 30, 1994, and the periods July 1, 1994 through December
F-9
<PAGE>
15, 1994 and December 16, 1994 through June 30, 1995 have been reclassified to
conform with the June 30, 1996 presentation.
DEBT ISSUANCE COSTS: The costs associated with the issuance of debt are
amortized utilizing the effective interest method over the term of the
underlying debt instrument. The terms of the debt range from six to ten years.
INCOME TAXES: Deferred income taxes are provided for the temporary differences
between the financial statements and the tax basis of assets and liabilities,
except for goodwill recorded in connection with the Acquisition, which is not
deductible for tax purposes. Deferred income taxes relate primarily to
depreciation associated with property, plant, and equipment, allowances for bad
debt and various accruals of salaries and related benefits.
USE OF ESTIMATES: The preparation of financial statements in conformity with
generally accepted accounting principles requires management to make estimates
and assumptions that affect 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.
F-10
<PAGE>
Note D--Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to be Disposed of
In March 1995, the Financial Accounting Standards Board issued Statement of
Financial Accounting Standards No. 121, "Accounting for the Impairment of Long-
Lived Assets and for Long-Lived Assets to be Disposed of" (SFAS No. 121). This
statement establishes accounting standards for the impairment of long-lived
assets, certain identifiable intangibles, and goodwill related to those assets
to be held and used and for long-lived assets and certain identifiable
intangibles to be disposed of. SFAS No. 121 requires these assets to be reviewed
for possible impairment whenever events or changes in circumstances indicate
that the carrying amount may not be recoverable. This statement will be
effective for fiscal years beginning after December 15, 1995, and the Company
plans to adopt the statement on July 1, 1996. Based upon the facts and
circumstances known today, the Company does not expect the adoption of SFAS No.
121 to have a material impact on its financial statements.
Note E--Acquisitions of Retail Oil Companies and Gasoline Stations
The Company acquired the assets of a retail oil company. The acquisition was
accounted for as a purchase transaction and, therefore, the financial statements
include the results of operations of the acquired company from the acquisition
date. The cost of the acquisition in the previous year was allocated as
follows:
Year Ended Year Ended
June 30, June 30,
1996 1995
------------------------------
Customer and service
accounts $ -0- $ 50,000
Covenants not to compete -0- 24,000
Goodwill -0- 68,000
---------- -----------
$ -0- $ 142,000
---------- -----------
---------- -----------
Number of acquisitions - 1
F-11
<PAGE>
Note F--Debt
In connection with the Acquisition, the Company retired the Predecessor's
operating line of credit and primary bank term loan. Mortgage notes (the
"Mortgage Notes") on several properties located in Delaware, Maryland and
West Virginia were assumed by the Successor.
The Company subsequently negotiated a new term loan and operating line of
credit with the Company's primary bank lender under the Third Amended and
Restated Revolving Credit and Term Loan Agreement dated as of December 15,
1994 (the "Credit Agreement"). Borrowings under the Credit Agreement are
secured by a first lien on substantially all the assets of the Company,
except those properties located in Delaware, Maryland and West Virginia
securing the Mortgage Notes. The primary lender is subordinated to the
mortgage lender on these properties.
The Credit Agreement contains various provisions regarding events of default and
restrictive covenants, including, among others, restrictions on new liens and
indebtedness, restrictions on the sale of assets, restrictions on mergers and
consolidations and a prohibition on the payment of dividends. In addition, at
the end of each quarter and/or fiscal year-end, the Company is required to
maintain a certain cumulative cash flow coverage ratio, minimum tangible net
worth, minimum working capital, specified maximum ratio of funded debt to
earnings before interest, taxes, depreciation and amortization ("EBITDA") and
debt service coverage ratio.
In addition to the Credit Agreement, the Company financed the Acquisition with
$34 million of 14 1/2% Senior Subordinated Notes due December 15, 2004 (the
"Notes"). Interest on the Notes is payable semiannually on June 15 and December
15 of each year. The Notes are subordinated to all existing and future senior
indebtedness of the Company. The Indenture governing the Notes (the "Indenture")
contains certain restrictive covenants and financial covenants similar to the
Credit Agreement.
The Company has entered into three amendments to the Credit Agreement and two
amendments to the Indenture during 1995 and 1996, which, among other things
revised certain definitions and/or certain financial covenants contained
therein. The Company is in compliance with such agreements as amended.
Subsequent to year-end, the Company amended the agreement. See Note N -
Subsequent Events.
F-12
<PAGE>
The outstanding balances, due dates and interest rates of debt at June 30, 1996
and 1995 were as follows:
June 30, June 30,
1996 1995 Rate
------------------------------------------
Term loan due December 31, 2000 $17,200,000 $20,400,000 Prime + 1.5%
or Eurodollar
Rate + 2.75%
Term loan due December 31, 2002 $17,250,000 $17,750,000 Prime + 2%
or Eurodollar
Rate + 3.25%
Mortgage note due May 1, 2001 $324,905 $378,802 7.5% to April
995 Prime +
1.5%
thereafter
Senior Subordinated Notes due
December 15, 2004, net of
unamortized bond discount
of $2,548,419 and $2,730,527 $31,451,581 $31,269,473 14.5%
Line of Credit due December $2,600,000 $1,800,000 Prime + 1.5%
31, 1998 or Eurodollar
Rate + 2.75%
Other long-term debt due 7.0% through
through 2006 $765,402 $940,821 9.5%
----------- -----------
Total debt $69,591,888 $72,539,096
Current portion of
long-term debt ($4,240,893) ($3,924,660)
------------- ------------
Long-term debt, less
current portion $ 65,350,995 $68,614,436
------------ -----------
------------ -----------
The term loan interest is payable either quarterly or based on the maturity of
the Eurodollar Rate Loans. The Senior Subordinated Notes interest is paid semi-
annually. All other interest payments are made monthly.
As noted above, the Company's term loans and line of credit are based on either
the Prime rate or Eurodollar rate. The Company decides whether to use the
Eurodollar or Prime rate based on the current market interest rates during the
year.
F-13
<PAGE>
The prime rate was 8.25% and 9% at June 30, 1996 and 1995, respectively. The
average Eurodollar rate at June 30, 1996 and 1995 was 5.5% and 6.125%,
respectively.
The Company has available lines of credit. The maximum and average amounts
outstanding and the maximum available for the fiscal years are as follows:
Year Ended June 30
1996 1995
------------------------
Maximum Outstanding $10,800,000 $ 4,000,000
Average Outstanding $ 2,849,808 $ 939,726
Maximum Available $12,000,000 $12,000,000
The Company entered into a two year interest rate swap covering the term loan
outstanding at January 17, 1996. The amount of the swap coverage is reduced as
payments of principle on the term loan are made. The interest rate provides a
fixed Eurodollar rate of 5.22% for the term.
The operating line of credit has a commitment fee of 1/2% per annum on the
unused portion. The Company paid $44,281, $15,385, $13,015, and $28,914 for the
year ended June 30, 1996, the periods December 16, 1994 through June 30, 1995,
July 1, 1994 through December 15, 1994 and the year ended June 30, 1994,
respectively.
The Company paid $9,398,476, $5,054,455, $1,239,657 and $2,526,247 in interest
for the year ended June 30, 1996 and during the periods December 16, 1994
through June 30, 1995 and July 1, 1994 through December 15, 1994 and the year
ended June 30, 1994, respectively. Principal payments due during each fiscal
year ended June 30 under all loan agreements are as follows:
1997 $ 4,240,893
1998 4,541,243
1999 4,525,552
2000 5,176,233
2001 6,113,257
Thereafter 44,994,710
----------
$69,591,888
-----------
-----------
Seven letters of credit, totaling $3,578,191, were outstanding at June 30, 1996.
These letters expire on or before July 1, 1997. Management believes none of
these letters of credit will be called in the future.
Note G--Related Party Transactions
In connection with the change of control in December 1994, the Company paid
certain transaction-related fees and expense reimbursements to entities owned by
certain of the current directors and controlling shareholders of the Company.
Such payments totaled $1,172,360. A quarterly management fee is also
F-14
<PAGE>
paid to entities owned by certain of the current directors and controlling
shareholders. The Company paid $300,000 of management fees in 1996.
NOTE H--Income Taxes
The components of income tax expense (benefit) are as follows:
Successor Predecessor
----------- ------------
Year Ended Dec 16, 1994- Jul 1, 1994- Year Ended
June 30,1996 Jun 30, 1995 Dec 15, 1994 June 30,1994
------------------------------------------------------
Federal income taxes
Current $ 159,438 $ 11,469 $ (807,313) $1,632,485
Deferred (1,609,321) (605,188) (78,419) (15,101)
State income taxes 21,810 1,687 (118,723) 353,803
------------ ------------ ------------ ---------
$(1,428,073) $ (592,032) $(1,004,455) $1,971,187
------------ ------------ ------------ ----------
------------ ------------ ------------ ----------
A reconciliation of the difference between income tax (benefit) expense at the
statutory federal rate and the effective rate is as follows:
Successor Predecessor
------------- ------------
Year Ended Dec 16, 1994- Jul 1, 1994- Year Ended
June 30,1996 Jun 30, 1995 Dec 15, 1994 June 30,1994
-------------------------------------------------------
Statutory federal rate
(34%) $(1,731,690) $ (700,332) $ (879,819) $1,718,445
State income taxes, net
of federal benefit (254,660) (102,990) (140,400) 220,429
Goodwill-pre acquisition -0- 12,480 12,963 27,501
Goodwill-post acquisition 500,073 193,419 -0- -0-
Other, net 58,204 5,391 2,801 4,812
----------- ----------- ----------- ----------
Income tax (benefit)
expense $(1,428,073) $ (592,032) $(1,004,455) $1,971,187
----------- ----------- ----------- ----------
----------- ----------- ----------- ----------
F-15
<PAGE>
The components of deferred taxes are as follows at June 30, 1996:
Deferred tax liabilities:
Depreciation - PP&E $ 449,299
Step-up in assets,
excluding goodwill 7,931,353
Other 380,351
----------
Total $8,761,003
----------
Deferred tax assets:
Allowance for bad debts 269,677
Accrued vacation 103,738
Alternative Minimum Tax 237,000
Other 156,738
----------
Total 767,153
----------
Net deferred tax liabilities $7,993,850
----------
----------
Deferred income taxes are provided for the temporary differences between the
financial statements and the tax basis of assets and liabilities, except for
goodwill in connection with the acquisition, which is not deductible for tax
purposes. The Company received income tax refunds of $880,366, $199,504, $0,
and $863 in the year ended June 30, 1996, the periods December 16, 1994 through
June 30, 1995 and July 1, 1994 through December 15, 1994 and the year ended June
30, 1994, respectively. The Company made income tax payments of $42,000,
$107,189, $278,300, and $1,764,875 in the year ended June 30, 1996, the periods
December 16, 1994 through June 30, 1995 and July 1, 1994 through December 15,
1994 and the year ended June 30, 1994, respectively.
The Company files a consolidated federal income tax return with GHI as its
parent corporation. GHI is ultimately liable for future federal income tax
liabilities of the Company. The Company's federal tax provision is calculated
on a separate return basis. The Company files separate company state income tax
returns and is ultimately liable for its future state income tax liabilities.
Note I--Environmental Regulations
Management believes that the environmental liability recorded as of June 30,
1996 properly provides for the Company's environmental liability exposure for
future remediation or contamination which existed at June 30, 1996.
Management's assessment of the environmental liability is based on a
comprehensive environmental study by an independent environmental consultant
that was completed during fiscal year 1995. Management is not aware of any
additional significant environmental exposures since the completion of the
fiscal year 1995 study.
The Company maintains a program to routinely detect releases of gasoline or
other regulated substances from underground storage
F-16
<PAGE>
tanks it owns or operates. The Company employs groundwater monitoring wells
and/or sophisticated in-tank monitoring devices at a majority of its Company
operated stations and this information is available on-line at the Company's
headquarters.
Note J--Pension and Other Benefit Plans
As part of an acquisition agreement, the Company agreed to provide post-
retirement health and life benefits to certain retirees and spouses of an entity
acquired in 1987. The net present value of these postretirement benefits was
established as a liability for all periods presented. Under this agreement, the
Company pays 100% of the health insurance premiums for 35 retirees and spouses,
100% of the life insurance premiums for 16 retirees and spouses, and
approximately 35% of the dental premiums for 4 retirees and spouses. There are
35 retirees and spouses at June 30, 1996 and the Company's portion of the
retirees' premiums approximated $37,000, $36,000, and $38,000 during the years
ended June 30, 1996, 1995, and 1994, respectively.
The actuarial present value of the accumulated postretirement benefit obligation
("APBO") was approximately $600,000 as of June 30, 1996. Net postretirement
benefit expense for the year ended June 30, 1996 was $34,000.
Effective January 1, 1988, the Company adopted "The Griffith Consumers Company
401(k) Plan and Trust" (the "Plan"). All full-time employees are eligible to
participate in the Plan after one year of employment. Until December 31, 1992,
each eligible participant could elect to contribute 2% to 15% of compensation,
and the Company contributed an equal amount up to 2% of the participant's total
compensation. Effective January 1, 1993, the Company contribution was increased
to 3%. Total contributions charged to expense for the year ended June 30, 1996
and the periods December 16, 1994 through June 30, 1995 and July 1, 1994 through
December 15, 1994 and the year ended June 30, 1994 were $285,567, $141,000,
$119,000, and $263,000, respectively.
Note K--Allowance for Bad Debts
Activity in the allowance for bad debts is as follows:
Year Ended June 30
1996 1995 1994
---------------------------------------
Beginning Balance $ 463,398 $ 552,073 $ 353,159
Provision for bad debts 336,000 188,000 356,000
Accounts written off,
net of recoveries (107,919) (276,675) (157,086)
---------- ---------- ----------
Ending balance $ 691,479 $ 463,398 $ 552,073
---------- ---------- ----------
---------- ---------- ----------
F-17
<PAGE>
Note L--Commitments and Contingencies
The Company leases office facilities, petroleum product storage facilities,
computer equipment and transportation equipment. The Company's operating leases
range in length from one to six years. Certain leases have options for renewal.
Future minimum payments, by year and in the aggregate, under noncancelable
operating leases with terms of one year or more, consist of the following at
June 30, 1996:
Year Ending Total Operating
June 30, Leases
------------ ---------------
1997 $ 571,614
1998 333,186
1999 207,264
2000 164,755
2001 163,155
Thereafter -0-
----------
Total minimum
lease payments $1,439,974
----------
----------
Rental expense for all operating leases for the year ended June 30, 1996, and
the periods December 16, 1994 through June 30, 1995 and July 1, 1994 through
December 15, 1994 and the year ended June 30, 1994 was $1,147,110, $643,929,
$544,863, and $1,353,500, respectively. The Company derives rental income
primarily from real estate leases to dealers. Rental income for the year ended
June 30, 1996 and the periods December 16, 1994 through June 30, 1995, and July
1, 1994 through December 15, 1994, and the year ended June 30, 1994 was $212,216
$109,580, $88,395, and $147,660, respectively.
The Company purchases petroleum products pursuant to supply contracts or on the
spot market. At June 30, 1996, the Company was a party to 14 supply contracts
which are effective for periods of up to three years. These contracts establish
maximum amounts of petroleum products which a supplier is required to provide
but the Company is not required to purchase a minimum amount. The price
approximates market at time of purchase. Historically, the Company has procured
approximately one-half of its petroleum products under these supply contracts
and the balance on the spot market.
The Company has 81 contracts with terms varying from two to twenty years to
supply nonaffiliated gasoline stations with petroleum products. These contracts
establish minimum amounts of petroleum products which the Company will supply.
The price approximates market at time of purchase.
Company management believes the probability is remote that the outcome of
litigation and other proceedings relating to the Company
F-18
<PAGE>
will have a material adverse impact on the results of the
Company's operations or its financial position.
Note M--Subsidiaries' Condensed Financial Statement Data
Griffith's wholly owned subsidiaries, Carl King, Inc. and Frederick
Terminals, Inc. (collectively, "Subsidiaries") are the full and unconditional
guarantors of the Notes, issued in connection with Company's private placement
thereof on December 15, 1994. This footnote sets forth the combined balance
sheets of the Subsidiaries as of June 30, 1996 and June 30, 1995, the combined
statements of operations and cash flows for the year ended June 30, 1996 and the
periods December 16, 1994 through June 30, 1995 and July 1, 1994 through
December 15, 1994, and changes in shareholder's equity for the period from June
30, 1993 through June 30, 1996.
In accordance with Staff Accounting Bulletin No. 55, the separate financial
statement data reflects all of the expenses that the Company incurred on each
Subsidiary's behalf. Except for certain general and administrative expenses and
income taxes, expenses are separately identifiable and, therefore, charged
directly to the respective Subsidiary. Common general and administrative
expenses are allocated based on management's assessment of the actual costs
associated with the operations; and income tax expense is provided in the
financial data on a separate return basis. Management believes that the methods
used to allocate expenses to each Subsidiary are reasonable.
F-19
<PAGE>
CARL KING, INC. AND FREDERICK TERMINALS, INC.
COMBINED CONDENSED BALANCE SHEETS
-------------- --------------
June 30 June 30
ASSETS: 1996 1995
-------------- --------------
Current assets $ 5,215,700 $ 3,125,955
Net property, plant and equipment 13,500,023 15,910,702
Net intangibles 12,496,263 13,502,376
Other 566,783 752,911
-------------- --------------
$ 31,778,769 $ 33,291,944
-------------- --------------
-------------- --------------
LIABILITIES AND SHAREHOLDER'S EQUITY:
Current liabilities $ 5,940,506 $ 5,112,715
Due to Parents 5,335,763 5,417,801
Long-term debt, less current portion 15,143,539 16,022,445
Other liabilities 1,555,511 1,997,564
Shareholder's equity 3,803,450 4,741,419
-------------- --------------
$ 31,778,769 $ 33,291,944
-------------- --------------
-------------- --------------
CARL KING, INC. AND FREDERICK TERMINALS, INC.
COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
Successor Successor Predecessor
-------------- --------------- ---------------
Jul 1, 1995 - Dec 16, 1994 - Jul 1, 1994 -
Jun 30, 1996 Jun 30, 1995 Dec 15, 1994
-------------- --------------- ---------------
<S> <C> <C> <C>
Total sales $ 96,811,737 $ 51,618,467 $ 44,704,897
Cost of sales 84,057,750 45,618,659 38,700,054
-------------- -------------- --------------
Gross profit 12,753,987 5,999,808 6,004,843
Selling, general, and administrative
expenses 8,398,315 4,462,622 3,811,513
Depreciation expense 2,800,950 1,458,549 932,048
Amortization expense 875,467 600,131 287,130
-------------- -------------- --------------
Operating income (loss) 679,255 (521,494) 974,152
Interest expenses 2,304,060 1,249,814 393,502
Other income 238,749 397,656 40,505
-------------- -------------- --------------
(Loss) Income before income tax (1,386,056) (1,373,652) 621,155
Income tax (benefit) expense (448,087) (322,461) 245,631
-------------- -------------- --------------
Net (loss) income $ (937,969) $ (1,051,191) $ 375,524
-------------- -------------- --------------
-------------- -------------- --------------
</TABLE>
F-20
<PAGE>
CARL KING, INC. AND FREDERICK TERMINALS, INC.
COMBINED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
<TABLE>
<CAPTION>
INVESTMENT RETAINED TOTAL
BY EARNINGS SHAREHOLDER'S
PARENT (DEFICIT) EQUITY
------------------ ------------------ ------------------
PREDECESSOR
<S> <C> <C> <C>
BALANCE JUNE 30, 1993 $5,074,657 $1,185,051 $6,259,708
Additional Investment by parent 717,953 - 717,953
Net income - 846,158 846,158
------------------ ------------------ ------------------
BALANCE JUNE 30, 1994 5,792,610 2,031,209 7,823,819
Net income - 375,524 375,524
------------------ ------------------ ------------------
BALANCE DECEMBER 15, 1994 5,792,610 2,406,733 8,199,343
Stock Redemption - (2,406,733) (2,406,733)
------------------ ------------------ ------------------
BALANCE DECEMBER 16, 1994 5,792,610 - 5,792,610
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
SUCCESSOR
(1,051,191) (1,051,191)
Net loss - - -
------------------ ------------------ ------------------
BALANCE JUNE 30, 1995 5,792,610 (1,051,191) 4,741,419
Net income - (937,969) (937,969)
------------------ ------------------ ------------------
BALANCE JUNE 30, 1996 $5,792,610 ($1,989,160) $3,803,450
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
CARL KING, INC. AND FREDERICK TERMINALS, INC.
COMBINED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
SUCCESSOR PREDECESSOR
------------------------------------- ------------------
JUL 1, 1995 - DEC 16, 1994 - JUL 1, 1994 -
JUN 30, 1996 JUN 30, 1995 DEC 15, 1994
----------------- ------------------ ------------------
<S> <C> <C> <C>
Operating activities $1,994,347 $7,324,404 $1,248,408
Investment activities (92,128) (15,145,311) (995,129)
Financing activities (948,985) 7,820,907 (759,118)
------------------ ------------------ ------------------
Increase (decrease) in cash 953,234 - (505,839)
Cash at beginning of year - - 505,839
------------------ ------------------ ------------------
Cash at end of year $953,234 - -
------------------ ------------------ ------------------
------------------ ------------------ ------------------
</TABLE>
F-21
<PAGE>
Note N--Subsequent Events
On July 11, 1996, the Company acquired certain assets used in the operations
of a chain of convenience stores and retail gasoline stations within the
states of Maryland, Delaware and Virginia under the "Shore Stop" trade name
and a dealer petroleum sales business at two facilities located in Virginia
and Maryland from Regent Investments, Inc., Delaware Investments, Inc., and
Mid-Atlantic Investments, Inc., each a Virginia corporation (collectively,
the "Sellers"). The Company intends to continue using the acquired assets as
convenience stores and dealer petroleum sales business, respectively. The
Company paid the Sellers $17,000,000 (plus the purchase price of certain
inventory), subject to certain adjustments, of which $1,500,000 was in the
form of a promissory note secured by first priority mortgages or deeds of
trust on certain stores and assumed $350,000 of debt. The terms and
conditions of the acquisition were determined upon arms length negotiations
between the Company and Sellers and are set forth in the Asset Purchase and
Sale Agreement by and among the Sellers and the Company, dated as of April
23, 1996 (the "Purchase Agreement"). No material relationship exists between
the Company and the Sellers. The acquisition was financed through an
amendment and restatement of the existing Credit Agreement.
F-22
<PAGE>
ITEM 14(a)1(b)(i)
KPMG Peat Marwick LLP
2100 Dominion Tower
999 Waterside Drive
Norfolk, VA 23510
INDEPENDENT AUDITORS' REPORT
The Board of Directors
Regent Investments, Inc.:
We have audited the accompanying balance sheets of Regent Investments, Inc.
as of December 31, 1995 and 1994, and the related statements of earnings and
retained earnings and cash flows for the years then ended. 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 Regent Investments, Inc. as
of December 31, 1995 and 1994, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
/s/ KPMG Peat Marwick LLP
March 13, 1996
1
<PAGE>
REGENT INVESTMENTS, INC.
Balance Sheets
December 31, 1995 and 1994
<TABLE>
<CAPTION>
Assets 1995 1994
------ ----------- -----------
<S> <C> <C>
Current assets:
Cash $ 534,173 957,012
Receivables:
Trade accounts, less allowance for doubtful
accounts of $17,785 in 1995 192,925 382,785
Advances to stockholders (note 2) 1,750,799 --
Other, including current installments of
notes receivable (note 2) 227,862 158,878
----------- -----------
Total receivables 2,171,586 541,663
----------- -----------
Inventories (notes 4, 8 and 9):
FlFO cost 2,554,105 2,605,193
Less LIFO reserve 359,800 282,100
----------- -----------
2,194,305 2,323,093
----------- -----------
Prepaid expenses 107,272 97,466
----------- -----------
Total current assets 5,007,336 3,919,234
----------- -----------
Property and equipment (notes 8 and 9):
Land 887,249 720,399
Store equipment and fixtures 3,170,829 2,908,411
Buildings and service stations 3,599,114 2,823,370
Pumps, tanks and equipment 6,365,240 5,815,918
Transportation equipment 176,851 197,959
----------- -----------
14,199,283 12,466,057
Less accumulated depreciation 6,836,394 5,814,464
----------- -----------
Net property and equipment 7,362,889 6,651,593
----------- -----------
Intangible assets, net (note 7) 39,050 60,350
Long-term notes receivable, excluding current
installments 160,622 238,343
Deferred loan costs, net 8,179 40,895
Other assets (note 6) 364,637 411,911
----------- -----------
$12,942,713 11,322,326
----------- -----------
----------- -----------
Liabilities and Stockholders' Equity 1995 1994
------------------------------------ ----------- -----------
Current liabilities:
Current installments of long-term debt (note 8) $ 258,240 924,003
Current installments of obligations under
noncompete agreements -- 110,161
Advances on bank line of credit (note 9) 859,093 310,510
Advances from shareholders -- 210,758
Accounts payable 2,784,262 3,034,322
Accrued expenses (note 12) 3,239,182 1,579,999
----------- -----------
Total current liabilities 7,140,777 6,169,753
----------- -----------
Long-term debt, excluding current
installments (note 8) 672,017 238,430
Environmental remediation (note 12) 400,000 --
----------- -----------
Total liabilities 8,212,794 6,408,183
----------- -----------
Stockholders' equity:
Common stock, 5,000 shares authorized,
1,000 shares issued 500,000 500,000
Additional paid-in capital 1,500,000 1,500,000
Retained earnings 2,729,919 2,914,143
----------- -----------
Total stockholders' equity 4,729,919 4,914,143
----------- -----------
Commitments, contingencies and subsequent event
(notes 5, 11, 12 and 13) ----------- -----------
$12,942,713 11,322,326
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to financial statements.
2
<PAGE>
REGENT INVESTMENTS, INC.
Statements of Earnings and Retained Earnings
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
------------ ----------
Sales and operating revenues $ 84,965,926 81,280,439
Cost of sales 66,900,651 64,132,393
------------ ----------
Gross profit 18,065,275 17,148,046
------------ ----------
Operating expenses:
Selling, service and distribution 13,758,162 13,882,737
General and administrative (note 7) 4,160,825 2,671,040
------------ ----------
17,918,987 16,553,777
------------ ----------
Operating income 146,288 594,269
------------ ----------
Other income (deduction):
Interest income 41,324 59,867
Interest expense (174,450) (213,709)
Gain on disposal of property and equipment, net 52,958 81,390
Other, net 169,908 47,237
------------ ----------
89,740 (25,215)
------------ ----------
Net earnings 236,028 569,054
Retained earnings at beginning of year 2,914,143 2,814,091
Distributions to stockholders (420,252) (469,002)
------------ ----------
Retained earnings at end of year $ 2,729,919 2,914,143
------------ ----------
------------ ----------
</TABLE>
See accompanying notes to financial statements.
3
<PAGE>
REGENT INVESTMENTS, INC.
Statements of Cash Flows
Years ended December 31, 1995 and 1994
<TABLE>
<CAPTION>
<S> <C> <C>
1995 1994
---------- -----------
Cash flows from operating activities:
Net earnings $ 236,028 569,054
----------- ----------
Adjustments to reconcile net earnings to net
cash provided by operating activities:
Increase (decrease) in allowance for
doubtful accounts 17,785 (13,059)
Increase in LIFO reserve 77,700 110,200
Increase in environmental remediation 500,000 --
Depreciation and amortization 1,424,397 1,554,970
Gain on disposal of property and
equipment, net (52,958) (81,390)
Decrease (increase) in notes receivable (110,000) 247,000
Change in assets and liabilities:
Receivables 180,110 (102,903)
Inventories 51,088 (10,971)
Prepaid expenses (9,806) 3,297
Accounts payable (250,060) 363,491
Accrued expenses 1,559,183 (405,179)
----------- ----------
Total adjustments 3,387,439 1,665,456
----------- ----------
Net cash provided by
operating activities 3,623,467 2,234,510
----------- ----------
Cash flows from investing activities:
Proceeds from disposal of property and equipment 123,459 989,830
Acquisitions of property and equipment (1,452,178) (2,028,254)
Principal payments received on notes receivable 110,702 161,337
Advances to stockholders (1,750,799) --
Decrease in other assets 47,274 21,816
----------- ----------
Net cash used in investing activities (2,921,542) (855,271)
----------- ----------
Cash flows from financing activities:
Net proceeds from bank line of credit 548,583 310,510
Net proceeds (payments) from advances from
shareholders (210,758) 210,758
Principal payments on long-term debt (932,176) (1,853,958)
Principal payments on noncompete agreements (110,161) (209,241)
Stockholder distributions (420,252) (469,002)
----------- ----------
Net cash used in financing activities (1,124,764) (2,010,933)
----------- ----------
Net decrease in cash (422,839) (631,694)
Cash at beginning of year 957,012 1,588,706
----------- ----------
Cash at end of year $ 534,173 957,012
----------- ----------
----------- ----------
Supplemental disclosure of cash flow information -
Cash paid during the year for interest $ 178,289 279,719
----------- ----------
----------- ----------
</TABLE>
Supplemental information on noncash investing and financing activities -
During the year ended December 31, 1995, the Company purchased the assets
and land of three stores through notes payable in the amount of $700,000.
See accompanying notes to financial statements.
4
<PAGE>
REGENT INVESTMENTS, INC.
Notes to Financial Statements
December 31, 1995 and 1994
(1) SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
(a) OPERATIONS
Regent Investments, Inc. (Regent; the Company) is engaged in the
operation of 51 convenience stores and a gasoline distribution business
which provides gasoline to the convenience stores and unrelated
customers. The Company operates throughout the eastern shore of
Virginia, Maryland and Delaware. The Company only grants credit to
local gas retail customers.
(b) INVENTORIES
Inventories are stated at the lower of cost or market. The last-in,
first-out (LIFO) cost method is used to value inventories.
(c) PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Buildings and equipment
are depreciated over the estimated useful lives of the respective
assets, primarily using the straight-line method.
(d) INTANGIBLE ASSETS
Intangible assets are comprised of noncompete agreements which are
being amortized on a straight-line basis over five year periods.
(e) INCOME TAXES
Income or loss of the Company is required to be reported by the
individual stockholders on their income tax returns rather than by the
Company. Accordingly, earnings of the Company are taxable to the
individual stockholders rather than to the Company.
(f) USE OF ESTIMATES
Management of the Company has made a number of estimates and
assumptions relating to the reporting of assets and liabilities and the
disclosure of contingent assets and liabilities to prepare these
financial statements in conformity with generally accepted accounting
principles. Actual results could differ from those estimates.
(2) RELATED PARTY TRANSACTIONS
During 1995, the Company advanced the stockholders $1,750,799 which is
non-interest bearing and payable on demand.
Included in other receivables at December 31, 1995 is an amount due
from a related party in the amount of $110,000.
During 1994, the Company sold land and buildings with a net book value
of $807,292 for $750,000 to a related party.
(3) FAIR VALUE OF FINANCIAL INSTRUMENTS
The following presents the carrying amounts and estimated fair values of
the Company's financial instruments at December 31, 1995. The methods
and assumptions used to estimate the fair value of each class of
financial instrument are also described below. FASB Statement No. 107,
DISCLOSURES ABOUT FAIR VALUE OF FINANCIAL INSTRUMENTS, which is
effective for the Company for 1995, defines the fair value of a
financial instrument as the amount at which the instrument could be
exchanged in a current transaction between willing parties.
(Continued)
5
<PAGE>
Long-term notes receivable with a carrying value of $160,622 have a fair
value which approximates the carrying value. The fair value is
determined as the present value of expected future cash flows discounted
at the interest rate currently offered by the Company, which
approximates rates currently offered by local lending institutions for
loans of similar terms to companies with comparable credit risk.
Long-term debt with a carrying value of $672,017 has a fair value which
approximates the carrying value. This fair value is estimated by
discounting the future cash flows of the instrument at rates currently
offered to the Company for similar debt instruments of comparable
maturities by the Company's bankers.
All other financial assets and liabilities have a carrying value which
approximates the fair value due to the short maturity of those
instruments.
(4) INVENTORIES
A summary of inventories for comparative purposes is as follows:
<TABLE>
<CAPTION>
1995 1994
----------------------- ----------------------
LIFO FIFO LIFO FIFO
---------- --------- --------- ---------
<S> <C> <C> <C> <C>
Gasoline $ 746,273 903,273 775,502 905,902
Convenience store
merchandise 1,448,032 1,650,832 1,547,591 1,699,291
---------- --------- --------- ---------
$2,194,305 2,554,105 2,323,093 2,605,193
---------- --------- --------- ---------
---------- --------- --------- ---------
</TABLE>
For the years ended December 31, 1995 and 1994, earnings on a LIFO
basis were $77,700 and 110,200, respectively, less than if
computed on a FIFO basis.
(5) LEASES
Future minimum lease payments under noncancelable operating leases as
of December 31, 1995 are as follows:
<TABLE>
<CAPTION>
Operating
leases
----------
<S> <C>
1996 $1,367,484
1997 1,306,802
1998 1,094,599
1999 162,011
2000 46,596
Thereafter 63,224
----------
Total minimum lease payments $4,040,716
----------
----------
</TABLE>
Regent has noncancelable operating lease agreements for convenience
stores and office facilities at December 31, 1995. The leases expire
during the next one to eight years. The operating lease agreements
generally allow for renewal periods of five to ten years. Total rental
expense for operating leases in 1995 and 1994 was approximately
$1,450,000 and $1,500,000, respectively, including payments to related
parties of approximately $260,000 and $229,000 in 1995 and 1994,
respectively.
(Continued)
6
<PAGE>
As a result of the sale of auto parts stores in 1993, the Company has
guaranteed four operating leases that were assigned to the purchasers of
the stores. Such leases call for annual payments of approximately
$60,000 through 1999.
(6) OTHER ASSETS
Included in other assets is a 7% investment in a limited partnership.
The investment is accounted for under the equity method and has a
carrying value of $358,710 and $378,184 at December 31, 1995 and 1994,
respectively.
(7) INTANGIBLE ASSETS
Included in intangible assets at December 31, 1995 and 1994 are
noncompete agreements valued at $39,050 and $60,350, respectively,
net of accumulated amortization of
$67,450 and $46,150.
Amortization expense of noncompete agreements totalled $21,300 and
$194,422 in 1995 and 1994, respectively, and is included in general
and administrative operating expenses.
(8) LONG-TERM DEBT
A summary of the long-term debt as of December 31, 1995 and 1994
follows:
<TABLE>
<CAPTION>
1995 1994
--------- -----------
<S> <C> <C>
Note payable to bank, interest
rate at 7.56%, due in monthly
principal installments of
$76,667, plus interest. The note is
secured by a blanket security
interest in assets of the Company,
and is guaranteed by the stockholders
and a Stock Pledge Agreement covering
all stock of Regent. Principal
installments, plus interest, are due
monthly until March 1996 $ 228,000 1,148,000
9% note payable due to an individual
in monthly installments of $428 which
include principal and interest,
through March 1998 10,430 14,433
8% notes payable due to an individual
in monthly installments of $6,690 which
include principal and interest,
through September 2010, secured
by property and equipment 691,827 --
--------- -----------
Total long-term debt 930,257 1,162,433
Less current installments of
long-term debt 258,240 924,003
--------- -----------
Long-term debt, excluding
current installments $672,017 $ 238,430
--------- -----------
--------- -----------
</TABLE>
The aggregate maturities of long-term debt after December 31, 1995 are
as follows: 1996, $258,240; 1997, $32,797; 1998, $31,601; 1999, $32,852;
2000, $35,579 and thereafter, $539,188.
(Continued)
7
<PAGE>
The Company is subject to certain covenants under the debt agreements.
At December 31, 1995, the Company was in compliance with such covenants
or received waivers in instances of noncompliance.
(9) LINE OF CREDIT AGREEMENT
The Company has a line of credit agreement with a local bank. The line
of credit carries an interest rate at the bank's prime rate and is due
on demand. The total line commitment amount is $2,000,000 and it is
secured by the same assets as the 7.56% note payable to bank (see note
8). It is reviewed annually for renewal. At December 31, 1995 there was
$859,093 outstanding under the line of credit and at December 31, 1994
there was $310,510 outstanding.
(10) PROFIT-SHARING RETIREMENT PLAN
Regent has a profit-sharing plan, the Regent Investments, Inc. Employee
Savings and Profit Sharing Plan (the Plan), covering substantially all
full-time employees. Employees become members of the Plan on the January
1st or July 1st following the completion of 1,000 hours of service. The
Plan is exempt from Federal income taxes under Section 401(a) of the
Internal Revenue Code.
Under the Plan, participants are allowed to make contributions of not
less than 1% nor more than 15% of their annual compensation. Regent will
contribute on behalf of each participant, amounts equal to 50% of the
participant contribution up to 6% of the participant's annual
compensation. Employee contributions totaled approximately $121,000 and
$126,000 for the years ended December 31, 1995 and 1994, respectively.
Matching contributions totaled approximately $50,000 for each year.
The Plan also provides for profit sharing contributions which are
determined by Regent at its sole discretion, subject to limitations
imposed by the Internal Revenue Service. These contributions are
allocated among the members based on a percentage of eligible members
compensation. There were no profit sharing contributions made in 1995 or
1994.
Participants are fully vested in their contribution balances at all
times. Participants become vested in the matching and profit sharing
contribution balances based upon years of service; vesting increases in
20% increments with each year of service beginning with the second year
of service.
Members also become fully vested in the matching and profit sharing
contributions to the Plan upon normal retirement at age 65, disability,
death, Plan termination, or permanent discontinuance of contributions by
Regent. Management maintains the right to amend or terminate the Plan
without the consent of members.
(11) LETTERS OF CREDIT
The Company has $2,000,000 in open letters of credit which relate to
compliance with various state pollution requirements.
(12) ENVIRONMENTAL REMEDIATION
The Company has identified environmental contamination associated with
18 underground storage tank sites it operates. The Company engaged an
environmental consultant to develop a remediation work plan to satisfy
clean-up criteria of the applicable state regulatory agencies. Utilizing
the remediation plan developed by the environmental consultant, the
Company developed an estimate of future cash payments for the
remediation plan.
(Continued)
8
<PAGE>
The total estimated aggregate cost of $500,000 is principally related to
treatment of contaminated soil and is expected to be paid $100,000 in
1996 and the balance in 1997. The aggregate undiscounted amount has been
accrued since it represents management's best estimate of the cost, but
the payments are not considered to be fixed and reliably determinable.
The estimate of costs and their timing of payment could change as a
result of changes to the plan required by state regulatory agencies and
unforeseen circumstances existing at the site.
(13) SUBSEQUENT EVENT
On February 13, 1996, the Company signed a letter of intent to sell
substantially all operating assets of property, equipment and inventory
of the Company to an unrelated party. While final proceeds have not yet
been determined, it is expected that the transaction will result in a
net gain.
9
<PAGE>
ITEM 14(a)1(b)(ii). PRO FORMA FINANCIAL INFORMATION
The accompanying unaudited pro forma statements of operation reflect the
combined financial operations of the Company and the impact of those certain
assets acquired from the Sellers on July 11, 1996. In preparing the pro forma
information, adjustments have been made to the Sellers' financial statements to
only include the assets that were acquired by the Company. The acquired
operations have business locations in Delaware, Maryland and Virginia.
The preliminary allocation of the $17.35 million purchase price is as follows:
<TABLE>
<S> <C>
Land $ 170,000
Buildings $ 1,571,550
Equipment $ 4,028,450
Covenant not to compete $ 200,000
Dealer contracts $ 2,400,000
Goodwill $ 8,980,000
-----------
Total $17,350,000
-----------
-----------
</TABLE>
The addition of these assets, and the related amortization and depreciation, and
the debt financing of the acquisition are the only adjustments necessary for
preparation of the pro forma statements of operations. The acquisition
described above, for the purpose of preparing the pro forma statements of
operations assumes it was completed on July 1, 1995.
The acquisition was accounted for as a purchase transaction, therefore future
statements will be consolidated only from the date of purchase. The purchase
price has been financed through an amendment to an existing loan agreement with
the Company's primary lender. The amendment provides for quarterly loan
repayments of $125,000 in fiscal year ending June 30, 1997, $187,500 in fiscal
year ending June 30, 1998 and 1999, $312,000 in fiscal year ending June 30, 2000
and balloon payments in fiscal years 2001, 2002, 2003 and 2004 (See the Fourth
Amended and Restated Credit and Term Loan Agreement dated as of July 8, 1996).
The pro forma statements of operation for the year ended June 30, 1995 and the
nine months ended March 31, 1996 and balance sheet as of March 31, 1996 are not
necessarily indicative of the results which actually would have occurred had the
transaction been in effect on the date and for the periods indicated or which
may result in the future.
10
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1996
<TABLE>
<CAPTION>
REGENT
ASSETS: GRIFFITH ACQUISITION PRO FORMA
- ------- ------------ ------------ ------------
<S> <C> <C> <C>
CURRENT ASSETS:
- ---------------
Cash $ 2,684,166 $ 3,941,590 $ 6,625,756
Accounts and notes receivable less
allowance for bad debts 17,600,681 0 17,600,681
Inventories 2,882,874 0 2,882,874
Other current assets 1,744,693 213,651 1,958,344
----------- ------------ -------------
TOTAL CURRENT ASSETS 24,912,414 4,155,241 29,067,655
PLANT, PROPERTY AND EQUIPMENT:
- ------------------------------
Land 5,570,189 170,000 5,740,189
Buildings 1,837,578 1,571,550 3,409,128
Machinery and Equipment 15,178,141 4,028,450 19,206,591
----------- ------------ -------------
22,585,908 5,770,000 28,355,908
Less: Allowances for Depreciation 4,993,145 0 4,993,145
----------- ------------ -------------
17,592,763 5,770,000 23,362,763
INTANGIBLES:
- ------------
Customer and service accounts 37,244,315 0 37,244,315
Covenants not to compete 2,936,564 200,000 3,136,564
Goodwill 38,848,703 8,980,000 47,828,703
Other intangibles 836,344 2,400,000 3,236,344
----------- ------------ -------------
79,865,926 11,580,000 91,445,926
Less: Allowances for Amortization 9,530,538 0 9,530,538
----------- ------------ -------------
70,335,388 11,580,000 81,915,388
Long-term Notes Receivable 1,128,267 0 1,128,267
Deferred Costs 3,168,294 1,836,349 5,004,643
----------- ------------ -------------
TOTAL ASSETS $ 117,137,126 $ 23,341,590 $ 140,478,716
----------- ------------ -------------
----------- ------------ -------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
11
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
PRO FORMA BALANCE SHEET
AS OF MARCH 31, 1996
<TABLE>
<CAPTION>
REGENT
LIABILITIES AND SHAREHOLDER'S EQUITY GRIFFITH ACQUISITION PRO FORMA
- ----------------------------------- ------------ ------------ ------------
<S> <C> <C> <C>
CURRENT LIABILITIES:
- --------------------
Accounts Payable $ 8,659,727 $ 0 $ 8,659,727
Accrued Expenses 3,407,200 1,491,590 4,898,790
Deferred Revenue 1,912,029 1,912,029
Income Taxes Payable 464,212 0 464,212
Other Taxes Payable 700,326 0 700,326
Current Portion of Long-Term Debt 5,124,660 500,000 5,624,660
----------- ------------ -------------
TOTAL CURRENT LIABILITIES 20,268,154 1,991,590 22,259,744
LONG-TERM DEBT, LESS
CURRENT PORTION 67,797,222 21,350,000 89,147,222
DEFERRED INCOME TAXES 8,871,063 8,871,063
POST-RETIREMENT EMPLOYEE BENEFITS
AND OTHER 1,602,916 0 1,602,916
----------- ------------ -------------
TOTAL LIABILITIES 98,539,355 23,341,590 121,880,945
SHAREHOLDER'S EQUITY:
- ---------------------
COMMON STOCK, par value $.01 per share,
100 shares, authorized, issued and
outstanding 1 0 1
additional paid-in capital 20,691,323 0 20,691,323
retained deficit ( 2,093,553) 0 ( 2,093,553)
----------- ------------ -------------
TOTAL SHAREHOLDER'S EQUITY 18,597,771 0 18,597,771
----------- ------------ -------------
TOTAL LIABILITIES AND SHAREHOLDER'S
EQUITY $ 117,137,126 $ 23,341,590 $ 140,478,716
----------- ------------ -------------
----------- ------------ -------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
12
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS
NINE MONTHS ENDED MARCH 31, 1996
<TABLE>
<CAPTION>
ACQUISITION
GRIFFITH OF CERTAIN PRO FORMA
CONSUMERS ASSETS OF ADJUSTMENTS
COMPANY & REGENT INCREASE PRO FORMA
SUBSIDIARIES INVESTMENTS (DECREASE) RESULTS
------------- ------------ ----------- -----------
<S> <C> <C> <C> <C>
SALES (Note 2) $ 153,752,127 $ 61,064,550 $ 0 $ 214,816,677
COST OF SALES
(Note 2) 117,837,581 48,105,422 0 165,943,003
-------------- ------------- ------------- -------------
GROSS PROFIT 35,914,546 12,959,128 0 48,873,674
GENERAL AND
ADMINISTRATIVE
EXPENSES 21,917,468 11,907,804 0 33,825,272
DEPRECIATION
(Note 3) 3,074,619 1,060,850 ( 379,100) 3,756,369
AMORTIZATION
(Note 4) 5,121,688 40,500 950,250 6,112,438
-------------- ------------- ------------- -------------
OPERATING INCOME 5,800,771 ( 50,026) ( 571,150) 5,179,595
INTEREST
EXPENSE
(Note 5) 7,049,527 107,065 1,340,435 8,497,027
OTHER INCOME 480,029 912,468 0 1,392,497
-------------- ------------- ------------- -------------
(LOSS) INCOME
BEFORE INCOME TAX ( 768,727) 755,377 ( 1,911,585) ( 1,924,935)
INCOME TAX (BENEFIT)
EXPENSE ( 142,942) 294,597 ( 745,518) ( 593,863)
-------------- ------------- ------------- -------------
NET INCOME (LOSS) ($ 625,785) $ 460,780 ($1,166,067) ($ 1,331,072)
-------------- ------------- ------------- -------------
-------------- ------------- ------------- -------------
</TABLE>
SEE NOTES TO CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
13
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
PRO FORMA STATEMENT OF OPERATIONS
YEAR ENDED JUNE 30, 1995
<TABLE>
<CAPTION>
ACQUISITION
GRIFFITH OF CERTAIN PRO FORMA
CONSUMERS ASSETS OF ADJUSTMENTS
COMPANY & REGENT INCREASE PRO FORMA
SUBSIDIARIES INVESTMENTS (DECREASE) RESULTS
------------- ------------- ------------ -------------
<S> <C> <C> <C> <C>
SALES (Note 2) $ 178,491,341 $ 83,828,650 $ 0 $ 262,319,991
COST OF SALES
(Note 2) 140,243,751 65,671,268 0 205,915,019
------------- ------------- ------------ -------------
GROSS PROFIT 38,247,590 18,157,382 0 56,404,972
GENERAL AND
ADMINISTRATIVE
EXPENSES 28,225,449 15,022,992 0 43,248,441
DEPRECIATION
(Note 3) 3,441,274 1,414,191 ( 505,191) 4,350,274
AMORTIZATION
(Note 4) 5,984,725 72,922 1,248,078 7,305,725
------------- ------------- ------------ -------------
OPERATING INCOME 596,142 1,647,277 ( 742,887) 1,500,532
INTEREST EXPENSE
(Note 5) 6,294,112 143,643 1,786,357 8,224,112
OTHER INCOME 1,050,470 1,135,287 0 2,185,757
------------- ------------- ------------ -------------
(LOSS) INCOME BEFORE
INCOME TAXES ( 4,647,500) 2,638,921 ( 2,529,244) ( 4,537,823)
INCOME TAX (BENEFIT)
EXPENSE ( 1,596,487) 1,029,179 ( 986,405) ( 1,553,713)
------------- ------------- ------------ -------------
NET INCOME (LOSS) ($3,051,013) $1,609,742 ($1,542,839) ($2,984,110)
------------- ------------- ------------ -------------
------------- ------------- ------------ -------------
</TABLE>
SEE NOTES TO CONSOLIDATED PRO FORMA FINANCIAL STATEMENTS
14
<PAGE>
NOTES TO PRO FORMA FINANCIAL STATEMENTS
- ---------------------------------------
1. The pro forma statement of operations for the year ended June 30, 1995
includes the sales, cost of sales, general and administrative expenses,
depreciation, amortization, interest and other income of the acquired operations
of the Sellers for the 12 months ended September 30, 1995. The 12 month period
ending September 30, 1995 was calculated by deducting the quarter ending
December 31, 1995 and adding the quarter ending December 31, 1994 to audited
year end financials for December 31, 1995. The pro forma statements of
operations for the nine months ended March 31, 1996 include the results of
operations of the Sellers for the period July 1, 1995 through March 31, 1996.
2. Regent annual sales and cost of sales have been adjusted to include only
those assets that were acquired by the Company.
3. Depreciation has been adjusted to reflect the fixed assets purchased by the
Company from the Sellers. Buildings are being depreciated over fifteen years
while equipment and vehicles are over five years. All fixed assets are
depreciated under the straight-line method.
4. Amortization of covenants not to compete is over seven years, dealer
contracts are amortized over a period of five years, and goodwill is amortized
over a period of fifteen years. All intangibles are amortized using the
straight-line method.
5. Interest expense has been adjusted to reflect the interest expense on the
$21,850,000 of debt incurred to finance the purchase of the Sellers.
6. Income tax effect for the pro forma is computed at the Company's statutory
tax rate for the applicable period.
15
<PAGE>
C. EXHIBITS.
None
ITEM 8. CHANGE IN FINANCIAL YEAR
Not Applicable
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GRIFFITH CONSUMERS COMPANY
Dated: September 26, 1996 By: /S/ RAYMOND R. MCKENZIE, JR.
------------------------------------------
Name: Raymond R. McKenzie, Jr.
Its: Vice President - Finance (Authorized
Officer and Principal Financial Officer)
16
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
FOURTH AMENDED AND RESTATED REVOLVING
CREDIT AND TERM LOAN AGREEMENT
dated as of July 8, 1996
by and among
GRIFFITH CONSUMERS COMPANY,
CARL KING, INC. and
SHORE STOP CORPORATION
as Borrowers
and
THE FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES HERETO,
as Banks
and
THE FIRST NATIONAL BANK OF BOSTON,
as Agent
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
1. DEFINITIONS AND RULES OF INTERPRETATION. . . . . . . . . . . . . . . . . . 2
1.1. Definitions. . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
1.2. Rules of Interpretation. . . . . . . . . . . . . . . . . . . . . .31
2. THE REVOLVING CREDIT FACILITY. . . . . . . . . . . . . . . . . . . . . . .32
2.1. Commitment to Lend.. . . . . . . . . . . . . . . . . . . . . . . .32
2.2. Commitment Fee.. . . . . . . . . . . . . . . . . . . . . . . . . .32
2.3. Reduction of Total Commitment. . . . . . . . . . . . . . . . . . .33
2.4. The Revolving Credit Notes.. . . . . . . . . . . . . . . . . . . .33
2.5. Interest on Revolving Credit Loans.. . . . . . . . . . . . . . . .34
2.6. Requests for Revolving Credit Loans. . . . . . . . . . . . . . . .34
2.7. Conversion Options.. . . . . . . . . . . . . . . . . . . . . . . .35
2.7.1. Conversion to Different Type of Revolving Credit Loan. .35
2.7.2. Continuation of Type of Revolving Credit Loan. . . . . .35
2.7.3. Eurodollar Rate Loans. . . . . . . . . . . . . . . . . .36
2.8. Funds for Revolving Credit Loan. . . . . . . . . . . . . . . . . .36
2.8.1. Funding Procedures.. . . . . . . . . . . . . . . . . . .36
2.8.2. Advances by Agent. . . . . . . . . . . . . . . . . . . .36
2.9. Change in Borrowing Base.. . . . . . . . . . . . . . . . . . . . .37
3. REPAYMENT OF THE REVOLVING CREDIT LOANS. . . . . . . . . . . . . . . . . .37
3.1. Maturity. . . . . . . . . . . . . . . . . . . . . . . . . . . . .37
3.2. Mandatory Repayments of Revolving Credit Loans . . . . . . . . . .37
3.3. Mandatory Loan Reduction Period. . . . . . . . . . . . . . . . . .38
3.4. Optional Repayments of Revolving Credit Loans. . . . . . . . . . .38
4. THE TERM LOANS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .38
4.1. Commitment to Lend.. . . . . . . . . . . . . . . . . . . . . . . .38
4.2. The Term Notes.. . . . . . . . . . . . . . . . . . . . . . . . . .38
4.2.1. Term Note A. . . . . . . . . . . . . . . . . . . . . . .38
4.2.2. Term Note B. . . . . . . . . . . . . . . . . . . . . . .39
4.2.3. Term Note C. . . . . . . . . . . . . . . . . . . . . . .40
4.3. Schedule of Installment Payments of Principal of Term Loan.. . . .40
4.3.1. Term Loan A. . . . . . . . . . . . . . . . . . . . . . .40
4.3.2. Term Loan B. . . . . . . . . . . . . . . . . . . . . . .41
4.3.3. Term Loan C. . . . . . . . . . . . . . . . . . . . . . .41
4.4. Optional Prepayment of Term Loans. . . . . . . . . . . . . . . . .42
4.5. Mandatory Prepayment of Term Loans.. . . . . . . . . . . . . . . .42
4.5.1. Excess Cash Flow.. . . . . . . . . . . . . . . . . . . .42
4.5.2. Net Proceeds.. . . . . . . . . . . . . . . . . . . . . .43
4.6. Allocation of Optional and Mandatory Prepayments.. . . . . . . . .44
4.7. Interest on Term Loans.. . . . . . . . . . . . . . . . . . . . . .44
4.7.1. Interest Rates.. . . . . . . . . . . . . . . . . . . . .44
4.7.2. Notification by Borrowers. . . . . . . . . . . . . . . .44
4.7.3. Amounts, etc.. . . . . . . . . . . . . . . . . . . . . .44
5. LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . . . . . . . .45
<PAGE>
-ii-
5.1. Letter of Credit Commitments.. . . . . . . . . . . . . . . . . . .45
5.1.1. Commitment to Issue Letters of Credit. . . . . . . . . .45
5.1.2. Letter of Credit Applications. . . . . . . . . . . . . .45
5.1.3. Terms of Letters of Credit.. . . . . . . . . . . . . . .46
5.1.4. Reimbursement Obligations of Banks.. . . . . . . . . . .46
5.1.5. Participations of Banks. . . . . . . . . . . . . . . . .46
5.1.6. Issuance by Banks. . . . . . . . . . . . . . . . . . . .46
5.2. Reimbursement Obligation of the Borrowers. . . . . . . . . . . . .47
5.3. Letter of Credit Payments. . . . . . . . . . . . . . . . . . . . .47
5.4. Obligations Absolute.. . . . . . . . . . . . . . . . . . . . . . .48
5.5. Reliance by Issuer.. . . . . . . . . . . . . . . . . . . . . . . .49
5.6. Letter of Credit Fee.. . . . . . . . . . . . . . . . . . . . . . .49
6. CERTAIN GENERAL PROVISIONS.. . . . . . . . . . . . . . . . . . . . . . . .50
6.1. Funds for Payments.. . . . . . . . . . . . . . . . . . . . . . . .50
6.1.1. Payments to Agent. . . . . . . . . . . . . . . . . . . .50
6.1.2. No Offset, etc.. . . . . . . . . . . . . . . . . . . . .50
6.2. Computations.. . . . . . . . . . . . . . . . . . . . . . . . . . .50
6.3. Inability to Determine Eurodollar Rate.. . . . . . . . . . . . . .51
6.4. Illegality.. . . . . . . . . . . . . . . . . . . . . . . . . . . .51
6.5. Additional Costs, etc. . . . . . . . . . . . . . . . . . . . . . .52
6.6. Capital Adequacy.. . . . . . . . . . . . . . . . . . . . . . . . .53
6.7. Certificate. . . . . . . . . . . . . . . . . . . . . . . . . . . .54
6.8. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . .54
6.9. Interest After Default.. . . . . . . . . . . . . . . . . . . . . .54
6.9.1. Overdue Amounts. . . . . . . . . . . . . . . . . . . . .54
6.9.2. Amounts Not Overdue. . . . . . . . . . . . . . . . . . .54
6.10. Other Fees.. . . . . . . . . . . . . . . . . . . . . . . . . . . .54
6.11. Joint and Several Liability. . . . . . . . . . . . . . . . . . . .55
7. COLLATERAL SECURITY AND GUARANTIES.. . . . . . . . . . . . . . . . . . . .58
7.1. Security of Borrowers. . . . . . . . . . . . . . . . . . . . . . .58
7.2. Guaranties and Security of Parent. . . . . . . . . . . . . . . . .58
7.3. Guaranties and Security of Frederick and Regent Transport. . . . .58
8. REPRESENTATIONS AND WARRANTIES.. . . . . . . . . . . . . . . . . . . . . .58
8.1. Corporate Authority. . . . . . . . . . . . . . . . . . . . . . . .59
8.1.1. Incorporation; Good Standing.. . . . . . . . . . . . . .59
8.1.2. Authorization. . . . . . . . . . . . . . . . . . . . . .59
8.1.3. Enforceability.. . . . . . . . . . . . . . . . . . . . .59
8.2. Governmental Approvals.. . . . . . . . . . . . . . . . . . . . . .60
8.3. Title to Properties; Leases. . . . . . . . . . . . . . . . . . . .60
8.4. Financial Statements and Projections.. . . . . . . . . . . . . . .60
8.4.1. Financial Statements.. . . . . . . . . . . . . . . . . .60
8.4.2. Pro Forma Financial Statements.. . . . . . . . . . . . .60
8.4.3. Projections. . . . . . . . . . . . . . . . . . . . . . .61
8.4.4. SSC and Regent Transport.. . . . . . . . . . . . . . . .61
<PAGE>
-iii-
8.5. No Material Changes, etc.. . . . . . . . . . . . . . . . . . . . .61
8.6. Franchises, Patents, Copyrights, etc.. . . . . . . . . . . . . . .61
8.7. Litigation.. . . . . . . . . . . . . . . . . . . . . . . . . . . .62
8.8. No Materially Adverse Contracts, etc.. . . . . . . . . . . . . . .62
8.9. Compliance with Other Instruments, Laws, etc.. . . . . . . . . . .62
8.10. Tax Status.. . . . . . . . . . . . . . . . . . . . . . . . . . . .62
8.11. No Event of Default. . . . . . . . . . . . . . . . . . . . . . . .63
8.12. Holding Company and Investment Company Acts. . . . . . . . . . . .63
8.13. Absence of Financing Statements, etc.. . . . . . . . . . . . . . .63
8.14. Perfection of Security Interest. . . . . . . . . . . . . . . . . .63
8.15. Certain Transactions.. . . . . . . . . . . . . . . . . . . . . . .63
8.16. Employee Benefit Plans.. . . . . . . . . . . . . . . . . . . . . .64
8.16.1. In General.. . . . . . . . . . . . . . . . . . . . . . .64
8.16.2. Terminability of Welfare Plans.. . . . . . . . . . . . .64
8.16.3. Guaranteed Pension Plans.. . . . . . . . . . . . . . . .64
8.16.4. Multiemployer Plans. . . . . . . . . . . . . . . . . . .65
8.17. Regulations U and X. . . . . . . . . . . . . . . . . . . . . . . .65
8.18. Environmental Compliance.. . . . . . . . . . . . . . . . . . . . .65
8.19. Subsidiaries, etc. . . . . . . . . . . . . . . . . . . . . . . . .66
8.20. Capital Structure. . . . . . . . . . . . . . . . . . . . . . . . .66
8.21. Disclosure.. . . . . . . . . . . . . . . . . . . . . . . . . . . .67
9. AFFIRMATIVE COVENANTS OF THE BORROWERS.. . . . . . . . . . . . . . . . . .67
9.1. Punctual Payment.. . . . . . . . . . . . . . . . . . . . . . . . .67
9.2. Maintenance of Office. . . . . . . . . . . . . . . . . . . . . . .68
9.3. Records and Accounts.. . . . . . . . . . . . . . . . . . . . . . .68
9.4. Financial Statements, Certificates and Information.. . . . . . . .68
9.5. Notices. . . . . . . . . . . . . . . . . . . . . . . . . . . . .70
9.5.1. Defaults.. . . . . . . . . . . . . . . . . . . . . . . .70
9.5.2. Environmental Events.. . . . . . . . . . . . . . . . . .70
9.5.3. Notification of Claim against Collateral.. . . . . . . .70
9.5.4. Notice of Litigation and Judgments.. . . . . . . . . . .70
9.6. Corporate Existence; Maintenance of Properties.. . . . . . . . . .71
9.7. Insurance. . . . . . . . . . . . . . . . . . . . . . . . . . . . .71
9.8. Interest Rate Protection.. . . . . . . . . . . . . . . . . . . . .72
9.9. Taxes, Etc.. . . . . . . . . . . . . . . . . . . . . . . . . . . .72
9.10. Inspection of Properties and Books, etc. . . . . . . . . . . . . .72
9.10.1. General. . . . . . . . . . . . . . . . . . . . . . . . .72
9.10.2. Commercial Finance Examination.. . . . . . . . . . . . .73
9.10.3. Appraisals.. . . . . . . . . . . . . . . . . . . . . . .73
9.10.4. Communications with Accountants. . . . . . . . . . . . .73
9.10.5. Compliance with Laws, Contracts, Licenses, and
Permits. . . . . . . . . . . . . . . . . . . . . . . . . . . . .74
9.11. Employee Benefit Plans.. . . . . . . . . . . . . . . . . . . . . .74
9.12. Use of Proceeds. . . . . . . . . . . . . . . . . . . . . . . . . .74
9.13. Further Assurances.. . . . . . . . . . . . . . . . . . . . . . . .75
<PAGE>
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10. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS. . . . . . . . . . . . . . . .75
10.1. Restrictions on Indebtedness.. . . . . . . . . . . . . . . . . . .75
10.2. Restrictions on Liens. . . . . . . . . . . . . . . . . . . . . . .77
10.3. Restrictions on Investments. . . . . . . . . . . . . . . . . . . .79
10.4. Distributions. . . . . . . . . . . . . . . . . . . . . . . . . . .81
10.5. Merger, Consolidation and Disposition of Assets. . . . . . . . . .81
10.5.1. Mergers and Acquisitions . . . . . . . . . . . . . . . . .81
10.5.2. Disposition of Assets. . . . . . . . . . . . . . . . . . .82
10.6. Sale and Leaseback.. . . . . . . . . . . . . . . . . . . . . . . .83
10.7. Compliance with Environmental Laws.. . . . . . . . . . . . . . . .83
10.8. Subordinated Debt. . . . . . . . . . . . . . . . . . . . . . . . .83
10.9. Employee Benefit Plans.. . . . . . . . . . . . . . . . . . . . . .84
10.10.Prohibited Commodity Transactions. . . . . . . . . . . . . . . . .84
10.11.Transactions with Affiliates.. . . . . . . . . . . . . . . . . . .85
10.12.Conduct of Business. . . . . . . . . . . . . . . . . . . . . . . .86
10.13.Regent Seller Note.. . . . . . . . . . . . . . . . . . . . . . . .87
11. FINANCIAL COVENANTS OF THE BORROWERS.. . . . . . . . . . . . . . . . . . .87
11.1. Debt Service Coverage Ratio. . . . . . . . . . . . . . . . . . . .87
11.2. Cash Flow Ratio. . . . . . . . . . . . . . . . . . . . . . . . . .87
11.3. Consolidated Working Capital.. . . . . . . . . . . . . . . . . . .88
11.4. Consolidated Net Worth.. . . . . . . . . . . . . . . . . . . . . .88
11.5. Capital Expenditures.. . . . . . . . . . . . . . . . . . . . . . .89
11.6. Funded Debt to Consolidated EBITDA Ratio.. . . . . . . . . . . . .90
11.7. Minimum Consolidated EBITDA. . . . . . . . . . . . . . . . . . . .90
12. CLOSING CONDITIONS.. . . . . . . . . . . . . . . . . . . . . . . . . . . .90
12.1. Loan Documents etc.. . . . . . . . . . . . . . . . . . . . . . . .91
12.1.1. Loan Documents.. . . . . . . . . . . . . . . . . . . . . .91
12.1.2. Subordinated Debt Documents. . . . . . . . . . . . . . . .91
12.1.3. Intercreditor Agreement. . . . . . . . . . . . . . . . . .91
12.2. Acquisition Transaction. . . . . . . . . . . . . . . . . . . . . .91
12.3. Financial Projections. . . . . . . . . . . . . . . . . . . . . . .91
12.4. Certified Copies of Charter Documents. . . . . . . . . . . . . . .91
12.5. Corporate Action.. . . . . . . . . . . . . . . . . . . . . . . . .92
12.6. Incumbency Certificate.. . . . . . . . . . . . . . . . . . . . . .92
12.7. Validity of Liens. . . . . . . . . . . . . . . . . . . . . . . . .92
12.8. Perfection Certificates and UCC Search Results.. . . . . . . . . .92
12.9. Title Insurance. . . . . . . . . . . . . . . . . . . . . . . . . .93
12.10.Certificates of Insurance. . . . . . . . . . . . . . . . . . . . .93
12.11.Borrowing Base Report. . . . . . . . . . . . . . . . . . . . . . .93
12.12.Environmental Site Assessments.. . . . . . . . . . . . . . . . . .93
12.13.Opinion of Counsel.. . . . . . . . . . . . . . . . . . . . . . . .93
12.14.Payment of Fees. . . . . . . . . . . . . . . . . . . . . . . . . .94
12.15.Private Placement Numbers. . . . . . . . . . . . . . . . . . . . .94
13. CONDITIONS TO ALL BORROWINGS.. . . . . . . . . . . . . . . . . . . . . . .94
13.1. Representations True; No Event of Default. . . . . . . . . . . . .94
<PAGE>
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13.2. No Legal Impediment. . . . . . . . . . . . . . . . . . . . . . . .94
13.3. Governmental Regulation. . . . . . . . . . . . . . . . . . . . . .95
13.4. Proceedings and Documents. . . . . . . . . . . . . . . . . . . . .95
13.5. Borrowing Base Report. . . . . . . . . . . . . . . . . . . . . . .95
14. EVENTS OF DEFAULT; ACCELERATION; ETC. . . . . . . . . . . . . . . . . . . 95
14.1. Events of Default and Acceleration.. . . . . . . . . . . . . . . .95
14.2. Termination of Commitments.. . . . . . . . . . . . . . . . . . . .99
14.3. Remedies. . . . . . . . . . . . . . . . . . . . . . . . . . . . 100
14.4. Distribution of Collateral Proceeds. . . . . . . . . . . . . . . 100
15. SETOFF . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 101
16. THE AGENT. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 102
16.1. Authorization. . . . . . . . . . . . . . . . . . . . . . . . . . 102
16.2. Employees and Agents.. . . . . . . . . . . . . . . . . . . . . . 102
16.3. No Liability.. . . . . . . . . . . . . . . . . . . . . . . . . . 102
16.4. No Representations.. . . . . . . . . . . . . . . . . . . . . . . 103
16.5. Payments. . . . . . . . . . . . . . . . . . . . . . . . . . . . 103
16.5.1. Payments to Agent. . . . . . . . . . . . . . . . . . . . 103
16.5.2. Distribution by Agent. . . . . . . . . . . . . . . . . . 103
16.5.3. Delinquent Banks.. . . . . . . . . . . . . . . . . . . . 104
16.6. Holders of Notes.. . . . . . . . . . . . . . . . . . . . . . . . 104
16.7. Indemnity. . . . . . . . . . . . . . . . . . . . . . . . . . . . 104
16.8. Agent as Bank. . . . . . . . . . . . . . . . . . . . . . . . . . 105
16.9. Resignation. . . . . . . . . . . . . . . . . . . . . . . . . . . 105
16.10.Notification of Defaults and Events of Default.. . . . . . . . . 105
16.11.Duties in the Case of Enforcement. . . . . . . . . . . . . . . . 105
17. EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 106
18. INDEMNIFICATION. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 107
19. SURVIVAL OF COVENANTS, ETC.. . . . . . . . . . . . . . . . . . . . . . . 107
20. ASSIGNMENT AND PARTICIPATION.. . . . . . . . . . . . . . . . . . . . . . 108
20.1. Conditions to Assignment by Banks. . . . . . . . . . . . . . . . 108
20.2. Certain Representations and Warranties; Limitations;
Covenants. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 109
20.3. Register . . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
20.4. New Notes. . . . . . . . . . . . . . . . . . . . . . . . . . . . 110
20.5. Participations.. . . . . . . . . . . . . . . . . . . . . . . . . 111
20.6. Disclosure.. . . . . . . . . . . . . . . . . . . . . . . . . . . 111
20.7. Assignee or Participant Affiliated with the Borrowers. . . . . . 112
20.8. Miscellaneous Assignment Provisions. . . . . . . . . . . . . . . 112
20.9. Assignment by Borrowers. . . . . . . . . . . . . . . . . . . . . 113
21. NOTICES, ETC.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 113
22. GOVERNING LAW. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 114
23. HEADINGS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
24. COUNTERPARTS.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 115
25. ENTIRE AGREEMENT, ETC. . . . . . . . . . . . . . . . . . . . . . . . . . 115
26. WAIVER OF JURY TRIAL.. . . . . . . . . . . . . . . . . . . . . . . . . . 115
<PAGE>
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27. CONSENTS, AMENDMENTS, WAIVERS, ETC.. . . . . . . . . . . . . . . . . . . 116
28. SEVERABILITY.. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 117
29. TRANSITIONAL ARRANGEMENTS. . . . . . . . . . . . . . . . . . . . . . . . 117
29.1. Third Amended and Restated Credit Agreement Superseded.. . . . . 117
29.2. Return and Cancellation of Notes.. . . . . . . . . . . . . . . . 117
<PAGE>
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EXHIBIT A Form of Borrower Security Agreement
EXHIBIT B Form of Borrowing Base Report
EXHIBIT C Form of Griffith Stock Pledge Agreement
EXHIBIT D Form of Parent Guaranty
EXHIBIT E Form of Parent Stock Pledge Agreement
EXHIBIT F Form of Subsidiary Guaranty
EXHIBIT G Form of Subsidiary Security Agreement
EXHIBIT H Form of Revolving Credit Note
EXHIBIT I Form of Loan Request
EXHIBIT J-1 Form of Term Note A
EXHIBIT J-2 Form of Term Note B
EXHIBIT J-3 Form of Term Note C
EXHIBIT K Form of Compliance Certificate
EXHIBIT L Form of Assignment and Acceptance
EXHIBIT M Form of Intercreditor Agreement
EXHIBIT N Form of Collateral Assignment of Trademarks Agreement
Schedule 1 Banks
Schedule 1(a) Revolving Credit Commitment
Schedule 1(b) Term Loans
Schedule 1(c) Acquisition Documents
Schedule 1(d) Mortgages
Schedule 1(e) Subordinated Debt Documents
Schedule 1(f) Certain Transaction Costs
Schedule 5 Letters of Credit
Schedule 8.3 Title to Properties; Leases
Schedule 8.7 Litigation
Schedule 8.10 Tax Status
Schedule 8.18 Environmental
Schedule 8.19 Subsidiaries
Schedule 8.20 Capital Structure
Schedule 10.1 Indebtedness
Schedule 10.2 Liens
Schedule 10.3 Investments
Schedule 10.11 Transactions with Affiliates
<PAGE>
FOURTH AMENDED AND RESTATED REVOLVING CREDIT
AND TERM LOAN AGREEMENT
This FOURTH AMENDED AND RESTATED REVOLVING CREDIT AND TERM LOAN AGREEMENT
is made as of July 8, 1996, by and among (i) GRIFFITH CONSUMERS COMPANY
("Griffith"), a Delaware corporation and successor by merger to Griffith
Consumers Company, a Maryland corporation, having its principal place of
business at 2510 Schuster Drive, Cheverly, MD 20781, (ii) CARL KING, INC.
("King") a Delaware corporation, having its principal place of business at 109
Main Street, Camden, DE 19334, (iii) SHORE STOP CORPORATION ("SSC" and,
together with Griffith and King, the "Borrowers"), a Delaware corporation,
having its principal place of business at 36082 Lankford Highway, Belle Haven,
Virginia 23306, (iv) THE FIRST NATIONAL BANK OF BOSTON ("FNBB") and the other
lending institutions from time to time listed on SCHEDULE 1 hereto
(collectively, "the Banks") and (v) THE FIRST NATIONAL BANK OF BOSTON as agent
("the Agent") for itself and the Banks.
WHEREAS, Griffith, King, the Banks and The First National Bank of Boston,
as agent for such Banks entered into a Third Amended and Restated Revolving
Credit and Term Loan Agreement dated as of December 15, 1994 (as thereafter
amended, the "Third Amended and Restated Credit Agreement") pursuant to which
such Banks party thereto have made loans to, and issued letters of credit for
the account of, Griffith and King;
WHEREAS, Griffith entered into an Asset Purchase and Sale Agreement dated
April 23, 1996 (the "Acquisition Agreement") with Regent Investments, Inc., a
Virginia corporation ("Regent"), Delaware Investments, Inc., a Virginia
corporation ("DI"), Mid-Atlantic Investments, Inc., a Virginia corporation
("Mid-A"), J. Duncan McDuff ("McDuff") and Vincent J. Mastracco, Jr.
("Mastracco" and together with Regent, DI, Mid-A and McDuff, individually, a
"Seller" and collectively, the "Sellers");
WHEREAS, SSC is a wholly-owned subsidiary of Griffith which has been formed
to hold the Acquisition Assets and operate the Business and Griffith has
assigned its rights and obligations under the Acquisition Agreement to SSC;
WHEREAS, pursuant to the Acquisition Agreement, SSC shall purchase the
assets (other than certain Excluded Assets, as defined and
<PAGE>
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described in the Acquisition Agreement) of Sellers (including, without
limitation, all of the issued and outstanding capital stock of Regent Transport,
Inc. ("Regent Transport"), a Maryland corporation) (collectively, all such
acquired assets the "Acquisition Assets") used in the operation of the Business
as hereinafter defined (the "Acquisition Transaction");
WHEREAS, to finance SSC's purchase of the Acquisition Assets, and in
connection with the Acquisition Transaction, the Borrowers desire to amend and
restate the Third Amended and Restated Credit Agreement and the Agent and the
lending institutions party thereto have agreed to such amendment;
NOW THEREFORE, in consideration of the foregoing premises, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree to amend and restate the Third Amended
and Restated Credit Agreement to read as follows:
1. DEFINITIONS AND RULES OF INTERPRETATION.
1.1 DEFINITIONS. The following terms shall have the meanings set
forth in this Section 1 or elsewhere in the provisions of this Credit Agreement
referred to below:
ACCOUNTS RECEIVABLE. All rights of the Borrowers to payment for goods or
product sold, leased or otherwise marketed in the ordinary course of business
and all rights of the Borrowers to payment for services rendered in the ordinary
course of business and all sums of money or other proceeds due thereon pursuant
to transactions with account debtors, (except for that portion of the sum of
money or other proceeds due thereon that relates to sales, use or property taxes
which have not been paid by the Borrowers in conjunction with such transactions
which shall be excluded from the calculations of Accounts Receivable), recorded
on books of account in accordance with generally accepted accounting principles.
ACQUISITION ASSETS. As defined in the preamble hereto..
ACQUISITION AGREEMENT. As defined in the preamble hereto.
ACQUISITION DOCUMENTS. Collectively, (i) the Acquisition Agreement, (ii)
each of the other documents listed on Schedule 1(c) hereto and (iii) any other
document or agreement delivered pursuant to, or in connection with the
Acquisition Transaction contemplated by, the Acquisition Agreement,
<PAGE>
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each as in effect on the date thereof and as amended with the prior written
consent of the Agent.
ACQUISITION TRANSACTION. As defined in the preamble hereto.
ADVISORY AGREEMENT. That certain Advisory Agreement among the Borrowers,
the Parent and Chartwell Investments Inc. dated as of May 29, 1996 and in the
form delivered to the Agent on the Closing Date.
AFFILIATE. When used with respect to any Bank, any Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control (including common investment management) with such Bank.
AFFILIATE. With respect to any of the Borrowers, the Parent or any
Subsidiary, as applicable, any Person that would be considered to be an
affiliate of any Borrower, the Parent or any Subsidiary, as applicable, under
Rule 144(a) of the Rules and Regulations promulgated under the Securities Act of
1933, as in effect on the date hereof, if such Borrower, the Parent or such
Subsidiary were issuing securities.
AFFILIATE TRANSACTION. See Section 10.11.
AGENT'S HEAD OFFICE. The Agent's head office located at 100 Federal
Street, Boston, Massachusetts 02110, or at such other location as the Agent may
designate from time to time.
AGENT. The First National Bank of Boston acting as agent for the Banks
or any successor Agent appointed pursuant to Section 16.
AGENT'S SPECIAL COUNSEL. Bingham, Dana & Gould LLP or such other counsel
as may be approved by the Agent.
APPLICABLE MARGIN. For each of the Loans set forth below and with
respect to any period consisting of twelve consecutive calendar months ending
after December 31, 1995, the Applicable Margin shall be that percentage set
forth below for such Loan opposite the Debt Service Coverage Ratio determined
for the most recently ended period of twelve consecutive calendar months for
which the Borrowers have delivered financial statements pursuant to Section 9.4:
(i) For Revolving Credit Loans:
<PAGE>
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- --------------------------------------------------------------------------------
Debt Service Base Rate Eurodollar Rate Applicable
Coverage Ratio Applicable Margin Margin
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Greater than 1.25:1 1.25% 2.50%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Less than or equal
to 1.25:1 1.50% 2.75%
- --------------------------------------------------------------------------------
(ii) For Term Loan A:
- --------------------------------------------------------------------------------
Debt Service Base Rate Eurodollar Rate Applicable
Coverage Ratio Applicable Margin Margin
- -------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Greater than 1.25:1 1.25% 2.50%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Less than or equal to 1.25:1 1.50% 2.75%
- -------------------------------------------------------------------------------
(iii) For Term Loan B:
- --------------------------------------------------------------------------------
Debt Service Base Rate Eurodollar Rate Applicable
Coverage Ratio Applicable Margin Margin
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Greater than 1.25:1 2.00% 3.25%
- --------------------------------------------------------------------------------
Less than or equal to 1.25:1 2.00% 3.25%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(iv) For Term Loan C:
- -------------------------------------------------------------------------------
Debt Service Base Rate Eurodollar Rate Applicable
Coverage Ratio Applicable Margin Margin
- --------------------------------------------------------------------------------
Greater than 1.25:1 2.25% 3.50%
- --------------------------------------------------------------------------------
Less than or equal to 1.25:1 2.25% 3.50%
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
PROVIDED that if the Borrowers' financial statements for any fiscal quarter or
twelve consecutive month period are not furnished to the Banks pursuant to
Section 9.4 hereof within five (5) Business Days after the relevant time
specified for such delivery in Section 9.4, it shall be assumed for purposes of
determining the Applicable Margin that the Debt Service Coverage Ratio is less
than or equal to 1.25:1 for the period commencing on the date such statements
were due and (provided that such financial statements are
<PAGE>
-5-
subsequently furnished to the Banks) ending on the date five (5) days
following the delivery to the Banks of such financial statements which indicate
that the Debt Service Coverage Ratio for the fiscal quarter or the period of
twelve calendar months ending on the last day of the last month included in such
financial statement is greater than 1.25:1; and PROVIDED, FURTHER, that if at
any time the financial statements furnished to the Banks pursuant to Section 9.4
hereof indicate that the Debt Service Coverage Ratio as reported as of any
previous date was higher than the actual Debt Service Coverage Ratio as of such
date, then the Borrowers shall promptly pay to the Banks the difference (if any)
between the interest rate calculated based on the actual Debt Service Coverage
Ratio as adjusted and that calculated based on the Debt Service Coverage Ratio
as previously reported.
APPROVED SUBSIDIARY. Regent Transport or any Subsidiary of a Borrower
whose assets have been approved for inclusion in the Borrowing Base by the Banks
holding at least 51% of the outstanding principal amount of the Revolving Credit
Notes; and if no such principal is outstanding, the Banks whose aggregate
Revolving Credit Commitments constitute at least 51% of the Total Commitment.
ASSIGNMENT AND ACCEPTANCE. See Section 20.1.
BALANCE SHEET DATE. June 30, 1995.
BANKS. FNBB and the other lending institutions and insurance
companies listed from time to time on SCHEDULE 1 hereto and any other Person who
becomes an assignee of any rights and obligations of a Bank pursuant to Section
20.
BASE RATE. The higher of (i) the annual rate of interest announced
from time to time by FNBB at its head office in Boston, Massachusetts, as its
"base rate" and (ii) one-half of one percent (1/2%) above the Federal Funds
Effective Rate. For the purposes of this definition, "Federal Funds Effective
Rate" shall mean for any day, the rate per annum equal 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 that is a Business Day, the average of the quotations for such day on such
transactions received by the Agent from three funds brokers of recognized
standing selected by the Agent.
BASE RATE LOANS. Revolving Credit Loans and all or any portion of the
Term Loans bearing interest calculated by reference to the Base Rate.
<PAGE>
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BORROWER SECURITY AGREEMENT. The Third Amended and Restated Security
Agreement, dated as of the date hereof, among the Borrowers and the Agent in
substantially the form of EXHIBIT A hereto.
BORROWERS. As defined in the preamble hereto.
BORROWING BASE. At the relevant time of reference thereto and subject
to the limitations set forth in Section 2.1(b), an amount determined by the
Agent by reference to the most recent Borrowing Base Report which is equal to
the sum of:
(a) 100% of Eligible Cash and Cash Equivalents; PLUS
(b) 85% of Eligible Accounts Receivable; PLUS
(c) 80% of the net book value (determined on a first-in, first-out
basis in accordance with generally accepted accounting principles
consistently applied at lower of cost or market) of Eligible Petroleum
Inventory; PLUS
(d) 80% of Eligible Petroleum Inventory In Transit; PLUS
(e) the lesser of (i) 25% of the net book value determined at cost
of Eligible Other Inventory or (ii) $500,000.
BORROWING BASE REPORT. A Borrowing Base Report, including an accounts
receivable aging report kept pursuant to Section 9.3 hereof, signed by the chief
financial officer of each Borrower and in substantially the form of EXHIBIT B
hereto.
BUSINESS. The operation of a chain of convenience stores and related
gasoline stations under the "Shore Stop" trade name and the operation of a
dealer petroleum sales business within the states of Maryland, Delaware and
Virginia.
BUSINESS DAY. Any day on which banking institutions in Boston,
Massachusetts, are open for the transaction of banking business and, in the case
of Eurodollar Rate Loans, also a day which is a Eurodollar Business Day.
CALENDAR YEAR. For any given year, January 1 through December 31.
CAPITAL ASSETS. Fixed assets, both tangible (such as land, buildings,
fixtures, machinery, vehicles, capital stock and equipment) and intangible (such
as patents, copyrights, trademarks, franchises, customer lists, supply contracts
with dealers, leases, and good will); PROVIDED that
<PAGE>
-7-
Capital Assets shall not include any item customarily charged directly to
expense or depreciated over a useful life of twelve (12) months or less in
accordance with generally accepted accounting principles.
CAPITAL EXPENDITURES. Amounts paid or indebtedness incurred by any of
the Borrowers and their Subsidiaries in connection with the purchase, lease or
maintenance by the Borrowers and their Subsidiaries of Capital Assets that would
be required to be capitalized and shown on the balance sheet of such Person in
accordance with generally accepted accounting principles, and including, without
duplication, supply contracts with dealers.
CAPITAL STOCK. Any and all shares, interests, participations, rights or
other equivalents (however designated) of corporate stock, including, without
limitation, with respect to partnerships, partnership interests (whether general
or limited) and any other interest or participation that confers on a Person the
right to receive a share of the profits and losses of, or distribution of assets
of, such partnership.
CAPITALIZED LEASE OBLIGATIONS. As to any Person, the obligations of such
Person under any Capitalized Leases.
CAPITALIZED LEASES. Leases under which any of the Borrowers is the
lessee or obligor, the discounted future rental payment obligations under which
are required to be capitalized on the balance sheet of the lessee or obligor in
accordance with generally accepted accounting principles.
CASH. United States dollar denominated currency, wire transfers of
United States dollar denominated money and any other form of immediately
available funds approved by the Agent.
CASH EQUIVALENTS. (i) Securities issued, or directly and fully
guaranteed or insured, by the United States government or any agency or
instrumentality thereof having maturities of not more than twelve months from
the date of acquisition, (ii) certificates of deposit and eurodollar time
deposits with maturities of twelve months or less from the date of acquisition,
bankers' acceptances with maturities not exceeding twelve months and overnight
bank deposits, in each case with any Bank, or with any domestic commercial bank
having capital and surplus in excess of $500,000,000 and a Keefe Bank Watch
Rating of "B" or better, (iii) repurchase obligations with a term of not more
than seven days for underlying securities of the types described in clauses (i)
and (ii) entered into with any financial institution meeting the qualifications
specified in clause (ii) above and (iv) commercial paper having one of the two
highest ratings obtainable from Moody's Investors Service, Inc. or Standard &
<PAGE>
-8-
Poor's or their successors and in each case maturing within twelve months after
the date of acquisition.
CASH FLOW PERCENTAGE. 75%, PROVIDED that at any time on or after
January 1, 1997 if the aggregate outstanding principal amount of the Term Loans
is less than $30,000,000, the Cash Flow Percentage shall be 50%.
CERCLA. See Section 8.18.
CHANGE OF CONTROL EVENT. The occurrence of any of the following: (i) the
adoption of a plan relating to the complete liquidation or dissolution of
Griffith, (ii) the failure of Parent to own 100% of the issued and outstanding
Capital Stock of Griffith, (iii) the acquisition by any Person or group (as such
term is used in Sections 13(d)(3) and 14(d)(2) of the Securities Exchange Act of
1934, as amended) of a direct or indirect interest in more of the Capital Stock
of the Parent entitled to vote for the election of directors than is owned,
collectively, whether directly or indirectly, by the Principals and their
Related Parties, (iv) the first day on which the general partner of Griffith
Partners L.P. ceases to be controlled directly or indirectly, by the Principals
(other than Griffith Partners L.P., The Travelers Insurance Company, The
Travelers Indemnity Company, The Travelers Life and Annuity Company and The
Phoenix Insurance Company) and their Related Parties or (v) the first day on
which a majority of the members of the board of directors of the Parent are not
Continuing Directors.
CLOSING DATE. July 11, 1996 which is the date on which the conditions
set forth in Section 12 have been satisfied and Term Loan A Additional Amount,
Term Loan B Additional Amount and Term Loan C is advanced.
CODE. The Internal Revenue Code of 1986, as amended.
COLLATERAL. All of the property, rights and interests of any of the
Borrowers, the Parent or any Subsidiary of the Borrowers that is or is intended
to be subject to the security interests and mortgages created by the Security
Documents.
COLLATERAL ASSIGNMENT OF TRADEMARKS. The Trademark Collateral Security
and Pledge Agreement dated as of the date hereof between SSC and the Agent
substantially in the form of EXHIBIT N hereto.
COMMITMENT PERCENTAGE. With respect to each Bank, its Revolving Credit
Commitment Percentage, its Term Loan A Commitment
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Percentage, its Term Loan B Commitment Percentage, or its Term Loan C Commitment
Percentage, as applicable.
CONSOLIDATED OR CONSOLIDATED. With reference to any term defined herein,
shall mean that term as applied to the accounts of the Borrowers, and their
Subsidiaries, consolidated in accordance with generally accepted accounting
principles.
CONSOLIDATED CURRENT ASSETS. All assets of the Borrowers and their
Subsidiaries on a consolidated basis that, in accordance with generally accepted
accounting principles, are properly classified as current assets, less (without
duplication) all write-offs and reserves taken with respect to such assets in
accordance with generally accepted accounting principles and consistent with the
past practices of the Borrowers.
CONSOLIDATED CURRENT LIABILITIES. All liabilities of the Borrowers and
their Subsidiaries on a consolidated basis that in accordance with generally
accepted accounting principles are properly classified as current liabilities
and including, without duplication, all outstanding Revolving Credit Loans, but
excluding (a) the Maximum Drawing Amount under Letters of Credit (to the extent
undrawn) and (b) the current maturities of all Indebtedness other than Revolving
Credit Loans.
CONSOLIDATED DEBT SERVICE. As to the Borrowers on a consolidated basis,
and in respect of any period, an amount equal to the sum of (a) Consolidated
Total Interest Expense of the Borrowers for such period, PLUS (b) the total
amount of all scheduled maturities or installments of Funded Debt of the
Borrowers due and payable during such period.
CONSOLIDATED EBITDA. The Consolidated Net Income of the Borrowers for
any period, calculated before deduction of (a) any tax expense attributable to
such period, (b) Consolidated Total Interest Expense for such period and (c)
depreciation, amortization and all other noncash charges for such period,
determined in accordance with generally accepted accounting principles, and
after eliminating therefrom to the extent otherwise reflected all extraordinary
non-recurring items of cash gain and loss and after adding back, to the extent
otherwise deducted, those Transaction Costs to the extent such Transaction Costs
and other costs are expensed during such period.
CONSOLIDATED NET EARNINGS AVAILABLE FOR DEBT SERVICE. For any period,
the result of (a) Consolidated EBITDA for such period, MINUS (b) the amount of
all cash income taxes paid or payable by the Borrowers on a consolidated basis
for such period MINUS (c) all Non-Discretionary Capital Expenditures for such
period.
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CONSOLIDATED NET INCOME. The consolidated net income (or deficit) of the
Borrowers and their Subsidiaries, after deduction of all expenses, taxes, and
other proper charges, determined in accordance with generally accepted
accounting principles.
CONSOLIDATED NET WORTH. The consolidated net worth of the Borrowers
determined in accordance with generally accepted accounting principles, LESS, to
the extent otherwise includable in the computations of Consolidated Net Worth,
any subscriptions receivable and any write-up of assets after the Closing Date
otherwise resulting in an increase in Consolidated Net Worth and excluding to
the extent otherwise includable the impact of compensation expense resulting
from the stock options and other similar equity incentive plans granted to
officers, directors and employees of the Borrowers.
CONSOLIDATED TOTAL INTEREST EXPENSE. For any period, without
duplication, the aggregate amount of interest required to be paid or accrued by
the Borrowers during such period on all Funded Debt of the Borrowers outstanding
during all or any part of such period, whether such interest was or is required
to be reflected as an item of expense or capitalized, including, without
limitation, interest in respect of Capitalized Leases, commissions, discounts
and other fees and charges incurred in respect of Letters of Credit, net
payments allocated to such period, if any, pursuant to the Interest Rate
Protection Agreements and any other similar interest rate hedging agreements,
other than (i) Transaction Costs and (ii) amortization of original issue
discount with respect to the Senior Subordinated Debt.
CONSOLIDATED WORKING CAPITAL. The excess of Consolidated Current Assets
over Consolidated Current Liabilities.
CONTINUING DIRECTORS. As of any date of determination, any member of the
Board of Directors of the Parent who (i) was a member of such Board of Directors
on December 15, 1994 or (ii) was nominated for election or elected to such Board
of Directors with the affirmative vote of a majority of the Continuing Directors
who were members of such board at the time of such nomination or election.
CONVERSION REQUEST. A notice given by the Borrowers to the Agent of the
Borrowers' election to convert or continue a Loan in accordance with Section 2.7
or Section 4.7.
CREDIT AGREEMENT. This Fourth Amended and Restated Revolving Credit and
Term Loan Agreement, including the Schedules and Exhibits hereto.
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DEBT SERVICE COVERAGE RATIO. For any period of four consecutive fiscal
quarters of the Borrowers, the ratio of (a) Consolidated Net Earnings Available
for Debt Service for such period calculated by deducting, without duplication,
the greater of Non-Discretionary Capital Expenditures for such period or (i) for
the four consecutive fiscal quarter period ending June 30, 1996, $1,000,000;
(ii) for the four consecutive fiscal quarter period ending September 30, 1996,
$1,075,000; (iii) for the four consecutive fiscal quarter period ending December
31, 1996, $1,150,000; (iv) for the four consecutive fiscal quarter period ending
March 31, 1997, $1,225,000 and (v) for each four consecutive fiscal quarter
period ending thereafter, $1,300,000 to (b) Consolidated Debt Service for such
period.
DEFAULT. See Section 14.1.
DI. As defined in the preamble hereto.
DISCRETIONARY CAPITAL EXPENDITURES. All Capital Expenditures of the
Borrowers other than Non-Discretionary Capital Expenditures.
DISTRIBUTION. The declaration or payment of any dividend on or in
respect of any shares of any class of capital stock of the Borrowers other than
dividends payable solely in shares of common stock of the Borrowers; the
purchase, redemption, or other retirement of any shares of any class of capital
stock of the Borrowers; the return of capital by any of the Borrowers to their
shareholders as such; or any other distribution on or in respect of any shares
of any class of capital stock of the Borrowers.
DOLLARS or $. Dollars in lawful currency of the United States of
America.
DOMESTIC LENDING OFFICE. Initially, the office of each Bank designated
as such in SCHEDULE 1 hereto; thereafter, such other office of such Bank, if
any, located within the United States that will be making or maintaining Base
Rate Loans.
DRAWDOWN DATE. The date on which any Revolving Credit Loan or Term Loan
was made, is made or is to be made, and the date on which any Loan is converted
from one Type of Loan to another Type of Loan or is continued as a particular
Type in accordance with Section 2.7 or Section 4.7, as applicable.
ELIGIBLE ACCOUNTS RECEIVABLE. At any time the aggregate amount of all
Accounts Receivable carried on the books of the Borrowers and any Approved
Subsidiaries arising in the ordinary course of business from the sale of
Petroleum Product Inventory, furnaces, furnace parts, other HVAC equipment and
other goods and services in the ordinary course of business
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in lines of business permitted under Section 10.12, less all reserves with
respect to such Accounts Receivable and less, to the extent not already deducted
in clause (v) below, any and all offsets, counterclaims or contras in respect
thereof, and which Accounts Receivable:
(i) have been invoiced and are not more than 60 days past the
respective due dates thereof;
(ii) become due not more than 30 days past the date of the
respective invoice therefor;
(iii) constitute the valid, binding and legally enforceable
obligation of the obligor thereon, and are not subordinate to any other
claim against such obligor and are not evidenced by any instrument unless
pledged for the benefit of the Agent;
(iv) are owned by the Borrowers or their Approved Subsidiaries free
and clear of all liens, security interests or encumbrances whatsoever,
other than those in favor of the Agent, on behalf of the Banks;
(v) are not the subject of a return, rejection, loss of or damage
to the goods or Petroleum Product Inventory, the sale of which gave rise
to the account receivable, or any request for credit, rebate, offset,
holdback or adjustment, any commission payable to third parties or any
other dispute with the obligor on such Accounts Receivable;
(vi) are not the obligation of an Affiliate of any Borrower or
their Approved Subsidiaries;
(vii) are from an obligor on the Account Receivable which is
creditworthy in the reasonable business judgment of the Agent;
(viii) are not Accounts Receivable from an obligor which has filed
a petition for relief under any existing or future law in any
jurisdiction relating to bankruptcy, insolvency, reorganization or relief
of debtors, made a general assignment for the benefit of creditors, had
filed against it any petition or other application for relief under any
existing or future law in any jurisdiction relating to bankruptcy,
insolvency, reorganization or relief of debtors, failed, suspended
business operations, became insolvent, called a meeting of its creditors
for the purpose of obtaining any financial concession or accommodation,
or had or suffered a receiver or a trustee to be appointed for all or a
significant portion of its assets or affairs;
<PAGE>
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(ix) have been invoiced and are currently due and payable; PROVIDED
that with respect to Accounts Receivable arising from installment sales
of furnaces, furnace parts and other HVAC equipment only those
installments which have been invoiced and are due and payable within 90
days from such invoice date shall be included in Eligible Accounts
Receivable to the extent otherwise qualified;
(x) are denominated in Dollars and payable in the United States;
and
(xi) are subject to a valid, first priority perfected lien and
security interest in favor of the Agent on behalf of the Banks, other
than with respect to installment notes provided that such installment
notes shall in any event be subject to the limitations in clause (ix)
above.
For the purpose of this definition, (i) to the extent that Eligible
Accounts Receivable owing by any obligor not preapproved by the Agent exceed 15%
of the aggregate amount of all Eligible Accounts Receivable, such excess shall
not be included in the calculation of Eligible Accounts Receivable, and (ii) to
the extent that any Borrower or any Approved Subsidiary is at any time directly
or contingently indebted for any reason to any obligor, the Accounts Receivable
owing to such Borrower or such Approved Subsidiary by such obligor shall be
deemed to be subject to an offset, counterclaim or contra in the amount of such
Indebtedness; PROVIDED, HOWEVER, to the extent that any Indebtedness of any
Borrower or any Approved Subsidiary to any obligor is secured by a Letter of
Credit, the portion of the Indebtedness so secured (not to exceed the amount
available for drawing under the Letter of Credit) shall not be deemed to be an
offset, counterclaim or contra with respect to the Accounts Receivable of such
obligor owing to such Borrower or such Approved Subsidiary.
ELIGIBLE ASSIGNEE. Any of (i) a Bank or any of its affiliates, (ii) a
commercial bank or finance company organized under the laws of the United
States, or any State thereof or the District of Columbia, and having total
assets in excess of $250,000,000; (iii) a savings and loan association or
savings bank organized under the laws of the United States, or any State thereof
or the District of Columbia, and having a net worth of at least $100,000,000,
calculated in accordance with generally accepted accounting principles; (iv) a
commercial bank organized under the laws of any other country which is a member
of the Organization for Economic Cooperation and Development (the "OECD"), or a
political subdivision of any such country, and having total assets in excess of
$250,000,000, PROVIDED that such bank is acting through a branch or
<PAGE>
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agency located in the country in which it is organized or another country which
is also a member of the OECD; (v) the central bank of any country which is a
member of the OECD; (vi) a domestic insurance company having total assets in
excess of $250,000,000; (vii) any institutional investor having a rating of not
less than A or its equivalent by Standard & Poor's; (viii) investment companies
(as defined in the Investment Company Act of 1940, as amended) or other
investment or mutual funds in each case having total assets in excess of (1)
with respect to assignments of any interest in or with respect to the Term Loans
or Term Notes, $100,000,000 or (2) with respect to assignments of any interest
in or with respect to the Revolving Credit Loans or the Revolving Credit Notes,
$250,000,000; (ix) employee benefit plans within the meaning of ERISA having
total assets in excess of $250,000,000; and (x) if, but only if, any Event of
Default under Sections 14.1(a), (b), (g) or (h) hereof has occurred and is
continuing, any other bank, insurance company, commercial finance company or
other financial institution or other Person approved by the Agent, such approval
not to be unreasonably withheld.
ELIGIBLE CASH AND CASH EQUIVALENTS. Cash and Cash Equivalents of the
Borrowers and any Approved Subsidiaries which are subject to a valid, first
priority, perfected lien and security interest in favor of the Agent on behalf
of the Banks and which are otherwise under the control of the Agent.
ELIGIBLE OTHER INVENTORY. As to the Borrower and any Approved
Subsidiary, at the relevant time of reference thereto, inventory held for
resale, owned by the Borrowers or any Approved Subsidiary and consisting of (i)
burner and gasoline pumps parts, (ii) furnaces and furnace parts, (iii) HVAC
equipment, and (iv) tires, batteries and other accessories and spare parts held
for resale in connection with the operation of service stations; and with
respect to all such inventory which (a) is subject to a valid, first priority
perfected lien and security interest in favor of the Agent on behalf of the
Banks, (b) is in good and salable condition, is not deteriorating in quality and
is not obsolete or unmarketable, (c) is owned by the Borrowers or their Approved
Subsidiaries free and clear of all liens, security interests or encumbrances
whatsoever other than those in favor of the Agent under the Security Documents
or those permitted under Sections 10.2(e) and (f) with respect to warehouseman's
liens and landlord's liens which secure amounts not then overdue and is not held
on consignment, and (d) is in the possession of the Borrowers or their Approved
Subsidiaries on premises owned by the Borrowers or their Approved Subsidiaries
within the United States unless with respect to any inventory located on
premises not owned by the Borrowers or their Approved Subsidiaries, all
reporting, filing, waiver and
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notice requirements of the Agent have been complied with in form and substance
satisfactory to the Agent.
ELIGIBLE PETROLEUM INVENTORY. As to the Borrowers and any Approved
Subsidiaries, at the relevant time of reference thereto, any Petroleum Product
Inventory owned by the Borrowers or any Approved Subsidiary and which (a) is
subject to a valid, first priority perfected lien and security interest in favor
of the Agent on behalf of the Banks, (b) is in good and salable condition, is
not deteriorating in quality and is not obsolete or unmarketable, (c) is owned
by the Borrowers or their Approved Subsidiaries free and clear of all liens,
security interests or encumbrances whatsoever other than those in favor of the
Agent under the Security Documents or those permitted under Sections 10.2(e) and
(f) with respect to warehouseman's liens and landlord's liens which secure
amounts not then overdue and is not held on consignment by the Borrowers, and
(d) is in the possession of the Borrowers or their Approved Subsidiaries in bulk
storage tanks on premises owned by the Borrowers or their Approved Subsidiaries
within the United States unless with respect to any inventory located on
premises not owned by the Borrowers or their Approved Subsidiaries, all
reporting, filing, waiver and notice requirements of the Agent have been
complied with in form and substance satisfactory to the Agent; PROVIDED that in
no event shall Eligible Petroleum Inventory include Petroleum Product Inventory
held for sale at retail outlets.
ELIGIBLE PETROLEUM INVENTORY IN TRANSIT. The aggregate purchase price of
Petroleum Product Inventory contracted for purchase by a Borrower or any
Approved Subsidiary if (a) such Petroleum Product Inventory has not yet been
delivered to such Borrower or such Approved Subsidiary, (b) such Petroleum
Product Inventory is not included in the Borrowing Base as Eligible Petroleum
Inventory but, upon delivery, such Petroleum Product Inventory would qualify as
Eligible Petroleum Inventory and (c) the obligation of such Borrower or such
Approved Subsidiary to pay the purchase price for such Petroleum Product
Inventory is supported by a Letter of Credit issued hereunder.
EMPLOYEE BENEFIT PLAN. Any employee benefit plan within the meaning of
Section 3(3) of ERISA maintained or contributed to by the Borrowers or any ERISA
Affiliate, other than a Multiemployer Plan.
ENVIRONMENTAL LAWS. See Section 8.18(a).
ERISA. The Employee Retirement Income Security Act of 1974, as amended.
ERISA AFFILIATE. Any Person which is treated as a single employer with
the Borrowers under Section 414 of the Code.
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ERISA REPORTABLE EVENT. A reportable event with respect to a Guaranteed
Pension Plan within the meaning of Section 4043 of ERISA and the regulations
promulgated thereunder as to which the requirement of notice has not been
waived.
EUROCURRENCY RESERVE RATE. For any day with respect to a Eurodollar Rate
Loan, the maximum rate (expressed as a decimal) at which any lender subject
thereto would be required to maintain reserves under Regulation D of the Board
of Governors of the Federal Reserve System (or any successor or similar
regulations relating to such reserve requirements) against "Eurocurrency
Liabilities" (as that term is used in Regulation D), if such liabilities were
outstanding. The Eurocurrency Reserve Rate shall be adjusted automatically on
and as of the effective date of any change in the Eurocurrency Reserve Rate.
EURODOLLAR BUSINESS DAY. Any day on which commercial banks are open for
international business (including dealings in Dollar deposits) in London or such
other eurodollar interbank market as may be selected by the Agent in its sole
discretion acting in good faith.
EURODOLLAR LENDING OFFICE. Initially, the office of each Bank designated
as such in SCHEDULE 1 hereto; thereafter, such other office of such Bank, if
any, that shall be making or maintaining Eurodollar Rate Loans.
EURODOLLAR RATE. For any Interest Period with respect to a Eurodollar
Rate Loan, the rate of interest equal to (i) the arithmetic average of the rates
per annum for each Reference Bank (rounded upwards to the nearest 1/100 of one
percent) of the rate at which such Reference Bank's Eurodollar Lending Office is
offered Dollar deposits two Eurodollar Business Days prior to the beginning of
such Interest Period in the interbank eurodollar market where the eurodollar and
foreign currency and exchange operations of such Eurodollar Lending Office are
customarily conducted, for delivery on the first day of such Interest Period for
the number of days comprised therein and in an amount comparable to the amount
of the Eurodollar Rate Loan of such Reference Bank to which such Interest Period
applies, divided by (ii) a number equal to 1.00 minus the Eurocurrency Reserve
Rate, if applicable.
EURODOLLAR RATE LOANS. Revolving Credit Loans and all or any portion of
the Term Loans bearing interest calculated by reference to the Eurodollar Rate.
EVENT OF DEFAULT. See Section 14.1.
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EXCESS CASH FLOW. As to the Borrowers, and with respect to any relevant
period, an amount equal to: (a) Consolidated Net Earnings Available for Debt
Service for such period, PLUS (b) the aggregate proceeds from all Indebtedness
which is permitted under Section 10.1(g) and (h) which is incurred by the
Borrowers during such period to the extent that in accordance with generally
accepted accounting principals the acquisition or Capitalized Lease in
connection with which such Indebtedness arises was treated as a Capital
Expenditure, PLUS (c) for the calculation of Excess Cash Flow for each of the
Borrowers' Fiscal Years ending 1997, 1998 and 1999, respectively, the amount of
Capital Expenditures actually made in excess of $3,500,000 per Fiscal Year in
each of such Fiscal Years, PROVIDED that the aggregate total added to
Consolidated Net Earnings Available for Debt Service pursuant to this clause (c)
for all Fiscal Years shall not be greater than $5,000,000; MINUS (d) all
Discretionary Capital Expenditures for such period; MINUS (e) Consolidated Debt
Service for such period.
FAMILY MEMBER. For any individual Person, the spouse or sibling of such
Person and such Person's and his or her spouse's or siblings' respective
estates, lineal descendants, adoptive children, heirs, executors,
administrators, personal representatives and trusts exclusively for any of their
benefit or exclusively for the benefit of their respective spouses, siblings,
estates, lineal descendants, heirs, or adoptive children.
FISCAL YEAR Any fiscal year of the Borrowers ending on June 30. Any
reference to a particular fiscal year of the Borrowers shall be a reference to
the fiscal year ending on June 30 of the year indicated. Subsequent changes of
the fiscal year of the Borrowers shall not change the term "Fiscal Year" as used
herein, unless the Agent shall consent in writing to such change.
FREDERICK. Frederick Terminals, Inc., a Maryland corporation and a
Subsidiary of Griffith.
FNBB. The First National Bank of Boston, a national banking association,
in its individual capacity.
FUNDED DEBT. With respect to any Person and as at any date of
determination thereof, without duplication, (a) all Indebtedness of such Person
under the Loan Documents as at such date other than contingent obligations
relating to undrawn amounts available under Letters of Credit and other than
Revolving Credit Loans in excess of $3,000,000, (b) all other Indebtedness of
such Person for money borrowed, including without limitation Subordinated Debt,
(whether recourse, non-recourse, secured or unsecured) which by its terms
matures at, or is extendible or renewable at the option of such Person to, a
date more than twelve (12) months after
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such date and including Permitted Seller Notes, and all current and final
maturities with respect thereto, (c) the principal component of all Capitalized
Lease Obligations of such Person maturing more than twelve (12) months after
such date and all payments required to be made by such Person in respect of the
principal component of such Capitalized Lease Obligations during the twelve (12)
months immediately following such date, (d) all Indebtedness for the deferred
purchase price of property or services represented by a note or other security
(other than in respect of any trade payable) or other Indebtedness arising under
any conditional sale or other title retention agreement with respect to property
acquired by the Borrowers (even though 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), (e) all Indebtedness of such Person secured by a
purchase money mortgage or other lien to secure all or part of the purchase
price of property subject to such mortgage or lien, and (f) Indebtedness of such
Person of the type described in clause (h) of the definition of "Indebtedness"
once any obligation of such Person with respect thereto has become due and
payable.
GENERALLY ACCEPTED ACCOUNTING PRINCIPLES. (i) When used in Section 11,
whether directly or indirectly through reference to a capitalized term used
therein, means (A) principles that are consistent with the principles
promulgated or adopted by the Financial Accounting Standards Board and its
predecessors, in effect for the Fiscal Year ended on the Balance Sheet Date, and
(B) to the extent consistent with such principles, the accounting practice of
the Borrowers reflected in their financial statements for the year ended on the
Balance Sheet Date, and (ii) when used in general, other than as provided above,
means principles that are (A) consistent with the principles promulgated or
adopted by the Financial Accounting Standards Board and its predecessors, as in
effect from time to time, and (B) consistently applied with past financial
statements of the Borrowers adopting the same principles, provided that in each
case referred to in this definition of "generally accepted accounting
principles" a certified public accountant would, insofar as the use of such
accounting principles is pertinent, be in a position to deliver an unqualified
opinion (other than a qualification regarding changes in generally accepted
accounting principles) as to financial statements in which such principles have
been properly applied.
GRIFFITH. As defined in the preamble hereto.
GRIFFITH STOCK PLEDGE AGREEMENT. The Third Amended and Restated Stock
Pledge Agreement, dated as of the date hereof, among Griffith, SSC and the Agent
in substantially the form of EXHIBIT C hereto.
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GUARANTEED PENSION PLAN. Any employee pension benefit plan within the
meaning of Section 3(2) of ERISA maintained or contributed to by the Borrowers
or any ERISA Affiliate the benefits of which are guaranteed on termination in
full or in part by the PBGC pursuant to Title IV of ERISA, other than a
Multiemployer Plan.
HAZARDOUS SUBSTANCES. See Section 8.18(b).
INDEBTEDNESS. With respect to any Person, (a) all indebtedness for
borrowed money of such Person, whether current or funded, secured or unsecured,
recourse or non-recourse, (b) all indebtedness of such Person for the deferred
purchase price of property or services represented by a note or other security
(other than in respect of any trade payable), (c) all indebtedness created or
arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person (even though 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), (d) all indebtedness of such Person
secured by a purchase money mortgage or other lien to secure all or part of the
purchase price of property subject to such mortgage or lien, (e) all Capitalized
Lease Obligations (other than the interest component of such Capitalized Lease
Obligations), (f) any liability of such Person in respect of banker's
acceptances or letters of credit, (g) all other indebtedness secured by any
mortgage, pledge, security interest, lien, charge or other encumbrance existing
on property owned or acquired subject thereto, whether or not the liability
secured thereby shall have been assumed, (h) all guarantees, endorsements and
other contingent obligations whether direct or indirect in respect of
indebtedness of others, including any obligation to supply funds to or in any
manner to invest in, directly or indirectly, the debtor, to purchase
indebtedness, or to assure the owner of indebtedness against loss, through an
agreement to purchase goods, supplies, or services for the purpose of enabling
the debtor to make payment of the indebtedness held by such owner or otherwise,
(i) the obligations to reimburse the issuer in respect of any letters of credit,
and (j) the amount of Past Due Trade Payables of such Person which exceed
$500,000.
INTERCREDITOR AGREEMENT. The Intercreditor Agreement dated as of the
Closing Date, among certain of the Sellers and the Agent, in substantially the
form of EXHIBIT M hereto.
INTEREST PAYMENT DATE. (i) As to any Base Rate Loan, the last day of
each calendar quarter; and (ii) as to any Eurodollar Rate Loan in respect of
which the Interest Period is (A) 3 months or less, the last day of such Interest
Period and (B) more than 3 months, the date that is 3
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months from the first day of such Interest Period and, in addition, the last day
of such Interest Period.
INTEREST PERIOD. With respect to each Eurodollar Rate Loan, (i)
initially, the period commencing on the Drawdown Date of such Loan and ending on
the last day of a period consisting of 1, 2, 3 or 6 months; as selected by the
Borrowers in a Loan Request and (ii) thereafter, each period commencing on the
last day of the next preceding Interest Period applicable to such Revolving
Credit Loan or all or such portion of any Term Loan and ending on the last day
of one of the periods set forth above, as selected by the Borrowers in a
Conversion Request; PROVIDED that all of the foregoing provisions relating to
Interest Periods are subject to the following:
(a) if any Interest Period with respect to a Eurodollar Rate Loan
would otherwise end on a day that is not a Eurodollar Business Day, that
Interest Period shall be extended to the next succeeding Eurodollar
Business Day unless the result of such extension would be to carry such
Interest Period into another calendar month, in which event such Interest
Period shall end on the immediately preceding Eurodollar Business Day;
(b) if the Borrowers shall fail to give notice as provided in
Section 2.7, the Borrowers shall be deemed to have requested a conversion
of the affected Eurodollar Rate Loan to a Base Rate Loan on the last day
of the then current Interest Period with respect thereto and the
continuance of all Base Rate Loans as Base Rate Loans;
(c) any Interest Period relating to any Eurodollar Rate Loan that
begins on the last Eurodollar Business Day of a calendar month (or on a
day for which there is no numerically corresponding day in the calendar
month at the end of such Interest Period) shall end on the last
Eurodollar Business Day of a calendar month; and
(d) any Interest Period relating to any Revolving Credit Loan that
would otherwise extend beyond the Revolving Credit Maturity Date shall
end on the Revolving Credit Maturity Date and any Interest Period
relating to any Term Loan that would otherwise extend beyond the Term
Loan Maturity Date applicable thereto shall end on such Term Loan
Maturity Date.
INTEREST RATE PROTECTION AGREEMENTS. See Section 9.8.
INVESTMENTS. All expenditures made and all liabilities incurred
(contingently or otherwise) for the acquisition of stock or Indebtedness of, or
for loans, advances, capital contributions or transfers of property to, or
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in respect of any guaranties (or other commitments as described under
Indebtedness), or obligations of, any Person. In determining the aggregate
amount of Investments outstanding at any particular time: (i) the amount of any
Investment represented by a guaranty shall be taken at not less than the
principal amount of the obligations guaranteed and still outstanding; (ii) there
shall be deducted in respect of each such Investment any amount received as a
return of capital (but only by repurchase, redemption, retirement, repayment,
liquidating dividend or liquidating distribution); and (iii) there shall not be
deducted from the aggregate amount of Investments any decrease in the value
thereof.
ISSUANCE FEE. See Section 5.6.
KING. As defined in the preamble hereto.
LETTER AGREEMENT. See Section 6.10.
LETTER OF CREDIT. See Section 5.1.1.
LETTER OF CREDIT APPLICATION. See Section 5.1.1.
LETTER OF CREDIT FEE. See Section 5.6.
LETTER OF CREDIT PARTICIPATION. See Section 5.1.4.
LOAN DOCUMENTS. This Credit Agreement, the Notes, the Letter of Credit
Applications, the Letters of Credit, the Security Documents and all other
documents, instruments and agreements executed or delivered in connection with
the foregoing.
LOAN REQUEST. See Section 2.6.
LOANS. The Revolving Credit Loans and the Term Loans.
MAJORITY BANKS. At any time, the Banks holding at least 51% of the sum
of (i) the aggregate principal amount of the Term Loans outstanding at such time
and (ii) the Revolving Credit Commitments at such time, or if the Revolving
Credit Commitments have been terminated, the aggregate principal amount of the
Revolving Credit Loans outstanding at such time.
MANAGEMENT CONSULTING AGREEMENT. That certain Management Consulting
Agreement between Griffith and Chartwell Investments Inc. dated as of December
15, 1994, as amended thereafter with the prior written consent of the Agent.
MAXIMUM DRAWING AMOUNT. The maximum aggregate amount that the
beneficiaries may at any time draw under outstanding Letters of
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Credit, as such aggregate amount may be reduced from time to time pursuant to
the terms of the Letters of Credit.
MID-A. As defined in the preamble hereto.
MORTGAGED PREMISES. Those real properties, together with all buildings,
improvements and fixtures, set forth on Schedule 2.1 of the Acquisition
Agreement, acquired by the Borrowers from the Sellers pursuant to the
Acquisition Transaction which have been mortgaged by the Borrowers to one or
more of the Sellers to secure the Regent Seller Note.
MORTGAGED PROPERTY. Any Real Estate which is subject to any Mortgage,
including, without limitation, the Mortgaged Premises.
MORTGAGES. The several mortgages listed on SCHEDULE 1(d) hereto from the
Borrowers to the Agent with respect to the fee and leasehold interests of the
Borrowers, as amended and in effect from time to time.
MULTIEMPLOYER PLAN. Any multiemployer plan within the meaning of Section
3(37) of ERISA maintained or contributed to by the Borrowers or any ERISA
Affiliate.
NON-DISCRETIONARY CAPITAL EXPENDITURES. All Capital Expenditures of the
Borrowers incurred by the Borrowers in order to maintain their property, plants
and equipment in compliance with applicable Environmental Laws and other laws
and regulations; PROVIDED that the first $3,750,000 of Capital Expenditures
incurred by the Borrowers in order to bring the Regent Properties into
compliance with, or maintain the Regent Properties in compliance with,
applicable Environmental Laws shall be excluded from Non-Discretionary Capital
Expenditures to the extent that such expenditures would otherwise have been
included within the meaning of Non-Discretionary Capital Expenditures.
NOTES. The Term Notes and the Revolving Credit Notes.
OBLIGATIONS. All indebtedness, obligations and liabilities of the
Borrowers to any of the Banks and the Agent, individually or collectively,
existing on the date of this Credit Agreement or arising thereafter, direct or
indirect, joint or several, absolute or contingent, matured or unmatured,
liquidated or unliquidated, secured or unsecured, arising by contract, operation
of law or otherwise, arising or incurred under this Credit Agreement or any of
the other Loan Documents or in respect of any of the Loans made or Reimbursement
Obligations incurred or with respect to all Interest Rate Protection Agreements
entered into by any Borrower with any Bank or any affiliate of any Bank.
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OPTIONS. See Section 8.20.
OUTSTANDING. With respect to the Loans, the aggregate unpaid principal
thereof as of any date of determination.
PARENT. Griffith Holdings, Inc., a Delaware corporation.
PARENT GUARANTY. The First Amended and Restated Limited Guaranty, dated
as of the date hereof, made by the Parent in favor of the Banks and the Agent
substantially in the form of EXHIBIT D hereto.
PARENT STOCK PLEDGE AGREEMENT. The First Amended and Restated Stock
Pledge Agreement, dated as of the date hereof, between the Parent and the Agent,
substantially in the form of EXHIBIT E hereto.
PAST DUE TRADE PAYABLES. With respect to any Person, trade payables of
such Person and its Subsidiaries on a consolidated basis that are more than 30
days past due.
PBGC. The Pension Benefit Guaranty Corporation created by Section 4002
of ERISA and any successor entity or entities having similar responsibilities.
PERFECTION CERTIFICATES. The Perfection Certificates dated as of the
Closing Date as defined in the Security Agreements.
PERMITTED ACQUISITION. Any acquisition permitted pursuant to Section
10.5.1.
PERMITTED LIENS. Liens, security interests and other encumbrances
permitted by Section 10.2.
PERMITTED SELLER NOTES. Promissory notes issued by the Borrowers having
terms and conditions satisfactory to the Majority Banks (including satisfactory
interest and maturity terms) and evidencing a Borrower's obligation to pay the
deferred portion of the purchase price in connection with a Permitted
Acquisition, including, without limitation, the Regent Seller Note.
PERSON. Any individual, corporation, limited liability company,
partnership, trust, unincorporated association, business, or other legal entity,
and any government or any governmental agency or political subdivision thereof.
PETROLEUM PRODUCT INVENTORY. Inventory consisting of refined petroleum
products, propane and intermediate feedstocks and blend components commonly used
in the petroleum industry to improve
<PAGE>
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characteristics of, or meet governmental or customer specifications for,
petroleum or refined petroleum products.
PRINCIPALS. Any of Todd R. Berman, Donald Gales, Bruce W. King, Barry J.
Lassman, Raymond R. McKenzie, Jr., Howard B. Schlosberg, Michael S. Shein,
Griffith Partners L.P., a Delaware limited partnership, The Travelers Insurance
Company, The Travelers Indemnity Company, The Travelers Life and Annuity Company
and The Phoenix Insurance Company.
REAL ESTATE. All real property at any time owned or leased (as lessee or
sublessee) by the Borrowers.
RECORD. The grid attached to any Note, or the continuation of such grid,
or any other similar record, including computer records, maintained by any Bank
with respect to any Loan referred to in such Note.
REFERENCE BANKS. FNBB.
REFINANCING INDEBTEDNESS. Any Indebtedness of the Borrowers or their
Subsidiaries issued in exchange for, or the net proceeds of which are used to
extend, refinance, renew, replace, defease or refund, other Indebtedness of the
Borrowers or any of their Subsidiaries; PROVIDED, that, (i) the principal amount
of such Refinancing Indebtedness does not exceed the principal amount of the
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded
(plus the amount of reasonable expenses, penalties and premiums incurred in
connection therewith so long as the inclusion of such penalties and premiums in
the principal amount of such Refinancing Indebtedness does not increase the per
annum total debt service amount associated with such Refinancing Indebtedness to
an amount in excess of the per annum total debt service amount associated with
the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded); (ii) such Refinancing Indebtedness has a final maturity that is the
same or later than the Indebtedness so extended, refinanced, renewed, replaced,
defeased or refunded, (iii) if the Indebtedness being extended, refinanced,
renewed, replaced, defeased or refunded is subordinated in right of payment to
the Obligations, such Refinancing Indebtedness is subordinated in right of
payment to the Obligations on terms at least as favorable to the Banks as those,
if any, contained in the documentation governing the Indebtedness being
extended, refinanced, renewed, replaced, defeased or refunded; (iv) such
Indebtedness is incurred by the Borrowers, or by the Subsidiary who is the
obligor on the Indebtedness being extended, refinanced, renewed, replaced,
defeased or refunded; (v) the interest rate applicable to such Refinancing
Indebtedness does not exceed the interest rate applicable to
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the Indebtedness so extended, refinanced, renewed, replaced, defeased or
refunded; and (vi) such refinancing shall not modify or amend the terms of such
Indebtedness so extended, refinanced, renewed, replaced, defeased or refunded in
any manner that would have, directly or indirectly, a material adverse effect on
the rights of any Bank or the Agent hereunder or under any of the other Loan
Documents.
REGENT. As defined in the preamble hereto.
REGENT PROPERTIES. Those parcels or leaseholds of real property acquired
by Griffith and/or SSC from one or more of the Sellers pursuant to the
Acquisition Transaction, including those parcels listed on Schedules 1.1 and 1.6
to the Acquisition Agreement.
REGENT SELLER NOTE. The note in the amount of One Million Five Hundred
Thousand Dollars ($1,500,000) in the form of EXHIBIT 1 to the Acquisition
Agreement (with such modifications as may be required by the Agent as a
condition precedent to the effectiveness of this Credit Agreement) to be
executed by Borrowers and delivered to Regent as partial consideration for the
Acquisition Assets as in effect on the Closing Date.
REGENT TRANSPORT. As defined in the preamble hereto.
REIMBURSEMENT OBLIGATION. The Borrowers' joint and several obligations
to reimburse the Agent and the Banks on account of any drawing under any Letter
of Credit as provided in Section 5.2.
RELATED PARTY. With respect to any Principal means (A) any controlling
stockholder, partner, Subsidiary or Family Member (in the case of an individual)
of such Principal or (B) any trust, corporation, partnership or other entity,
the beneficiaries, stockholders, partners, owners or Persons directly or
indirectly beneficially holding a 51% or more controlling interest of which
consist of such Principal and/or such other Persons referred to in the
immediately preceding clause (A).
REVOLVING CREDIT COMMITMENT. With respect to each Bank listed on
SCHEDULE 1(a), the amount set forth on SCHEDULE 1(a) hereto as the amount of
such Bank's commitment to make Revolving Credit Loans to, and to participate in
the issuance, extension and renewal of Letters of Credit for the account of, the
Borrowers, as the same may be reduced from time to time; or if such commitment
is terminated pursuant to the provisions hereof, zero.
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REVOLVING CREDIT COMMITMENT PERCENTAGE. With respect to each Bank listed
on SCHEDULE 1(a), the percentage set forth on SCHEDULE 1(a) hereto as such
Bank's percentage of the Total Commitment.
REVOLVING CREDIT LOANS. Revolving credit loans made or to be made by the
Banks listed on SCHEDULE 1(a) to the Borrowers pursuant to Section 2.
REVOLVING CREDIT MATURITY DATE. (a) December 31, 1999, or (b) December
31, 2000, if all of the Banks listed on SCHEDULE 1(a), in their sole discretion,
shall agree to extend the Revolving Credit Maturity Date for an additional year
upon the written request of the Borrowers delivered after the second anniversary
of the date hereof.
REVOLVING CREDIT NOTE RECORD. A Record with respect to a Revolving
Credit Note.
REVOLVING CREDIT NOTES. See Section 2.4.
REVOLVING CREDIT OUTSTANDINGS. At any relevant time of reference
thereto, the sum of (i) aggregate outstanding balance of the Revolving Credit
Loans, PLUS (ii) the Maximum Drawing Amount PLUS (iii) the aggregate amount of
Unpaid Reimbursement Obligations.
SECURITY AGREEMENTS. The Borrower Security Agreement and the Subsidiary
Security Agreement.
SECURITY DOCUMENTS. The Parent Guaranty, the Subsidiary Guaranty, the
Security Agreements, the Mortgages, the Stock Pledge Agreements, the Collateral
Assignment of Trademarks, the Intercreditor Agreement, and any other guaranties,
security agreements or other security documents executed and delivered to the
Agent in accordance with Section 10.5.1.
SELLER(S). As defined in the preamble hereto.
SENIOR INDEBTEDNESS. See Section 6.11(g).
SENIOR SUBORDINATED DEBT. Indebtedness arising under those certain
14 1/2% Series A Senior Subordinated Notes due 2004 issued by Griffith in the
initial aggregate principal amount of not less than $34,000,000 and not more
than $35,000,000, and 14 1/2% Senior Subordinated Notes issued in exchange for
such Series A Senior Subordinated Notes.
SOLVENT. As to any Person at any time, such Person shall be Solvent if
(a) the present and fair salable value of the property of such Person is
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greater than the amount of such Person's liabilities (including disputed,
contingent and unliquidated liabilities) as such value is established and
liabilities evaluated for purposes of Section 101(31) of the United States
Bankruptcy Code and, in the alternative, for purposes of the applicable Uniform
Fraudulent Transfer Act; (b) the present fair salable value of the property of
such Person is not less than the amount that will be required to pay the
probable liability of such Person on its debts as they become absolute and
matured; (c) such Person is able to realize upon its property and pay its debts
and other liabilities (including disputed, contingent and unliquidated
liabilities) as they mature in the normal course of business; (d) such Person
will not incur debts or liabilities beyond such Person's ability to pay as such
debts and liabilities mature; and (e) such Person is not engaged in business or
a transaction, and is not about to engage in business or a transaction, for
which such Person's property would constitute unreasonably small capital.
SSC. Shore Stop Corporation, a Delaware corporation and a wholly-owned
Subsidiary of Griffith.
STOCK PLEDGE AGREEMENTS. The Griffith Stock Pledge Agreement and the
Parent Stock Pledge Agreement.
SUBORDINATED DEBT. Unsecured Indebtedness of the Borrowers, that is
expressly subordinated and made junior to the payment and performance in full of
the Obligations, and evidenced as such by a written instrument containing
subordination provisions in form and substance satisfactory to the Banks,
including without limitation, the Senior Subordinated Debt.
SUBORDINATED DEBT DOCUMENTS. Collectively, (i) that certain Indenture
dated as of December 15, 1994 between Griffith and NationsBank Trust Company of
New York, as Trustee, pursuant to which Griffith issued the Senior Subordinated
Debt and (ii) each of the other documents listed on SCHEDULE 1(e) hereto, each
in the form delivered to the Agent on the Closing Date.
SUBSIDIARY. With respect to any Person, (i) a corporation a majority of
whose Capital Stock with voting power, under ordinary circumstances, to elect
directors is at the time, directly or indirectly, owned by such Person, by one
or more Subsidiaries of such Person or by such Person and one or more
Subsidiaries thereof or (ii) any other Person (other than a corporation) in
which such Person, one or more Subsidiaries thereof or such Person and one or
more Subsidiaries thereof, directly or indirectly, at the date of determination
thereof has at least a majority ownership
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interest and the power to direct the policies, management and affairs thereof.
SUBSIDIARY GUARANTY. The First Amended and Restated Guaranty dated as of
the date hereof, made by Frederick and Regent Transport in favor of the Banks
and the Agent, substantially in the form of EXHIBIT F hereto and any other
guaranty executed after the date hereof by a Subsidiary of any Borrower and
delivered to the Agent in accordance with Section 10.5.1.
SUBSIDIARY SECURITY AGREEMENT. The First Amended and Restated Subsidiary
Security Agreement, dated as of the date hereof, between Frederick, Regent
Transport and the Agent substantially in the form of EXHIBIT G hereto.
SUPER MAJORITY BANKS. At any time, the Banks holding at least 66 2/3% of
the sum of (i) the aggregate principal amount of the Term Loans outstanding at
such time and (ii) the Revolving Credit Commitments at such time, or if the
Revolving Credit Commitments have been terminated, the aggregate principal
amount of the Revolving Credit Loans outstanding at such time.
TERM LOANS. Term Loan A, Term Loan B, and Term Loan C.
TERM LOAN A. The term loans in an aggregate principal amount of
$20,750,000 made by the Banks listed on SCHEDULE 1(b) to the Borrowers in an
amount equal with respect to each such Bank to such Bank's Term Loan A Aggregate
Amount and which are evidenced by Term Notes A.
TERM LOAN A ADDITIONAL AMOUNT. With respect to each Bank listed on
SCHEDULE 1(b), the term loans to be made by such Bank to the Borrowers on the
Closing Date pursuant to the terms and conditions of this Credit Agreement in
the amount set forth opposite such Bank's name on SCHEDULE 1(b) hereto under the
column TERM LOAN A ADDITIONAL AMOUNT.
TERM LOAN A ADJUSTMENT AMOUNT. That amount set forth opposite FNBB's
name in Schedule 1(b) to be repaid to FNBB on the Closing Date pursuant to
Section 9.12 of this Credit Agreement.
TERM LOAN A AGGREGATE AMOUNT. With respect to each Bank listed on
SCHEDULE 1(b), that amount set forth opposite such Bank's name in SCHEDULE 1(b)
hereto under the column TERM LOAN A AGGREGATE AMOUNT.
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TERM LOAN A COMMITMENT PERCENTAGE. With respect to each Bank listed on
SCHEDULE 1(b), the percentage set forth on SCHEDULE 1(b) hereto as such Bank's
percentage of Term Loan A.
TERM LOAN A MATURITY DATE. December 31, 2000.
TERM LOAN B. The term loans in an aggregate principal amount of
$19,625,000 made by the Banks listed on SCHEDULE 1(b) to the Borrowers in an
amount equal with respect to each such Bank to such Bank's Term Loan B Aggregate
Amount and which are evidenced by Term Notes B.
TERM LOAN B ADDITIONAL AMOUNT. With respect to each Bank listed on
SCHEDULE 1(b), the term loans to be made by such Bank to the Borrowers on the
Closing Date pursuant to the terms and conditions of this Credit Agreement in
the amount set forth opposite such Bank's name on SCHEDULE 1(b) hereto under the
column TERM LOAN B ADDITIONAL AMOUNT.
TERM LOAN B ADJUSTMENT AMOUNT. That amount set forth opposite Senior
Debt Portfolio's name in Schedule 1(b) to be repaid to Senior Debt Portfolio on
the Closing Date pursuant to Section 9.12 of this Credit Agreement.
TERM LOAN B AGGREGATE AMOUNT. With respect to each Bank listed on
SCHEDULE 1(b), that amount set forth opposite such Bank's name in SCHEDULE 1(b)
hereto under the column TERM LOAN B AGGREGATE AMOUNT.
TERM LOAN B COMMITMENT PERCENTAGE. With respect to each Bank listed on
SCHEDULE 1(b), the percentage set forth on SCHEDULE 1(b) hereto as such Bank's
percentage of Term Loan B.
TERM LOAN B MATURITY DATE. December 31, 2002.
TERM LOAN C. The term loans to be made by the Banks listed on SCHEDULE
1(b) to the Borrowers on the Closing Date in the aggregate principal amount of
$15,000,000 pursuant to Section 4.1.
TERM LOAN C AMOUNT. With respect to each Bank listed on SCHEDULE 1(b),
that amount set forth opposite such Bank's name in SCHEDULE 1(b) hereto under
the column TERM LOAN C AMOUNT.
TERM LOAN C COMMITMENT PERCENTAGE. With respect to each Bank listed on
SCHEDULE 1(b), the percentage set forth on SCHEDULE 1(b) hereto as such Bank's
percentage of Term Loan C.
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TERM LOAN C MATURITY DATE. December 31, 2003.
TERM LOAN DEBT. The aggregate amount Outstanding on Term Loan A, Term
Loan B and Term Loan C.
TERM LOAN MATURITY DATES. The Term Loan A Maturity Date, the Term Loan B
Maturity Date, and the Term Loan C Maturity Date, as applicable.
TERM NOTES A. See Section 4.2.1.
TERM NOTES B. See Section 4.2.1.
TERM NOTES C. See Section 4.2.1.
TERM NOTES. Term Notes A, Term Notes B and Term Notes C, collectively.
TERM NOTE RECORD. A Record with respect to a Term Note.
THIRD AMENDED AND RESTATED CREDIT AGREEMENT. As defined in the recitals
hereto.
TOTAL COMMITMENT. The sum of the Revolving Credit Commitments of the
Banks, as in effect from time to time.
TRANSACTION COSTS. All of the costs, fees and expenses incurred by the
Parent, the Borrowers and their Subsidiaries in connection with the Acquisition
Transaction and the transactions contemplated hereby including without
limitation, underwriter's, broker's, finder's or placements fees or commissions
or other similar fees of other professionals, the fees payable to the Agent
under the Letter Agreement and the fees payable under the Advisory Agreement, in
each case as set forth on Schedule 1(f).
TYPE. As to any Revolving Credit Loan or all or any portion of the Term
Loans, its nature as a Base Rate Loan or a Eurodollar Rate Loan.
UNIFORM CUSTOMS. With respect to any Letter of Credit, the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 or any successor version thereto adopted
by the Agent in the ordinary course of its business as a letter of credit issuer
and in effect at the time of issuance of such Letter of Credit.
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UNPAID REIMBURSEMENT OBLIGATION. Any Reimbursement Obligation for which
the Borrowers do not reimburse the Agent and the Banks on the date specified in,
and in accordance with, Section 5.2.
WHOLLY OWNED SUBSIDIARY. With respect to any Person, a Subsidiary of
such Person all of the outstanding Capital Stock or other ownership interests of
which (other than directors' qualifying shares) shall at the time be owned by
such Person and/or by one or more Wholly Owned Subsidiaries of such Person.
1.2 RULES OF INTERPRETATION.
(a) A reference to any document or agreement shall include such
document or agreement as amended, modified or supplemented from time to
time in accordance with its terms and the terms of this Credit Agreement
unless this Agreement specifically provides otherwise.
(b) The singular includes the plural and the plural includes the
singular.
(c) A reference to any law includes any amendment or modification
to such law.
(d) A reference to any Person includes its permitted successors and
permitted assigns.
(e) Accounting terms not otherwise defined herein have the meanings
assigned to them by generally accepted accounting principles applied on a
consistent basis by the accounting entity to which they refer.
(f) The words "include", "includes" and "including" are not
limiting.
(g) All terms not specifically defined herein or by generally
accepted accounting principles, which terms are defined in the Uniform
Commercial Code as in effect in the Commonwealth of Massachusetts, have
the meanings assigned to them therein, with the term "instrument" being
that defined under Article 9 of the Uniform Commercial Code.
(h) Reference to a particular "Section " refers to that section of
this Credit Agreement unless otherwise indicated.
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(i) The words "herein", "hereof", "hereunder" and words of like
import shall refer to this Credit Agreement as a whole and not to any
particular section or subdivision of this Credit Agreement.
2. THE REVOLVING CREDIT FACILITY.
2.1 COMMITMENT TO LEND. (a) Subject to the terms and conditions set
forth in this Credit Agreement, each of the Banks listed on SCHEDULE 1(a)
severally agrees to lend to the Borrowers and the Borrowers may borrow, repay,
and reborrow from time to time between the Closing Date and the Revolving Credit
Maturity Date upon notice by the Borrowers to the Agent given in accordance with
Section 2.6, such sums as are requested by the Borrowers up to a maximum
aggregate amount outstanding (after giving effect to all amounts requested) at
any one time equal to such Bank's Revolving Credit Commitment minus such Bank's
Revolving Credit Commitment Percentage of the sum of the Maximum Drawing Amount
and all Unpaid Reimbursement Obligations; PROVIDED that the sum of the
outstanding amount of the Revolving Credit Loans (after giving effect to all
amounts requested) plus the Maximum Drawing Amount and all Unpaid Reimbursement
Obligations shall not at any time exceed the lesser of (i) the Total Commitment
and (ii) the Borrowing Base. The Revolving Credit Loans shall be made PRO RATA
in accordance with each such Bank's Revolving Credit Commitment Percentage.
Each request for a Revolving Credit Loan hereunder shall constitute a
representation and warranty by the Borrowers that the conditions set forth in
Section 12 and Section 13, in the case of the initial Revolving Credit Loans to
be made on the Closing Date, and Section 13, in the case of all other Revolving
Credit Loans, have been satisfied on the date of such request.
(b) The assets of any Approved Subsidiary may only be included in the
calculation of the Borrowing Base if (i) such assets meet the relevant
requirements for inclusion in the Borrowing Base, (ii) the Revolving Credit
Loans to be made by the Banks which are supported by such assets in the
Borrowing Base are required for the working capital needs of such Approved
Subsidiary and (iii) a Borrower advances an amount equal to such Revolving
Credit Loan in the form of an intercompany loan to such Approved Subsidiary;
PROVIDED, HOWEVER, that with respect to Regent Transport only, compliance with
clauses (ii) and (iii) shall not be required.
2.2 COMMITMENT FEE. The Borrowers agree to pay to the Agent for the
accounts of the Banks listed on SCHEDULE 1(a) in accordance with their
respective Revolving Credit Commitment Percentages a commitment fee calculated
at the rate of one-half of one percent (0.5%) per annum on the average daily
amount during each calendar quarter or portion thereof
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from the Closing Date to the Revolving Credit Maturity Date by which the Total
Commitment MINUS the sum of the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations exceeds the outstanding amount of Revolving Credit
Loans during such calendar quarter. The commitment fee shall be payable
quarterly in arrears on the first day of each calendar quarter for the
immediately preceding calendar quarter commencing on the first such date
following the Closing Date, with a final payment on the Revolving Credit
Maturity Date or any earlier date on which the Total Commitment shall terminate.
2.3 REDUCTION OF TOTAL COMMITMENT. The Borrowers shall have the right
at any time and from time to time upon three (3) Business Days prior written
notice to the Agent to reduce by a minimum of $1,000,000 or an integral multiple
thereof, or terminate entirely the Total Commitment, whereupon the Revolving
Credit Commitment of each Bank shall be reduced PRO RATA in accordance with its
Revolving Credit Commitment Percentage of the amount specified in such notice
or, as the case may be, terminated. Promptly after receiving any notice of the
Borrowers delivered pursuant to this Section 2.3, the Agent will notify the
Banks of the substance thereof. Upon the effective date of any such reduction
or termination, the Borrowers shall pay to the Agent for the respective accounts
of the Banks the full amount of any commitment fee then accrued on the amount of
the reduction. No reduction or termination of the Total Commitment may be
reinstated.
2.4 THE REVOLVING CREDIT NOTES. The Revolving Credit Loans shall be
evidenced by separate promissory notes of the Borrowers in substantially the
form of EXHIBIT H hereto (each a "Revolving Credit Note"), dated as of the
Closing Date and completed with appropriate insertions. One Revolving Credit
Note shall be payable to the order of each Bank in a principal amount equal to
such Bank's Revolving Credit Commitment or, if less, the outstanding amount of
all Revolving Credit Loans made by such Bank, plus interest accrued thereon, as
set forth below. The Borrowers irrevocably authorize each Bank to make or cause
to be made, at or about the time of the Drawdown Date of any Revolving Credit
Loan or at the time of receipt of any payment of principal on such Bank's
Revolving Credit Note, an appropriate notation on such Bank's Revolving Credit
Note Record reflecting the making of such Revolving Credit Loan or (as the case
may be) the receipt of such payment. The outstanding amount of the Revolving
Credit Loans set forth on such Bank's Revolving Credit Note Record shall be
PRIMA FACIE evidence of the principal amount thereof owing and unpaid to such
Bank, but the failure to record, or any error in so recording, any such amount
on such Bank's Revolving Credit Note Record shall not limit or otherwise affect
the obligations of the Borrowers hereunder or under any Revolving Credit
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Note to make payments of principal of or interest on any Revolving Credit Note
when due.
2.5 INTEREST ON REVOLVING CREDIT LOANS. Except as otherwise provided
in Section 6.9,
(a) Unless the Borrowers shall have validly and effectively
elected to have Revolving Credit Loans made or continued as Eurodollar
Rate Loans pursuant to the provisions of this Credit Agreement, each
Revolving Credit Loan shall bear interest at the Base Rate PLUS the
Applicable Margin in effect from time to time.
(b) In the event that the Borrowers shall have validly and
effectively elected to have all or any portion of the Revolving Credit
Loans made as Eurodollar Rate Loans pursuant to the provisions of this
Agreement, such Revolving Credit Loans shall bear interest for the period
commencing with the Drawdown Date thereof and ending on the last day of
the Interest Period with respect thereto at the Eurodollar Rate PLUS the
Applicable Margin in effect from time to time.
(c) The Borrowers promise to pay interest on each Revolving Credit
Loan in arrears on each Interest Payment Date with respect thereto.
2.6 REQUESTS FOR REVOLVING CREDIT LOANS. The Borrowers shall give to
the Agent written notice in the form of EXHIBIT I hereto (or telephonic notice
confirmed in a writing in the form of EXHIBIT I hereto) of each Revolving Credit
Loan requested hereunder (a "Loan Request") no later than (a) 10:00 a.m. on the
proposed Drawdown Date of any Base Rate Loan and (b) three (3) Eurodollar
Business Days prior to the proposed Drawdown Date of any Eurodollar Rate Loan.
Each such notice shall specify (A) the principal amount of the Revolving Credit
Loan requested, (B) the proposed Drawdown Date of such Revolving Credit Loan,
(C) the Type of such Revolving Credit Loan and (D) if such Revolving Credit Loan
is to be a Eurodollar Rate Loan, the Interest Period for such Revolving Credit
Loan. Promptly upon receipt of any such notice, the Agent shall notify each of
the Banks listed on SCHEDULE 1(a) thereof. Each Loan Request shall be
irrevocable and binding on the Borrowers and shall obligate the Borrowers to
accept the Revolving Credit Loan requested from the Banks on the proposed
Drawdown Date. Each Loan Request shall be in a minimum aggregate amount of (x)
$100,000 or an integral multiple thereof for any Base Rate Loan or (y) $500,000
or an integral multiple thereof for any Eurodollar Rate Loan.
<PAGE>
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2.7 CONVERSION OPTIONS.
2.7.1. CONVERSION TO DIFFERENT TYPE OF REVOLVING CREDIT LOAN.
The Borrowers may elect from time to time to convert any outstanding
Revolving Credit Loan to a Revolving Credit Loan of the other Type,
PROVIDED that (i) with respect to any such conversion of a Base Rate Loan
to a Eurodollar Rate Loan, the Borrowers shall give the Agent at least
three (3) Eurodollar Business Days prior written notice of such election;
(ii) with respect to any such conversion of a Eurodollar Rate Loan to a
Base Rate Loan, such conversion shall only be made on the last day of the
Interest Period with respect thereto and (iii) no Base Rate Loan may be
converted into a Eurodollar Rate Loan when any Default or Event of
Default has occurred and is continuing. On the date on which such
conversion is being made each Bank shall take such action as is necessary
to transfer its Revolving Credit Commitment Percentage of such Revolving
Credit Loans to its Domestic Lending Office or its Eurodollar Lending
Office, as the case may be. All or any part of outstanding Revolving
Credit Loans of one Type may be converted into a Revolving Credit Loan of
the other Type as provided herein, PROVIDED that any partial conversion
shall be in an aggregate principal amount of $500,000 or an integral
multiple thereof. Each Conversion Request relating to the conversion of
a Base Rate Loan to a Eurodollar Rate Loan shall be irrevocable by the
Borrowers.
2.7.2. CONTINUATION OF TYPE OF REVOLVING CREDIT LOAN. Any
Eurodollar Rate Loan may be continued as a Eurodollar Rate Loan upon the
expiration of an Interest Period with respect thereto by compliance by
the Borrowers with the notice provisions contained in Section 2.7.1;
PROVIDED that no Eurodollar Rate Loan may be continued as such when any
Default or Event of Default has occurred and is continuing, but shall be
automatically converted to a Base Rate Loan on the last day of the first
Interest Period relating thereto ending during the continuance of any
Default or Event of Default of which officers of the Agent have actual
knowledge. In the event that the Borrowers fail to provide any such
notice with respect to the continuation of any Eurodollar Rate Loan as
such or with respect to the conversion of a Base Rate Loan to a
Eurodollar Rate Loan, then such Loan shall be automatically converted to
or continued (as the case may be) to a Base Rate Loan on the last day of
the then current Interest Period relating thereto. The Agent shall
notify the Banks promptly when any such automatic conversion contemplated
by this Section 2.7 is scheduled to occur.
<PAGE>
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2.7.3. EURODOLLAR RATE LOANS. Any conversion to or from
Eurodollar Rate Loans shall be in such amounts and be made pursuant to
such elections so that, after giving effect thereto, the aggregate
principal amount of all Eurodollar Rate Loans having the same Interest
Period shall not be less than $500,000 or a whole multiple of $500,000 in
excess thereof and each Bank holds its Revolving Credit Commitment
Percentage of all Outstanding Eurodollar Rate Loans except as otherwise
provided in Section 6.4.
2.8 FUNDS FOR REVOLVING CREDIT LOAN.
2.8.1. FUNDING PROCEDURES. Not later than 12:00 noon (Boston
time) on the proposed Drawdown Date of any Revolving Credit Loans, each
of the Banks listed on SCHEDULE 1(a) will make available to the Agent, at
its Head Office, in immediately available funds, the amount of such
Bank's Revolving Credit Commitment Percentage of the amount of the
requested Revolving Credit Loans. Upon receipt from each Bank of such
amount, and upon receipt of the documents required by Sections 12 and 13
and the satisfaction of the other conditions set forth therein, to the
extent applicable, the Agent will make available to the Borrowers the
aggregate amount of such Revolving Credit Loans made available to the
Agent by the Banks. The failure or refusal of any Bank to make available
to the Agent at the aforesaid time and place on any Drawdown Date the
amount of its Revolving Credit Commitment Percentage of the requested
Revolving Credit Loans shall not relieve any other Bank from its several
obligation hereunder to make available to the Agent the amount of such
other Bank's Revolving Credit Commitment Percentage of any requested
Revolving Credit Loans.
2.8.2. ADVANCES BY AGENT. The Agent may, unless notified to
the contrary by any Bank prior to a Drawdown Date, assume that such Bank
has made available to the Agent on such Drawdown Date the amount of such
Bank's Revolving Credit Commitment Percentage of the Revolving Credit
Loans to be made on such Drawdown Date, and the Agent may (but it shall
not be required to), in reliance upon such assumption, make available to
the Borrowers a corresponding amount. If any Bank makes available to the
Agent such amount on a date after such Drawdown Date, such Bank shall pay
to the Agent on demand an amount equal to the product of (i) the average
computed for the period referred to in clause (iii) below, of the
weighted average interest rate paid by the Agent for federal funds
acquired by the Agent during each day included in such period, TIMES (ii)
the amount of such Bank's Revolving Credit Commitment Percentage of such
Revolving Credit
<PAGE>
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Loans, TIMES (iii) a fraction, the numerator of which is the number of days
that elapse from and including such Drawdown Date to the date on which the
amount of such Bank's Revolving Credit Commitment Percentage of such
Revolving Credit Loans shall become immediately available to the Agent, and
the denominator of which is 365. A statement of the Agent submitted to
such Bank with respect to any amounts owing under this paragraph shall be
PRIMA FACIE evidence of the amount due and owing to the Agent by such Bank.
If the amount of such Bank's Revolving Credit Commitment Percentage of such
Revolving Credit Loans is not made available to the Agent by such Bank
within three (3) Business Days following such Drawdown Date, the Agent
shall be entitled to recover such amount from the Borrowers on demand, with
interest thereon at the rate per annum applicable to the Revolving Credit
Loans made on such Drawdown Date.
2.9. CHANGE IN BORROWING BASE. The Borrowing Base shall be determined
twice monthly (or at such other interval as may be specified pursuant to
Section 9.4(d)) by the Agent by reference to the Borrowing Base Report most
recently delivered to the Banks and the Agent pursuant to Section 9.4(d).
3. REPAYMENT OF THE REVOLVING CREDIT LOANS.
3.1. MATURITY. The Borrowers hereby jointly and severally promise
to pay on the Revolving Credit Maturity Date, and there shall become absolutely
due and payable on the Revolving Credit Maturity Date, all of the Revolving
Credit Loans outstanding on such date, together with any and all accrued and
unpaid interest thereon.
3.2 MANDATORY REPAYMENTS OF REVOLVING CREDIT LOANS. If at any time the
sum of the outstanding amount of the Revolving Credit Loans, the Maximum Drawing
Amount and all Unpaid Reimbursement Obligations exceeds the lesser of (i) the
Total Commitment, and (ii) the Borrowing Base, then the Borrowers shall
immediately pay the amount of such excess to the Agent for the respective
accounts of the Banks listed on SCHEDULE 1(a) for application: first, to any
Unpaid Reimbursement Obligations; second, to the Revolving Credit Loans; and
third, to provide to the Agent cash collateral for Reimbursement Obligations as
contemplated by Section 5.2(b) and (c). Each payment of any Unpaid
Reimbursement Obligations or prepayment of Revolving Credit Loans shall be
allocated among the Banks listed on SCHEDULE 1(a), in proportion, as nearly as
practicable, to each Reimbursement Obligation or (as the case may be) the
respective unpaid principal amount of each Bank's Revolving
<PAGE>
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Credit Note, with adjustments to the extent practicable to equalize any prior
payments or repayments not exactly in proportion.
3.3. MANDATORY LOAN REDUCTION PERIOD. During the period from April 1
to October 1 of each Calendar Year, commencing with the Calendar Year 1995, the
Borrowers will maintain the total amount Outstanding under the Revolving Credit
Loans, excluding Letters of Credit, at an amount not exceeding $3,000,000 for a
period of 30 consecutive days.
3.4 OPTIONAL REPAYMENTS OF REVOLVING CREDIT LOANS. The Borrowers shall
have the right, at their election, to repay the outstanding amount of the
Revolving Credit Loans, as a whole or in part, at any time without penalty or
premium, PROVIDED that any full or partial prepayment of the outstanding amount
of any Eurodollar Rate Loans pursuant to this Section 3.4 may be made only on
the last day of the Interest Period relating thereto. The Borrowers shall give
the Agent, no later than 12:00 noon, Boston time, at least one (1) Business Day
prior written notice of any proposed prepayment pursuant to this Section 3.4 of
Base Rate Loans, and three (3) Eurodollar Business Days notice of any proposed
prepayment pursuant to this Section 3.4 of Eurodollar Rate Loans, in each case
specifying the proposed date of prepayment of Revolving Credit Loans and the
principal amount to be prepaid. Each such partial prepayment of the Revolving
Credit Loans shall be in an integral multiple of $100,000, shall be accompanied
by the payment of accrued interest on the principal prepaid to the date of
prepayment and shall be applied, in the absence of instruction by the Borrowers,
first to the principal of Base Rate Loans and then to the principal of
Eurodollar Rate Loans, at the Agent's option. Each partial prepayment shall be
allocated among the Banks listed on SCHEDULE 1(a), in proportion, as nearly as
practicable, to the respective unpaid principal amount of each Bank's Revolving
Credit Note, with adjustments to the extent practicable to equalize any prior
repayments not exactly in proportion.
4. THE TERM LOANS.
4.1 COMMITMENT TO LEND. Subject to the terms and conditions set
forth in this Credit Agreement, each Bank listed on SCHEDULE 1(b) agrees to lend
to the Borrowers on the Closing Date its Term Loan A Additional Amount, its Term
Loan B Additional Amount, and its Term Loan C Amount.
4.2 THE TERM NOTES.
4.2.1. TERM NOTE A. Term Loan A shall be evidenced by separate
promissory notes of the Borrowers in substantially the
<PAGE>
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form of EXHIBIT J-1 hereto (each a "Term Note A"), dated the Closing Date
and completed with appropriate insertions. One Term Note A shall be
payable to the order of each Bank listed on SCHEDULE 1(b) in a principal
amount equal to such Bank's Term Loan A Aggregate Amount and shall
represent the joint and several obligation of the Borrowers to pay to such
Bank such principal amount or, if less, the outstanding amount of such
Bank's Term Loan A Commitment Percentage of Term Loan A, plus interest
accrued thereon, as set forth below. The Borrowers irrevocably authorize
each Bank to make or cause to be made a notation on such Bank's Term Note
Record reflecting the original principal amount of such Bank's Term Loan A
Commitment Percentage of Term Loan A and, at or about the time of such
Bank's receipt of any principal payment on such Bank's Term Note A an
appropriate notation on such Bank's Term Note Record reflecting such
payment. The aggregate unpaid amount set forth on such Bank's Term Note
Record shall be PRIMA FACIE evidence of the principal amount thereof owing
and unpaid to such Bank, but the failure to record, or any error in so
recording, any such amount on such Bank's Term Note Record shall not affect
the obligations of the Borrowers hereunder or under any Term Note A to make
payments of principal of and interest on any Term Note A when due.
4.2.2. TERM NOTE B. Term Loans B shall be evidenced by separate
promissory notes of the Borrowers in substantially the form of EXHIBIT J-
2 hereto (each a "Term Note B"), dated the Closing Date and completed
with appropriate insertions. One Term Note B shall be payable to the
order of each Bank listed on SCHEDULE 1(b) in a principal amount equal to
such Bank's Term Loan B Aggregate Amount and representing the joint and
several obligation of the Borrowers to pay to such Bank such principal
amount or, if less, the outstanding amount of such Bank's Term Loan B
Commitment Percentage of Term Loan B, plus interest accrued thereon, as
set forth below. The Borrowers irrevocably authorize each Bank to make
or cause to be made a notation on such Bank's Term Note Record reflecting
the original principal amount of such Bank's Term Loan B Commitment
Percentage of Term Loan B and, at or about the time of such Bank's
receipt of any principal payment on such Bank's Term Note B an
appropriate notation on such Bank's Term Note Record reflecting such
payment. The aggregate unpaid amount set forth on such Bank's Term Note
Record shall be PRIMA FACIE evidence of the principal amount thereof
owing and unpaid to such Bank, but the failure to record, or any error in
so recording, any such amount on such Bank's Term Note Record shall not
affect the obligations of the Borrowers hereunder or under any Term Note
<PAGE>
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B to make payments of principal of and interest on any Term Note B when
due.
4.2.3. TERM NOTE C. Term Loans C shall be evidenced by
separate promissory notes of the Borrowers in substantially the form of
EXHIBIT J-3 hereto (each a "Term Note C"), dated the Closing Date and
completed with appropriate insertions. One Term Note C shall be payable
to the order of each Bank listed on SCHEDULE 1(b) in a principal amount
equal to such Bank's Term Loan C Amount and representing the joint and
several obligation of the Borrowers to pay to such Bank such principal
amount or, if less, the outstanding amount of such Bank's Term Loan C
Commitment Percentage of Term Loan C, plus interest accrued thereon, as
set forth below. The Borrowers irrevocably authorize each Bank to make
or cause to be made a notation on such Bank's Term Note Record reflecting
the original principal amount of such Bank's Term Loan C Commitment
Percentage of Term Loan C and, at or about the time of such Bank's
receipt of any principal payment on such Bank's Term Note C an
appropriate notation on such Bank's Term Note Record reflecting such
payment. The aggregate unpaid amount set forth on such Bank's Term Note
Record shall be PRIMA FACIE evidence of the principal amount thereof
owing and unpaid to such Bank, but the failure to record, or any error in
so recording, any such amount on such Bank's Term Note Record shall not
affect the obligations of the Borrowers hereunder or under any Term Note
C to make payments of principal of and interest on any Term Note C when
due.
4.3 SCHEDULE OF INSTALLMENT PAYMENTS OF PRINCIPAL OF TERM LOAN. The
Borrowers jointly and severally promise to pay to the Agent for the account of
the Banks listed on SCHEDULE 1(b) the principal amounts of Term Loan A, Term
Loan B, and Term Loan C as follows:
4.3.1. TERM LOAN A. Term Loan A shall be paid in nineteen (19)
consecutive quarterly installments, with each quarterly payment in a
given Fiscal Year equal to the amount set forth opposite such Fiscal Year
in the table below, such installments to be due and payable on the last
day of each fiscal quarter commencing on June 30, 1996 and ending on
December 31, 2000, with a final additional payment on December 31, 2000
in an amount equal to the remaining unpaid principal balance (if any) of
Term Loan A.
<PAGE>
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- -----------------------------------------------------------------------------
FISCAL YEAR ENDING IN JUNE OF QUARTERLY PAYMENTS ANNUAL TOTAL
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
1997 $ 962,500 $ 3,850,000
- -----------------------------------------------------------------------------
1998 $1,075,000 $ 4,300,000
- -----------------------------------------------------------------------------
1999 $1,075,000 $ 4,300,000
- -----------------------------------------------------------------------------
2000 $1,250,000 $ 5,000,000
- -----------------------------------------------------------------------------
2001 (Sept. 30, 2000, Dec. 31, 2000) $1,250,000 $ 2,500,000
- -----------------------------------------------------------------------------
$19,950,000
-----------------
4.3.2. TERM LOAN B. Term Loan B shall be paid in twenty-
seven (27) consecutive quarterly installments with each quarterly payment
in a given Fiscal Year equal to the amount set forth opposite such Fiscal
Year in the table below (with the exception of Fiscal Year ending of 2001
in which the installments due on September 30, 2000 and December 31, 2000
will be in the amount of $812,500, and the installments for March 31,
2001 and June 30, 2001 will be in the amount of $1,812,500, as noted in
the table below), such installments to be due and payable on the last day
of each fiscal quarter commencing on June 30, 1996, and ending on
December 31, 2002, with a final additional payment on December 31, 2002
in an amount equal to the unpaid principal balance (if any) of Term Loan
B.
- -----------------------------------------------------------------------------
FISCAL YEAR ENDING IN JUNE OF QUARTERLY PAYMENTS ANNUAL TOTAL
- -----------------------------------------------------------------------------
- -----------------------------------------------------------------------------
1997 $ 125,000 $ 500,000
- -----------------------------------------------------------------------------
1998 $ 125,000 $ 500,000
- -----------------------------------------------------------------------------
1999 $ 125,000 $ 500,000
- -----------------------------------------------------------------------------
2000 $ 250,000 $ 1,000,000
- -----------------------------------------------------------------------------
2001 (Sept. 30, 2000, Dec. 31, 2000) $ 812,500 ---------
- -----------------------------------------------------------------------------
2001 (March 31, 2001, June 30, 2001) $1,812,500 $ 5,250,000
- ----------------------------------------------------------------------------
2002 $2,000,000 $ 8,000,000
- -----------------------------------------------------------------------------
2003 (Sept. 30, 2002, Dec. 31, 2002) $1,875,000 $ 3,750,000
- -----------------------------------------------------------------------------
$19,500,000
-----------
4.3.3. TERM LOAN C. Term Loan C shall be paid in thirty (30)
consecutive quarterly installments, with each quarterly payment in a
given Fiscal Year equal to the amount set forth opposite such Fiscal Year
in the table below, such installments to be due and payable on the last
day of each fiscal quarter commencing on September 30, 1996 and ending on
December 31, 2003, with a
<PAGE>
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final additional payment on December 31, 2003 in an amount equal to the
remaining unpaid principal balance (if any) of Term Loan C.
FISCAL YEAR ENDING IN JUNE OF QUARTERLY PAYMENTS ANNUAL TOTAL
- ----------------------------- ------------------ ------------
1997 $ 62,500 $ 250,000
1998 $ 62,500 $ 250,000
1999 $ 62,500 $ 250,000
2000 $ 62,500 $ 250,000
2001 $ 62,500 $ 250,000
2002 $ 62,500 $ 250,000
2003 $1,562,500 $ 6,250,000
2004 (Sept. 30, 2003, Dec. 31, 2003) $3,625,000 $ 7,250,000
-----------
$15,000,000
4.4. OPTIONAL PREPAYMENT OF TERM LOANS. The Borrowers shall have the
right at any time to prepay the Term Notes on or before their respective Term
Loan Maturity Dates, as a whole, or in part, upon not less than one (1) Business
Day prior written notice to the Agent of any proposed prepayment pursuant to
this Section 4.4 of Base Rate Loans and three (3) Eurodollar Business Days prior
written notice to the Agent of any proposed prepayment pursuant to this Section
4.4 of Eurodollar Rate Loans, without premium or penalty, PROVIDED that (i) each
partial prepayment shall be in the minimum principal amount of $1,000,000 or an
integral multiple of $500,000 in excess thereof, and (ii) no portion of the Term
Loan bearing interest at the Eurodollar Rate may be prepaid pursuant to this
Section 4.4 except on the last day of the Interest Period relating thereto
unless the Borrowers pay to the Agent, on demand by the Agent, the additional
amounts determined in accordance with Section 6.8 as a result of such
prepayment.
4.5. MANDATORY PREPAYMENT OF TERM LOANS.
4.5.1. EXCESS CASH FLOW. On September 30 of each year,
commencing with September 30, 1997, the Borrowers shall prepay the amount
outstanding on the Term Loans in an amount equal to the Cash Flow
Percentage of Excess Cash Flow for the immediately preceding Fiscal Year
MINUS the amount of any optional prepayments of the Term Loans made in
such Fiscal Year pursuant to Section 4.4 and MINUS the amount of any
prepayments of the Term Loans made pursuant to Section 4.5.2 to the
extent that any cash proceeds
<PAGE>
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referred to in Section 4.5.2 are included in the calculation of Excess
Cash Flow for such prior Fiscal Year.
4.5.2. NET PROCEEDS. The Borrowers shall also prepay the Term
Loans as follows:
(a) no later than 30 days following the issuance of equity
securities by Griffith, unless the Majority Banks shall otherwise consent
in writing, the Borrowers shall prepay the Term Loans by an amount equal
to 100% of the cash proceeds from the issuance of such equity securities
net of all usual and customary costs and expenses actually incurred in
connection with such issuance;
(b) no later than 180 days after any sale of assets other than
(i) sales of inventory in the ordinary course, (ii) sales of obsolescent
and obsolete items of equipment in the ordinary course of business and
sales of motor vehicles and other equipment in the ordinary course of
business in connection with Investments permitted under Section 10.3(e)
or (f); PROVIDED that sales of motor vehicles in connection with
Investments permitted by Section 10.3(f) shall not exceed $500,000 in
aggregate amount for any single fiscal year of the Borrowers, (iii) sales
of assets by one Borrower to another Borrower and sales between any of
the Borrowers and any Wholly-Owned Subsidiary of a Borrower to the extent
otherwise permitted hereunder and (iv) Distributions which are permitted
under Section 10.4, the Borrowers shall prepay the Term Loans by an
amount equal to 100% of the cash proceeds from such sale net of all costs
and expenses incurred in connection therewith and after repayment of all
Indebtedness which is secured by a first priority lien on the assets sold
unless (A) within such 180-day period the Borrowers have applied such
proceeds to finance the acquisition of another business, customer list or
supply contract or the making of Capital Expenditures, in each case in
connection with a line of business permitted by Section 10.12; and (B)
with respect to any such proceeds in excess of (x) $1,000,000 in the
aggregate during any Calendar Year, (y) $1,000,000 in connection with any
single transaction or series of related transactions or (z) the first
$3,000,000 of aggregate proceeds from all asset sales during the term of
this Agreement (other than those permitted by clauses (i) through (iv)
above), the Majority Banks shall have given their prior written consent
to each such application. Upon receipt in cash of any deferred portions
of the sale price, such amount shall be applied to prepay the Term Loans
unless such amount shall have been applied within 180 days of such
receipt as provided in this Section 4.5.2.
<PAGE>
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4.6. ALLOCATION OF OPTIONAL AND MANDATORY PREPAYMENTS. Each optional
prepayment under Section 4.4 and mandatory prepayment required under Section 4.5
shall be allocated among the Banks listed on SCHEDULE 1(b), in proportion, as
nearly as practicable, to the respective outstanding amount of each Bank's Term
Notes A, Term Notes B, or Term Notes C as applicable, with adjustments to the
extent practicable to equalize any prior prepayments not exactly in proportion.
Any prepayment of principal of the Term Loans shall include all interest accrued
to the date of prepayment and shall be applied ratably to reduce each of the
remaining scheduled installments of principal due on the Term Loans. No amount
repaid with respect to the Term Loans may be reborrowed.
4.7. INTEREST ON TERM LOANS.
4.7.1. INTEREST RATES. Except as otherwise provided in Section
6.9, the Term Loans shall bear interest at the following rates:
(a) To the extent that all or any portion of the Term
Loans is a Base Rate Loan, the Term Loans or such portion shall
bear interest during such Interest Period at the Base Rate plus the
Applicable Margin in effect from time to time.
(b) To the extent that all or any portion of the Term
Loans is a Eurodollar Rate Loan, the Term Loans or such portion
shall bear interest during the applicable Interest Period at the
Eurodollar Rate plus the Applicable Margin in effect from time to
time.
The Borrowers promise to pay interest on the Term Loans or any portion
thereof outstanding in arrears on each Interest Payment Date.
4.7.2. NOTIFICATION BY BORROWERS. The Borrowers shall notify the
Agent, such notice to be irrevocable, at least three (3) Eurodollar
Business Days prior to the Drawdown Date with respect to the Term Loans
if all or any portion of the Term Loans is to bear interest at the
Eurodollar Rate. After such Term Loans have been made, the provisions of
Section 2.7 shall apply MUTATIS MUTANDIS with respect to all or any
portion of the Term Loans so that the Borrowers may have the same
interest rate options with respect to all or any portion of the Term
Loans as it would be entitled to with respect to the Revolving Credit
Loans.
4.7.3. AMOUNTS, ETC. Any portion of the Term Loan bearing
interest at the Eurodollar Rate relating to any Interest Period shall
<PAGE>
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be in the amount of $500,000 or an integral multiple thereof. No
Interest Period relating to the Term Loans or any portion thereof bearing
interest at the Eurodollar Rate shall extend beyond the date on which a
regularly scheduled installment payment of the principal of the Term
Loans is to be made unless a portion of the Term Loans at least equal to
such installment payment has an Interest Period ending on such date or is
then bearing interest at the Base Rate.
5. LETTERS OF CREDIT.
5.1 LETTER OF CREDIT COMMITMENTS.
5.1.1. COMMITMENT TO ISSUE LETTERS OF CREDIT. Subject to the
terms and conditions hereof and the execution and delivery by the
Borrowers of a letter of credit application on the Agent's customary form
(a "Letter of Credit Application"), the Agent on behalf of the Banks
listed on SCHEDULE 1(a) and in reliance upon the agreement of the Banks
listed on SCHEDULE 1(a) set forth in Section 5.1.4 and upon the
representations and warranties of the Borrowers contained herein, agrees,
in its individual capacity, to issue, extend and renew for the account of
the Borrowers one or more standby letters of credit (individually, a
"Letter of Credit"), in such form as may be requested from time to time
by the Borrowers and agreed to by the Agent; PROVIDED, HOWEVER, that,
after giving effect to such request, (a) the sum of the aggregate Maximum
Drawing Amount and all Unpaid Reimbursement Obligations shall not exceed
$5,500,000 at any one time, (b) the sum of (i) the Maximum Drawing Amount
on all Letters of Credit, PLUS (ii) all Unpaid Reimbursement Obligations,
PLUS (iii) the amount of the Revolving Credit Loans outstanding shall not
exceed the lesser of (A) the Total Commitment and (B) the Borrowing Base
and PROVIDED, FURTHER, no standby Letter of Credit shall have a term
longer than one (1) year (without giving effect to any automatic renewal
provisions thereof); PROVIDED that in any event no Letter of Credit shall
be issued, renewed or extended if as a result thereof the expiry date
thereof is later than the date permitted under Section 5.1.3.
Notwithstanding anything to the contrary herein, those letters of credit
listed on SCHEDULE 5 hereto shall be deemed to be Letters of Credit
issued hereunder for all purposes of this Agreement and the Loan
Documents.
5.1.2. LETTER OF CREDIT APPLICATIONS. Each Letter of Credit
Application shall be completed to the satisfaction of the Agent. In the
event that any provision of any Letter of Credit
<PAGE>
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Application shall be inconsistent with any provision of this Credit
Agreement, then the provisions of this Credit Agreement shall, to the
extent of any such inconsistency, govern.
5.1.3. TERMS OF LETTERS OF CREDIT. Each Letter of Credit issued,
extended or renewed hereunder shall, among other things, (i) provide for
the payment of sight drafts for honor thereunder when presented in
accordance with the terms thereof and when accompanied by the documents
described therein, and (ii) have an expiry date no later than the date
which is fourteen (14) days (or, if the Letter of Credit is confirmed by
a confirmer or otherwise provides for one or more nominated persons,
forty-five (45) days) prior to the Revolving Credit Maturity Date and no
Letter of Credit shall remain outstanding beyond such expiry date. Each
Letter of Credit so issued, extended or renewed shall be subject to the
Uniform Customs.
5.1.4. REIMBURSEMENT OBLIGATIONS OF BANKS. Each Bank listed on
SCHEDULE 1(a) severally agrees that it shall be absolutely liable,
without regard to the occurrence of any Default or Event of Default or
any other condition precedent whatsoever, to the extent of such Bank's
Revolving Credit Commitment Percentage, to reimburse the Agent on demand
for the amount of each draft paid by the Agent under each Letter of
Credit to the extent that such amount is not reimbursed by the Borrowers
pursuant to Section 5.2 (such agreement for a Bank being called herein
the "Letter of Credit Participation" of such Bank).
5.1.5. PARTICIPATIONS OF BANKS. Each such payment made by a Bank
shall be treated as the purchase by such Bank of a participating interest
in the Borrowers' Reimbursement Obligation under Section 5.2 in an amount
equal to such payment. Each Bank shall share in accordance with its
participating interest in any interest which accrues pursuant to Section
5.2.
5.1.6. ISSUANCE BY BANKS. Any Letter of Credit to be issued
hereunder may, at the request of the Agent, and with the consent of any
Bank, be issued by such Bank pursuant to the provisions of this Section
5.1. In each such case, to the extent applicable, references to the
Agent as an issuing Bank and to the obligations of the other Banks in
connection with Letters of Credit in this Section 5.1 and any other such
reference relating to Letters of Credit, the Maximum Drawing Amount, the
Reimbursement Obligations or any Unpaid Reimbursement Obligations shall,
with respect to the relevant Letter of Credit, be deemed to be references
to such issuing Bank.
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5.2. REIMBURSEMENT OBLIGATION OF THE BORROWERS. In order to induce the
Agent to issue, extend and renew each Letter of Credit and the Banks to
participate therein, the Borrowers hereby jointly and severally agree to
reimburse or pay to the Agent, for the account of the Agent or (as the case may
be) the Banks listed on SCHEDULE 1(a), with respect to each Letter of Credit
issued, extended or renewed by the Agent hereunder,
(a) except as otherwise expressly provided in Section 5.2(b) and
(c), on each date that any draft presented under such Letter of Credit is
honored by the Agent, or the Agent otherwise makes a payment with respect
thereto, (i) the amount paid by the Agent under or with respect to such
Letter of Credit, and (ii) the amount of any taxes (other than taxes
solely on the net income of the Banks or the Agent), fees, charges or
other costs and expenses whatsoever incurred by the Agent or any Bank in
connection with any payment made by the Agent or any Bank under, or with
respect to, such Letter of Credit,
(b) upon the reduction (but not termination) of the Total
Commitment to an amount less than the Maximum Drawing Amount, an amount
equal to such difference, which amount shall be held by the Agent for the
benefit of the Banks and the Agent as cash collateral for all
Reimbursement Obligations, and
(c) upon the termination of the Total Commitment, or the
acceleration of the Reimbursement Obligations with respect to all Letters
of Credit in accordance with Section 14, an amount equal to the then
Maximum Drawing Amount on all Letters of Credit, which amount shall be
held by the Agent for the benefit of the Banks and the Agent as cash
collateral for all Reimbursement Obligations.
Each such payment shall be made to the Agent at the Agent's Head Office in
immediately available funds. Interest on any and all amounts remaining unpaid
by the Borrowers under this Section 5.2 at any time from the date such amounts
become due and payable (whether as stated in this Section 5.2, by acceleration
or otherwise) until payment in full (whether before or after judgment) shall be
payable to the Agent on demand at the rate specified in Section 6.9 for overdue
principal on the Revolving Credit Loans.
5.3. LETTER OF CREDIT PAYMENTS. If any draft shall be presented or
other demand for payment shall be made under any Letter of Credit, the Agent
shall notify the Borrowers of the date and amount of the draft presented or
demand for payment and of the date and time when it expects to pay such draft or
honor such demand for payment. If the Borrowers fail to reimburse the Agent as
provided in Section 5.2 on or before the
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date that such draft is paid or other payment is made by the Agent, the Agent
may at any time thereafter notify the Banks of the amount of any such Unpaid
Reimbursement Obligation. No later than 3:00 p.m. (Boston time) on the Business
Day next following the receipt of such notice, each Bank listed on SCHEDULE 1(a)
shall make available to the Agent, at its Head Office, in immediately available
funds, such Bank's Revolving Credit Commitment Percentage of such Unpaid
Reimbursement Obligation, together with an amount equal to the product of (i)
the average, computed for the period referred to in clause (iii) below, of the
weighted average interest rate paid by the Agent for federal funds acquired by
the Agent during each day included in such period, TIMES (ii) the amount equal
to such Bank's Revolving Credit Commitment Percentage of such Unpaid
Reimbursement Obligation, TIMES (iii) a fraction, the numerator of which is the
number of days that elapse from and including the date the Agent paid the draft
presented for honor or otherwise made payment to the date on which such Bank's
Revolving Credit Commitment Percentage of such Unpaid Reimbursement Obligation
shall become immediately available to the Agent, and the denominator of which is
360. The responsibility of the Agent to the Borrowers and the Banks shall be
only to determine that the documents (including each draft) delivered under each
Letter of Credit in connection with such presentment shall be in conformity in
all material respects with such Letter of Credit.
5.4. OBLIGATIONS ABSOLUTE. The Borrowers' obligations under this
Section 5 shall be absolute and unconditional under any and all circumstances
and irrespective of the occurrence of any Default or Event of Default or any
condition precedent whatsoever or any setoff, counterclaim or defense to payment
which the Borrowers may have or have had against the Agent, any Bank or any
beneficiary of a Letter of Credit. The Borrowers further agree with the Agent
and the Banks that the Agent and the Banks shall not be responsible for, and
the Borrowers' Reimbursement Obligations under Section 5.2 shall not be affected
by, among other things, the validity or genuineness of documents or of any
endorsements thereon, even if such documents should in fact prove to be in any
or all respects invalid, fraudulent or forged, or any dispute between or among
the Borrowers, the beneficiary of any Letter of Credit or any financing
institution or other party to which any Letter of Credit may be transferred or
any claims or defenses whatsoever of the Borrowers against the beneficiary of
any Letter of Credit or any such transferee. The Agent and the Banks shall not
be liable for any error, omission, interruption or delay in transmission,
dispatch or delivery of any message or advice, however transmitted, in
connection with any Letter of Credit. The Borrowers agree that any action taken
or omitted by the Agent or any Bank under or in connection with each Letter of
Credit and the related drafts and
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documents, if done in good faith, shall be binding upon the Borrowers and shall
not result in any liability on the part of the Agent or any Bank to the
Borrowers. The Agent and the Banks shall have no liability in connection with
any Letter of Credit unless it is determined by a court of competent
jurisdiction in a final, non-appealable order, that such action or omission on
the part of the Agent or such Bank, as the case may be, constitutes gross
negligence or willful misconduct.
5.5. RELIANCE BY ISSUER. To the extent not inconsistent with Section
5.4, the Agent shall be entitled to rely, and shall be fully protected in
relying upon, any Letter of Credit, draft, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, telecopy, telex or teletype
message, statement, order or other document 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, independent accountants and
other experts selected by the Agent. The Agent shall be fully justified in
failing or refusing to take any action under this Agreement unless it shall
first have received such advice or concurrence of the Majority Banks as it
reasonably deems appropriate or it shall first be indemnified to its reasonable
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
Agent shall in all cases be fully protected in acting, or in refraining from
acting, under this Agreement in accordance with a request of the Majority Banks,
and such request and any action taken or failure to act pursuant thereto shall
be binding upon the Banks and all future holders of the Revolving Credit Notes
or of a Letter of Credit Participation.
5.6. LETTER OF CREDIT FEE. The Borrowers shall pay to the Agent, for
the PRO RATA accounts of the Banks listed on SCHEDULE 1(a) in accordance with
their respective Revolving Credit Commitment Percentages, a fee for each Letter
of Credit equal to the greater of $500 or two percent (2.00%) per annum of the
face amount of such Letter of Credit for the period during which such Letter of
Credit is outstanding, such fee to be payable quarterly in arrears (the "Letter
of Credit Fee"). In addition, the Borrowers shall pay to the Agent or, in the
event a Letter of Credit is not issued by the Agent, to the issuing Bank, for
Agent's own account or such issuing Bank's account, an additional issuance fee
equal to 0.25% per annum of the face amount of such Letter of Credit for the
period during which such letter of credit is outstanding, such fee to be paid
quarterly in arrears and on the date of an amendment to or the negotiation of
any Letter of Credit, or, a fee in an amount equal to the fee customarily
charged by the Agent or such issuing Bank for an amendment to or the negotiation
of a letter of credit (such fees to be referred to herein collectively as the
"Issuance Fee").
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6. CERTAIN GENERAL PROVISIONS.
6.1. FUNDS FOR PAYMENTS.
6.1.1. PAYMENTS TO AGENT. All payments of principal, interest,
Reimbursement Obligations, commitment fees, Letter of Credit Fees and any
other amounts due hereunder or under any of the other Loan Documents
shall be made to the Agent, for the respective accounts of the Banks and
the Agent, at the Agent's Head Office or at such other location in the
Boston, Massachusetts area that the Agent may from time to time
designate, in each case in immediately available funds.
6.1.2. NO OFFSET, ETC. All payments by the Borrowers hereunder
and under any of the other Loan Documents shall be made without setoff or
counterclaim and free and clear of and without deduction for any taxes,
levies, imposts, duties, charges, fees, deductions, withholdings,
compulsory loans, restrictions or conditions of any nature now or
hereafter imposed or levied by any jurisdiction or any political
subdivision thereof or taxing or other authority therein unless the
Borrowers are compelled by law to make such deduction or withholding. If
any such obligation is imposed upon the Borrowers with respect to any
amount payable by them hereunder or under any of the other Loan
Documents, the Borrowers will pay to the Agent, for the account of the
Banks or (as the case may be) the Agent, on the date on which such amount
is due and payable hereunder or under such other Loan Document, such
additional amount in Dollars as shall be necessary to enable the Banks or
the Agent to receive the same net amount which the Banks or the Agent
would have received on such due date had no such obligation been imposed
upon the Borrowers (other than taxes with respect to the Agent's and the
Banks' net income). The Borrowers will deliver promptly to the Agent
certificates or other valid vouchers for all taxes or other charges
deducted from or paid with respect to payments made by the Borrowers
hereunder or under such other Loan Document.
6.2 COMPUTATIONS. All computations of interest on the Loans and of
commitment fees, Letter of Credit Fees or other fees shall, be based on a 360-
day year and paid for the actual number of days elapsed. Except as otherwise
provided in the definition of the term "Interest Period" with respect to
Eurodollar Rate Loans, whenever a payment hereunder or under any of the other
Loan Documents becomes due on a day that is not a Business Day, the due date for
such payment shall be extended to the next succeeding Business Day, and interest
shall accrue during such
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extension. The outstanding amount of the Loans as reflected on the Revolving
Credit Note Records and the Term Note Records from time to time shall be
considered correct and binding on the Borrowers unless within five (5) Business
Days after receipt of any notice by the Agent or any of the Banks of such
outstanding amount, the Agent or such Bank shall notify the Borrowers to the
contrary.
6.3 INABILITY TO DETERMINE EURODOLLAR RATE. In the event, prior to the
commencement of any Interest Period relating to any Eurodollar Rate Loan, the
Agent shall determine that adequate and reasonable methods do not exist for
ascertaining the Eurodollar Rate that would otherwise determine the rate of
interest to be applicable to any Eurodollar Rate Loan during any Interest
Period, the Agent shall forthwith give notice of such determination (which shall
be conclusive and binding on the Borrowers and the Banks) to the Borrowers and
the Banks. In such event (i) any Loan Request or Conversion Request with
respect to Eurodollar Rate Loans shall be automatically withdrawn and, shall be
deemed a request for Base Rate Loans, (ii) each Eurodollar Rate Loan will
automatically, on the last day of the then current Interest Period relating
thereto, become a Base Rate Loan, and (iii) the obligations of the Banks to make
Eurodollar Rate Loans shall be suspended until the Agent or the Majority Banks
determineS that the circumstances giving rise to such suspension no longer
exist, whereupon the Agent or, as the case may be, the Agent upon the
instruction of the Majority Banks, shall so notify the Borrowers and the Banks.
6.4. ILLEGALITY. Notwithstanding any other provisions herein, if any
present or future law, regulation, treaty or directive or any change in the
interpretation or application thereof shall make it unlawful for any Bank to
make or maintain Eurodollar Rate Loans, such Bank shall forthwith give notice of
such circumstances to the Borrowers and the other Banks and thereupon (i) the
commitment of such Bank to make Eurodollar Rate Loans or convert Loans of
another Type to Eurodollar Rate Loans shall forthwith be suspended and (ii) such
Bank's Revolving Credit Loans then outstanding as Eurodollar Rate Loans, if any,
shall be converted automatically to Base Rate Loans on the last day of each
Interest Period applicable to such Eurodollar Rate Loans or within such earlier
period as may be required by law. The Borrowers hereby agree promptly to pay
the Agent for the account of such Bank, upon demand by such Bank, any additional
amounts necessary to compensate such Bank for any costs incurred by such Bank in
making any conversion in accordance with this Section 6.4, including any
interest or fees payable by such Bank to lenders of funds obtained by it in
order to make or maintain its Eurodollar Loans hereunder.
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6.5. ADDITIONAL COSTS, ETC. If any present or future applicable law,
which expression, as used herein, includes statutes, rules and regulations
thereunder and interpretations thereof by any competent court or by any
governmental or other regulatory body or official charged with the
administration or the interpretation thereof and requests, directives,
instructions and notices at any time or from time to time hereafter made upon or
otherwise issued to any Bank or the Agent by any central bank or other fiscal,
monetary or other authority (whether or not having the force of law), shall:
(a) subject any Bank or the Agent to any tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature with respect to this
Credit Agreement, the other Loan Documents, any Letters of Credit, such
Bank's Revolving Credit Commitment or the Loans (other than taxes based
upon or measured by the income or profits of such Bank or the Agent), or
(b) materially change the basis of taxation (except for changes in
taxes on income or profits) of payments to any Bank of the principal of
or the interest on any Loans or any other amounts payable to any Bank or
the Agent under this Credit Agreement or any of the other Loan Documents,
or
(c) impose or increase or render applicable (other than to the
extent specifically provided for elsewhere in this Credit Agreement) any
special deposit, reserve, assessment, liquidity, capital adequacy or
other similar requirements (whether or not having the force of law)
against assets held by, or deposits in or for the account of, or loans
by, or letters of credit issued by, or commitments of an office of any
Bank, or
(d) impose on any Bank or the Agent any other conditions or
requirements with respect to this Credit Agreement, the other Loan
Documents, any Letters of Credit, the Loans, such Bank's Commitment, or
any class of loans, letters of credit or commitments of which any of the
Loans or such Bank's Revolving Credit Commitment forms a part;
and the result of any of the foregoing is
(i) to increase the cost to any Bank of making, funding,
issuing, renewing, extending or maintaining any of the Loans or
such Bank's Revolving Credit Commitment or any Letter of Credit, or
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(ii) to reduce the amount of principal, interest,
Reimbursement Obligation or other amount payable to such Bank or
the Agent hereunder on account of such Bank's Revolving Credit
Commitment, any Letter of Credit or any of the Loans, or
(iii) to require such Bank or the Agent to make any
payment or to forego any interest or Reimbursement Obligation or
other sum payable hereunder, the amount of which payment or
foregone interest or Reimbursement Obligation or other sum is
calculated by reference to the gross amount of any sum receivable
or deemed received by such Bank or the Agent from the Borrowers
hereunder,
then, and in each such case, the Borrowers will, upon demand made by such Bank
or (as the case may be) the Agent at any time and from time to time and as often
as the occasion therefor may arise, pay to such Bank or the Agent such
additional amounts as will be sufficient to compensate such Bank or the Agent
for such additional cost, reduction, payment or foregone interest or
Reimbursement Obligation or other sum.
6.6. CAPITAL ADEQUACY. If after the date hereof any Bank or the Agent
determines that (i) the adoption of or change in any law, governmental rule,
regulation, policy, guideline or directive (whether or not having the force of
law) regarding capital requirements for banks or bank holding companies or any
change in the interpretation or application thereof by a court or governmental
authority with appropriate jurisdiction, or (ii) compliance by such Bank or the
Agent or any corporation controlling such Bank or the Agent with any law,
governmental rule, regulation, policy, guideline or directive (whether or not
having the force of law) of any such entity regarding capital adequacy, has the
effect of reducing the return on such Bank's or the Agent's commitment with
respect to any Loans to a level below that which such Bank or the Agent could
have achieved but for such adoption, change or compliance (taking into
consideration such Bank's or the Agent's then existing policies with respect to
capital adequacy and assuming full utilization of such entity's capital) by any
amount deemed by such Bank or (as the case may be) the Agent to be material,
then such Bank or the Agent may notify the Borrowers of such fact. To the
extent that the amount of such reduction in the return on capital is not
reflected in the Base Rate, the Borrowers agree to pay such Bank or (as the case
may be) the Agent for the amount of such reduction in the return on capital as
and when such reduction is determined upon presentation by such Bank or (as the
case may be) the Agent of a certificate in accordance with Section 6.7 hereof.
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6.7. CERTIFICATE. A certificate setting forth any additional amounts
payable pursuant to Sections 6.5 or 6.6 and a brief explanation of such amounts
which are due, submitted by any Bank or the Agent to the Borrowers, shall be
conclusive, absent manifest error, that such amounts are due and owing.
6.8 INDEMNITY. The Borrowers agree to indemnify each Bank and to hold
each Bank harmless from and against any loss, cost or expense (including loss of
anticipated profits) that such Bank may sustain or incur as a consequence of (i)
default by the Borrowers in payment of the principal amount of or any interest
on any Eurodollar Rate Loans as and when due and payable, including any such
loss or expense arising from interest or fees payable by such Bank to lenders of
funds obtained by it in order to maintain its Eurodollar Rate Loans, (ii)
default by the Borrowers in making a borrowing or conversion after the Borrowers
have given (or are deemed to have given) a Loan Request, notice (in the case of
all or any portion of the Term Loans pursuant to Section 4.7.2) or a Conversion
Request relating thereto in accordance with Section 2.6 or Section 2.7 or
Section 4.7 or (iii) the making of any payment of a Eurodollar Rate Loan or the
making of any conversion of any such Loan to a Base Rate Loan on a day that is
not the last day of the applicable Interest Period with respect thereto,
including interest or fees payable by such Bank to lenders of funds obtained by
it in order to maintain any such Loans.
6.9 INTEREST AFTER DEFAULT.
6.9.1. OVERDUE AMOUNTS. Overdue principal and (to the extent
permitted by applicable law) interest on the Loans and all other overdue
amounts payable hereunder or under any of the other Loan Documents shall
bear interest compounded monthly and payable on demand at a rate per
annum equal to four percent (4%) above the Base Rate until such amount
shall be paid in full (after as well as before judgment).
6.9.2. AMOUNTS NOT OVERDUE. During the continuance of an Event
of Default, the principal of the Revolving Credit Loans and Term Loans
not overdue shall, until such Event of Default has been cured or remedied
or such Event of Default has been waived by the Majority Banks pursuant
to Section 27, bear interest at a rate per annum equal to the rate of
interest applicable to overdue principal pursuant to Section 6.9.1.
6.10 OTHER FEES. In addition to the commitment fees and the Letter of
Credit Fee payable hereunder, the Borrowers agree to pay to the Agent for its
own account, certain fees as set forth in a letter agreement
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dated as of April 15, 1996 by and among the Agent and the Borrowers (the "Letter
Agreement").
6.11 JOINT AND SEVERAL LIABILITY.
(a) Each of the Borrowers is accepting joint and several liability
hereunder and under the other Loan Documents in consideration of the financial
accommodations to be provided by the Banks under this Credit Agreement, for the
mutual benefit, directly and indirectly, of each of the Borrowers and in
consideration of the undertakings of each other Borrower to accept joint and
several liability for the Obligations.
(b) Each of the Borrowers, jointly and severally, hereby irrevocably
and unconditionally accepts, not merely as a surety but also as a co-debtor,
joint and several liability with the other Borrowers, with respect to the
payment and performance of all of the Obligations (including, without
limitation, any Obligations arising under this Section 6.11), it being the
intention of the parties hereto that all the Obligations shall be the joint and
several obligations of each Borrower without preferences or distinction among
them.
(c) If and to the extent that any of the Borrowers shall fail to make
any payment with respect to any of the Obligations as and when due or to perform
any of the Obligations in accordance with the terms thereof, then in each such
event the other Borrowers will make such payment with respect to, or perform,
such Obligation.
(d) The Obligations of each of the Borrowers under the provisions of
this Section 6.11 constitute the full recourse Obligation of the other Borrowers
enforceable against each such corporation to the full extent of its properties
and assets, irrespective of the validity, regularity or enforceability of this
Credit Agreement or any other circumstance whatsoever.
(e) Except as otherwise expressly provided in this Agreement, each of
the Borrowers hereby waives notice of acceptance of its joint and several
liability, notice of any Loans made or Letters of Credit issued under this
Credit Agreement, notice of the occurrence of any default, or of any demand for
any payment under this Credit Agreement, notice of any action at any time taken
or omitted by the Agent or any Bank under or in respect of any of the
Obligations, any requirement of diligence or to mitigate damages and, generally,
to the extent permitted by applicable law, all demands, notices and other
formalities of every kind in connection with this Credit Agreement. Each of the
Borrowers hereby assents to, and waives notice of, any extension or postponement
of the time for the payment of any of the Obligations, the acceptance of any
payment of any
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of the Obligations, the acceptance of any partial payment thereon, any waiver,
consent or other action or acquiescence by the Agent or any Bank at any time or
times in respect of any default by any of the Borrowers in the performance or
satisfaction of any term, covenant, condition or provision of this Credit
Agreement, any and all other indulgences whatsoever by the Agent or any Bank in
respect of any of the Obligations, and the taking, addition, substitution or
release, in whole or in part, at any time or times, of any security for any of
the Obligations or the addition, substitution or release, in whole or in part,
of any of the Borrowers. Without limiting the generality of the foregoing, each
of the Borrowers assents to any other action or delay in acting or failure to
act on the part of the Agent or any Bank with respect to the failure by any of
the Borrowers to comply with any of its respective Obligations, including,
without limitation, any failure strictly or diligently to assert any right or to
pursue any remedy or to comply fully with applicable laws or regulations
thereunder, which might, but for the provisions of this Section 6.11, afford
grounds for terminating, discharging or relieving any of the Borrowers, in whole
or in part, from any of its Obligations under this Section 6.11, it being the
intention of each of the Borrowers that, so long as any of the Obligations
hereunder remain unsatisfied, the Obligations of such Borrowers under this
Section 6.11 shall not be discharged except by performance and then only to the
extent of such performance. The Obligations of each of the Borrowers under this
Section 6.11 shall not be diminished or rendered unenforceable by any winding
up, reorganization, arrangement, liquidation, reconstruction or similar
proceeding with respect to any of the Borrowers or the Banks. The joint and
several liability of the Borrowers hereunder shall continue in full force and
effect notwithstanding any absorption, merger, amalgamation or any other change
whatsoever in the name, membership, constitution or place of formation of any of
the Borrowers or the Agent or any Bank.
(f) The provisions of this Section 6.11 are made for the benefit of the
Agent and the Banks and their respective successors and assigns, and may be
enforced by it or them from time to time against any or all of the Borrowers as
often as occasion therefor may arise and without requirement on the part of the
Agent or the Banks first to marshall any of its or their claims or to exercise
any of its or their rights against the other Borrowers or to exhaust any
remedies available to it or them against the other Borrowers or to resort to any
other source or means of obtaining payment of any of the Obligations hereunder
or to elect any other remedy. The provisions of this Section 6.11 shall remain
in effect until all of the Obligations shall have been paid in full or otherwise
fully satisfied. If at any time, any payment, or any part thereof, made in
respect of any of the Obligations, is rescinded or must otherwise be restored or
returned by the Banks upon the insolvency, bankruptcy or reorganization of any
of the
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Borrowers, or otherwise, the provisions of this Section 6.11 will forthwith be
reinstated in effect, as though such payment had not been made.
(g) Each of the Borrowers hereby agrees that it will not enforce any of
its rights of contribution or subrogation against the other Borrowers or any
Affiliate of the other Borrowers with respect to any liability incurred by it
hereunder or under any of the other Loan Documents, any payments made by it to
the Agent or the Banks with respect to any of the Obligations or any collateral
security therefor until such time as all Indebtedness of the Borrowers owing to
the Banks or the Agent under the Loan Documents (the "Senior Indebtedness") has
been paid in full in cash (or in form otherwise satisfactory to the Banks in
their sole discretion). Any claim which any Borrower may have against any other
Borrower with respect to any payments to the Banks hereunder or under any other
Loan Documents are hereby expressly made subordinate and junior in right of
payment, without limitation as to any increases in the Obligations arising
hereunder or thereunder, to the prior payment in full of the Senior Indebtedness
and, in the event of any insolvency, bankruptcy, receivership, liquidation,
reorganization or other similar proceeding under the laws of any jurisdiction
relating to such other Borrower, its debts or its assets, whether voluntary or
involuntary, all such Senior Indebtedness shall be paid in full before any
payment or distribution of any character, whether in cash, securities or other
property, shall be made to any Borrower therefor.
(h) Each of the Borrowers hereby agrees that the payment of any amounts
due with respect to the indebtedness owing by any Borrower to any other Borrower
or any Affiliate of any Borrower is hereby subordinated to the prior payment in
full in cash (or in form otherwise satisfactory to the Banks in their sole
discretion) of the Senior Indebtedness. Each Borrower hereby agrees that after
the occurrence and during the continuance of any Event of Default, such Borrower
will not demand, sue for or otherwise attempt to collect any indebtedness of any
other Borrower owing to such Borrower until the Senior Indebtedness shall have
been paid in full in cash (or in form otherwise satisfactory to the Banks in
their sole discretion). If, notwithstanding the foregoing sentence, such
Borrower shall collect, enforce or receive any amounts in respect of such
indebtedness, such amounts shall be collected, enforced and received by such
Borrower as trustee for the Agent and be paid over to the Agent for the PRO RATA
account of the Banks to be applied to repay the Senior Indebtedness.
(i) It is the intention and agreement of the Borrowers, the Agent and
the Banks that the Obligations of each of the Borrowers shall be valid and
enforceable against such Borrower to the maximum extent permitted
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by applicable law. Accordingly, if any provision of any Loan Document creating
any obligation of any Borrower in favor of the Agent and the Banks shall be
declared to be invalid or unenforceable in any respect or to any extent, it is
the stated intention and agreement of the Borrowers, the Agent and the Banks
that any balance of the obligation created by such provision and all other
Obligations of such Borrower shall remain valid and enforceable. Likewise, if
by final order a court of competent jurisdiction shall declare any sums which
the Banks or the Agent may be otherwise entitled to collect from any Borrower
under the Loan Documents to be in excess of those permitted under any law
(including any federal or state fraudulent conveyance or like statute or rule of
law) applicable to the Obligations of such Borrower, it is the stated intention
and agreement of the Borrowers, the Agent and the Banks that all sums not in
excess of those permitted under such applicable law shall remain fully
collectible by the Banks and the Agent from such Borrower.
7. COLLATERAL SECURITY AND GUARANTIES.
7.1. SECURITY OF BORROWERS. The Obligations shall be secured by (a) a
perfected first priority security interest (subject only to Permitted Liens
entitled to priority under applicable law) in all of the assets of the
Borrowers, whether now owned or hereafter acquired, and (b) a perfected second
priority security interest on the Mortgaged Premises securing the Regent Seller
Note, all pursuant to the terms of the Security Documents to which the Borrowers
are party.
7.2. GUARANTIES AND SECURITY OF PARENT. The Obligations shall be
guaranteed by the Parent pursuant to the terms of the Parent Guaranty, and shall
be secured by a pledge of all of the issued and outstanding capital stock of
Griffith pursuant to the terms of the Parent Stock Pledge Agreement.
7.3. GUARANTIES AND SECURITY OF FREDERICK AND REGENT TRANSPORT. The
Obligations shall be guaranteed by Frederick and Regent Transport pursuant to
the terms of the Subsidiary Guaranty and shall be secured by a perfected first
priority security interest (subject only to Permitted Liens entitled to priority
under applicable law) in all of the assets of Frederick and Regent Transport,
whether now owned or hereafter acquired, pursuant to the terms of the Security
Documents to which Frederick and Regent Transport are parties.
8. REPRESENTATIONS AND WARRANTIES.
The Borrowers jointly and severally represent and warrant to the Banks
and the Agent after giving effect to the Acquisition Transaction
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(except to the extent such representation or warranty is applicable prior to the
Closing Date) as follows:
8.1. CORPORATE AUTHORITY.
8.1.1. INCORPORATION; GOOD STANDING. Each of the Borrowers and
their Subsidiaries (i) is a corporation duly organized, validly existing
and in good standing under the laws of its state of incorporation, (ii)
has all requisite corporate power to own its property and conduct its
business as now conducted and as presently contemplated, and (iii) is in
good standing as a foreign corporation and is duly authorized to do
business in each jurisdiction where such qualification is necessary
except where a failure to be so qualified would not have a materially
adverse effect on the business, assets or financial condition of such
Borrower or such Subsidiary.
8.1.2. AUTHORIZATION. The execution, delivery and performance of
this Credit Agreement and the other Loan Documents to which each Borrower
or any of its Subsidiaries is or is to become a party and the
transactions contemplated hereby and thereby (i) are within the corporate
authority of such Person, (ii) have been duly authorized by all necessary
corporate proceedings, (iii) do not conflict with or result in any breach
or contravention of any provision of law, statute, rule or regulation to
which such Borrower or any of its Subsidiaries is subject or any
judgment, order, writ, injunction, license or permit applicable to such
Borrower or any of its Subsidiaries and (iv) do not conflict with any
provision of the corporate charter or bylaws of, or any material
agreement or other instrument binding upon, any Borrower or any of their
respective Subsidiaries.
8.1.3. ENFORCEABILITY. The execution and delivery of this Credit
Agreement and the other Loan Documents to which each Borrower or any of
its Subsidiaries is or is to become a party will result in valid and
legally binding obligations of such Person enforceable against it in
accordance with the respective terms and provisions hereof and thereof,
except as enforceability is limited by bankruptcy, insolvency,
reorganization, moratorium or other laws relating to or affecting
generally the enforcement of creditors' rights and except to the extent
that availability of the remedy of specific performance or injunctive
relief is subject to the discretion of the court before which any
proceeding therefor may be brought.
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8.2. GOVERNMENTAL APPROVALS. The consummation of the Acquisition
Transaction and the execution, delivery and performance by each Borrower and any
of its Subsidiaries of the Acquisition Documents or this Credit Agreement and
the other Loan Documents to which such Borrower or any of its Subsidiaries is or
is to become a party and the transactions contemplated thereby do not require
the approval or consent of, or filing with, any governmental agency or authority
other than (i) those already obtained, (ii) routine filings to maintain good
standing and (iii) filings to create or perfect security interests in the
Collateral which will be completed on the Closing Date and periodic filings
required to continue such security interests and any filings required to create
or perfect security interests in Collateral acquired after the Closing Date.
8.3. TITLE TO PROPERTIES; LEASES. Except as indicated on SCHEDULE 8.3
hereto, as of the Closing Date, the Borrowers and their Subsidiaries own all of
the assets reflected in the consolidated balance sheet of the Borrowers and
their Subsidiaries as at the Balance Sheet Date or acquired since that date
including the Acquisition Assets (except property and assets other than
Acquisition Assets sold or otherwise disposed of in the ordinary course of
business since that date), subject to no rights of others, including any
mortgages, leases, conditional sales agreements, title retention agreements,
liens or other encumbrances except Permitted Liens.
8.4. FINANCIAL STATEMENTS AND PROJECTIONS.
8.4.1. FINANCIAL STATEMENTS. There have been furnished to each
of the Banks the consolidated balance sheet of the Borrowers (other than
SSC) and their Subsidiaries (other than Regent Transport) as at the
Balance Sheet Date, and consolidated and consolidating statements of
income of such Borrowers and such Subsidiaries for each of the Fiscal
Year then ended. Such balance sheet and statements of income have been
prepared in accordance with generally accepted accounting principles and
fairly present the financial condition of such Borrowers as at the close
of business on the Balance Sheet Date and the results of operations for
the Fiscal Year then ended. There are no contingent liabilities of such
Borrowers or any of their Subsidiaries as of the Balance Sheet Date
involving material amounts, known to the officers of the Borrowers, which
were not disclosed in the balance sheet as at the Balance Sheet Date and
the notes related thereto or previously disclosed to the Agent in
writing.
8.4.2. PRO FORMA FINANCIAL STATEMENTS. The Borrowers have
delivered to the Banks PRO FORMA balance sheets for the
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Borrowers and their Subsidiaries dated as of the Closing Date which
fairly present the Borrowers' financial condition as of such date after
giving effect to all of the transactions contemplated herein and by the
Acquisition Documents, including, without limitation, the completion of
the Acquisition Transaction.
8.4.3. PROJECTIONS. The projections of the annual balance sheets
and related statements of income and cash flow of the Borrowers and their
Subsidiaries on a consolidated basis, for the 1996 through 2001 Fiscal
Years have been delivered to the Agent on or prior to the Closing Date.
The projections were based when made upon reasonable estimates and
assumptions, have been prepared on the basis of the assumptions stated
therein and as at the Closing Date reflect the reasonable estimates of
the Borrowers and their Subsidiaries of the results of operations and
other information projected therein, it being understood that the
projections are not guarantees of results and that actual results will
vary from the projections, and such variations may be material.
8.4.4. SSC AND REGENT TRANSPORT. There have been delivered to
each of the Banks the Financial Information (as defined in Section 11.5
of the Acquisition Agreement).
8.5. NO MATERIAL CHANGES, ETC. Since the Balance Sheet Date there has
occurred no materially adverse change in the financial condition or business of
the Borrowers (other than SSC) and their Subsidiaries (other than Regent
Transport) as shown on or reflected in the consolidated balance sheet of such
Borrowers and such Subsidiaries as at the Balance Sheet Date, or the
consolidated statement of income for the fiscal year then ended, other than
changes in the ordinary course of business that have not had any materially
adverse effect in the aggregate on the business or financial condition of such
Borrowers and any of such Subsidiaries taken as a whole or changes which are
fairly presented in the PRO FORMA balance sheets which have been delivered to
the Banks pursuant to Section 8.4.2. Since the Balance Sheet Date, the
Borrowers (other than SSC) have not made any Distribution other than as
permitted by Section 10.4. Since December 31, 1995, there has been no material
adverse change in the operations or condition, financial or otherwise, or
prospects of the Business or the Acquisition Assets.
8.6. FRANCHISES, PATENTS, COPYRIGHTS, ETC. Each of the Borrowers and
their Subsidiaries possesses all franchises, patents, copyrights, trademarks,
trade names (including without limitation, as of the Closing Date, "Shore Stop"
and those items listed on SCHEDULE 1.10 of the Acquisition Agreement), licenses
and permits, and rights in respect of
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the foregoing, adequate for the conduct of its business (including the Business)
substantially as now conducted or contemplated to be conducted after the Closing
Date without known conflict with any rights of others.
8.7. LITIGATION. Except as set forth in SCHEDULE 8.7 hereto, there are
no actions, suits, proceedings or investigations of any kind pending or, to the
knowledge of the Borrowers, threatened against the Borrowers or any of their
Subsidiaries before any court, tribunal or administrative agency or board that,
if adversely determined, might, either in any case or in the aggregate,
materially adversely affect the properties, assets, financial condition or
business of the Borrowers and their Subsidiaries or materially impair the right
of the Borrowers and their Subsidiaries, considered as a whole, to carry on
business substantially as now conducted by them, or result in any substantial
liability not adequately covered by insurance, or for which adequate reserves
are not maintained on the consolidated balance sheet of the Borrowers and their
Subsidiaries, or which question the validity of this Credit Agreement or any of
the other Loan Documents, or any action taken or to be taken pursuant hereto or
thereto.
8.8. NO MATERIALLY ADVERSE CONTRACTS, ETC. None of the Borrowers nor
any of their Subsidiaries are subject to any charter, corporate or other legal
restriction, or any judgment, decree, order, rule or regulation that has or is
expected, in the judgment of the Borrowers' officers, to have a materially
adverse effect on the business, assets or financial condition of (i) any of the
Borrowers or (ii) the Borrowers and their Subsidiaries taken as a whole. None
of the Borrowers nor any of their Subsidiaries is a party to any contract or
agreement that has or is expected, in the judgment of the Borrowers' officers,
to have any materially adverse effect on the business of (i) the Borrowers and
(ii) the Borrowers and their Subsidiaries taken as a whole.
8.9. COMPLIANCE WITH OTHER INSTRUMENTS, LAWS, ETC. None of the
Borrowers nor any of their Subsidiaries is in violation of any provision of its
charter documents, bylaws, or any agreement or instrument to which it may be
subject or by which it or any of its properties may be bound or any decree,
order, judgment, statute, license, rule or regulation, in any of the foregoing
cases in a manner that could result in the imposition of substantial penalties
or materially and adversely affect the financial condition, properties or
business of (i) the Borrowers or (ii) the Borrowers and their Subsidiaries taken
as a whole.
8.10. TAX STATUS. The Borrowers and their Subsidiaries (i) have made or
filed all federal and state income and all other tax returns, reports and
declarations required by any jurisdiction to which any of them
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is subject, (ii) have paid, prior to the date on which penalties accrue, all
taxes and other governmental assessments and charges shown or determined to be
due on such returns, reports and declarations, except those being contested in
good faith and by appropriate proceedings and (iii) have set aside on their
books provisions reasonably adequate for the payment of all taxes for periods
subsequent to the periods to which such returns, reports or declarations apply.
Except as disclosed on SCHEDULE 8.10, the officers of the Borrowers know of no
on-going investigation or claim by the taxing authority of any jurisdiction.
8.11. NO EVENT OF DEFAULT. No Default or Event of Default has occurred
and is continuing.
8.12. HOLDING COMPANY AND INVESTMENT COMPANY ACTS. None of the Borrowers
nor any of their Subsidiaries is a "holding company", or a "subsidiary company"
of a "holding company", or an affiliate" of a "holding company", as such terms
are defined in the Public Utility Holding Company Act of 1935; nor is it an
"investment company", or an "affiliated company" or a "principal underwriter" of
an "investment company", as such terms are defined in the Investment Company Act
of 1940.
8.13. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect to
Permitted Liens, there is no financing statement, security agreement, chattel
mortgage, real estate mortgage or other document filed or recorded with any
filing records, registry or other public office, that purports to cover, affect
or give notice of any present or possible future lien on, or security interest
in, any assets or property of the Borrowers or any of their Subsidiaries or any
rights relating thereto.
8.14. PERFECTION OF SECURITY INTEREST. As of the Closing Date, all
filings, assignments, pledges and deposits of documents or instruments have been
made and all other actions have been taken that are necessary or advisable,
under applicable law, to establish and perfect the Agent's security interest in
the Collateral. The Collateral and the Agent's rights with respect to the
Collateral are not subject to any setoff, claims, withholdings or other
defenses. The Borrowers and their Subsidiaries are the owners of the Collateral
free from any lien, security interest, encumbrance and any other claim or
demand, except for Permitted Liens.
8.15. CERTAIN TRANSACTIONS. Except for transactions permitted pursuant
to Section 10.11 and arm's length transactions pursuant to which the Borrowers
or any of their Subsidiaries make payments in the ordinary course of business
upon terms no less favorable than the Borrowers or their Subsidiaries could
obtain from third parties, none of the officers, directors, or employees of the
Borrowers or any of their Subsidiaries is
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presently a party to any transaction with the Borrowers or their Subsidiaries
(other than for services as employees, officers, and directors), including any
contract, agreement or other arrangement providing for the furnishing of
services to or by, providing for rental of real or personal property to or from,
or otherwise requiring payments to or from any officer, director or such
employee or, to the knowledge of the Borrowers, any corporation, partnership,
trust or other entity in which any officer, director, or any such employee has a
substantial interest or is an officer, director, trustee or partner.
8.16. EMPLOYEE BENEFIT PLANS.
8.16.1. IN GENERAL. Each Employee Benefit Plan has been
maintained and operated in compliance in all material respects with the
provisions of ERISA and, to the extent applicable, the Code, including
but not limited to the provisions thereunder respecting prohibited
transactions. As of the Closing Date, the Borrowers have heretofore
delivered to the Agent the most recently completed annual report, Form
5500, with all required attachments, and actuarial statement required to
be submitted under Section 103(d) of ERISA, with respect to each
Guaranteed Pension Plan.
8.16.2. TERMINABILITY OF WELFARE PLANS. Under each Employee
Benefit Plan which is an employee welfare benefit plan within the meaning
of Section 3(1) or Section 3(2)(B) of ERISA, no benefits are due unless
the event giving rise to the benefit entitlement occurs prior to plan
termination (except as required by Title I, Part 6 of ERISA) . The
Borrowers or an ERISA Affiliate, as appropriate, may terminate each such
Plan at any time (or at any time subsequent to the expiration of any
applicable bargaining agreement) in the discretion of the Borrowers or
such ERISA Affiliate without liability to any Person.
8.16.3. GUARANTEED PENSION PLANS. Each contribution required to
be made to a Guaranteed Pension Plan, whether required to be made to
avoid the incurrence of an accumulated funding deficiency, the notice or
lien provisions of Section 302(f) of ERISA, or otherwise, has been timely
made. No waiver of an accumulated funding deficiency or extension of
amortization periods has been received with respect to any Guaranteed
Pension Plan. No liability to the PBGC (other than required insurance
premiums, all of which have been paid) has been incurred by the Borrowers
or any ERISA Affiliate with respect to any Guaranteed Pension Plan and
there has not been any ERISA Reportable Event, or any other event or
condition which presents a material risk of termination of any
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Guaranteed Pension Plan by the PBGC. Based on the latest valuation of
each Guaranteed Pension Plan (which in each case occurred within twelve
months of the date of this representation), and on the actuarial methods
and assumptions employed for that valuation, the aggregate benefit
liabilities of all such Guaranteed Pension Plans within the meaning of
Section 4001 of ERISA did not exceed the aggregate value of the assets of
all such Guaranteed Pension Plans, disregarding for this purpose the
benefit liabilities and assets of any Guaranteed Pension Plan with assets
in excess of benefit liabilities, by more than $100,000.
8.16.4. MULTIEMPLOYER PLANS. None of the Borrowers nor any ERISA
Affiliate has incurred any material liability (including secondary
liability) to any Multiemployer Plan as a result of a complete or partial
withdrawal from such Multiemployer Plan under Section 4201 of ERISA or as
a result of a sale of assets described in Section 4204 of ERISA. None of
the Borrowers nor any ERISA Affiliate has been notified that any
Multiemployer Plan is in reorganization or insolvent under and within the
meaning of Section 4241 or Section 4245 of ERISA or that any
Multiemployer Plan intends to terminate or has been terminated under
Section 4041A of ERISA.
8.17. REGULATIONS U AND X. The proceeds of the Loans shall be used for
the purposes permitted by Section 9.12. The Borrowers will use Letters of
Credit solely to support the purchase of Petroleum Product Inventory and to
secure bonding and performance requirements. No portion of any Loan is to be
used, and no portion of any Letter of Credit is to be obtained, for the purpose
of purchasing or carrying any "margin security" or "margin stock" as such terms
are used in Regulations U and X of the Board of Governors of the Federal Reserve
System, 12 C.F.R. Parts 221 and 224.
8.18. ENVIRONMENTAL COMPLIANCE.
(a) The Borrowers and their Subsidiaries are not, to the best of
their knowledge and belief, in violation of any judgment, decree, order,
law, license, rule or regulation pertaining to environmental matters,
including those arising under the Resource Conservation and Recovery Act,
the Comprehensive Environmental Response, Compensation and Liability Act
of 1980 ("CERCLA"), the Superfund Amendments and Reauthorization Act of
1986, the Federal Water Pollution Control Act, the Federal Clean Air Act,
the Toxic Substances Control Act or any state or local statute,
regulation, ordinance, order or decree relating to health, safety or the
environment ("Environmental Laws"), which violation would have a
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materially adverse effect on the business, assets or financial condition
of the Borrowers or any of their Subsidiaries, except as disclosed on
SCHEDULE 8.18 hereto.
(b) None of the Borrowers nor any of its Subsidiaries has received
written notice that it has been identified by the United States
Environmental Protection Agency as a potentially responsible party under
CERCLA with respect to a site listed on the National Priorities List, 40
C.F.R. Part 300 Appendix B (1986) nor has such Borrower or such
Subsidiary received any notification that any hazardous waste, as defined
by 42 U.S.C. Section 6903(5), any hazardous substances, as defined by 42
U.S.C. Section 9601(14), any "pollutant or contaminant", as defined by 42
U.S.C. Section 9601(33), or any toxic substance, hazardous materials, or
other chemicals or substances regulated by any Environmental Laws
("Hazardous Substances") that it has disposed of has been found at any
site at which a federal or state agency is conducting a remedial
investigation or other action pursuant to any Environmental Law except as
disclosed on SCHEDULE 8.18 hereto.
(c) None of the Real Estate is subject to any applicable
environmental clean-up responsibility law or environmental restrictive
transfer law or regulation, by virtue of the transactions set forth
herein and contemplated hereby.
8.19. SUBSIDIARIES, ETC. Set forth on SCHEDULE 8.19 hereto is a list of
the only Subsidiaries of the Borrowers. Except as set forth on SCHEDULE 8.19,
none of the Borrowers nor any Subsidiary of a Borrower is engaged in any joint
venture or partnership with any Person.
8.20. CAPITAL STRUCTURE. On the Closing Date (i) the authorized capital
stock of Parent consists of 2,000,000 shares of common stock, of which 1,261,542
shares are issued and outstanding and such shares are held by the Persons listed
on SCHEDULE 8.20 hereto in the amounts set forth thereon for each Person, and
300,000 shares of preferred stock, none of which is issued and outstanding, (ii)
the authorized capital stock of Griffith consists solely of 1,000 shares of
common stock, of which 100 shares are issued and outstanding and such shares are
held by the Parent, (iii) the authorized capital stock of King consists solely
of 10,000 shares of common stock, of which 1,000 shares are issued and
outstanding and such shares are held by Griffith, (iv) the authorized capital
stock of SSC consists solely of 1,000 shares of common stock, of which 100
shares are issued and outstanding and such shares are held by Griffith, (v) the
authorized capital stock of Frederick consists solely of 5,000 shares of common
stock, of which 500 shares are issued and outstanding and such
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shares are held by Griffith, (vi) the authorized capital stock of Regent
Transport consists solely of 5,000 shares of common stock, of which 200 shares
are issued and outstanding and such shares are held by SSC, and (vii) there are
no outstanding subscriptions, options, warrants, rights (including "phantom"
stock rights), preemptive rights or other contracts, commitments, understandings
or arrangements, including any right of conversion or exchange under any
outstanding security, instrument or agreement (together, "Options"), obligating
any Borrower to issue or sell any shares of capital stock of such Borrower or to
grant, extend or enter into any Option with respect thereto, and there are no
outstanding contractual obligations of any Borrower to purchase, redeem or
otherwise acquire any shares of capital stock of such Borrower.
8.21. DISCLOSURE. No representation or warranty made by any of the
Borrowers in this Agreement or in any agreement, instrument, document,
certificate, statement or letter furnished to the Agent or any of the Banks by
or on behalf of any of the Borrowers in connection with any of the transactions
contemplated by any of the Loan Documents contains any untrue statement of a
material fact or omits to state a material fact necessary in order to make the
statements contained therein not misleading in light of the circumstances in
which they are made. Except as disclosed in writing to each of the Banks and
the Agent, there is no fact known as to any of the Borrowers which could
reasonably be expected to materially adversely affect, or which would reasonably
be expected to materially adversely affect in the future, the financial
condition, assets or business operations of (i) any of the Borrowers or (ii) the
Borrowers and their Subsidiaries taken as a whole.
9. AFFIRMATIVE COVENANTS OF THE BORROWERS.
Each of the Borrowers covenants and agrees on a joint and several basis
that, so long as any Loan, Unpaid Reimbursement Obligation, Letter of Credit, or
Note is outstanding or any Bank has any obligation to make any Loans or the
Agent has any obligation to issue, extend or renew any Letters of Credit:
9.1. PUNCTUAL PAYMENT. Each of the Borrowers will duly and punctually
pay or cause to be paid the principal and interest on the Loans, all
Reimbursement Obligations, the Letter of Credit Fees, the commitment fees, the
Agent's fee and all other amounts provided for in this Credit Agreement and the
other Loan Documents to which the Borrowers or any of their Subsidiaries are a
party, all in accordance with the terms of this Credit Agreement and such other
Loan Documents.
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9.2. MAINTENANCE OF OFFICE. Griffith will maintain its chief executive
office in Cheverly, Maryland, King will maintain its chief executive office in
Camden, Delaware and SSC will maintain its chief executive office in 36082
Lankford Highway, Belle Haven, Virginia 23306, or, in each case, at such other
place in the United States of America as such Borrower shall designate upon
thirty days prior written notice to the Agent, where notices, presentations and
demands to or upon the Borrowers in respect of the Loan Documents to which the
Borrowers are a party may be given or made.
9.3. RECORDS AND ACCOUNTS. The Borrowers will (i) keep, and cause each
of their Subsidiaries to keep, true and accurate records and books of account in
which full, true and correct entries will be made in accordance with generally
accepted accounting principles and (ii) maintain adequate accounts and reserves
for all taxes (including income taxes), depreciation, depletion, obsolescence
and amortization of their properties and the properties of their Subsidiaries,
contingencies, and other reserves.
9.4. FINANCIAL STATEMENTS, CERTIFICATES AND INFORMATION. The Borrowers
will deliver to each of the Banks:
(a) as soon as practicable, but in any event not later than ninety
(90) days after the end of each Fiscal Year of the Borrowers, the
consolidated balance sheet of the Borrowers and their Subsidiaries and
the related consolidated statement of income and consolidated statement
of cash flow and consolidating statement of income and consolidating
statement of cash flow for such year, each setting forth in comparative
form the figures for the previous Fiscal Year and all such consolidated
and consolidating statements to be in reasonable detail, prepared in
accordance with generally accepted accounting principles, and certified
without qualification by Ernst & Young or Arthur Andersen or by other
independent certified public accountants satisfactory to the Agent,
together with a written statement from such accountants to the effect
that they have read a copy of this Credit Agreement, and that, in making
the examination necessary to said certification, they have obtained no
knowledge of any Default or Event of Default, or, if such accountants
shall have obtained knowledge of any then existing Default or Event of
Default they shall disclose in such statement any such Default or Event
of Default; PROVIDED that such accountants shall not be liable to the
Banks for failure to obtain knowledge of any Default or Event of Default;
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(b) as soon as practicable, but in any event within thirty (30)
days after the end of each month in each Fiscal Year of the Borrowers,
copies of the unaudited monthly consolidated balance sheet of the
Borrowers and their Subsidiaries as at the end of such month and the
related unaudited consolidated statements of income and cash flow of the
Borrowers for such month, each prepared in accordance with generally
accepted accounting principles (except for the absence of footnotes), and
reports setting forth the Borrowers' sales volumes and margins by class
of trade for such month, together with a certification by the principal
financial or accounting officer of the Borrowers that the information
contained in such financial statements and reports fairly presents the
financial condition and performance of the Borrowers and their
Subsidiaries on the date thereof (subject to year-end adjustments);
(c) simultaneously with the delivery of the financial statements
referred to in subsections (a) and (b) above, (i) a statement certified
by the principal financial or accounting officer of the Borrowers in
substantially the form of EXHIBIT K hereto and setting forth in
reasonable detail computations evidencing compliance with the covenants
contained in Section 11 and (if applicable) reconciliations to reflect
changes in generally accepted accounting principles since the Balance
Sheet Date, and (ii) a schedule setting forth all Distributions made
during the period covered by such financial statements;
(d) no later than the fifth Business Day following the fifteenth
(15th) day and the last day of each calendar month, a Borrowing Base
Report setting forth the Borrowing Base as at such fifteenth (15th) day
or last day of each month, as applicable, together with an accounts
receivable aging report as of such date;
(e) within sixty (60) days of the beginning of each Fiscal Year of
the Borrowers, or at such earlier time as the Agent may reasonably
request, the annual operating budget for the Borrowers and their
Subsidiaries for such Fiscal Year as prepared by management;
(f) contemporaneously with the filing or mailing thereof, copies
of all material of a financial nature filed with the Securities and
Exchange Commission (including any registration statements) or sent to
the stockholders of the Borrowers or the holders of any Subordinated
Debt; and
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(g) from time to time such other financial data and information
(including accountants, management letters) as the Agent or any Bank may
reasonably request and copies of any special audits of any Borrower.
9.5. NOTICES.
9.5.1. DEFAULTS. The Borrowers will promptly notify the Agent
and each of the Banks in writing of the occurrence of any Default or
Event of Default. If any Person shall give any notice or take any other
action in respect of a claimed default (whether or not constituting an
Event of Default) under this Credit Agreement or any other note, evidence
of indebtedness, indenture or other obligation to which or with respect
to which the Borrowers or any of their Subsidiaries are a party or
obligor, whether as principal, guarantor, surety or otherwise, the
Borrowers shall forthwith give written notice thereof to the Agent and
each of the Banks, describing the notice or action and the nature of the
claimed default.
9.5.2. ENVIRONMENTAL EVENTS. The Borrowers will promptly give
notice to the Agent and each of the Banks (i) of any violation of any
Environmental Law that the Borrowers or any of their Subsidiaries report
in writing or which is reportable by such Person in writing (or for which
any written report supplemental to any oral report is made) to any
federal, state or local environmental agency and (ii) upon becoming aware
thereof, of any inquiry, proceeding, investigation, or other action,
including a notice from any agency of potential environmental liability,
or any federal, state or local environmental agency or board, that has
the potential to materially affect the assets, liabilities, financial
conditions or operations of the Borrowers or any of their Subsidiaries,
or the Agent's mortgages or security interests pursuant to the Security
Documents.
9.5.3. NOTIFICATION OF CLAIM AGAINST COLLATERAL. The Borrowers
will, promptly upon becoming aware thereof, notify the Agent and each of
the Banks in writing of any setoff, claims (including, with respect to
the Real Estate, environmental claims), withholdings or other defenses to
which any of the Collateral, or the Agent's rights with respect to the
Collateral, are subject.
9.5.4. NOTICE OF LITIGATION AND JUDGMENTS. The Borrowers will,
and will cause each of their Subsidiaries to, give notice to the Agent
and each of the Banks in writing within fifteen
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(15) days of becoming aware of any litigation or proceedings threatened
in writing or any pending litigation and proceedings affecting the
Borrowers or any of their Subsidiaries or to which the Borrowers or any
of their Subsidiaries are or are to become a party involving an uninsured
claim against the Borrowers or any of their Subsidiaries that could
reasonably be expected to have a materially adverse effect on the
Borrowers or any of their Subsidiaries and stating the nature and status
of such litigation or proceedings. The Borrowers will, and will cause
each of their Subsidiaries to, give notice to the Agent and each of the
Banks, in writing, in form and detail satisfactory to the Agent, within
ten (10) days of any judgment not covered by insurance, final or
otherwise, against the Borrowers or any of their Subsidiaries in an
amount in excess of $100,000.
9.6. CORPORATE EXISTENCE; MAINTENANCE OF PROPERTIES. The Borrowers will
do or cause to be done all things necessary to preserve and keep in full force
and effect their corporate existence, rights and franchises and those of their
Subsidiaries. The Borrowers will cause all of their properties and those of
their Subsidiaries used or useful in the conduct of their business or the
business of their Subsidiaries to be maintained and kept in good condition,
repair and working order (ordinary wear and tear excepted) and supplied with all
necessary equipment, and (ii) will cause to be made all necessary repairs,
renewals, replacements, betterments and improvements thereof, all as in the
judgment of the Borrowers may be necessary so that the business carried on in
connection therewith may be properly and advantageously conducted at all times,
and (iii) will, and will cause each of their Subsidiaries to, continue to
engage in the businesses permitted by Section 10.12; PROVIDED that nothing in
this Section 9.6 shall prevent the Borrowers from discontinuing the operation
and maintenance of any of their properties or any of those of their Subsidiaries
if such discontinuance is, in the judgment of the Borrowers, desirable in the
conduct of their business and that do not in the aggregate materially adversely
affect the business of the Borrowers and their Subsidiaries on a consolidated
basis.
9.7. INSURANCE. The Borrowers will, and will cause each of their
Subsidiaries to, maintain with financially sound and reputable insurers
insurance naming the Agent as loss payee (except in the case of public liability
insurance) with respect to their properties and businesses against such
casualties and contingencies as shall be in accordance with the general
practices of businesses engaged in similar activities in similar geographic
areas and in amounts, containing such terms, in such forms and for such periods
as may be reasonable and prudent and in accordance with the terms of the
Security Documents; PROVIDED that (a) in no event
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will the deductible amount in respect of any covered loss exceed an amount which
is usual and customary for similar businesses engaged in similar activities, (b)
insurance with respect to inventory will at all times be maintained in an amount
at least equal to its fair market value from time to time, (c) all insurance
shall be in such form, for such periods and written by such companies as may be
satisfactory to the Agent, (d) all policies of insurance shall provide for ten
(10) days' minimum cancellation notice to the Agent, (e) in the event of any
failure by the Borrowers or their Subsidiaries to provide and maintain insurance
as required herein, the Agent may provide such insurance and charge the amount
thereof to the Borrowers and the Borrowers hereby promise to pay to the Agent on
demand the amount of any disbursements made by the Agent for such purpose, and
(f) the Borrowers shall furnish to the Agent certificates or other evidence
satisfactory to the Agent of compliance with the foregoing provisions.
9.8. INTEREST RATE PROTECTION. The Borrowers will maintain interest
rate cap, collar or swap agreements ("Interest Rate Protection Agreements"), as
shall be necessary to effectively cap or fix the interest cost to the Borrowers
on at least 50% of the initial Outstanding principal amount of the Term Loans on
terms satisfactory to the Majority Banks for such period of time as the
Borrowers and the Agent shall agree.
9.9. TAXES, ETC. The Borrowers will, and will cause each of their
Subsidiaries to, duly pay and discharge, or cause to be paid and discharged,
before the imposition of penalties, all taxes, assessments and other
governmental charges imposed upon them and their real properties, sales and
activities, or any part thereof, or upon the income or profits therefrom, as
well as all claims for labor, materials, or supplies that if unpaid might by law
become a lien or charge upon any of their property; PROVIDED that any such tax,
assessment, charge, levy or claim need not be paid if the validity or amount
thereof shall currently be contested in good faith by appropriate proceedings
and if the Borrowers or their Subsidiaries shall have set aside on their books
adequate reserves with respect thereto; and PROVIDED FURTHER that the Borrowers
and each of their Subsidiaries will pay all such taxes, assessments, charges,
levies or claims forthwith upon the commencement of proceedings to foreclose any
lien that may have attached as security therefor.
9.10. INSPECTION OF PROPERTIES AND BOOKS, ETC.
9.10.1 GENERAL. The Borrowers shall permit the Banks, through
the Agent or any of the Banks' other designated representatives, to visit
and inspect any of the properties of the Borrowers or any of their
Subsidiaries, to examine the books of
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account of the Borrowers (and to make copies thereof and extracts
therefrom), and to discuss the affairs, finances and accounts of the
Borrowers and their Subsidiaries with, and to be advised as to the same
by their officers, all at such reasonable times and intervals during
normal business hours as the Agent or any Bank may reasonably request.
9.10.2. COMMERCIAL FINANCE EXAMINATION. At least once each
Calendar Year, or more frequently as determined by the Agent if an Event
of Default shall have occurred and be continuing, the Agent has the right
to conduct or cause to be conducted by an independent auditor or any
employee or agent of the Agent, a commercial finance examination
including without limitation an audit examination of the inventory and
Accounts Receivable of the Borrowers and other components included in the
Borrowing Base, the report of which examination shall indicate whether or
not the information set forth in the Borrowing Base Report most recently
delivered is accurate and complete in all material respects (including
with respect to such accounts receivable verification of the amount,
aging, identity and credit of the respective account debtors and the
billing practices of the Borrowers or their applicable Subsidiary and
with respect to inventory verification as to the value, location and
respective types and other matters). All such collateral reports shall
be conducted and made at the expense of the Borrowers.
9.10.3. APPRAISALS. No more frequently than once each Calendar
Year, or more frequently as determined by the Agent if an Event of
Default shall have occurred and be continuing, upon the request of the
Agent, the Borrowers will obtain and deliver to the Agent appraisal
reports in form and substance and from appraisers satisfactory to the
Agent, stating (i) the then current fair market, orderly liquidation and
forced liquidation values of all or any portion of the Real Estate owned
by the Borrowers and their Subsidiaries and (ii) the then current
business value of each of the Borrowers and their Subsidiaries. All such
appraisals shall be conducted and made at the expense of the Borrowers.
9.10.4. COMMUNICATIONS WITH ACCOUNTANTS. The Borrowers authorize
the Agent and, if accompanied by the Agent, the Banks to communicate
directly with the Borrowers' independent certified public accountants and
authorizes such accountants to disclose to the Agent and the Banks any
and all financial statements and other supporting financial documents and
schedules including copies of any management letter with respect to the
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business, financial condition and other affairs of the Borrowers or any
of their Subsidiaries. At the request of the Agent, the Borrowers shall
deliver a letter addressed to such accountants instructing them to comply
with the provisions of this Section 9.10.4.
9.10.5. COMPLIANCE WITH LAWS, CONTRACTS, LICENSES, AND
PERMITS. Each of the Borrowers will, and will cause each of their
Subsidiaries to, comply with (i) the applicable laws and regulations
wherever their business is conducted, including all Environmental Laws,
(ii) the provisions of their charter documents and by-laws, (iii) all
agreements and instruments by which they or any of their properties may
be bound and (iv) all applicable decrees, orders, and judgments, except
where the failure to so comply would not have a material adverse effect
on such Borrower. If any authorization, consent, approval, permit or
license from any officer, agency or instrumentality of any government
shall become necessary or required in order that any Borrower or any of
its Subsidiaries may fulfill any of its obligations hereunder or any of
the other Loan Documents to which such Borrower or such Subsidiary is a
party, the Borrowers will, or (as the case may be) will cause such
Subsidiary to, immediately take or cause to be taken all reasonable steps
within the power of the Borrowers or their Subsidiaries to obtain such
authorization, consent, approval, permit or license and furnish the Agent
and the Banks with evidence thereof.
9.11. EMPLOYEE BENEFIT PLANS. The Borrowers will (i) promptly upon
filing the same with the Department of Labor or Internal Revenue Service upon
request of the Agent, furnish to the Agent a copy of the most recent actuarial
statement required to be submitted under Section 103(d) of ERISA and Annual
Report, Form 5500, with all required attachments, in respect of each Guaranteed
Pension Plan and (ii) promptly upon receipt or dispatch, furnish to the Agent
any notice, report or demand sent or received in respect of a Guaranteed Pension
Plan under Sections 302, 4041, 4042, 4043, 4063, 4065, 4066 and 4068 of ERISA,
or in respect of a Multiemployer Plan, under Sections 4041A, 4202, 4219, 4242,
or 4245 of ERISA.
9.12. USE OF PROCEEDS. The Borrowers will use the proceeds of the
Revolving Credit Loans solely (a) to finance acquisitions permitted by Section
10.5.1 hereof; and (b) for working capital and general corporate purposes. The
Borrowers will have used the proceeds of the Term Loans Outstanding immediately
prior to the Closing Date as provided in Section 9.12 of the Third Amended and
Restated Credit Agreement. The Borrowers will use the proceeds of the Term
Loans advanced on the Closing Date solely (a) to finance the Transaction Costs,
(b) to finance the Borrowers purchase of the Acquisition Assets, (c) to finance
certain Non-Discretionary Capital
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Expenditures required to bring the Acquisition Assets into compliance with
Environmental Laws and (d) for working capital and general corporate purposes.
The Borrowers will use Letters of Credit solely to support the purchase of
Petroleum Product Inventory, and to secure the Borrowers' bonding and
performance obligations.
9.13. FURTHER ASSURANCES. The Borrowers will cooperate with the Banks
and the Agent and execute such further instruments and documents as the Banks or
the Agent shall reasonably request to carry out to their satisfaction the
transactions contemplated by this Credit Agreement and the other Loan Documents.
10. CERTAIN NEGATIVE COVENANTS OF THE BORROWERS.
The Borrowers jointly and severally covenant and agree that, so long as
any Loan, Unpaid Reimbursement Obligation, Letter of Credit or Note is
outstanding or any Bank has any obligation to make any Loans or the Agent has
any obligations to issue, extend or renew any Letters of Credit:
10.1. RESTRICTIONS ON INDEBTEDNESS. The Borrowers will not, and will not
permit any of their Subsidiaries to, create, incur, assume, guarantee or be or
remain liable, contingently or otherwise, with respect to any Indebtedness other
than:
(a) Indebtedness to the Banks and the Agent arising under any of
the Loan Documents;
(b) current liabilities of the Borrowers or their Subsidiaries
incurred in the ordinary course of business not incurred through (i) the
borrowing of money, or (ii) the obtaining of credit except for credit on
an open account basis customarily extended and in fact extended in
connection with normal purchases of goods and services;
(c) Indebtedness in respect of taxes, assessments, governmental
charges or levies and claims for labor, materials and supplies to the
extent that payment therefor shall not at the time be required to be made
in accordance with the provisions of Section 9.9;
(d) Indebtedness in respect of judgments or awards in an amount
and for a period not resulting in an Event of Default;
(e) endorsements for collection, deposit or negotiation and
warranties of products or services, in each case incurred in the ordinary
course of business;
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(f) Subordinated Debt in an amount not exceeding $35,000,000 in
aggregate principal amount at any time outstanding;
(g) obligations incurred after the Closing Date under Capitalized
Leases and Indebtedness incurred after the Closing Date in connection
with the acquisition after the Closing Date of any real or personal
property by the Borrowers or their Subsidiaries (but not including
Indebtedness evidenced by Permitted Seller Notes), PROVIDED that the
aggregate principal amount of such Indebtedness shall not exceed (i)
$1,600,000 outstanding at any one time and (ii) the lesser of the
purchase price for such property or the fair market value of such
property at the time of such acquisition;
(h) Indebtedness incurred in connection with a Permitted
Acquisition (other than the Acquisition Transaction) which is evidenced
by Permitted Seller Notes (other than the Regent Seller Note) in an
aggregate principal amount not to exceed (i) $500,000 outstanding at any
one time and (ii) the lesser of the purchase price for the property so
acquired or the fair market value of such property at the time of such
Permitted Acquisition;
(i) Indebtedness existing on the Closing Date and listed and
described on SCHEDULE 10.1 hereto;
(j) Indebtedness incurred in connection with Interest Rate
Protection Agreements and other hedging transactions which are permitted
under Section 10.10;
(k) Indebtedness of the Borrowers to each other, or of a
Subsidiary of any Borrower to such Borrower;
(l) Indebtedness in respect of guaranties by the Borrowers or
their Subsidiaries of Indebtedness incurred by contractors or dealers
with whom the Borrowers or their Subsidiaries do business; PROVIDED that
such guaranties are entered into in the ordinary course of business
consistent with past practices and the liabilities thereunder do not
exceed at any time an aggregate amount equal to $1,000,000 LESS the
amount of any Indebtedness of the type described in this Section 10.1(l)
which was incurred subsequent to December 14, 1994 and prior to the
Closing Date but EXCLUDING for all purposes of this Section 10.1(l) the
amount of Indebtedness of a similar type existing on December 14, 1994
and permitted under Section 10.1(i);
(m) Indebtedness of any Borrower or its Subsidiaries consisting of
guaranties of Indebtedness of the other Borrowers or the other
Subsidiaries that is otherwise permitted under this Section 10.1;
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(n) Indebtedness in respect of guaranties of trade payables issued
by the Borrowers or any of their Subsidiaries in the ordinary course of
business consistent with past practices;
(o) Indebtedness of the Borrowers under the Regent Seller Note;
provided that the Regent Seller Note shall be in form and substance
acceptable to the Agent; and
(p) Refinancing Indebtedness incurred in exchange for, or the net
proceeds of which are used to extend, refinance, renew, replace, defease
or refund, other Indebtedness that is permitted to be outstanding
hereunder.
10.2. RESTRICTIONS ON LIENS. The Borrowers will not, and will not permit
any of their Subsidiaries to, (i) create or incur or suffer to be created or
incurred or to exist any lien, encumbrance, mortgage, pledge, charge,
restriction or other security interest of any kind upon any of their property or
assets of any character whether now owned or hereafter acquired, or upon the
income or profits therefrom; (ii) transfer any of such property or assets or the
income or profits therefrom for the purpose of subjecting the same to the
payment of Indebtedness or performance of any other obligation in priority to
payment of their general creditors; (iii) acquire, or agree or have an option to
acquire, any property or assets upon conditional sale or other title retention
or purchase money security agreement, device or arrangement; (iv) suffer to
exist for a period of more than thirty (30) days after the same shall have been
incurred any Indebtedness or claim or demand against it that if unpaid might by
law or upon bankruptcy or insolvency, or otherwise, be given any priority
whatsoever over their general creditors; or (v) sell, assign, pledge or
otherwise transfer any accounts, contract rights, general intangibles, chattel
paper or instruments, with or without recourse; PROVIDED that the Borrowers and
any of their Subsidiaries may create or incur or suffer to be created or
incurred or to exist:
(a) liens in favor of the Agent for the benefit of the Banks and
the Agent under the Loan Documents;
(b) liens to secure taxes, assessments and other government
charges or liens on properties to secure claims for labor, material or
supplies in respect of Indebtedness permitted by Section 10.1(c);
(c) deposits or pledges made in connection with, or to secure
payment of, workers' compensation, unemployment insurance, old age
pensions or other social security obligations;
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(d) liens on properties in respect of judgments or awards, the
Indebtedness with respect to which is permitted by Section 10.1(d);
(e) liens of carriers, warehousemen, mechanics and materialmen,
and other like liens on properties provided that (i) such liens are in
existence less than 120 days from the date of creation thereof in respect
of obligations not overdue or (ii) such liens are being contested in good
faith and by appropriate proceedings and adequate reserves with respect
thereto are maintained on the books of the Borrowers in accordance with
generally accepted accounting principles;
(f) encumbrances on Real Estate consisting of easements, rights of
way, zoning restrictions, restrictions on the use of real property and
defects and irregularities in the title thereto, landlord's or lessor's
liens under leases to which any Borrower or any of its Subsidiaries is a
party, and other minor liens or encumbrances none of which in the opinion
of the Borrowers interferes materially with the use of the property
affected in the ordinary conduct of the business of the Borrowers and
their Subsidiaries, which defects do not individually or in the aggregate
have a materially adverse effect on the business of any Borrower
individually or of the Borrowers and their Subsidiaries on a consolidated
basis;
(g) purchase money security interests in or purchase money
mortgages on real or personal property acquired after the Closing Date to
secure purchase money Indebtedness of the type and amount permitted by
Section 10.1(g) and (h), incurred in connection with the acquisition of
such property, which security interests or mortgages cover only the real
or personal property so acquired;
(h) liens existing on the Closing Date and listed on SCHEDULE 10.2
hereto;
(i) liens on any Mortgaged Properties which are permitted by the
Mortgages;
(j) liens on the properties of any Subsidiary of a Borrower in
favor of any Borrower, PROVIDED that such lien is subordinated in all
respects to the liens in favor of the Agent;
(k) liens in favor of the Trustee under the Subordinated Debt
Documents on payments made to such Trustee for the benefit of the
holders of Senior Subordinated Debt to secure the payment of the
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Trustee's fees and expenses pursuant to the Subordinated Debt Documents
as in effect on the Closing Date;
(l) liens securing the performance of bids, trade contracts (other
than borrowed money), leases, statutory obligations, surety or appeal
bonds, performance bonds and other obligations of a like nature incurred
in the ordinary course of business; and
(m) liens on the Mortgaged Premises securing the Regent Seller
Note, provided that such liens are in form and substance acceptable to
the Agent.
10.3. RESTRICTIONS ON INVESTMENTS. The Borrowers will not, and will not
permit any of their Subsidiaries to, permit to exist or to remain outstanding
any Investment except Investments in:
(a) Cash and Cash Equivalents;
(b) Investments existing on the Closing Date and listed on
SCHEDULE 10.3 hereto;
(c) Investments consisting of promissory notes or stock or other
securities received as proceeds of asset dispositions permitted by
Section 10.5.2;
(d) Investments by the Borrowers in Subsidiaries of the Borrowers
existing on the Closing Date and Investments occurring on the Closing
Date consisting of the contribution by Griffith to SSC of the proceeds of
Loans in order for SSC to finance the purchase of the Acquisition Assets
and to pay the Transaction Costs;
(e) Investments consisting of arrangements between the Borrowers
or any of their Subsidiaries and dealers who are not Affiliates of the
Borrowers or any of their Subsidiaries involving loans or advances of, or
similar arrangements with respect to, cash, equipment or inventory, to
secure or maintain supply agreements or to finance purchases of equipment
or inventory, in each case, in the ordinary course of business consistent
with the past practices of the Borrowers or such Subsidiaries and
Investments by the Borrowers or any of their Subsidiaries resulting from
loans or sales of equipment on an installment basis to dealers, in each
case, in the ordinary course of business consistent with the past
practices of the Borrowers or such Subsidiary; PROVIDED, that the
aggregate amount of any Investments made after the Closing Date permitted
under this Section 10.3(e) together with any other Capital Expenditures
permitted hereunder (excluding installment sales) do not exceed the
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amount permitted for Capital Expenditures under Section 11.5 in any Fiscal
Year;
(f) Investments by the Borrowers or any of their Subsidiaries
resulting from loans or sales of equipment to customers or contractors
on an installment basis, in the ordinary course of business consistent
with the past practices of the Borrowers or such Subsidiary;
(g) Permitted Acquisitions;
(h) Investments by one Borrower in another Borrower;
(i) Investments in respect of Interest Rate Protection
Agreements and Investments consisting of the purchase and sale of
commodities contracts which are permitted under Section 10.10;
(j) Investments consisting of advances to employees or officers
of the Borrowers or their Subsidiaries other than such employees or
officers who are also officers, directors or principals of Chartwell
Investments Inc., not to exceed $100,000 at any time outstanding;
(k) Investments consisting of Accounts Receivable; prepaid
expenses in the ordinary course; negotiable instruments and other
similar instruments held for collection; and lease, utility, workers'
compensation, performance and other similar deposits;
(l) Investments consisting of stock, obligations or securities
received in settlement of debts owing to the Borrowers or any
Subsidiary or as a result of bankruptcy or insolvency proceedings or
upon the foreclosure, perfection or enforcement of any lien in favor
of the Borrowers or such Subsidiary, in each case as to the debt owing
to the Borrowers or such Subsidiary that arose in the ordinary course
of business of the Borrowers or such Subsidiary;
(m) Investments in Approved Subsidiaries in an amount not to
exceed the amount required pursuant to Section 2.1(b)(iii);
(n) Investments consisting of guaranties to the extent such
guaranties are permitted under Section 10.1;
(o) Investments by any Borrower in Frederick or Regent Transport
not to exceed $200,000 in aggregate amount solely for the purpose of
funding operating expenses of Frederick consistent with past practices
or the operating expenses of Regent Transport; and
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(p) Investments by any Borrower in Regent Transport in order to
finance the purchase by Regent Transport of Petroleum Product
Inventory, whether funded by Loans or not.
10.4 DISTRIBUTIONS. None of the Borrowers will make any Distributions
other than (i) Distributions from King or SSC to Griffith, from Frederick to
Griffith and from Regent Transport to SSC, (ii) Distributions to the Parent not
to exceed $200,000 in any Calendar Year and $350,000 in the aggregate for the
repurchase, redemption or other acquisition or retirement for value of any
capital stock (including all warrants, or options) of the Parent held by any
member or former member of the Parent's or the Borrowers' management, PROVIDED
that no Default or Event of Default shall have occurred and be continuing
immediately prior to or after such Distribution, (iii) Distributions to the
Parent for the payment of out-of-pocket expenses incurred by the Parent in the
ordinary course of business to Persons who are not Affiliates of the Parent;
PROVIDED that such Distributions shall not exceed $100,000 in aggregate in any
Fiscal Year, (iv) so long as no Default or Event of Default has occurred and is
continuing, Distributions to the Parent for the payment of ordinary and
customary registration expenses actually incurred by the Parent to register
shares of the Parent's common stock, (v) Distributions to the Parent to comply
with the ongoing reporting requirements under the Securities Exchange Act of
1934, as amended and (vi) Distributions to the Parent for the payment of
consolidated federal, state and local income taxes and franchise taxes required
to be paid on a cash basis by the Parent on behalf of any of the Borrowers or
the Subsidiaries of the Borrowers. None of King, SSC or Frederick will agree to
any restriction or encumbrance on its ability to make Distributions to Griffith
and Regent Transport will not agree to any restriction or encumbrance on its
ability to make Distributions to SSC.
10.5. MERGER, CONSOLIDATION AND DISPOSITION OF ASSETS.
10.5.1. MERGERS AND ACQUISITIONS. The Borrowers will not, and
will not permit any of their Subsidiaries to, become a party to any
merger or consolidation, or agree to or effect any asset acquisition
or stock acquisition other than (a) the Acquisition Transaction to be
completed pursuant to the Acquisition Documents, (b) the acquisition
of assets that would not be accounted for as a Capital Expenditure in
accordance with generally accepted accounting principles in the
ordinary course of business, (c) the acquisition of assets in
connection with exchanges or swaps of assets for assets of
substantially equal value (when aggregated with the cash component
paid to or by the Borrowers in connection with such transaction)
provided that (i) immediately after giving effect
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thereto no Default or Event of Default shall occur, or be projected to
occur as a consequence of such acquisition, and (ii) if the value of
such swapped assets is greater than $3,000,000, such exchange or swap
transaction shall be pursuant to documentation satisfactory to the
Agent and the Majority Banks and (d) the acquisition of other assets
so long as Capital Expenditures attributable to such acquisitions are
either (i) permitted pursuant to Section 11.5 hereof, or (ii) financed
by Permitted Seller Notes; PROVIDED that no such acquisition shall be
permitted under clause (d) hereof unless (A) immediately after giving
effect thereto no Default or Event of Default shall occur, or be
projected to occur hereunder as a consequence of such acquisition
hereof, (B) if the assets acquired constitute a business, such
business shall be a permitted business under Section 10.12 hereof and
the Borrowers shall have delivered to the Agent certified PRO FORMA
financial statements and projections taking into account such
acquisition, (C) the Borrowers shall be Solvent after giving effect to
such acquisition and any Indebtedness acquired or incurred in
connection therewith, and (D) if any Borrower forms a new Subsidiary
to consummate such acquisition, and such Investment is otherwise
permitted hereunder, the stock of such Subsidiary shall be pledged to
the Agent and such Subsidiary shall execute and deliver a guaranty of
the Obligations in favor of the Banks and the Agent substantially in
the form of the Subsidiary Guaranty; and PROVIDED, FURTHER, that no
acquisition of assets shall be permitted under this Section 10.5.1
unless all acquired assets shall be pledged in favor of the Agent as
security for the payment and performance of the Obligations pursuant
to documentation satisfactory to the Agent and all filings and other
actions which the Agent deems necessary or advisable to create a
first-priority lien in such assets in favor of the Agent shall have
been taken, subject to Permitted Liens.
10.5.2. DISPOSITION OF ASSETS. The Borrowers will not, and
will not permit any of their Subsidiaries to, become a party to or
agree to or effect any disposition of assets, other than:
(a) dispositions of assets of the type described; in
Section 4.5.2(b)(i) through (iv); PROVIDED that any prepayment of
the Term Loans is made as required by such section; or
(b) such other sale, transfer or disposition of assets
(other than those assets described in Section 10.5.2(a));
PROVIDED that (i) at least 75% of the consideration therefor
received by the Borrowers shall be in the form of cash, (ii) any
non-cash proceeds received by the Borrowers shall be pledged to
the
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Agent on terms satisfactory to the Agent, (iii) the proceeds of
such sale, transfer or disposition are applied as required by
Section 4.5.2 and (iv) the Agent and the Super Majority Banks
shall have given their prior written consent to such sale,
transfer or disposition which consent may be given or withheld in
the sole discretion of the Agent and the Super Majority Banks if
(A) the value of the assets sold in such sales exceeds $1,000,000
in any Calendar Year, (B) the value of assets sold in any single
transaction or series of related transactions exceeds $1,000,000
or (C) the value of all assets sold hereunder during the term of
this Agreement exceeds $3,000,000; or
(c) any sale, transfer or disposition of assets in
connection with exchanges or swaps of assets of the type
permitted pursuant to Section 10.5.1(c).
In the event any Collateral is disposed of in accordance with
this Section 10.5.2, the Agent may release its security interest in
such Collateral without the consent of any of the Banks.
10.6. SALE AND LEASEBACK. The Borrowers will not, and will not
permit any of their Subsidiaries to, enter into any arrangement, directly or
indirectly, whereby the Borrowers or any of their Subsidiaries shall sell or
transfer any property owned by it in order then or thereafter to lease such
property or lease other property that the Borrowers or any of their Subsidiaries
intends to use for substantially the same purpose as the property being sold or
transferred.
10.7. COMPLIANCE WITH ENVIRONMENTAL LAWS. The Borrowers will
not, and will not permit any of their Subsidiaries to, conduct any activity at
any Real Estate or use any Real Estate in any manner that would violate any
Environmental Law or bring such Real Estate in violation of any Environmental
Law if such violation would have a material adverse effect on such Borrower or
the Borrowers and their Subsidiaries taken as a whole.
10.8. SUBORDINATED DEBT. The Borrowers will not, and will not
permit any of their Subsidiaries to, amend, supplement or otherwise modify the
terms of any Subordinated Debt or prepay, redeem, repurchase or otherwise
acquire any Subordinated Debt, or offer to prepay, redeem, repurchase or
otherwise acquire any Subordinated Debt, or make any payment on account of any
principal or premium payable in connection with the prepayment, redemption or
retirement of Subordinated Debt or agree to the modification or amendment of any
of the terms of payment of,
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or amortization or sinking fund requirements applicable to the Subordinated
Debt; PROVIDED, that the Borrowers may incur Refinancing Indebtedness and apply
the proceeds thereof to any Subordinated Debt in accordance with Section
10.1(p). The Borrowers will not designate any Indebtedness or other obligations
as "Designated Senior Debt" under the terms of the Indenture or any of the other
Subordinated Debt Documents.
10.9. EMPLOYEE BENEFIT PLANS. No Borrower nor any ERISA Affiliate
will
(a) engage in any "prohibited transaction" within the meaning of
Section 406 of ERISA or Section 4975 of the Code which could result in
a material liability for the Borrowers or any of their Subsidiaries;
or
(b) permit any Guaranteed Pension Plan to incur an "accumulated
funding deficiency", as such term is defined in Section 302 of ERISA,
whether or not such deficiency is or may be waived; or
(c) fail to contribute to any Guaranteed Pension Plan to an
extent which, or terminate any Guaranteed Pension Plan in a manner
which, could result in the imposition of a lien or encumbrance on the
assets of the Borrowers pursuant to Section 302(f) or Section 4068 of
ERISA; or
(d) permit or take any action which would result in the
aggregate benefit liabilities (with the meaning of Section 4001 of
ERISA) of all Guaranteed Pension Plans exceeding the value of the
aggregate assets of such Plans, disregarding for this purpose the
benefit liabilities and assets of any such Plan with assets in excess
of benefit liabilities, by more than the amount set forth in Section
8.16.3.
10.10. PROHIBITED COMMODITY TRANSACTIONS. The Borrowers will not,
and will not permit any of their Subsidiaries to, purchase or sell any
commodities futures contracts; PROVIDED, that the Borrowers or their
Subsidiaries may purchase and sell commodities contracts on national exchanges
for the sale or purchase of petroleum products in connection with hedging
transactions entered into in the ordinary course of the business of any Borrower
or any Subsidiary of a Borrower that are (a) economically appropriate and
consistent with such Borrower's or such Subsidiary's business, (b) used to
offset price risks incidental to such Borrower's or such Subsidiary's cash or
spot transactions in petroleum products, and (c) established and liquidated in
accordance with sound commercial practices.
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10.11. TRANSACTIONS WITH AFFILIATES. Without the prior written consent
of the Agent and each of the Banks, none of the Borrowers, nor any of their
Subsidiaries, will sell, lease, transfer or otherwise dispose of any of its
properties or assets to, or purchase any property or assets from, or enter into
any contract, agreement, understanding, loan, advance or guarantee with, or for
the benefit of, any Affiliate (each of the foregoing, an "Affiliate
Transaction"), unless (a) such Affiliate Transaction is on terms that are no
less favorable to such Borrower or such Subsidiary than those that would have
been obtained in a comparable transaction by such Borrower or such Subsidiary
with an unrelated Person and (b) the Borrowers or their Subsidiaries, as
applicable, deliver to the Agent (i) with respect to any Affiliate Transaction
involving aggregate payments in excess of $100,000, a resolution of such
Borrower's board of directors certified by an authorized officer certifying that
such Affiliate Transaction complies with clause (a) above and has been approved
by a majority of the disinterested members of such board of directors and (ii)
with respect to any Affiliate Transaction involving aggregate payments in excess
of $500,000, an opinion as to the fairness to the Borrowers and their
Subsidiaries, from a financial point of view issued by an independent nationally
recognized investment banking, appraisal or accounting firm experienced in the
appraisal or similar review of similar types of transactions (or if an opinion
is unavailable as to the fairness from a financial point of view of any
consulting fee payable to an advisor or any other transaction for which a
fairness opinion is not customarily rendered, then an opinion that such fee or
other transaction is within the range of reasonableness for comparable
consulting services or transactions entered into on an arms-length basis)
PROVIDED, HOWEVER, that (i) the employment agreements and consulting agreements
listed on SCHEDULE 10.11, as in effect on the Closing Date and any other
employment agreement entered into by the Borrowers or their Subsidiaries in the
ordinary course of business with any full-time employee of the Borrowers or
their Subsidiaries who beneficially owns less than 5% of the outstanding capital
stock of such Person or any parent thereof, in each case other than the
employment agreements described in clause (y) of the following sentence, and
(ii) transactions between or among the Borrowers and their Subsidiaries shall
not be deemed Affiliate Transactions. Notwithstanding anything contained in
this Section 10.11 to the contrary, without the prior written consent of the
Agent and all of the Banks, none of the Borrowers, nor any of their
Subsidiaries, will pay to Chartwell Investments Inc., First Chartwell Investment
Inc. or any employee, officer or director of the Borrowers or their Subsidiaries
who is also an officer, director or principal of Chartwell Investments Inc. or
First Chartwell Investments Inc., any salary, benefits, awards (whether in the
form of stock options or otherwise), director's fees or any other form of direct
or indirect compensation, PROVIDED, HOWEVER, (w) the Borrowers may, pursuant to
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the terms of the Management Consulting Agreement, pay to Chartwell Investments
Inc. all out-of-pocket costs and expenses actually incurred by Chartwell
Investments Inc. to non-affiliated third parties in connection with the
performance of Chartwell Investments Inc.'s duties under the Management
Consulting Agreement, (x) so long as no Event of Default under Sections 14.1(a)
or (b) hereunder shall have occurred and be continuing or would occur as a
consequence of the payment otherwise permitted pursuant to this clause (x), the
Borrowers may, pursuant to the terms of the Management Consulting Agreement, pay
to Chartwell Investments Inc. an amount not to exceed $200,000 per year payable
quarterly in advance PLUS, so long as no Event of Default under Section 14.1(c)
hereunder with respect to Section 11 shall have occurred and be continuing or
would occur as a consequence thereof, the additional amounts specified pursuant
to Section 4(b) of the Management Consulting Agreement, PROVIDED, FURTHER, that
the payments pursuant to this clause (x) shall in no event exceed $2,000,000 in
the aggregate exclusive of out-of-pocket costs and expenses paid to non-
affiliated third parties as permitted under clause (w) above; (y) the Borrowers
may pay salary and benefits, to employees of the Borrowers or their Subsidiaries
who are also officers, directors and/or principals of Chartwell Investments Inc.
pursuant to their respective employment agreements in the form delivered to the
Agent on the Closing Date (as defined in the Third Amended and Restated Credit
Agreement) in an aggregate amount not to exceed $500,000 PLUS (i) the working
facilities and other matters referred to in Section 5, (ii) the expense
reimbursements provided for in Section 6, (iii) benefits pursuant to Section 7,
and (iv) the indemnification and insurance provided for in Section 10, in each
case, of such employment agreements; and (z) the Borrowers may pay to Chartwell
Investment Inc. amounts included in the Transaction Costs, without duplication.
10.12. CONDUCT OF BUSINESS. None of the Borrowers, nor any of their
Subsidiaries, will engage in any business other than (i) the Business and the
sale and distribution of petroleum, gas or other similar fuel products and
related equipment, and such business activities that are related to, ancillary
or supportive of, connected with or arising out of such business (including,
without limitation, the operation of additional convenience stores and the sale,
installation and servicing of heating, ventilation and air conditioning
equipment) and (ii) such other business activities as are similar in nature to
those currently conducted by the Borrowers and their Subsidiaries on the Closing
Date after giving effect to the Acquisition Transaction; PROVIDED, HOWEVER, that
with respect to Regent Transport, the Borrowers shall not permit Regent
Transport to engage in any business other than the acquisition and storage of
Petroleum Product Inventory and the sale of such Petroleum Product Inventory to
the Borrowers.
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10.13. REGENT SELLER NOTE. Griffith will not, until the termination
of this Agreement and the repayment of the Loans in full, amend, supplement or
otherwise modify in any way the terms of the Regent Seller Note or prepay or
offer to prepay any principal or interest with respect to such note, without the
prior written approval of the Agent.
11. FINANCIAL COVENANTS OF THE BORROWERS.
The Borrowers jointly and severally covenant and agree that, so long
as any Loan, Unpaid Reimbursement Obligation, Letter of Credit or Note is
outstanding or any Bank has any obligation to make any Loans or the Agent has
any obligation to issue, extend or renew any Letters of Credit:
11.1. DEBT SERVICE COVERAGE RATIO. For each period of four
consecutive fiscal quarters, commencing with the period of four consecutive
fiscal quarters ending June 30, 1996, the Borrowers will not permit the Debt
Service Coverage Ratio for such period of four consecutive fiscal quarters of
the Borrowers to be less than 1.10 to 1.00.
11.2. CASH FLOW RATIO. For each period of quarters ending
during the period set forth in the table below, commencing with the period of
four consecutive fiscal quarters ending June 30, 1996, the Borrowers will not
permit the ratio of (a) Consolidated Net Earnings Available for Debt Service
calculated for the period of four consecutive fiscal quarters then ended PLUS
(i) the aggregate proceeds from all Indebtedness which is permitted under
Section 10.1(g) and (h) which is incurred by the Borrowers during such period to
the extent that in accordance with generally accepted accounting principles the
acquisition or Capitalized Lease in connection with which such Indebtedness
arises was treated as a Capital Expenditure PLUS, (ii) subject to the limitation
set forth below in this Section 11.2, for each period of four consecutive fiscal
quarters which include one or more fiscal quarters which end in Fiscal Year
1997, Fiscal Year 1998 or Fiscal Year 1999, the amount of Capital Expenditures
actually made in such period of four consecutive fiscal quarters in excess of
$3,500,000, (PROVIDED that the Borrowers may, at their option, elect not to add
back such excess amount for any period of four consecutive fiscal quarters if
such fiscal quarters do not occur in a single Fiscal Year) to (b) Consolidated
Debt Service calculated for such period PLUS Discretionary Capital Expenditures
made by the Borrowers and their Subsidiaries during such period, to be less than
the amount set forth opposite such date in the table below:
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Period Ratio
------ -----
6/30/96 to 3/31/00 (inclusive) 1.0:1.0
6/30/00 and thereafter (inclusive) 1.1:1.0
Notwithstanding the foregoing, for purposes of calculating compliance
with this covenant, the Borrowers may not add back Capital Expenditures pursuant
to clause (a) (ii) of this Section 11.2 in an aggregate amount in excess of
$5,000,000. For purposes of calculating compliance with this limitation, the
aggregate amount of Capital Expenditures added back pursuant to clause (a) (ii)
above shall be equal to the aggregate of the add back amounts attributed (as
provided below) to each fiscal quarter (without duplication for each of the four
times such fiscal quarter appears in the rolling four quarter periods for which
compliance hereunder is calculated). The add back of Capital Expenditures shall
be attributable to the fiscal quarter which is the last fiscal quarter in the
period of four consecutive fiscal quarters with respect to which such add back
first occurs.
11.3. CONSOLIDATED WORKING CAPITAL. The Borrowers will not permit
Consolidated Working Capital to be less than (a) $1.00 during any period
commencing January 1 and ending May 31, inclusive of each Fiscal Year of the
Borrowers; and (b) $(4,500,000) during any period commencing June 1 and ending
December 31 of each Fiscal Year of the Borrowers.
11.4. CONSOLIDATED NET WORTH. The Consolidated Net Worth of the
Borrowers on the Closing Date will not be less than $5,000,000. The
Consolidated Net Worth of the Borrowers as at the end of each Fiscal Year ending
thereafter will not be less than that amount set forth below opposite each such
Fiscal Year:
Fiscal Year Consolidated Net Worth
------ ---- ------------ --- -----
1996 $ 5,000,000
1997 $ (1,000,000)
1998 $ (3,000,000)
1999 $ (4,500,000)
2000 $ (6,500,000)
2001 $ (7,000,000)
2002 $ (7,000,000)
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11.5 CAPITAL EXPENDITURES. The Borrowers will not, and will not
permit any of their Subsidiaries to, make Capital Expenditures (exclusive of
any Capital Expenditures made by delivery of Permitted Seller Notes issued in
such fiscal year and permitted under Section 10.1 but including any cash
principal repayment made with respect to such Permitted Seller Notes in the
period during which such repayments are made) OR Investments made pursuant to
Section 10.3(e) in any Fiscal Year that exceed, in the aggregate, the amount
set forth below for such Fiscal Year:
Fiscal Year End Capital Expenditures
------ ---- --- ------- ------------
1996 $ 1,500,000
1997 $ 8,700,000
1998 $ 4,800,000
1999 $ 4,500,000
Thereafter $ 3,500,000
PROVIDED, HOWEVER, that if (a) any amounts permitted to be incurred in the
Fiscal Year ending June 30, 1997 may be incurred in the Fiscal Year ending June
30, 1996 in addition to the amounts specifically permitted above for the Fiscal
Year ending June 30, 1996, provided that, to the extent Capital Expenditures
are incurred in the Fiscal Year ending June 30, 1996 in excess of $1,500,000,
the amount of Capital Expenditures permitted to be incurred in the Fiscal Year
ending June 30, 1997 shall be decreased by such excess amount; (b) the amount of
Capital Expenditures which are permitted to be incurred in the Fiscal Year
ending June 30, 1997 after any adjustments pursuant to clause (a) above and
which are not incurred in such year may be carried over and used in the Fiscal
Years ending June 30, 1998 and June 30, 1999 and shall be deemed to be the first
amounts utilized in such Fiscal Years; and (c) if during any other Fiscal Year
the amount of Capital Expenditures permitted for that Fiscal Year is not so
utilized, such unutilized amount may be utilized, and shall be deemed to be the
first amount utilized, in the immediately succeeding Fiscal Year only.
Notwithstanding anything in this Section 11.5 to the contrary, (x) in
addition to the amount of Capital Expenditures permitted for the Fiscal Year
ending June 30, 1996 in the table above, the Borrowers may make additional
Capital Expenditures in such Fiscal Year not to exceed $760,000, provided that
such Capital Expenditures are made solely in connection with Investments by the
Borrowers in dealer supply arrangements which are permitted pursuant to Section
10.3(e) hereof and (y) if the amount of such additional Capital Expenditures
permitted
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pursuant to the foregoing clause (x) is not fully utilized in the Fiscal Year
ending June 30, 1996, the unutilized amount may not be utilized in any other
immediately succeeding Fiscal Year.
11.6. FUNDED DEBT TO CONSOLIDATED EBITDA RATIO. The Borrowers will not
permit the ratio of (a) Funded Debt as of the end of each period of four
consecutive fiscal quarters of the Borrowers ending during each of the periods
set forth in the table below, commencing with the four quarter period ending
June 30, 1996, to (b) Consolidated EBITDA for such period, to be more than the
amount set forth opposite the relevant date in the table below:
Period Ratio
------ -----
6/30/96 - 3/31/97 (inclusive) 5.00 to 1.0
6/30/97 - 3/31/98 (inclusive) 4.75:1.0
6/30/98 - 3/31/99 (inclusive) 4.00:1.0
6/30/99 and thereafter 3.50:1.0
; PROVIDED THAT, for purposes of calculating the ratio of Funded Debt to
Consolidated EBITDA (a) for any period, any Permitted Acquisition which occurred
during such period shall be deemed to have occurred immediately prior to the
beginning of such period; and (b) for each period of four fiscal quarters ending
at any time from the Closing Date through and including June 30, 1997, Funded
Debt shall be decreased by $5,000,000; and (c) for each period of four fiscal
quarters ending at any time from and including September 30, 1997 through and
including June 30, 1998, Funded Debt shall be decreased by $2,500,000.
11.7. MINIMUM CONSOLIDATED EBITDA. The Borrowers will not permit
Consolidated EBITDA for the four consecutive fiscal quarters of the Borrowers
ending June 30, 1997 to be less than $17,000,000.
12. CLOSING CONDITIONS.
The effectiveness of this Credit Agreement and obligations of the Banks
to advance the Term Loan A Additional Amount, the Term Loan B Additional Amount,
the Term Loan C or the initial Revolving Credit Loans hereunder and of the Agent
to issue any initial Letters of Credit hereunder shall be subject to the
satisfaction of the following conditions precedent on the Closing Date:
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12.1. LOAN DOCUMENTS ETC.
12.1.1. LOAN DOCUMENTS. Each of the Loan Documents shall have
been duly executed and delivered by the respective parties thereto, shall
be in full force and effect and shall be in form and substance
satisfactory to each of the Banks. Each Bank shall have received a fully
executed copy of each such document.
12.1.2. SUBORDINATED DEBT DOCUMENTS. Each of the Subordinated
Debt Documents shall have been duly amended in order to (a) permit the
Acquisition Transaction and the transactions contemplated by the Credit
Agreement and (b) provide that all Obligations now or hereafter
Outstanding under the Loan Documents constitute "Senior Debt" as defined
in the Subordinated Debt Documents and amend the definition of "Credit
Agreement" thereunder to refer to this Credit Agreement; which amendment
shall be executed and delivered by the respective parties thereto, shall
be in full force and effect and shall be in form and substance
satisfactory to each of the Banks. Each Bank shall have received a
certified copy of such amendment.
12.1.3. INTERCREDITOR AGREEMENT. The Intercreditor Agreement
shall have been duly executed and delivered by the respective parties
thereto, shall be in full force and effect and shall be in form and
substance satisfactory to the Banks and the Agent.
12.2. ACQUISITION TRANSACTION. The Borrowers shall have delivered to
the Agent and the Banks certified copies of all of the Acquisition Documents in
form and substance satisfactory to the Agent. The Banks shall receive
satisfactory evidence that the Acquisition Transaction shall simultaneously with
the effectiveness of this Credit Agreement be completed in accordance with the
terms of the Acquisition Documents in all material respects and in accordance
with law.
12.3. FINANCIAL PROJECTIONS. The Borrowers shall have delivered to
the Agent the PRO FORMA financial statements and the financial projections
referred to in Sections 8.4.2 and 8.4.3 reflecting the Loans to be made on the
Closing Date and the completion of the Acquisition Transaction.
12.4. CERTIFIED COPIES OF CHARTER DOCUMENTS. Each of the Banks shall
have received from the Borrowers and each of their Subsidiaries a copy,
certified by a duly authorized officer of such Person to be true and complete on
the Closing Date, of each of (i) its charter or other incorporation documents as
in effect on such date of certification, and (ii) its by-laws as in effect on
such date.
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12.5. CORPORATE ACTION. All corporate action necessary for the valid
execution, delivery and performance by the Borrowers, each of their Subsidiaries
and Parent of this Credit Agreement, the other Loan Documents, the Acquisition
Documents and the amendments to the Subordinated Debt Documents to which they
are or are to become a party shall have been duly and effectively taken, and
evidence thereof satisfactory to the Banks shall have been provided to each of
the Banks.
12.6. INCUMBENCY CERTIFICATE. Each of the Banks shall have received from
the Borrowers and each of their Subsidiaries an incumbency certificate, dated as
of the Closing Date, signed by a duly authorized officer of such Borrower or
such Subsidiary, and giving the name and bearing a specimen signature of each
individual who shall be authorized: (i) to sign, in the name and on behalf of
each of the Borrowers and each of its Subsidiaries, each of the Loan Documents
to which such Borrower or such Subsidiary is or is to become a party; (ii) in
the case of the Borrowers, to make Loan Requests and Conversion Requests and to
apply for Letters of Credit; and (iii) to give notices and to take other action
on its behalf under the Loan Documents.
12.7. VALIDITY OF LIENS. The Security Documents shall be effective to
create in favor of the Agent a legal, valid and enforceable (a) first (except
for Permitted Liens entitled to priority under applicable law) priority security
interest in and lien upon the Collateral other than the Mortgaged Premises, and
(b) a second priority security interest in and lien upon the Mortgaged Premises.
All filings, recordings, deliveries of instruments and other actions necessary
or desirable in the opinion of the Agent to protect and preserve such security
interests shall have been duly effected, including without limitation, all
actions necessary to comply with the Federal Assignment of Claims Act. The
Agent shall have received evidence thereof in form and substance satisfactory to
the Agent. The Agent shall have received, with respect to all motor vehicles
owned by the Borrowers (other than those which are subject to Permitted Liens),
all necessary applications for certificates of title (and fees therefor) noting
the Agent's lien thereon. The Agent shall have received in pledge stock
certificates evidencing all of the issued and outstanding shares of King, SSC,
Frederick and Regent Transport.
12.8. PERFECTION CERTIFICATES AND UCC SEARCH RESULTS. The Agent shall
have received from each of the Borrowers and their Subsidiaries a completed and
fully executed Perfection Certificate dated as of the Closing Date and the
results of UCC searches with respect to the Collateral, indicating no liens
other than Permitted Liens and otherwise in form and substance satisfactory to
the Agent.
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12.9. TITLE INSURANCE. The Agent shall have received a title insurance
policy or endorsements with respect to existing title insurance policies
satisfactory to the Agent covering each Mortgaged Property (or commitments to
issue such policies or endorsements, with all conditions to issuance of the
title policy deleted by an authorized agent of the title insurance company)
together with proof of payment of all fees and premiums for such policies or
endorsements, from the title insurance company and in amounts satisfactory to
the Agent, insuring the interest of the Agent and each of the Banks as mortgagee
under the Mortgages.
12.10. CERTIFICATES OF INSURANCE. The Agent shall have received a
certificate of insurance from an independent insurance broker dated no more than
five days prior to the Closing Date, identifying insurers, types of insurance,
insurance limits, and policy terms, naming the Agent as loss payee and
additional insured, and otherwise describing the insurance obtained in
accordance with the provisions of the Security Agreements.
12.11. BORROWING BASE REPORT. The Agent shall have received from the
Borrowers a Borrowing Base Report dated as of the Closing Date.
12.12. ENVIRONMENTAL SITE ASSESSMENTS. Each of the Banks shall have
received an executive summary of environmental site assessments from
environmental engineers and in form and substance satisfactory to the Agent,
covering all Real Estate included in the Acquisition Assets and all other real
property included in the Acquisition Assets in respect of which the Borrowers
and their Subsidiaries may have material liability, whether contingent or
otherwise, for the storage, dumping or disposal of Hazardous Substances.
12.13. OPINION OF COUNSEL. Each of the Banks and the Agent shall have
received (a) a favorable legal opinion addressed to the Banks and the Agent,
dated as of the Closing Date, in form and substance satisfactory to the Banks
and the Agent, from Akin, Gump, Strauss, Hauer & Feld, counsel to the Borrowers
and their Subsidiaries, (b) a favorable legal opinion addressed to the Sellers,
dated as of the Closing Date, from Akin, Gump, Strauss, Hauer & Feld L.L.P.,
counsel to Borrowers, Parent, Frederick, and Regent Transport, including
authorization for the Agent and the Banks to rely thereon, (c) such opinions of
local counsel that the Agent and the Banks may reasonably request, (d) a
favorable opinion addressed to Griffith dated as of the Closing Date, in form
and substance satisfactory to the Banks and the Agent from Kaufman & Canoles,
counsel to the Sellers, stating that the Banks and the Agent may rely thereon
and (e) a legal opinion addressed to the Banks and the Agent from the Agent's
Special Counsel.
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12.14 PAYMENT OF FEES. The Borrowers shall have paid to the Banks or
the Agent, as appropriate, the fees under the Third Amended and Restated Credit
Agreement accrued and outstanding on the Closing Date, and all amounts payable
to the Agent on the Closing Date pursuant to the Letter Agreement, and the
reasonable fees and expenses the Agent's Special Counsel incurred in connection
with this transaction.
12.15. PRIVATE PLACEMENT NUMBERS. The Borrowers shall have applied to
Standard & Poor's CUSIP Service Bureau for assignment of, and received, Private
Placement Numbers for the Term Notes A, the Term Notes B and Term Notes C,
respectively.
13. CONDITIONS TO ALL BORROWINGS.
The effectiveness of this Credit Agreement and the obligations of the
Banks to make any advance hereunder, including the Revolving Credit Loan and any
Term Loan, and of the Agent to issue, extend or renew any Letter of Credit, in
each case whether on or after the Closing Date, shall also be subject to the
satisfaction of the following conditions precedent:
13.1. REPRESENTATIONS TRUE; NO EVENT OF DEFAULT. Each of the
representations and warranties of the Borrowers contained in this Credit
Agreement, the other Loan Documents or in any document or instrument delivered
pursuant to or in connection with this Credit Agreement shall be true as of the
date as of which they were made and shall also be true at and as of the time of
the making of such Loan or the issuance, extension or renewal of such Letter of
Credit, with the same effect as if made at and as of that time (except to the
extent of changes resulting from transactions contemplated or permitted by this
Credit Agreement and the other Loan Documents and changes occurring in the
ordinary course of business that singly or in the aggregate are not materially
adverse, and to the extent that such representations and warranties relate
expressly to an earlier date) and no Default or Event of Default shall have
occurred and be continuing. The Agent shall have received a certificate of the
Borrowers signed by an authorized officer of the Borrowers to such effect.
13.2. NO LEGAL IMPEDIMENT. No change shall have occurred in any law or
regulations thereunder or interpretations thereof that in the reasonable opinion
of any Bank would make it illegal for such Bank to make such Loan or to
participate in the issuance, extension or renewal of such Letter of Credit or in
the reasonable opinion of the Agent would make it illegal for the Agent to
issue, extend or renew such Letter of Credit.
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13.3. GOVERNMENTAL REGULATION. Each Bank shall have received such
statements in substance and form reasonably satisfactory to such Bank as such
Bank shall require for the purpose of compliance with any applicable regulations
of the Comptroller of the Currency or the Board of Governors of the Federal
Reserve System.
13.4. PROCEEDINGS AND DOCUMENTS. All proceedings in connection with the
transactions contemplated by this Credit Agreement, the other Loan Documents and
all other documents incident thereto shall be satisfactory in substance and in
form to the Banks and to the Agent and the Agent's Special Counsel, and the
Banks, the Agent and such counsel shall have received all information and such
counterpart originals or certified or other copies of such documents as the
Agent may reasonably request.
13.5. BORROWING BASE REPORT. The Agent shall have received the most
recent Borrowing Base Report required to be delivered to the Agent in accordance
with Section 9.4(d) and, if requested by the Agent, a Borrowing Base Report
dated within five (5) days of the Drawdown Date of such Loan or of the date of
issuance, extension or renewal of such Letter of Credit.
14. EVENTS OF DEFAULT; ACCELERATION; ETC.
14.1. EVENTS OF DEFAULT AND ACCELERATION. If any of the following events
("Events of Default" or, if the giving of notice or the lapse of time or both is
required, then, prior to such notice or lapse of time, "Defaults") shall occur:
(a) any Borrower shall fail to pay any principal of the Loans or
any Reimbursement Obligation when the same shall become due and payable,
whether at the stated date of maturity or any accelerated date of
maturity or at any other date fixed for payment;
(b) any Borrower shall fail to pay any interest on the Loans, the
commitment fee, any Letter of Credit Fee, fees payable pursuant to the
Letter Agreement, or other sums due hereunder or under any of the other
Loan Documents, within two days after the same shall become due and
payable, whether at the stated date of maturity or any accelerated date
of maturity or at any other date fixed for payment;
(c) any Borrower shall fail to comply with any of their covenants
contained in Section 9.1, 9.5.1, 9.10, 9.12, 10 or 11 or any of the
covenants contained in any of the Mortgages or any Subsidiary of any
Borrower shall fail to comply with its obligations under its Subsidiary
Guaranty;
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(d) the Parent, any Borrower or any Subsidiary of any Borrower
shall fail to perform any term, covenant or agreement contained herein or
in any of the other Loan Documents (other than those specified elsewhere
in this Section 14.1) for fifteen (15) days after written notice of such
failure has been given to the Borrowers by the Agent;
(e) any representation or warranty of the Parent, any Borrower or
any Subsidiary of any Borrower in this Credit Agreement or any of the
other Loan Documents or in any other document or instrument delivered
pursuant to or in connection with this Credit Agreement shall prove to
have been false in any material respect upon the date when made or deemed
to have been made or repeated;
(f) the Parent, any Borrower or any Subsidiary of any Borrower
shall fail to pay at maturity, or within any applicable period of grace,
any obligation for borrowed money or credit received or in respect of any
Capitalized Leases, in an aggregate amount exceeding $250,000, or fail to
observe or perform any material term, covenant or agreement contained in
any agreement by which it is bound, evidencing or securing borrowed money
or credit received or in respect of any Capitalized Leases, in an
aggregate amount exceeding $250,000, for such period of time as would
permit (assuming the giving of appropriate notice if required) the holder
or holders thereof or of any obligations issued thereunder to accelerate
the maturity thereof;
(g) the Parent, any Borrower or any Subsidiary of any Borrower
shall make an assignment for the benefit of creditors, or admit in
writing their inability to pay or generally fail to pay their debts as
they mature or become due, or shall petition or apply for the appointment
of a trustee or other custodian, liquidator or receiver of the Parent,
any Borrower or any Subsidiary of any Borrower or of any substantial part
of the assets of the Parent, any Borrower or any Subsidiary of any
Borrower, or shall commence any case or other proceeding relating to the
Parent, any Borrower or any Subsidiary of any Borrower, under any
bankruptcy, reorganization, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law of any jurisdiction, now
or hereafter in effect, or shall take any action to authorize or in
furtherance of any of the foregoing, or if any such petition or
application shall be filed or any such case or other proceeding shall be
commenced against the Parent, any Borrower or any Subsidiary of any
Borrower and the Parent, any Borrower or any Subsidiary of any Borrower,
shall
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indicate their approval thereof, consent thereto or acquiescence
therein or such petition or application shall not have been dismissed
within sixty (60) days following the filing thereof;
(h) a decree or order is entered appointing any such trustee,
custodian, liquidator or receiver or adjudicating the Parent, any
Borrower or any Subsidiary of any Borrower, bankrupt or insolvent, or
approving a petition in any such case or other proceeding, or a decree or
order for relief is entered in respect of the Parent, any Borrower or any
Subsidiary of any Borrower, in an involuntary case under federal
bankruptcy laws as now or hereafter constituted;
(i) there shall remain in force, undischarged, unsatisfied and
unstayed, for more than thirty days, whether or not consecutive, any
final judgment against any Borrower or any Subsidiary of any Borrower
that, with other outstanding final judgments, undischarged, against any
Borrower or any Subsidiary of any Borrower exceeds in the aggregate
$250,000 (net of insurance proceeds) or any judgment or award is in force
and execution is levied thereunder;
(j) there shall exist any default under the terms of the
Subordinated Debt Documents or any other document evidencing Subordinated
Debt, including, without limitation, the Senior Subordinated Debt, or the
holders of all or any part of the Subordinated Debt, including, without
limitation, the Senior Subordinated Debt, shall accelerate the maturity
of all or any part of the Subordinated Debt, or any Borrower shall offer
to prepay, redeem or repurchase any of the Subordinated Debt in whole or
in part, or the Subordinated Debt shall be prepaid, redeemed or
repurchased in whole or in part;
(k) if any of the Loan Documents shall be cancelled, terminated,
revoked or rescinded or the Agent's security interests, mortgages or
liens in substantially all of the Collateral shall cease to be perfected,
or shall cease to have the priority contemplated by the Security
Documents, in each case otherwise than in accordance with the terms
thereof or with the express prior written agreement, consent or approval
of the Banks, or any action at law, suit or in equity or other legal
proceeding to cancel, revoke or rescind any of the Loan Documents shall
be commenced by or on behalf of the Parent, any Borrower or any
Subsidiary of any Borrower party thereto or any of their respective
stockholders, or any court or any other governmental or regulatory
authority or agency of competent jurisdiction shall make a determination
that, or issue a judgment,
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order, decree or ruling to the effect that, any one or more of the Loan
Documents is illegal, invalid or unenforceable in accordance with the terms
thereof;
(l) with respect to any Guaranteed Pension Plan, an ERISA
Reportable Event shall have occurred and the Majority Banks shall have
determined in their reasonable discretion that such event reasonably
could be expected to result in liability of the Borrowers to the PBGC or
such Guaranteed Pension Plan in an aggregate amount exceeding $50,000 and
such event in the circumstances occurring reasonably could constitute
grounds for the termination of such Guaranteed Pension Plan by the PBGC
or for the appointment by the appropriate United States District Court of
a trustee to administer such Guaranteed Pension Plan; or a trustee shall
have been appointed by the United States District Court to administer
such Plan; or the PBGC shall have instituted proceedings to terminate
such Guaranteed Pension Plan;
(m) any Borrower or any Subsidiary of any Borrower shall be
enjoined, restrained or in any way prevented by the order of any court or
any administrative or regulatory agency from conducting any material part
of its business and such order shall continue in effect for more than
thirty (30) days;
(n) there shall occur any material damage to, or loss, theft or
destruction of, any Collateral, whether or not insured, or any strike,
lockout, labor dispute, embargo, condemnation, act of God or public
enemy, or other casualty, which in any such case causes, for more than
fifteen (15) consecutive days, the cessation or substantial curtailment
of revenue producing activities at any facility of any Borrower or any
Subsidiary of any Borrower if such event or circumstance is not covered
by business interruption insurance and would have a material adverse
effect on the business or financial condition of any of the Borrowers or
such Subsidiary;
(o) there shall occur the loss, suspension or revocation of, or
failure to renew, any license or permit now held or hereafter acquired by
the Borrowers or any of their Subsidiaries if such loss, suspension,
revocation or failure to renew would have a material adverse effect on
the business or financial condition of any of the Borrowers;
(p) any Borrower or any Subsidiary of any Borrower shall be
indicted for a state or federal crime, or any civil or criminal action
shall otherwise have been brought against any Borrower or any
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Subsidiary of any Borrower, a punishment for which in any such case could
include the forfeiture of any assets of the Borrowers or any Approved
Subsidiary included in the Borrowing Base having a fair market value in
excess of $100,000 or any assets of the Borrowers not included in the
Borrowing Base but having a fair market value in excess of $250,000;
(q) a Change of Control Event shall have occurred;
(r) Parent shall at any time legally or beneficially own less than
100% of the issued and outstanding shares of the capital stock of
Griffith or Griffith shall at any time legally or beneficially own less
than 100% of the issued and outstanding shares of the capital stock of
King and SSC or SSC shall at any time own less than 100% of the issued
and outstanding shares of the capital stock of Regent Transport; or
(s) there shall occur any event of default that permits
acceleration of the Regent Seller Note.
then, and in any such event, so long as the same may be continuing, the Agent
may, and upon the request of the Majority Banks shall, by notice in writing to
the Borrowers declare all amounts owing with respect to this Credit Agreement,
the Notes and the other Loan Documents and all Reimbursement Obligations to be,
and they shall thereupon forthwith become, immediately due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived by the Borrowers; PROVIDED that in the event of any
Event of Default specified in Sections 14.1(g) or 14.1(h), all such amounts
shall become immediately due and payable automatically and without any
requirement of notice from the Agent or any Bank.
14.2. TERMINATION OF COMMITMENTS. If any one or more of the Events of
Default specified in Section 14.1(g) or Section 14.1(h) shall occur, any unused
portion of the credit hereunder shall forthwith terminate and each of the Banks
shall be relieved of all further obligations to make Loans to the Borrowers and
the Agent shall be relieved of all further obligations to issue, extend or renew
Letters of Credit. If any other Event of Default shall have occurred and be
continuing, or if on any Drawdown Date or other date for issuing, extending or
renewing any Letter of Credit the conditions precedent to the making of the
Loans to be made on such Drawdown Date or (as the case may be) to issuing,
extending or renewing such Letter of Credit on such other date are not
satisfied, the Agent may and, upon the request of the Majority Banks, shall, by
notice to the Borrowers, terminate the unused portion of the credit hereunder,
and
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upon such notice being given such unused portion of the credit hereunder shall
terminate immediately and each of the Banks shall be relieved of all further
obligations to make Loans and the Agent shall be relieved of all further
obligations to issue, extend or renew Letters of Credit. No termination of the
credit hereunder shall relieve the Borrowers of any of the Obligations.
14.3. REMEDIES. In case any one or more of the Events of Default shall
have occurred and be continuing, and whether or not the Banks shall have
accelerated the maturity of the Loans pursuant to Section 14.1, each Bank, if
owed any amount with respect to the Loans or the Reimbursement Obligations, may,
with the consent of the Majority Banks but not otherwise, proceed to protect and
enforce its rights by suit in equity, action at law or other appropriate
proceeding, whether for the specific performance of any covenant or agreement
contained in this Credit Agreement and the other Loan Documents or any
instrument pursuant to which the Obligations to such Bank are evidenced,
including as permitted by applicable law the obtaining of the EX PARTE
appointment of a receiver, and, if such amount shall have become due, by
declaration or otherwise, proceed to enforce the payment thereof or any other
legal or equitable right of such Bank. No remedy herein conferred upon any Bank
or the Agent or the holder of any Note or purchaser of any Letter of Credit
Participation is intended to be exclusive of any other remedy and each and every
remedy shall be cumulative and shall be in addition to every other remedy given
hereunder or now or hereafter existing at law or in equity or by statute or any
other provision of law.
14.4. DISTRIBUTION OF COLLATERAL PROCEEDS. In the event that, following
the occurrence or during the continuance of any Default or Event of Default, the
Agent or any Bank, as the case may be, receives any moneys in connection with
the enforcement of any of the Security Documents, or otherwise with respect to
the realization upon any of the Collateral, such moneys shall be distributed for
application as follows:
(a) First, to the payment of, or (as the case may be) the
reimbursement of the Agent for or in respect of all reasonable costs,
expenses, disbursements and losses which shall have been incurred or
sustained by the Agent in connection with the collection of such moneys
by the Agent, for the exercise, protection or enforcement by the Agent of
all or any of the rights, remedies, powers and privileges of the Agent
under this Credit Agreement or any of the other Loan Documents or in
respect of the Collateral or in support of any provision of adequate
indemnity to the Agent against any taxes or liens which by law shall
have, or may have, priority over the rights of the Agent to such moneys;
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(b) Second, to all other Obligations in such order or preference
as the Majority Banks may determine; PROVIDED, HOWEVER, that
distributions in respect of such Obligations shall be made (i) PARI PASSU
among Obligations with respect to the Agent's fee payable pursuant to
Section 6.10 and all other Obligations unless otherwise agreed by the
Agent, (ii) Obligations owing to the Banks with respect to principal
shall be made PRO RATA between the Revolving Credit Loans and the Term
Loans, unless otherwise agreed by all of the Banks and (iii) Obligations
owing to the Banks with respect to each type of Obligation such as
principal, interest, fees and expenses, shall be made among the Banks PRO
RATA in accordance with each Bank's relative interest in such type of
Obligation; and PROVIDED, FURTHER, that the Agent may in its discretion
make proper allowance to take into account any Obligations not then due
and payable;
(c) Third, upon payment and satisfaction in full or other
provisions for payment in full satisfactory to the Banks and the Agent of
all of the Obligations, to the payment of any obligations required to be
paid pursuant to Section 9-504(1)(c) of the Uniform Commercial Code of
the Commonwealth of Massachusetts; and
(d) Fourth, the excess, if any, shall be returned to the Borrowers
or to such other Persons as are entitled thereto.
15. SETOFF.
Regardless of the adequacy of any collateral, during the continuance of
any Event of Default, any deposits or other sums credited by or due from any of
the Banks to the Borrowers and any securities or other property of the Borrowers
in the possession of such Bank (other than any such deposits or property
belonging to a third party or held by such Bank in a fiduciary capacity) may be
applied to or set off by such Bank against the payment of Obligations of the
Borrowers to such Bank. Each of the Banks agrees with each other Bank that (i)
if an amount to be set off is to be applied to Indebtedness of the Borrowers to
such Bank, other than Indebtedness evidenced by the Notes held by such Bank or
constituting Reimbursement Obligations owed to such Bank, such amount shall be
applied ratably to such other Indebtedness and to the Indebtedness evidenced by
all such Notes held by such Bank or constituting Reimbursement Obligations owed
to such Bank, and (ii) if such Bank shall receive from the Borrowers, whether by
voluntary payment, exercise of the right of setoff, counterclaim, cross action,
enforcement of the claim evidenced by the Notes held by, or constituting
Reimbursement Obligations owed to, such Bank by proceedings against the
Borrowers at
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law or in equity or by proof thereof in bankruptcy, reorganization, liquidation,
receivership or similar proceedings, or otherwise, and shall retain and apply to
the payment of the Note or Notes held by, or Reimbursement Obligations owed to,
such Bank any amount in excess of its ratable portion of the payments received
by all of the Banks with respect to the Notes held by, and Reimbursement
Obligations owed to, all of the Banks, such Bank will make such disposition and
arrangements with the other Banks with respect to such excess, either by way of
distribution, PRO TANTO assignment of claims, subrogation or otherwise as shall
result in each Bank receiving in respect of the Notes held by it or
Reimbursement obligations owed it, its proportionate payment as contemplated by
this Credit Agreement; PROVIDED that if all or any part of such excess payment
is thereafter recovered from such Bank, such disposition and arrangements shall
be rescinded and the amount restored to the extent of such recovery, but without
interest.
16. THE AGENT.
16.1. AUTHORIZATION. The Agent is authorized to take such action on
behalf of each of the Banks and to exercise all such powers as are hereunder and
under any of the other Loan Documents and any related documents delegated to the
Agent, together with such powers as are reasonably incident thereto, PROVIDED
that no duties or responsibilities not expressly assumed herein or therein shall
be implied to have been assumed by the Agent. The relationship between the
Agent and the Banks is and shall be that of agent and principal only, and
nothing contained in this Credit Agreement or any of the other Loan Documents
shall be construed to constitute the Agent as a trustee for any Bank.
16.2. EMPLOYEES AND AGENTS. The Agent may exercise its powers and
execute its duties by or through employees or agents and shall be entitled to
take, and to rely on, advice of counsel concerning all matters pertaining to its
rights and duties under this Credit Agreement and the other Loan Documents. The
Agent may utilize the services of such Persons as the Agent in its sole
discretion may reasonably determine, and all reasonable fees and expenses of any
such Persons shall be paid by the Borrowers.
16.3. NO LIABILITY. Neither the Agent nor any of its shareholders,
directors, officers or employees nor any other Person assisting them in their
duties nor any agent or employee thereof, shall be liable for any waiver,
consent or approval given or any action taken, or omitted to be taken, in good
faith by it or them hereunder or under any of the other Loan Documents, or in
connection herewith or therewith, or be responsible for the consequences of any
oversight or error of judgment whatsoever,
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except that the Agent or such other Person, as the case may be, may be liable
for losses due to its willful misconduct or gross negligence.
16.4. NO REPRESENTATIONS. The Agent shall not be responsible for the
execution or validity or enforceability of this Credit Agreement, the Notes, the
Letters of Credit, any of the other Loan Documents or any instrument at any time
constituting, or intended to constitute, collateral security for the Notes, or
for the value of any such collateral security or for the validity,
enforceability or collectability of any such amounts owing with respect to the
Notes, or for any recitals or statements, warranties or representations made
herein or in any of the other Loan Documents or in any certificate or instrument
hereafter furnished to it by or on behalf of the Borrowers, or be bound to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, covenants or agreements herein or in any instrument at any time
constituting, or intended to constitute, collateral security for the Notes or to
inspect any of the properties, books or records of the Borrowers. The Agent
shall not be bound to ascertain whether any notice, consent, waiver or request
delivered to it by the Borrowers or any holder of any of the Notes shall have
been duly authorized or is true, accurate and complete. The Agent has not made
nor does it now make any representations or warranties, express or implied, nor
does it assume any liability to the Banks, with respect to the credit worthiness
or financial conditions of the Borrowers. Each Bank acknowledges that it has,
independently and without reliance upon the Agent or any other Bank, and based
upon such information and documents as it has deemed appropriate, made its own
credit analysis and decision to enter into this Credit Agreement.
16.5. PAYMENTS.
16.5.1. PAYMENTS TO AGENT. A payment by the Borrowers to the
Agent hereunder or any of the other Loan Documents for the account of any
Bank shall constitute a payment to such Bank. The Agent agrees promptly
to distribute to each Bank such Bank's PRO RATA share of payments
received by the Agent for the account of the Banks except as otherwise
expressly provided herein or in any of the other Loan Documents.
16.5.2. DISTRIBUTION BY AGENT. If in the opinion of the Agent the
distribution of any amount received by it in such capacity hereunder,
under the Notes or under any of the other Loan Documents might involve it
in liability, it may refrain from making distribution until its right to
make distribution shall have been adjudicated by a court of competent
jurisdiction. If a court of competent jurisdiction shall adjudge that
any amount received and
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distributed by the Agent is to be repaid, each Person to whom any such
distribution shall have been made shall either repay to the Agent its
proportionate share of the amount so adjudged to be repaid or shall pay
over the same in such manner and to such Persons as shall be determined
by such court.
16.5.3. DELINQUENT BANKS. Notwithstanding anything to the
contrary contained in this Credit Agreement or any of the other Loan
Documents, any Bank that fails (i) to make available to the Agent its PRO
RATA share of any Loan or to purchase any Letter of Credit Participation
or (ii) to comply with the provisions of Section 15 with respect to
making dispositions and arrangements with the other Banks, where such
Bank's share of any payment received, whether by setoff or otherwise, is
in excess of its PRO RATA share of such payments due and payable to all
of the Banks, in each case as, when and to the full extent required by
the provisions of this Credit Agreement, shall be deemed delinquent (a
"Delinquent Bank") and shall be deemed a Delinquent Bank until such time
as such delinquency is satisfied. A Delinquent Bank shall be deemed to
have assigned any and all payments due to it from the Borrowers, whether
on account of outstanding Loans, Unpaid Reimbursement Obligations,
interest, fees or otherwise, to the remaining nondelinquent Banks for
application to, and reduction of, their respective PRO RATA shares of all
outstanding Loans and Unpaid Reimbursement Obligations. The Delinquent
Bank hereby authorizes the Agent to distribute such payments to the
nondelinquent Banks in proportion to their respective PRO RATA shares of
all outstanding Loans and Unpaid Reimbursement Obligations. A Delinquent
Bank shall be deemed to have satisfied in full a delinquency when and if,
as a result of application of the assigned payments to all outstanding
Loans and Unpaid Reimbursement Obligations of the nondelinquent Banks,
the Banks' respective PRO RATA shares of all outstanding Loans and Unpaid
Reimbursement Obligations have returned to those in effect immediately
prior to such delinquency and without giving effect to the nonpayment
causing such delinquency.
16.6. HOLDERS OF NOTES. The Agent may deem and treat the payee of any
Note or the purchaser of any Letter of Credit Participation as the absolute
owner or purchaser thereof for all purposes hereof until it shall have been
furnished in writing with a different name by such payee or by a subsequent
holder, assignee or transferee.
16.7. INDEMNITY. The Banks ratably agree hereby to indemnify and hold
harmless the Agent from and against any and all claims, actions
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and suits (whether groundless or otherwise), losses, damages, costs, expenses
(including any expenses for which the Agent has not been reimbursed by the
Borrowers as required by Section 17), and liabilities of every nature and
character arising out of or related to this Credit Agreement, the Notes, or any
of the other Loan Documents or the transactions contemplated or evidenced hereby
or thereby, or the Agent's actions taken hereunder or thereunder, except to the
extent that any of the same shall be directly caused by the Agent's willful
misconduct or gross negligence.
16.8. AGENT AS BANK. In its individual capacity, FNBB shall have the
same obligations and the same rights, powers and privileges in respect to its
Revolving Credit Commitment and the Loans made by it, and as the holder of any
of the Notes and as the purchaser of any Letter of Credit Participations, as it
would have were it not also the Agent.
16.9. RESIGNATION. The Agent may resign at any time by giving sixty
(60) days prior written notice thereof to the Banks and the Borrowers. Upon any
such resignation, the Majority Banks shall have the right to appoint a successor
Agent. Unless an Event of Default shall have occurred and be continuing, such
successor Agent shall be reasonably acceptable to the Borrowers. If no
successor Agent shall have been so appointed by the Majority Banks and shall
have accepted such appointment within thirty (30) days after the retiring
Agent's giving of notice of resignation, then the retiring Agent may, on behalf
of the Banks, appoint a successor Agent, which shall be a financial institution
having a long-term debt rating of not less than A or its equivalent by Standard
& Poor's. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations
hereunder. After any retiring Agent's resignation, the provisions of this
Credit Agreement and the other Loan Documents shall continue in effect for its
benefit in respect of any actions taken or omitted to be taken by it while it
was acting as Agent.
16.10. NOTIFICATION OF DEFAULTS AND EVENTS OF DEFAULT. Each Bank hereby
agrees that, upon learning of the existence of a Default or an Event of Default,
it shall promptly notify the Agent thereof. The Agent hereby agrees that upon
receipt of any notice under this Section 16.10 it shall promptly notify the
other Banks of the existence of such Default or Event of Default.
16.11. DUTIES IN THE CASE OF ENFORCEMENT. In case one of more Events of
Default have occurred and shall be continuing, and whether or not acceleration
of the Obligations shall have occurred, the Agent shall, if
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(i) so requested by the Majority Banks and (ii) the Banks have provided to the
Agent such additional indemnities and assurances against expenses and
liabilities as the Agent may reasonably request, proceed to enforce the
provisions of the Security Documents authorizing the sale or other disposition
of all or any part of the Collateral and exercise all or any such other legal
and equitable and other rights or remedies as it may have in respect of such
Collateral. The Majority Banks may direct the Agent in writing as to the method
and the extent of any such sale or other disposition, the Banks hereby agreeing
to indemnify and hold the Agent, harmless from all liabilities incurred in
respect of all actions taken or omitted in accordance with such directions,
PROVIDED that the Agent need not comply with any such direction to the extent
that the Agent reasonably believes the Agent's compliance with such direction to
be unlawful or commercially unreasonable in any applicable jurisdiction.
17. EXPENSES.
The Borrowers agree to pay (i) the reasonable costs of producing and
reproducing this Credit Agreement, the other Loan Documents and the other
agreements and instruments mentioned herein, (ii) any taxes (including any
interest and penalties in respect thereto) payable by the Agent or any of the
Banks (other than taxes based upon the Agent's or any Bank's net income) on or
with respect to the transactions contemplated by this Credit Agreement (the
Borrowers hereby agreeing to indemnify the Agent and each Bank with respect
thereto), (iii) the reasonable fees, expenses and disbursements of the Agent's
Special Counsel or any local counsel to the Agent incurred in connection with
the preparation, administration or interpretation of the Loan Documents and
other instruments mentioned herein, each closing hereunder, and amendments,
modifications, approvals, consents or waivers hereto or hereunder, (iv) the
fees, expenses and disbursements of the Agent incurred by the Agent in
connection with the preparation, administration or interpretation of the Loan
Documents and other instruments mentioned herein, including all title insurance
premiums and surveyor, engineering and appraisal and inspection charges, (v) all
reasonable out-of-pocket expenses (including without limitation reasonable
attorneys' fees and costs, which attorneys may be employees of any Bank or the
Agent, and reasonable consulting, accounting, appraisal, investment banking and
similar professional fees and charges) incurred by any Bank or the Agent in
connection with (A) the enforcement of or preservation of rights under any of
the Loan Documents against the Borrowers or the administration thereof after the
occurrence of a Default or Event of Default and (B) any litigation, proceeding
or dispute whether arising hereunder or otherwise, in any way related to any
Bank's or the Agent's relationship with the Borrowers (other than those related
solely to (i) disputes between or among the Banks, or the
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shareholders of any Bank and such Bank, and (ii) any Bank's or the Agent's gross
negligence or willful misconduct) and (vii) all reasonable fees, expenses and
disbursements of any Bank or the Agent incurred in connection with UCC searches,
UCC filings or mortgage recordings. The covenants of this Section 17 shall
survive payment or satisfaction of all other Obligations.
18. INDEMNIFICATION.
The Borrowers agree to indemnify and hold harmless the Agent and the
Banks from and against any and all claims, actions and suits whether groundless
or otherwise, and from and against any and all liabilities, losses (other than
lost profits), damages and expenses of every nature and character arising out of
this Credit Agreement or any of the other Loan Documents or the transactions
contemplated hereby (other than those related solely to (i) disputes between or
among the Banks or the shareholders of any Bank and such Bank, and (ii) any
Bank's or the Agent's gross negligence or willful misconduct) including, without
limitation, (i) any actual or proposed use by the Borrowers of the proceeds of
any of the Loans or Letters of Credit, (ii) the Borrowers entering into or
performing this Credit Agreement or any of the other Loan Documents or (iii)
with respect to the Borrowers and their respective properties and assets, the
violation of any Environmental Law, the presence, disposal, escape, seepage,
leakage, spillage, discharge, emission, release or threatened release of any
Hazardous Substances or any action, suit, proceeding or investigation brought or
threatened with respect to any Hazardous Substances (including, but not limited
to, claims with respect to wrongful death, personal injury or damage to
property), in each case including, without limitation, the reasonable fees and
disbursements of counsel and allocated costs of internal counsel incurred in
connection with any such investigation, litigation or other proceeding. In
litigation, or the preparation therefor, the Banks and the Agent shall be
entitled to select their own counsel and, in addition to the foregoing
indemnity, the Borrowers agree to pay promptly the reasonable fees and expenses
of such counsel. If, and to the extent that the obligations of the Borrowers
under this Section 18 are unenforceable for any reason, the Borrowers hereby
agree to make the maximum contribution to the payment in satisfaction of such
obligations which is permissible under applicable law. The covenants contained
in this Section 18 shall survive payment or satisfaction in full of all other
Obligations.
19. SURVIVAL OF COVENANTS, ETC.
All covenants, agreements, representations and warranties made herein, in
the Notes, in any of the other Loan Documents or in any
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documents or other papers delivered by or on behalf of the Borrowers pursuant
hereto shall be deemed to have been relied upon by the Banks and the Agent,
notwithstanding any investigation heretofore or hereafter made by any of them,
and shall survive the making by the Banks of any of the Loans and the issuance,
extension or renewal of any Letters of Credit, as herein contemplated, and shall
continue in full force and effect so long as any Letter of Credit or any amount
due under this Credit Agreement or the Notes or any of the other Loan Documents
remains outstanding or any Bank has any obligation to make any Loans or the
Agent has any obligation to issue, extend or renew any Letter of Credit, and for
such further time as may be otherwise expressly specified in this Credit
Agreement. All statements contained in any certificate in writing delivered to
any Bank or the Agent at any time by or on behalf of the Borrowers pursuant
hereto or in connection with the transactions contemplated hereby shall
constitute representations and warranties by the Borrowers hereunder.
20. ASSIGNMENT AND PARTICIPATION.
20.1. CONDITIONS TO ASSIGNMENT BY BANKS. Except as provided herein,
each Bank may assign to one or more Eligible Assignees all or a portion of its
interests, rights and obligations under this Credit Agreement (including all or
a portion of its Commitment Percentages and Revolving Credit Commitment and the
same portion of the Revolving Credit Loans at the time owing to it, the
Revolving Credit Notes held by it and its participating interest in the risk
relating to any Letters of Credit); PROVIDED that (i) except with respect to an
assignment by a Bank to an affiliate of such Bank of its interest with respect
to any Term Loans or Term Notes, the Agent and, so long as no Event of Default
has occurred, each of the Borrowers has given its prior written consent to such
assignment, which consent will not be unreasonably withheld, (ii) except as
otherwise consented to by the Majority Banks, each such assignment shall be of a
constant, and not a varying, percentage of all the assigning Bank's rights and
obligations under this Credit Agreement with respect to the Revolving Credit
Loans, Term Loan A, Term Loan B, and Term Loan C, (iii) each assignment shall be
in a minimum amount equal to either (A) $5,000,000 or a whole multiple of
$1,000,000 in excess thereof or (B) if less, all of the assigning Bank's
interests under the Credit Agreement, and (iv) the parties to such assignment
shall execute and deliver to the Agent, for recording in the Register (as
hereinafter defined), an Assignment and Acceptance, substantially in the form of
EXHIBIT L hereto (an "Assignment and Acceptance"), together with any Notes
subject to such assignment. Upon such execution, delivery, acceptance and
recording, from and after the effective date specified in each Assignment and
Acceptance, which effective date shall be at least five (5) Business
<PAGE>
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Days after the execution thereof, (i) the assignee thereunder shall be a party
hereto and, to the extent provided in such Assignment and Acceptance, have the
rights and obligations of a Bank hereunder, and (ii) the assigning Bank shall,
to the extent provided in such assignment and upon payment to the Agent of the
registration fee referred to in Section 20.3, be released from its obligations
under this Credit Agreement.
20.2. CERTAIN REPRESENTATIONS AND WARRANTIES; LIMITATIONS; COVENANTS. By
executing and delivering an Assignment and Acceptance, the parties to the
assignment thereunder confirm to and agree with each other and the other parties
hereto as follows:
(a) other than the representation and warranty that it is the
legal and beneficial owner of the interest being assigned thereby free
and clear of any adverse claim, the assigning Bank makes no
representation or warranty, express or implied, and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with this Credit Agreement or
the execution, legality, validity, enforceability, genuineness,
sufficiency or value of this Credit Agreement, the other Loan Documents
or any other instrument or document furnished pursuant hereto or the
attachment, perfection or priority of any security interest or mortgage,
(b) the assigning Bank makes no representation or warranty and
assumes no responsibility with respect to the financial condition of the
Borrowers or any other Person primarily or secondarily liable in respect
of any of the Obligations, or the performance or observance by the
Borrowers and their Subsidiaries or any other Person primarily or
secondarily liable in respect of any of the Obligations of any of their
obligations under this Credit Agreement or any of the other Loan
Documents or any other instrument or document furnished pursuant hereto
or thereto;
(c) such assignee confirms that it has received a copy of this
Credit Agreement, together with copies of the most recent financial
statements referred to in Section 8.4 and Section 9.4 and such other
documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and
Acceptance;
(d) such assignee will, independently and without reliance upon
the assigning Bank, the Agent or any other Bank and based on such
documents and information as it shall deem appropriate at the
<PAGE>
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time, continue to make its own credit decisions in taking or not taking
action under this Credit Agreement;
(e) such assignee represents and warrants that it is an Eligible
Assignee;
(f) such assignee appoints and authorizes the Agent to take such
action as agent on its behalf and to exercise such powers under this
Credit Agreement and the other Loan Documents as are delegated to the
Agent by the terms hereof or thereof, together with such powers as are
reasonably incidental thereto;
(g) such assignee agrees that it will perform in accordance with
their terms all of the obligations that by the terms of this Credit
Agreement are required to be performed by it as a Bank;
(h) such assignee represents and warrants that it is legally
authorized to enter into such Assignment and Acceptance; and
(i) such assignee acknowledges that it has made arrangements with
the assigning Bank satisfactory to such assignee with respect to its PRO
RATA share of Letter of Credit Fees in respect of outstanding Letters of
Credit.
20.3. REGISTER. The Agent shall maintain a copy of each Assignment and
Acceptance delivered to it and a register or similar list (the "Register") for
the recordation of the names and addresses of the Banks and the Commitment
Percentages of, and principal amount of the Loans owing to and Letter of Credit
Participations purchased by, the Banks from time to time. The entries in the
Register shall be conclusive, in the absence of manifest error, and the
Borrowers, the Agent and the Banks may treat each Person whose name is recorded
in the Register as a Bank hereunder for all purposes of this Credit Agreement.
The Register shall be available for inspection by the Borrowers and the Banks at
any reasonable time and from time to time upon reasonable prior notice. Upon
each such recordation (other than an Assignment by an assigning Bank to one of
its affiliates), the assigning Bank agrees to pay to the Agent a registration
fee in the sum of $2,500.
20.4. NEW NOTES. Upon its receipt of an Assignment and Acceptance
executed by the parties to such assignment, together with each Note subject to
such assignment, the Agent shall (i) record the information contained therein in
the Register, and (ii) give prompt notice thereof to the Borrowers and the Banks
(other than the assigning Bank). Within five (5) Business Days after receipt of
such notice, the Borrowers, at their own expense, shall execute and deliver to
the Agent, in exchange
<PAGE>
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for each surrendered Note, a new Note to the order of such Eligible Assignee in
an amount equal to the amount assumed by such Eligible Assignee pursuant to such
Assignment and Acceptance and, if the assigning Bank has retained some portion
of its obligations hereunder, a new Note to the order of the assigning Bank in
an amount equal to the amount retained by it hereunder. Such new Notes shall
provide that they are replacements for the surrendered Notes, shall be in an
aggregate principal amount equal to the aggregate principal amount of the
surrendered Notes, shall be dated the effective date of such in Assignment and
Acceptance and shall otherwise be substantially in the form of the assigned
Notes. Within five (5) days of issuance of any new Notes pursuant to this
Section 20.4, the Borrowers shall deliver an opinion of counsel, addressed to
the Banks and the Agent, relating to the due authorization, execution and
delivery of such new Notes and the legality, validity and binding effect
thereof, in form and substance satisfactory to the Banks. The surrendered Notes
shall be cancelled and returned to the Borrowers.
20.5. PARTICIPATIONS. Each Bank may sell participations to one or more
banks or other entities in all or a portion of such Bank's rights and
obligations under this Credit Agreement and the other Loan Documents; PROVIDED
that (i) each such participation shall be in an amount of not less than
$1,000,000, (ii) any such sale or participation shall not affect the rights and
duties of the selling Bank hereunder to the Borrowers and (iii) the only rights
granted to the participant pursuant to such participation arrangements with
respect to waivers, amendments or modifications of the Loan Documents shall be
the rights to approve waivers, amendments or modifications that would reduce the
principal of or the interest rate on any Loans, extend the term of any Loans or
increase the amount of the Revolving Credit Commitment of such Bank as it
relates to such participant, reduce the amount of any commitment fees or Letter
of Credit Fees to which such participant is entitled or extend any regularly
scheduled payment date for principal or interest.
20.6. DISCLOSURE. Each Bank agrees that it will use commercially
reasonable efforts not to disclose without the prior written consent of the
Borrowers (other than to any Bank's and its affiliates' directors, employees,
trustees, agents, representatives, auditors or counsel who are subject to
confidentiality obligations in the course of their duties) any information
obtained by such Bank pursuant to this Credit Agreement and which is designated
by the Borrowers to such Bank in writing as confidential, provided that any Bank
may disclose any such information (1) as has become generally available to the
public (other than through disclosure by such Bank or its affiliate in
contravention of this Credit Agreement), (2) as may be required or appropriate
in any report, statement or testimony submitted to any governmental agency
claiming
<PAGE>
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jurisdiction over such Bank (including the National Association of Insurance
Commissioners), (3) as may be required or appropriate in response to any summons
or subpoena or in connection with any litigation in which such Bank is involved,
(4) to the extent such Bank believes it necessary in order to comply with any
law, order, regulation or ruling applicable to it, (5) to a prospective assignee
or participant in connection with any contemplated assignment of or
participation in all or a portion of such Bank's interests, rights and
obligations under this Credit Agreement (provided that such prospective assignee
or participant agrees to be bound by the provisions of this Section 20.6) or (6)
to the extent such Bank reasonably believes such disclosure is necessary to
correct any public information about the relationship of such Bank to the
Borrowers or any Subsidiary under any of the Loan Documents.
20.7. ASSIGNEE OR PARTICIPANT AFFILIATED WITH THE BORROWERS. If any
assignee Bank (other than The Travelers Insurance Company or The Travelers
Indemnity Company or any of their respective affiliates) is an Affiliate of any
Borrower, then any such assignee Bank shall have no right to vote as a Bank
hereunder or under any of the other Loan Documents for purposes of granting
consents or waivers or for purposes of agreeing to amendments or other
modifications to any of the Loan Documents or for purposes of making requests to
the Agent pursuant to Section 14.1 or Section 14.2, and the determination of the
Majority Banks shall for all purposes of this Agreement and the other Loan
Documents be made without regard to such assignee Bank's interest in any of the
Loans. If any Bank sells a participating interest in any of the Loans or
Reimbursement Obligations to a participant, and such participant is a Borrower
or an Affiliate of the Borrowers, then such transferor Bank shall promptly
notify the Agent of the sale of such participation. A transferor Bank shall
have no right to vote as a Bank hereunder or under any of the other Loan
Documents for purposes of granting consents or waivers or for purposes of
agreeing to amendments or modifications to any of the Loan Documents or for
purposes of making requests to the Agent pursuant to Section 14.1 or Section
14.2 to the extent that such participation is beneficially owned by the
Borrowers or any Affiliate of the Borrowers, and the determination of the
Majority Banks shall for all purposes of this Agreement and the other Loan
Documents be made without regard to the interest of such transferor Bank in the
Loans to the extent of such participation.
20.8. MISCELLANEOUS ASSIGNMENT PROVISIONS. Any assigning Bank shall
retain its rights to be indemnified pursuant to Section 17 with respect to any
claims or actions arising prior to the date of such assignment. If any assignee
Bank is not incorporated under the laws of the United States of America or any
state thereof, it shall, prior to the date on which any interest or fees are
payable hereunder or under any of
<PAGE>
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the other Loan Documents for its account, deliver to the Borrowers and the Agent
certification as to its exemption from deduction or withholding of any United
States federal income taxes. If any Reference Bank transfers all of its
interest, rights and obligations under this Credit Agreement, the Agent shall,
in consultation with the Borrowers and with the consent of the Borrowers and the
Majority Banks, appoint another Bank to act as a Reference Bank hereunder.
Anything contained in this Section 20 to the contrary notwithstanding, any Bank
may at any time pledge all or any portion of its interest and rights under this
Credit Agreement (including all or any portion of its Notes) to any of the
twelve Federal Reserve Banks organized under Section 4 of the Federal Reserve
Act, 12 U.S.C. Section 341. No such pledge or the enforcement thereof shall
release the pledgor Bank from its obligations hereunder or under any of the
other Loan Documents.
20.9. ASSIGNMENT BY BORROWERS. The Borrowers shall not assign or
transfer any of its rights or obligations under any of the Loan Documents
without the prior written consent of each of the Banks.
21. NOTICES, ETC.
Except as otherwise expressly provided in this Credit Agreement, all
notices and other communications made or required to be given pursuant to this
Credit Agreement or the Notes or any Letter of Credit Applications shall be in
writing and shall be delivered in hand, mailed by United States registered or
certified first class mail, postage prepaid, sent by overnight courier, or sent
by telegraph, telecopy, facsimile or telex and confirmed by delivery via courier
or postal service, addressed as follows:
(a) if to Griffith, at 2510 Schuster Drive Cheverly, MD 20781,
Attention: Raymond R. McKenzie, Jr. with a copy to Michael S. Shein, 717
Fifth Avenue, 23rd floor, New York, New York 10022, or at such other
address for notice as Griffith shall last have furnished in writing to
the Person giving the notice, with copies to (i) the Parent, at 2510
Schuster Drive Cheverly, MD 20781 and (ii) Russell W. Parks, Jr., P.C.,
Akin, Gump, Strauss, Hauer & Feld, L.L.P., 1333 New Hampshire Avenue,
N.W., Washington, DC 20036, Fax number: (202) 887-4288;
(b) if to King, at 109 Main Street, Camden, DE 19334, Attention:
William Sanner with a copy to Michael S. Shein, 717 Fifth Avenue, 23rd
floor, New York, New York 10022, or at such other address for notice as
King shall last have furnished in writing to the Person giving the
notice, with copies to (i) the Parent, at 2510 Schuster Drive Cheverly,
MD 20781 and (ii) Russell W. Parks, Jr.,
<PAGE>
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P.C., Akin, Gump, Strauss, Hauer & Feld, L.L.P., 1333 New Hampshire
Avenue, N.W., Washington, DC 20036, Fax number: (202) 887-4288;
(c) if to SSC, at 36082 Lankford Highway, Belle Haven, Virginia,
23306, Attention: William Sanner with a copy to Michael S. Shein, 717
Fifth Avenue, 23rd floor, New York, New York 10022, or at such other
address for notice as SSC shall last have furnished in writing to the
Person giving the notice, with copies to (i) the Parent, at 2510 Schuster
Drive Cheverly, MD 20781 and (ii) Russell W. Parks, Jr., P.C., Akin,
Gump, Strauss, Hauer & Feld, L.L.P., 1333 New Hampshire Avenue, N.W.,
Washington, DC 20036, Fax number: (202) 887-4288;
(d) if to the Agent, at 100 Federal Street, Boston, Massachusetts
02110, USA, Attention: Michael P. Hannon, Vice President, or such other
address for notice as the Agent shall last have furnished in writing to
the Person giving the notice, with a copy to Sula R. Fiszman, Esq.,
Bingham, Dana & Gould LLP, 150 Federal Street, Boston, MA 02110, Fax
number (617) 951-8736; and
(e) if to any Bank, at such Bank's address set forth on SCHEDULE 1
hereto, or such other address for notice as such Bank shall have last
furnished in writing to the Person giving the notice.
Any such notice or demand shall be deemed to have been duly given or made
and to have become effective (i) if delivered by hand, overnight courier or
facsimile to a responsible officer of the party to which it is directed, at the
time of the receipt thereof by such officer or the sending of such facsimile and
(ii) if sent by registered or certified first-class mail, postage prepaid, on
the third Business Day following the mailing thereof.
22. GOVERNING LAW.
THIS CREDIT AGREEMENT AND, EXCEPT AS OTHERWISE SPECIFICALLY PROVIDED
THEREIN, EACH OF THE OTHER LOAN DOCUMENTS ARE CONTRACTS UNDER THE LAWS OF THE
COMMONWEALTH OF MASSACHUSETTS AND SHALL FOR ALL PURPOSES BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF SAID COMMONWEALTH OF MASSACHUSETTS
(EXCLUDING THE LAWS APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWERS
AGREE THAT ANY SUIT FOR THE ENFORCEMENT OF THIS CREDIT AGREEMENT OR ANY OF THE
OTHER LOAN DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF
MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN
<PAGE>
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AND CONSENTS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWERS BY MAIL AT THE ADDRESS
SPECIFIED IN SECTION 21. THE BORROWERS HEREBY WAIVE ANY OBJECTION THAT THEY MAY
NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH SUIT OR ANY SUCH COURT OR THAT
SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
23. HEADINGS.
The captions in this Credit Agreement are for convenience of reference
only and shall not define or limit the provisions hereof.
24. COUNTERPARTS.
This Credit Agreement and any amendment hereof may be executed in several
counterparts and by each party on a separate counterpart, each of which when
executed and delivered shall be an original, and all of which together shall
constitute one instrument. In proving this Credit Agreement it shall not be
necessary to produce or account for more than one such counterpart signed by the
party against whom enforcement is sought.
25. ENTIRE AGREEMENT, ETC.
The Loan Documents and any other documents executed in connection
herewith or therewith express the entire understanding of the parties with
respect to the transactions contemplated hereby. Neither this Credit Agreement
nor any term hereof may be changed, waived, discharged or terminated, except as
provided in Section 27.
26. WAIVER OF JURY TRIAL.
The Borrowers hereby waive their right to a jury trial with respect to
any action or claim arising out of any dispute in connection with this Credit
Agreement, the Notes or any of the other Loan Documents, any rights or
obligations hereunder or thereunder or the performance of such rights and
obligations. Except as prohibited by law, the Borrowers hereby waive any right
they may have to claim or recover in any litigation referred to in the preceding
sentence any special, exemplary, punitive or consequential damages or any
damages other than, or in addition to, actual damages. The Borrowers (i)
certify that no representative, agent or attorney of any Bank or the Agent has
represented, expressly or otherwise, that such Bank or the Agent would not, in
the event of litigation, seek to enforce the foregoing waivers and (ii)
acknowledges that
<PAGE>
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the Agent and the Banks have been induced to enter into this Credit Agreement
and the other Loan Documents to which it is a party by, among other things, the
waivers and certifications contained herein.
27. CONSENTS, AMENDMENTS, WAIVERS, ETC.
Any consent or approval required or permitted by this Credit Agreement to
be given by the Banks may be given, and any term of this Credit Agreement, the
other Loan Documents or any other instrument related hereto or mentioned herein
may be amended, and the performance or observance by the Borrowers of any terms
of this Credit Agreement, the other Loan Documents or such other instrument or
the continuance of any Default or Event of Default may be waived (either
generally or in a particular instance and either retroactively or prospectively)
with, but only with, the written consent of the Borrowers and the written
consent of the Majority Banks. Notwithstanding the foregoing, (a) the rate of
interest on the Notes (other than interest accruing pursuant to Section 6.9
following the effective date of any waiver by the Majority Banks of the Default
or Event of Default relating thereto), the scheduled amortization of the Term
Loans, any of the Term Loan Maturity Dates, the Revolving Credit Maturity Date,
the amount of the Revolving Credit Commitments of the Banks, and the amount of
commitment fee or Letter of Credit Fees hereunder may not be changed or extended
without the written consent of the Borrowers and the written consent of each
Bank; (b) the definition of Majority Banks and Super Majority Banks,
respectively, and the provisions of Section 4.6, Section 10.11, Section 14.4 or
this Section 27 may not be amended without the written consent of all of the
Banks nor may any Subsidiary of a Borrower or the Parent be released from its
respective obligations under its Subsidiary Guaranty or the Parent Guaranty, as
applicable, without the written consent of all the Banks; (c) the provisions of
Section 4.5, Section 10 (other than Section 10.11) and Section 11 may not be
amended without the written consent of the Super Majority Banks; (d) the amount
of any Letter of Credit Fees payable for the Agent's account and Section 16 may
not be amended without the written consent of the Agent and (e) the provisions
of Sections 3.1, 3.2 and 3.3, the definition of Borrowing Base and each defined
term which is a component of the Borrowing Base and the limitation on the
aggregate Maximum Drawing Amount and all Unpaid Reimbursement Obligations set
forth in clause (a) of the proviso of Section 5.1.1 may not be amended without
the written consent of each Bank listed on SCHEDULE 1(a) hereto. Except as
otherwise provided in Section 10.5.2 hereof, the Agent shall not release (x) any
Collateral which collectively with any other Collateral which has previously
been released or will be contemporaneously released by the Agent has an
aggregate value of less than $1,000,000 without the written consent of the
Majority Banks and (y) any Collateral which collectively with any other
Collateral which has previously been released or will be
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contemporaneously released by the Agent has an aggregate value equal to or
greater than $1,000,000 without the written consent of all the Banks. No waiver
shall extend to or affect any obligation not expressly waived or impair any
right consequent thereon. No course of dealing or delay or omission on the part
of the Agent or any Bank in exercising any right shall operate as a waiver
thereof or otherwise be prejudicial thereto. No notice to or demand upon the
Borrowers shall entitle the Borrowers to other or further notice or demand in
similar or other circumstances.
28. SEVERABILITY.
The provisions of this Credit Agreement are severable and if any one
clause or provision hereof shall be held invalid or unenforceable in whole or in
part in any jurisdiction, then such invalidity or unenforceability shall affect
only such clause or provision, or part thereof, in such jurisdiction, and shall
not in any manner affect such clause or provision in any other jurisdiction, or
any other clause or provision of this Credit Agreement in any jurisdiction.
29. TRANSITIONAL ARRANGEMENTS.
29.1. THIRD AMENDED AND RESTATED CREDIT AGREEMENT SUPERSEDED. This
Credit Agreement and the Notes issued hereunder shall on the Closing Date amend,
restate and entirely supersede in its entirety the Third Amended and Restated
Credit Agreement and the promissory notes issued thereunder except as provided
in this Section 29. On the Closing Date, the rights and obligations of Griffith
and King under the Third Amended and Restated Credit Agreement and the
promissory notes issued thereunder shall be subsumed within and governed by this
Credit Agreement and the Notes; PROVIDED, HOWEVER, that (i) "Loans" and "Letters
of Credit", each as defined in the Third Amended and Restated Credit Agreement,
outstanding thereunder on the Closing Date shall for purposes of this Credit
Agreement be deemed to be Loans or Letters of Credit issued or advanced
hereunder and (ii) interest which has accrued and remains unpaid with respect to
such Loans and any Adjustment Amount to be received by any Bank on the Closing
Date shall continue to be due and payable at such times and on such terms as set
forth in the Third Amended and Restated Credit Agreement.
29.2. RETURN AND CANCELLATION OF NOTES. As soon as reasonably
practicable after the receipt by each Bank of the Notes issued hereunder on the
Closing Date, such Bank will return to the Borrowers, marked "cancelled", the
"Notes" held by such Bank pursuant to the Third Amended and Restated Credit
Agreement.
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IN WITNESS WHEREOF, the undersigned have duly executed this Credit
Agreement as a sealed instrument as of the date first set forth above.
GRIFFITH CONSUMERS COMPANY
By: /s/ Raymond R. McKenzie
---------------------------
Name: Raymond R. McKenzie
Title: Vice President
CARL KING, INC.
By: /s/ Raymond R. McKenzie
---------------------------
Name: Raymond R. McKenzie
Title: Vice President
SHORE STOP CORPORATION
By: /s/ Raymond R. McKenzie
--------------------------
Name: Raymond R. McKenzie
Title: Vice President
THE FIRST NATIONAL BANK OF BOSTON,
individually and as Agent
By: /s/ Michael P. Hannon
____________________________
Name: Michael P. Hannon
Title: Vice President
THE TRAVELERS INSURANCE COMPANY
By: /s/ Allen R. Cantrell
____________________________
Name: Allen R. Cantrell
Title: Investment Officer
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THE TRAVELERS INDEMNITY COMPANY
By: /s/ Allen R. Cantrell
____________________________
Name: Allen R. Cantrell
Title: Investment Officer
SENIOR DEBT PORTFOLIO
By: Boston Management and Research, as
Investment Advisor
By: /s/ Jeffrey S. Garner
----------------------------
Name: Jeffrey S. Garner
Title: Vice President
RIGGS BANK N.A.
By: /s/ Ana g. (Illegible)
----------------------------
Title: Ana G. (Illegible)
Vice President
<PAGE>
EXHIBIT 4.19
EXECUTION COPY
- -------------------------------------------------------------------------------
GRIFFITH CONSUMERS COMPANY
AND
THE GUARANTORS NAMED HEREIN
AND
THE BANK OF NEW YORK,
AS SUCCESSOR TRUSTEE
--------------------
SECOND SUPPLEMENTAL INDENTURE
DATED AS OF JUNE 30, 1996
--------------------
$34,000,000
14-1/2% SENIOR SUBORDINATED NOTES
DUE 2004
- -------------------------------------------------------------------------------
<PAGE>
SECOND SUPPLEMENTAL INDENTURE dated as of June 30, 1996, among GRIFFITH
CONSUMERS COMPANY, a Delaware corporation (the "Company") and CARL KING,
INC., a Delaware corporation, FREDERICK TERMINALS, INC., a Maryland
corporation (individually, an "Initial Guarantor" and collectively, the
"Initial Guarantors") and SHORE STOP CORPORATION (the "New Guarantor" and
collectively with the Initial Guarantors, the "Guarantors"), and THE BANK OF
NEW YORK, as successor Trustee to NationsBank Trust Company of New York
("NationsBank").
RECITALS
WHEREAS, the Company, the Initial Guarantors and NationsBank entered
into an Indenture, dated as of December 15, 1994, which Indenture was amended
by the First Supplemental Indenture dated as of March 15, 1995 (as so
amended, the "Indenture"), pursuant to which the Company issued $34,000,000
in principal amount of 14-1/2% Senior Subordinated Notes due 2004 (the
"Securities") (capitalized terms used herein without definition shall have
the respective meanings ascribed to them in the Indenture); and
WHEREAS, The Bank of New York became the successor trustee to
NationsBank under the Indenture effective December 4, 1995;
WHEREAS, Section 9.02 of the Indenture provides that the Company, the
Guarantors and the Trustee may amend or supplement the Indenture with the
consent of the Holders of a majority in principal amount of the Notes;
WHEREAS, the Company, the Guarantors, and the Trustee, desire to amend
the Indenture with the consent of the requisite number of Holders; and
WHEREAS, such consent of the requisite number of Holders has been
obtained to this Second Supplemental Indenture;
NOW, THEREFORE, to comply with the provisions of the Indenture and in
consideration of the above premises, the Company, the Guarantors, and the
Trustee covenant and agree for the benefit of each other and for the equal
and proportionate benefit of the respective Holders of the Securities as
follows:
ARTICLE 1
Section 1.01. This Second Supplemental Indenture is supplemental to the
Indenture and does and shall be deemed to form a part of, and shall be
construed in connection with as part of, the Indenture for any and all
purposes, including but not limited to discharge of the Indenture as provided
in Article 8 of the Indenture.
<PAGE>
Section 1.02.
(a) The definition of "Carl King" shall be as follows:
"CARL KING" means Carl King, Inc., a Delaware corporation.
(b) The definition of "Credit Agreement" shall be deleted in its
entirety and replaced with the following:
"CREDIT AGREEMENT" means that certain Fourth Amended and Restated
Revolving Credit and Term Loan Agreement, dated as of July 8, 1996, by
and among the Company, its Subsidiaries that are parties thereto, certain
lenders party thereto and The First National Bank of Boston, acting in
its capacity as agent for the lenders party thereto, providing for up to
$13,000,000 of Senior Revolving Debt and $60,000,000 in Senior Term Debt,
including any related notes, collateral documents, instruments and
agreements executed in connection therewith, and in each case as amended,
modified, renewed, refunded, replaced, extended or refinanced from time
to time. Any reference in this Indenture to the "Credit Agreement, as in
effect on the date hereof" shall mean the Credit Agreement as in effect
on July 8, 1996."
(c) The definition of "Guarantors" shall be deleted in its
entirety and replaced with the following:
"GUARANTORS" means each of (i) the Initial Guarantors, (ii) Shore
Stop and (iii) any other subsidiary of the Company that executes a
Subsidiary Guarantee in accordance with the provision of this Indenture,
and their respective successors and assigns."
(d) The definition of "Shore Stop" shall be as follows:
"SHORE STOP" means Shore Stop Corporation, a Delaware corporation.
Section 1.03.
(a) Clause (a) of the second paragraph of Section 4.09 is deleted
in its entirety and replaced with the following:
"(a) the incurrence by the Company and its subsidiaries of Senior
Term Debt (and Guarantees thereof by the Company's Subsidiaries) in an
aggregate principal amount at any one time outstanding not to exceed an
amount equal to $60,000,000 less the aggregate amount of all repayments,
optional or mandatory, of the principal
-2-
<PAGE>
of any Senior Term Debt that have been made since the date of the
Indenture."
(b) The number "$15,000,000" in subclause (y) of clause (b) of the
second paragraph of Section 4.09 is deleted and replaced with the number
"$16,000,000."
(c) Clause (e) of the second paragraph of Section 4.09 is hereby
relettered clause "(m)" and a new clause (e) of the second paragraph of
Section 4.09 is hereby inserted to read as follows:
"(e) the incurrence by the Company or any of its Subsidiaries of
Indebtedness in the aggregate principal amount of $1,500,000 pursuant to
the Promissory Note dated on or about July 9, 1996 issued to Regent
Investments, Inc."
(d) Clause (f) of the second paragraph of Section 4.09 is hereby
amended by deleting the number "$2,000,000" and inserting in its place the
number $2,500,000."
Section 1.04. The first paragraph of Section 4.21 is hereby deleted in
its entirety and replaced with the following:
"The "Debt Service Coverage Ratio" and the "Funded Debt to
Consolidated EBITDA Ratio" of the Company (each as defined or calculated
in the Credit Agreement, as in effect on July 8, 1996) shall (a), in the
case of the Debt Service Coverage Ratio for any period of four consecutive
fiscal quarters commencing with the period of four consecutive fiscal
quarters ending December 31, 1995, not be less than (i) .76 to 1.0 for
the period of four consecutive fiscal quarters ending December 31, 1995
and (ii) .99 to 1.0 for each period of four consecutive fiscal quarters
ending after December 31, 1995, and (b), in the case of the Funded Debt to
Consolidated EBITDA Ratio, for any period of four consecutive fiscal
quarters commencing with the period of four consecutive fiscal quarters
ending March 31, 1995, not be greater than the amount set forth opposite
the relevant date below:
DATE RATIO
3/31/95 7.37 to 1.0
6/30/95 7.43 to 1.0
9/30/95 7.10 to 1.0
12/31/95 6.55 to 1.0
-3-
<PAGE>
3/31/96 6.27 to 1.0
6/30/96 - 3/31/97 5.50 to 1.0
6/30/97 - 3/31/98 5.23 to 1.0
6/30/98 - 3/31/99 4.40 to 1.0
6/30/99 and thereafter 3.85 to 1.0"
Section 1.05. The notice provision to the Trustee set forth in Section
12.02 is hereby amended to read as follows:
"If to the Trustee: The Bank of New York
101 Barclay Street
21st Floor West
New York, New York 10286
Telecopier No.: (212) 815-5915
Attention: Corporate Trust Trustee
Administration"
Section 1.06. This Second Supplemental Indenture shall become effective
as of the date first above written immediately upon its execution and
delivery by each of the Company, the Guarantors, and the Trustee.
ARTICLE 2
Section 2.01. Except as specifically modified herein, the Indenture and
the Securities are in all respects ratified and confirmed and shall remain in
full force and effect in accordance with their terms.
Section 2.02. Except as otherwise expressly provided herein, no duties,
responsibilities or liabilities are assumed, or shall be construed to be
assumed, by the Trustee by reason of this Second Supplemental Indenture. This
Second Supplemental Indenture is executed and accepted by the Trustee subject
to all the terms and conditions set forth in the Indenture with the same
force and effect as if those terms and conditions were repeated at length
herein and made applicable to the Trustee with respect hereto.
Section 2.03. The laws of the State of New York shall govern this
Second Supplemental Indenture without regard to principles of conflicts of
law. The Trustee, the Company, the Guarantors, 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 Second Supplemental Indenture.
Section 2.04. The parties may sign any number of copies of this Second
Supplemental Indenture. Each signed copy shall be an
-4-
<PAGE>
original, but all of such executed copies together shall represent the same
agreement.
-5-
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, all as of the date first written
above.
COMPANY
GRIFFITH CONSUMERS COMPANY
By: /s/ RAYMOND R. MCKENZIE
---------------------------------
Name: Raymond R. McKenzie, Jr.
------------------------------
Title: Treasurer/Secretary
------------------------------
GUARANTORS:
CARL KING, INC.
By: /s/ RAYMOND R. MCKENZIE
---------------------------------
Name: Raymond R. McKenzie, Jr.
------------------------------
Title: V-P
------------------------------
FREDERICK TERMINALS, INC.
By: /s/ RAYMOND R. MCKENZIE
---------------------------------
Name: Raymond R. McKenzie, Jr.
------------------------------
Title: Treasurer/Secretary
------------------------------
SHORE STOP CORPORATION
By: /s/ RAYMOND R. MCKENZIE
---------------------------------
Name: Raymond R. McKenzie, Jr.
------------------------------
Title: V-P
------------------------------
TRUSTEE:
THE BANK OF NEW YORK, as Trustee
By:
---------------------------------
Name:
------------------------------
Title:
------------------------------
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Second
Supplemental Indenture to be duly executed, all as of the date first written
above.
COMPANY
GRIFFITH CONSUMERS COMPANY
By:
---------------------------------
Name:
------------------------------
Title:
------------------------------
GUARANTORS:
CARL KING, INC.
By:
---------------------------------
Name:
------------------------------
Title:
------------------------------
FREDERICK TERMINALS, INC.
By:
---------------------------------
Name:
------------------------------
Title:
------------------------------
SHORE STOP CORPORATION
By:
---------------------------------
Name:
------------------------------
Title:
------------------------------
TRUSTEE:
THE BANK OF NEW YORK, as Trustee
By: /s/ REMO J. REALE
---------------------------------
Name: REMO J. REALE
------------------------------
Title: ASSISTANT VICE PRESIDENT
------------------------------
<PAGE>
CONSENT
The undersigned hereby certifies that:
(i) it is the Holder of $10,000,000 aggregate principal amount of 14-1/2%
Senior Subordinated Notes due 2004 of Griffith Consumers Company
issued pursuant to the Indenture dated as of December 15, 1994 (the
"Indenture") among Griffith Consumers Company (the "Company"), Carl
King, Inc., Frederick Terminals, Inc. (collectively, the "Guarantors")
and NationsBank Trust Company of New York, as Trustee;
(ii) it is authorized to execute and deliver this Consent;
(iii) it hereby consents to the amendment to the Indenture by the Second
Supplemental Indenture dated as of June __, 1996, a copy of which is
attached hereto; and
(iv) it hereby instructs The Bank of New York, as successor trustee under
the Indenture (the "Trustee") to join with the Company and the
Guarantors in the execution of such Second Supplemental Indenture, with
such changes therein as the Company, the Guarantors and the Trustee
shall deem necessary or appropriate to effectuate the amendment to the
Indenture as set forth in the Second Supplemental Indenture.
Dated: As of June __, 1996 JOHN HANCOCK MUTUAL LIFE
INSURANCE COMPANY
By:
-----------------------------------
(Please print name as it appears on
the face of the Notes)
/s/ Eugene X. Hodge, Jr.
- ------------------------------- --------------------------------------
Signature Guarantee (Signature of authorized officer)
Eugene X. Hodge, Jr.
--------------------------------------
(Please print name and title
of signing officer)
Investment Officer
<PAGE>
COMMONWEALTH OF MASSACHUSETTS )
)ss.
COUNTY OF SUFFOLK )
On July 1, 1996, before me, a Notary Public in and for said County and
State, personally appeared Eugene X. Hodge, Jr. known to me to be the
Investment Officer of John Hancock Mutual Life Insurance Company, the
corporation that executed the within instrument, and known to me to be the
person who executed the within instrument on behalf of the corporation therein
named, and acknowledged to me that such corporation executed the within
instrument pursuant to its bylaws or a resolution of its board of directors.
WITNESS my hand and official seal.
/s/ Deborah Givens
--------------------------
Notary Public in and for
said County and State
Expiration: [SEAL]
--------------
Seal
<PAGE>
CONSENT
The undersigned hereby certifies that:
(i) it is the Holder of $4,000,000 aggregate principal amount of 14-1/2%
Senior Subordinated Notes due 2004 of Griffith Consumers Company
issued pursuant to the Indenture dated as of December 15, 1994 (the
"Indenture") among Griffith Consumers Company (the "Company"), Carl
King, Inc., Frederick Terminals, Inc. (collectively, the "Guarantors")
and NationsBank Trust Company of New York, as Trustee;
(ii) it is authorized to execute and deliver this Consent;
(iii) it hereby consents to the amendment to the Indenture by the Second
Supplemental Indenture dated as of June __, 1996, a copy of which is
attached hereto; and
(iv) it hereby instructs The Bank of New York, as successor trustee under
the Indenture (the "Trustee") to join with the Company and the
Guarantors in the execution of such Second Supplemental Indenture, with
such changes therein as the Company, the Guarantors and the Trustee
shall deem necessary or appropriate to effectuate the amendment to the
Indenture as set forth in the Second Supplemental Indenture.
Dated: As of June __, 1996 THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY
By: /s/ R.G. Marsh
-----------------------------------
Lincoln Investment
Management, Inc., formerly
Lincoln National Investment
Management Company,
Attorney-In-Fact
[SEAL]
- ------------------------------- --------------------------------------
Signature Guarantee (Signature of authorized officer)
R.G. Marsh
--------------------------------------
(Please print name and title
of signing officer)
2nd Vice President
<PAGE>
CONSENT
The undersigned hereby certifies that:
(i) it is the Holder of $650,000 aggregate principal amount of 14-1/2%
Senior Subordinated Notes due 2004 of Griffith Consumers Company
issued pursuant to the Indenture dated as of December 15, 1994 (the
"Indenture") among Griffith Consumers Company (the "Company"), Carl
King, Inc., Frederick Terminals, Inc. (collectively, the "Guarantors")
and NationsBank Trust Company of New York, as Trustee;
(ii) it is authorized to execute and deliver this Consent;
(iii) it hereby consents to the amendment to the Indenture by the Second
Supplemental Indenture dated as of June __, 1996, a copy of which is
attached hereto; and
(iv) it hereby instructs The Bank of New York, as successor trustee under
the Indenture (the "Trustee") to join with the Company and the
Guarantors in the execution of such Second Supplemental Indenture, with
such changes therein as the Company, the Guarantors and the Trustee
shall deem necessary or appropriate to effectuate the amendment to the
Indenture as set forth in the Second Supplemental Indenture.
Dated: As of June 21, 1996 DECLARATION OF TRUST FOR DEFINED
BENEFIT PLANS OF ZENECA
HOLDINGS INC. (Fuelship & Co.)
[SEAL] By:
-----------------------------------
(Please print name as it
appears on the face of the Notes)
/s/ Karen S. Larson /s/ (Illegible)
- ------------------------------- --------------------------------------
Signature Guarantee (Signature of authorized officer)
--------------------------------------
(Please print name and title
of signing officer)
<PAGE>
CONSENT
The undersigned hereby certifies that:
(i) it is the Holder of $1,000,000 aggregate principal amount of 14-1/2%
Senior Subordinated Notes due 2004 of Griffith Consumers Company
issued pursuant to the Indenture dated as of December 15, 1994 (the
"Indenture") among Griffith Consumers Company (the "Company"), Carl
King, Inc., Frederick Terminals, Inc. (collectively, the "Guarantors")
and NationsBank Trust Company of New York, as Trustee;
(ii) it is authorized to execute and deliver this Consent;
(iii) it hereby consents to the amendment to the Indenture by the Second
Supplemental Indenture dated as of June __, 1996, a copy of which is
attached hereto; and
(iv) it hereby instructs The Bank of New York, as successor trustee under
the Indenture (the "Trustee") to join with the Company and the
Guarantors in the execution of such Second Supplemental Indenture, with
such changes therein as the Company, the Guarantors and the Trustee
shall deem necessary or appropriate to effectuate the amendment to the
Indenture as set forth in the Second Supplemental Indenture.
Dated: As of June 21, 1996 DECLARATION OF TRUST FOR DEFINED
BENEFIT PLANS OF ICI AMERICAN
HOLDINGS INC. (Northman & Co.)
[SEAL] By:
-----------------------------------
(Please print name as it
appears on the face of the Notes)
/s/ Karen S. Larson /s/ (Illegible)
- ------------------------------- --------------------------------------
Signature Guarantee (Signature of authorized officer)
--------------------------------------
(Please print name and title
of signing officer)
<PAGE>
CONSENT
The undersigned hereby certifies that:
(i) it is the Holder of $3,350,000 aggregate principal amount of 14-1/2%
Senior Subordinated Notes due 2004 of Griffith Consumers Company
issued pursuant to the Indenture dated as of December 15, 1994 (the
"Indenture") among Griffith Consumers Company (the "Company"), Carl
King, Inc., Frederick Terminals, Inc. (collectively, the "Guarantors")
and NationsBank Trust Company of New York, as Trustee;
(ii) it is authorized to execute and deliver this Consent;
(iii) it hereby consents to the amendment to the Indenture by the Second
Supplemental Indenture dated as of June __, 1996, a copy of which is
attached hereto; and
(iv) it hereby instructs The Bank of New York, as successor trustee under
the Indenture (the "Trustee") to join with the Company and the
Guarantors in the execution of such Second Supplemental Indenture, with
such changes therein as the Company, the Guarantors and the Trustee
shall deem necessary or appropriate to effectuate the amendment to the
Indenture as set forth in the Second Supplemental Indenture.
Dated: As of June 21, 1996 DELAWARE STATE EMPLOYEES'
RETIREMENT FUND (Nap & Co.)
[SEAL] By:
-----------------------------------
(Please print name as it
appears on the face of the Notes)
/s/ Karen S. Larson /s/ (Illegible)
- ------------------------------- --------------------------------------
Signature Guarantee (Signature of authorized officer)
--------------------------------------
(Please print name and title
of signing officer)
<PAGE>
CONSENT
The undersigned hereby certifies that:
(i) it is the Holder of $15,000,000 aggregate principal amount of 14-1/2%
Senior Subordinated Notes due 2004 of Griffith Consumers Company
issued pursuant to the Indenture dated as of December 15, 1994 (the
"Indenture") among Griffith Consumers Company (the "Company"), Carl
King, Inc., Frederick Terminals, Inc. (collectively, the "Guarantors")
and NationsBank Trust Company of New York, as Trustee;
(ii) it is authorized to execute and deliver this Consent;
(iii) it hereby consents to the amendment to the Indenture by the Second
Supplemental Indenture dated as of June __, 1996, a copy of which is
attached hereto; and
(iv) it hereby instructs The Bank of New York, as successor trustee under
the Indenture (the "Trustee") to join with the Company and the
Guarantors in the execution of such Second Supplemental Indenture, with
such changes therein as the Company, the Guarantors and the Trustee
shall deem necessary or appropriate to effectuate the amendment to the
Indenture as set forth in the Second Supplemental Indenture.
Dated: As of June , 1996 SUNAMERICA LIFE INS. COMPANY
(f.k.a. SUN LIFE INSURANCE COMPANY
OF AMERICA), as Beneficial Owner
Okgbd & Co., as Record Owner
By: /s/ George Flores
-----------------------------------
(Please print name as it
appears on the face of the Notes)
Title: Assistant Treasurer
-------------------------------
/s/ (Illegible)
- ------------------------------- --------------------------------------
Signature Guarantee (Signature of authorized officer)
[SEAL]
/s/ John Reilly As Agent for SunAmerica Life Ins. Co.
(f.k.a. Sun Life Ins. Co. of America)
--------------------------------------
(Please print name and title
of signing officer)
<PAGE>
Exhibit 10.43
CONFIDENTIAL
EMPLOYMENT AGREEMENT
THIS AGREEMENT is made this 18 day of October, 1995, by and between
Griffith Consumers Company, a Delaware corporation (the "Corporation"), and
Terrence P. Sullivan ("Employee").
RECITALS:
A. The Corporation and its wholly-owned subsidiary, Carl King, Inc.
("King"), are engaged in the business of buying and selling gasoline, fuel oil
and petroleum products.
B. Employee is a current employee of King and the Corporation desires
that Employee serve as an employee of the Corporation and as a Vice President of
King.
C. Employee has indicated his willingness to accept such employment.
NOW, THEREFORE, in consideration of the mutual premises and covenants as
hereinafter set forth, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. EMPLOYMENT. The Corporation hereby agrees to employ Employee
and Employee hereby agrees to accept employment with the Corporation and King in
accordance with the terms and conditions set forth in this Agreement.
2. TERM. Subject to the provisions for termination as hereinafter
provided, the term of this Agreement shall begin as of the date hereof and
continue for a period of three years. If this Agreement is terminated pursuant
to Section 9, Employee shall only be entitled to receive those amounts expressly
provided for in Section 9 and no other. At least 210 days
<PAGE>
prior to the end of the initial term and any renewal term, Employee shall
deliver a notice to the Corporation requesting the Corporation to elect, at its
sole option, either not to renew this Agreement or to extend this Agreement for
an additional one year period. The Corporation shall make the election required
by this Section 2 within 30 days after receiving such notice. If the
Corporation fails to make the election required by this Section 2, the
Corporation shall be deemed to have elected to renew this Agreement for an
additional one year period. The initial term of this Agreement plus any renewal
terms is hereinafter referred to as the "Employment Term." If the Employee fails
to give the notice as required above, the Corporation shall have the right to
renew or not renew the Agreement for an additional one year period.
3. COMPENSATION.
(a) SALARY. For all services rendered by Employee pursuant
to this Agreement, the Corporation shall pay, or cause King to pay, to Employee
an annual salary of $75,000 ("base salary"), payable in accordance with the
Corporation's customary practices. The amount of the base salary shall be
reviewed by the Compensation Committee of the Board of Directors of the
Corporation and may be increased (but not decreased) at least once each year to
insure that it is commensurate with the value of the services performed by
Employee; PROVIDED, HOWEVER, that the amount of the base salary shall be
increased each year by an amount not less than the increase in the Consumer
Price Index, Urban Wage Earners and Clerical Workers, New York, New York,
Northeastern New Jersey, all items (1967=100).
(b) BONUS. In addition to his base salary, Employee shall
be entitled to participate in any bonus plan of King, to the extent provided
for therein. Subject to the following sentence, Employee's bonus for each of
the fiscal years ended June 30, 1996, 1997
-2-
<PAGE>
and 1998 shall not be less than $20,000. If during the Employment Term
Employee dies or his employment is terminated pursuant to Section 9(a),
Section 9(b)(i) or Section 9(b)(iii) hereof, the amount of the bonus for the
fiscal year in which such event occurs shall be pro rated based on the
number of full months (out of twelve months) that Employee was employed by the
Corporation during such fiscal year (such prorated bonus shall be payable
within 60 days after the end of such fiscal year). If Employee's employment
is terminated pursuant to Section 9(b)(ii) hereof, Employee will not receive
any portion of the bonus that he would have received for such fiscal year had
this Agreement not been so terminated. In addition, Employee shall receive a
bonus of $25,000, payable on or prior to seven days after the date of this
Agreement.
(c) EQUITY COMPENSATION. Employee will be eligible to
participate in the Griffith Holdings, Inc. ("GHI") Executive Nonqualified
Stock Option Plan (the "Equity Compensation Plan"). Employee shall be granted
nonqualified stock options to purchase 5,000 shares of GHI Common Stock at an
exercise price per share equal to $16.4905 per share, which options shall be
granted pursuant to a Grant and Stock Option Agreement in the form attached
hereto as EXHIBIT A.
(d) OTHER. In addition to any other compensation paid to
Employee pursuant to the provisions of this Agreement, the Corporation may
(but shall not be obligated to) pay Employee additional compensation in an
amount and manner and at such time as is determined within the sole discretion
of the Corporation's Board of Directors or its Compensation Committee.
4. DUTIES. Employee is engaged to perform services for and on
behalf of: (i) the Corporation as an employee; and (ii) King as a Vice
President, or such other executive
-3-
<PAGE>
position as the Board of Directors of the Corporation or King shall
designate. Employee shall have such duties as may be assigned to him by the
Corporation's Board of Directors or by any officer of the Corporation or King
having supervision over his employment. Employee shall report directly to the
President of King. Employee shall devote his full time, attention, energies
and efforts to rendering services on behalf of the Corporation and King and
their affiliates, and will not engage in any other outside employment (except
personal investment for his own account (provided that investments in
competing businesses shall be limited to five percent or less of the capital
stock of public companies)) without the prior approval of the Board of
Directors of the Corporation.
5. WORKING FACILITIES. The Corporation, at its own cost, shall
furnish, or cause King to furnish, Employee with office facilities, technical
and secretarial personnel, supplies, equipment and other facilities and
services appropriate to his position and adequate for the performance of his
duties hereunder.
6. EXPENSES. In addition to the compensation provided for under
Section 3 hereof, the Corporation agrees to pay, or cause King to pay, for
(or to reimburse Employee for) all reasonable business, travel and
entertainment expenses incurred by Employee in pursuance of his duties
hereunder. Employee shall furnish King with a monthly statement and a
description of the nature of the business purpose of each expense for which
he seeks reimbursement.
7. VACATION. At such reasonable time as the Corporation shall
in its discretion permit, Employees shall be entitled without loss of pay to
absent himself voluntarily from the performance of his employment under this
Agreement, all such voluntary absences to count as vacation time; PROVIDED
THAT:
-4-
<PAGE>
(a) Such paid vacation shall consist of no more than the
number of working days per year as are then customary for employees of King.
Unused vacation days may be carried forward from one year to the next to the
extent permitted by King's then current policy.
(b) Upon the termination or nonrenewal of this Agreement,
Employee shall be entitled to receive compensation for all earned but unused
vacation days to the extent permitted by King's then current policy.
(c) In addition to the aforesaid paid vacations, Employee
shall be entitled (i) to all paid holidays and sick leave given by King to
its senior management and (ii) without loss of pay to absent himself
voluntarily from the performance of his employment with the Corporation and
King for such additional periods of time and for such valid and legitimate
reasons as the Board of Directors of the Corporation in its discretion may
determine.
8. OTHER BENEFITS. During the Employment Term, Employee shall
be entitled to participate in any and all group insurance, medical benefit,
disability insurance, pension, profit sharing or other employee benefit plans
made generally available to employees of King.
9. TERMINATION. This Agreement may be terminated in the
following manner:
(a) This Agreement may be terminated upon 60 days' written
notice given by Employee to the Corporation, and shall terminate immediately
upon the death of Employee. If this Agreement is terminated pursuant to this
Section 9(a), Employee shall only be entitled to receive any salary accrued
through such date and any bonus to which he is entitled pursuant to Section 3(b)
of this Agreement.
-5-
<PAGE>
(b) This Agreement shall be terminable at the option of
the Corporation (i) upon 30 days' prior written notice if, because of injury,
illness or other incapacity, whether physical or mental, Employee becomes
unable to perform all or substantially all of his duties hereunder on a
full-time basis for a period of three consecutive months or more, (ii)
immediately upon written notice to Employee in the event of (A) willful
failure by Employee to substantially and materially perform his duties
hereunder (other than any such failure resulting from Employee's exercise of
business judgment or incapacity due to physical or mental illness), which
failure is not cured by Employee within 30 days after a written demand for
material and substantial performance is delivered to Employee by the Board of
Directors of the Corporation which specifically identifies the manner in
which the Board believes that Employee has not substantially performed his
duties, or (B) willful engaging by Employee in misconduct materially and
demonstrably injurious to the Corporation or King, or (C) the conviction of
Employee of any criminal or fraudulent act (other than minor traffic
violations), or (iii) upon 30 days' prior written notice without cause. In
the event that the Corporation terminates this Agreement pursuant to either
clause (i) or (iii) above, the Corporation shall continue to pay Employee his
then current base salary and the benefits to which he is entitled pursuant to
Section 8 of this Agreement for twelve months from the date of such
termination notice, and any bonus to which he is entitled pursuant to Section
3(b) of this Agreement.
(c) Employee agrees that upon termination of this
Agreement he shall resign from all directorships, offices and other positions
with the Corporation and its subsidiaries and affiliates.
-6-
<PAGE>
10. NON-COMPETITION.
(a) During the Employment Term of this Agreement
(including any renewals thereof) Employee agrees that he shall comply with
the terms of the Noncompetition Covenant set forth on EXHIBIT B hereto (the
"Noncompetition Covenant") and the Nonsolicitation Covenant set forth on
EXHIBIT C hereto (the "Nonsolicitation Covenant").
(b) In the event this Agreement is terminated by the
Corporation pursuant to Section 9(b)(i) or 9(b)(iii) hereof, Employee agrees
(i) during the time he is receiving his base salary and benefits pursuant to
the last sentence of Section 9(b) of this Agreement, he will comply with the
terms of the Noncompetition Covenant, and (ii) for a period of two years from
the date of termination of this Agreement, he will comply with the terms of
the Nonsolicitation Covenant.
(c) In the event this Agreement is terminated by the
Corporation pursuant to Section 9(b)(ii) hereof or is terminated by Employee
pursuant to Section 9(a) hereof, Employee agrees that for a period of two
years from the date of termination of this Agreement, he will comply with the
terms of the Nonsolicitation Covenant.
(d) In the event this Agreement is not renewed pursuant to
Section 2 hereof, Employee agrees that for a period of two years following
the last date on which this Agreement is effective he will comply with the
terms of the Nonsolicitation Covenant.
11. CONFIDENTIALITY. Employee shall not, at any time during the
term of this Agreement or thereafter, whether or not in the employ of the
Corporation, its affiliates or their successors, communicate or divulge to,
or use for the benefit of, any person, firm, corporation or association, any
of the trade secrets, confidential business information or data used by the
-7-
<PAGE>
Corporation, its affiliates and/or any related corporation in its business
and communicated to or acquired by Employee while in the employment of the
Corporation or its affiliates; PROVIDED that this Section shall not be
violated by the communication or use by Employee of information which has
become publicly known without any breach by Employee of his obligations under
this Section 11. Employee agrees that any and all files, working papers,
tapes, documents, memoranda or other materials used or prepared by him in the
course of his employment shall be and remain the sole property of the
Corporation. Upon termination of employment, Employee shall not, without the
written consent of the Board of Directors of the Corporation, remove any
originals or copies of any files, working papers, tapes, documents, memoranda
or other materials of the Corporation or its affiliates, and shall turn over
to the Corporation all such materials which are in his possession, custody or
control.
12. NOTICES. Any notice required or permitted to be given under
this Agreement shall be in writing and shall be deemed to have been duly
given if delivered personally or if sent by registered or certified mail,
return receipt requested, with first class postage prepaid and addressed (i)
to Employee, at his residence, and (ii) to the Corporation, at 2510 Schuster
Drive, Cheverly, Maryland 20781, Attention: Howard B. Schlossberg. Any notice
which is required to be made within a stated period of time shall be deemed
timely if made before midnight of the last day of such period.
13. ALTERATION OR AMENDMENT. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by all the
parties. No waiver of any provision of this Agreement shall be valid unless
in writing and signed by the person against whom it is sought to be enforced.
The failure of any party at any time to insist upon strict
-8-
<PAGE>
performance of any condition, promise, agreement or understanding set forth
herein shall not be construed as a waiver or relinquishment of the right to
insist upon strict performance of the same condition, promise, agreement or
understanding at a future time. The invalidity or unenforceability of any
particular provision of this Agreement shall not affect the other provisions
hereof, and this Agreement shall be construed in all respects as if such
invalid or unenforceable provisions had been omitted.
14. GOVERNING LAW. This Agreement shall be subject to and
governed by the laws of the State of Delaware regardless of applicable
conflict of laws rules or the fact that either or both of the parties now is
or may become a resident of a different state or country.
15. BENEFIT AND BURDEN. This Agreement shall inure to the benefit
of, and shall be binding upon, the parties hereto and their respective
successors, assigns, heirs, and personal representatives. This Agreement
shall not be assignable by Employee, but may be assigned by the Corporation.
16. AUTHORITY. The person executing this Agreement on behalf of
the Corporation hereby certifies that he or she has full power and authority
to execute and deliver this Agreement on behalf of the Corporation.
17. ENTIRE AGREEMENT. This document contains the entire agreement
between the parties. No statement, promises or inducements made by any party
hereto, or agent of either party hereto, which is not contained in this
written contract, shall be valid or binding; and this contract may not be
enlarged, modified or altered except in writing and signed by all the parties.
-9-
<PAGE>
IN WITNESS WHEREOF, the Corporation has caused this Agreement to be
signed by its duly authorized officer and Employee has executed this
Agreement on the date and year first above written.
Attest: GRIFFITH CONSUMERS COMPANY
/s/ Raymond R. McKenzie By: /s/ Howard Schlossberg
- --------------------------- -----------------------------
President
Witness: EMPLOYEE
/s/ Bruce King /s/ Terrence P. Sullivan
- --------------------------- ------------------------------
Terrence P. Sullivan
-10-
<PAGE>
EXHIBIT A
GRANT AND STOCK OPTION AGREEMENT
-11-
<PAGE>
FORM OF
GRIFFITH HOLDINGS, INC.
EXECUTIVE NONQUALIFIED STOCK OPTION PLAN
GRANT OF NONQUALIFIED STOCK OPTIONS AND STOCK OPTION AGREEMENT
Date of Grant: October 18, 1995
THIS GRANT AND AGREEMENT, dated as of the date of grant first stated
above (the "Date of Grant"), is delivered by Griffith Holdings, Inc. (the
"Company") to Terrence P. Sullivan (the "Optionee"), who is an employee or
officer of the Company or a subsidiary of the Company.
WHEREAS, the Board of Directors of the Company (the "Board") on
December 15, 1994 adopted, with subsequent stockholder approval, the Griffith
Holdings, Inc. Executive Nonqualified Stock Option Plan (the "Plan");
WHEREAS, the Plan provides for the granting by the Company's Option
Committee (the "Committee") to executive officers and other key employees of
the Company or its subsidiaries of nonqualified options to purchase shares of
the common stock of the Company (the "Common Stock"), in accordance with the
terms and provisions thereof; and
WHEREAS, the Committee considers the Optionee to be a person who is
eligible for a grant of nonqualified stock options under the Plan, and has
determined that it would be in the best interest of the Company to grant the
nonqualified stock options documented herein.
NOW, THEREFORE, the parties hereto, intending to be legally bound hereby,
agree as follows:
1. GRANT OF OPTIONS.
Subject to the terms and conditions hereinafter set forth, the Company,
with the approval and at the direction of the Committee, hereby grants to the
Optionee, as of the Date of Grant, options to purchase up to 5,000 shares of
Common Stock at an exercise price of $16.4905 per share, the fair market value
per share of Common Stock on the Date of Grant. Such Options are hereinafter
referred to as the "Options" and the shares of Common Stock purchasable upon
exercise of the Options are hereinafter sometimes referred to as the "Option
Shares." The Options are not intended by the parties hereto to qualify as
incentive stock options (as such term is defined under section 422 of the
Internal Revenue Code of 1986).
<PAGE>
2. DATE OF OPTIONS BECOME EXERCISABLE.
Subject to such further limitations as are provided herein, the Options
shall become exercisable in three (3) installments, the Optionee having the
right hereunder to purchase from the Company the following number of Option
Shares upon exercise of the Options, on and after the following dates, in
cumulative fashion;
(a) on and after the first anniversary of the Date of Grant, up to
one-third (ignoring fractional shares) of the total number of Option Shares;
(b) on and after the second anniversary of the Date of Grant, up
to an additional one-third (ignoring fractional shares) of the total number of
Option Shares; and
(c) on and after the third anniversary of the Date of Grant, the
remaining Option Shares.
3. TERMINATION OF OPTIONS.
Subject to Section 14 hereof:
(a) the termination date of all Options granted herein shall be
determined in accordance with this Section 3, except where an earlier
termination date is specified elsewhere in this Agreement or in the Plan;
(b) any Options that have not become exercisable on the date of
the Optionee's termination of employment shall terminate and be null and void
as of the date of such termination of employment;
(c) the Options and all rights hereunder with respect thereto, to
the extent such rights shall not have been exercised or otherwise terminated
pursuant to the Plan, shall terminate and become null and void upon the tenth
anniversary of the Date of Grant (the "Option Term");
(d) if the Optionee's employment with the employer is terminated
pursuant to Section 9(b)(ii) of the Employment Agreement dated the date hereof
between the Optionee and the Company (the "Employment Agreement"), all Options
(whether or not then exercisable) shall expire immediately on the date of
termination;
(e) if the Optionee's employment terminates by reason of
disability or death, the Options may be exercised during the 180-day period
immediately following the date of such termination, but only to the extent
that the Options were outstanding and exercisable on the date of such
termination. In no event, however, shall any such period extend beyond the
Option Term;
-2-
<PAGE>
(f) if the Company terminates the Optionee's employment or fails
to renew the Optionee's employment agreement, for reasons other than
disability, death, or a termination pursuant to Section 9(b)(ii) of the
Employment Agreement, the Options may be exercised during the 90-day period
immediately following the date of such termination, but only to the extent
that the Options were outstanding and exercisable on the date of such
termination. In no event, however, shall any such period extend beyond the
Option Term.
(g) if the Optionee terminates employment voluntarily, the
Options may be exercised during the 30-day period immediately following the
date of such termination, but only to the extent that the Options were
outstanding and exercisable on the date of such termination. In no event,
however, shall any such period extend beyond the Option Term; and
(h) in the event of the death of the Optionee, the Options may be
exercised by the Optionee's legal representative(s) at any time during the
180-day period immediately following the date of death, but only to the
extent that the Options would otherwise have been exercisable by the Optionee.
4. MANNER OF EXERCISE OF OPTIONS.
(a) The Optionee may exercise the Options with respect to all or
any part of the number of Option Shares then exercisable hereunder by giving
the Secretary of the company written notice of intent to exercise. The notice
of exercise shall specify the number of Option Shares as to which the Options
are to be exercised and the date of exercise thereof, which date shall be at
least five days after the giving of such notice unless an earlier time shall
have been mutually agreed upon.
(b) Full payment (in U.S. dollars) by the Optionee of the option
price for the Option Shares purchased shall be made on or before the exercise
date specified in the notice of exercise in cash, or, with the prior written
consent of the Committee, in whole or in part through the surrender of
previously acquired shares of Common Stock at their fair market value on the
exercise date. The Committee shall have the right to require the Optionee to
remit to the Company an additional amount sufficient to satisfy any federal,
state, and/or local withholding tax requirements prior to the delivery of any
certificate or certificates for the Option Shares. Alternatively, the
Committee may issue such shares of Common Stock net of the number of shares
sufficient to satisfy the withholding tax requirements.
(c) The Optionee's right to exercise the Options granted pursuant
to this Agreement is conditioned upon the Optionee's execution of an
irrevocable proxy and voting agreement, in
-3-
<PAGE>
substantially the form attached to this Agreement, with respect to the Option
Shares.
(d) On the exercise date specified in the Optionee's notice or as
soon thereafter as is practicable, the Company shall cause to be delivered to
the Optionee a certificate or certificates for the Option Shares then being
purchased (out of theretofore unissued Common Stock or reacquired Common
Stock, as the Company may elect) upon full payment for such Option Shares and
the execution of the irrevocable proxy and voting agreement described in
paragraph (c) of this Section. The obligation of the Company to deliver
Common Stock shall, however, be subject to the condition that if at any time
the Committee shall determine in its discretion that the listing,
registration or qualification of the Options or the Option Shares upon any
securities exchange or under any state or federal law, or the consent or
approval of any governmental regulatory body, is necessary or desirable as a
condition of, or in connection with, the Options or the issuance or purchase
of Common Stock thereunder, the Options may not be exercised in whole or in
part unless such listing, registration, qualification, consent or approval
shall have been effected or obtained free of any conditions not acceptable to
the Committee.
(e) If the Optionee fails to pay for any of the Option Shares
specified in such notice, fails to execute an irrevocable proxy and voting
agreement with respect to the Option Shares, or fails to accept delivery
thereof, the Optionee's right to purchase such Option Shares may be
terminated by the Company. The date specified in the Optionee's notice as the
date of exercise shall be deemed the date of exercise of the Options,
provided that payment in full for the Option Shares to be purchased upon such
exercise and an executed irrevocable proxy and voting agreement with respect
to those Option Shares shall have been received by such date.
5. ADJUSTMENT OF AND CHANGES IN COMMON STOCK OF THE COMPANY.
In the event of a reorganization, recapitalization, change of shares,
stock split, spin-off, stock dividend, reclassification, subdivision or
combination of shares, merger, consolidation, rights offering, or any other
change in the corporate structure or shares of capital stock of the Company,
the Committee shall make a proportionate adjustment to the number and kind of
shares of Common Stock subject to the Options or to the option price;
provided, however, that no such adjustment shall give the Optionee any
additional benefits under the Options.
6. FAIR MARKET VALUE.
As used herein, the "fair market value" of a share of stock shall be the
fair market value determined by the Committee in such manner as it may
reasonably deem appropriate. In no event shall
-4-
<PAGE>
the fair market value of any share of Common Stock be less than its par value.
7. NO RIGHTS OF STOCKHOLDERS.
Neither the Optionee nor any personal representative shall be, or shall
have any of the rights and privileges of, a stockholder of the Company with
respect to any of the Option Shares, in whole or in part, prior to the date of
exercise of the Options.
8. NON-TRANSFERABILITY OF OPTIONS.
During the Optionee's lifetime, the Options hereunder shall be exercisable
only by the Optionee or any guardian or legal representative of the Optionee,
and the Options shall not be transferable except, in case of the death of the
Optionee, by will or the laws of descent and distribution, nor shall the Options
be subject to attachment, execution or other similar process. In the event of
(a) any attempt by the Optionee to alienate, assign, pledge, hypothecate or
otherwise dispose of the Options, except as provided for herein, or (b) the levy
of any attachment, execution or similar process upon the rights or interest
hereby conferred, the Company may terminate the options by notice to the
Optionee and it shall thereupon become null and void.
9. EMPLOYMENT NOT AFFECTED.
Neither the granting of the Options nor their exercise shall be construed
as granting to the Optionee any right with respect to continuance of employment
with the Company or any of its subsidiaries. Except as may otherwise be limited
by a written agreement between the Company or a subsidiary of the Company and
the Optionee, the right of the Company or subsidiary to terminate at will the
Optionee's employment with it at any time (whether by dismissal, discharge,
retirement or otherwise) is specifically reserved by the Company or subsidiary
and acknowledged by the Optionee.
10. AMENDMENT OF OPTIONS.
The Options may be amended by the Board or the Committee at any time (i) if
the Board or the Committee determines, in its sole discretion, that amendment is
necessary or advisable in the light of any addition to or change in the Internal
Revenue Code of 1986 or in the regulations issued thereunder, or any federal or
state securities law or other law or regulation, which change occurs after the
Date of Grant and by its terms applies to the Options; or (ii) other than in the
circumstances described in clause (i), with the consent of the Optionee.
-5-
<PAGE>
11. NOTICE.
Any notice to the Company provided for in this instrument shall be
addressed to it in care of its Secretary at its executive office at 2510
Schuster Drive, Cheverly, Maryland 20781, and any notice to the Optionee shall
be addressed to the Optionee at the current address shown on the payroll records
of the Company or its subsidiary. Any notice shall be deemed to be duly given
if and when properly addressed and posted by registered or certified mail,
postage prepaid.
12. INCORPORATION OF PLAN BY REFERENCE.
The Options are granted pursuant to the terms of the Plan, and the Options
shall in all respects be interpreted in accordance with the Plan. The Committee
shall interpret and construe the Plan an this instrument, and its
interpretations and determinations shall be conclusive and binding on the
parties hereto and any other person claiming an interest hereunder, with respect
to any issue arising hereunder or thereunder.
13. GOVERNING LAW.
The validity, construction, interpretation and effect of this instrument
shall exclusively be governed by and determined in accordance with the law of
the State of Delaware, except to the extent preempted by federal law, which
shall to that extent govern.
14. CANCELLATION RIGHT.
Notwithstanding anything to the contrary contained herein:
(a) Upon termination of the Optionee's employment, then, subject
to the limitation in paragraph (b) of this section, the Company shall have
the right, but shall not be obligated, to cancel all or part of the Stock
Options otherwise exercisable by the Optionee at any time prior to the
exercise thereof by the Optionee. If the Company exercises such cancellation
right, it shall pay to the Optionee the excess (less any required withholding
for taxes), if any, of the fair market value, determined as of the date of
the cancellation, of the Common Stock subject to such cancelled Stock Options
over the product of the option price of such cancelled Stock Options and the
number of shares of Common Stock subject to such Stock Options. The Optionee
may not transfer or assign the right to such payment upon cancellation.
(b) Notwithstanding the provisions of paragraph (a) of this
section, if the exercise by the Company of the cancellation right set forth in
paragraph (a) would cause the Optionee to violate the provisions of Section
16(b) of the '34 Act, the cancellation right shall not apply until the first day
that the
-6-
<PAGE>
exercise of such right would not result in a violation of Section 16(b) of the
'34 Act.
15. RIGHTS OF FIRST REFUSAL.
The Option Shares shall be subject to the rights of first refusal set forth
in the Plan.
IN WITNESS WHEREOF, the Company has caused its duly authorized officer to
execute this Grant of Nonqualified Stock Options and Stock Option Agreement and
the Optionee has placed his or her signature hereon, effective as of the Date of
Grant.
GRIFFITH HOLDINGS, INC.
By: /s/ Michael Shein
----------------------
Title: Vice President
--------------------
ACCEPTED AND AGREED TO:
By: /s/ Terrence P. Sullivan
------------------------
Optionee
By: /s/ Maureen M. Sullivan
------------------------
Optionee's Spouse
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<PAGE>
EXHIBIT B
NONCOMPETITION COVENANT
Employee agrees that he will not enter into, be engaged or interested in,
as a stockholder, officer, agent, employee, consultant or otherwise, any
business or undertaking which may compete in any manner with that of the
Corporation, its affiliates or their successors within any county where any of
the Corporation, its affiliates, or their successors is doing business, or has
made definite plans for and has taken steps preparatory to doing business;
PROVIDED, THAT Employee's ownership of five percent or less of the capital stock
of a public company that competes with the Corporation shall not be prohibited
by this Covenant.
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<PAGE>
EXHIBIT C
NONSOLICITATION COVENANT
Employee agrees that he will not (i) call upon any person who is, at that
time, an employee of the Corporation, any of its affiliates or their successors
in a managerial capacity for the purpose or with the intent of enticing such
employee away from or out of the employ of the Corporation, any of its
affiliates or their successors, or (ii) solicit business from any person or
entity which is at that time a customer of the Corporation, any of its
affiliates or their successors. If Employee is no longer employed by the
Corporation, the solicitation of residential heating oil customers of the
Corporation by Employee's new employer through routine marketing activities
shall not be prohibited by this Covenant; PROVIDED THAT confidential information
of the Corporation is not being used in violation of Section 11 of this
Agreement.
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<PAGE>
EXHIBIT 10.44
AGREEMENT FOR
CONSULTING SERVICES
THIS AGREEMENT (the "Agreement") is made as of the 15th day of December,
1995 by and among Griffith Consumers Company, a Delaware corporation
("Company"), Griffith Holdings, Inc., a Delaware corporation, ("Parent"), and
Walter J. Meighan ("Consultant").
RECITALS
WHEREAS, Company and Parent acknowledge that Consultant, the former
Chairman of the Board of the Company, has developed various areas of
expertise in businesses engaged in the buying and selling gasoline, fuel oil
and various other petroleum products (the "Petroleum Business"); and
WHEREAS, Company and Parent desire to obtain the services of Consultant
and Consultant desires to provide such services to Company and Parent
according to the terms and conditions provided in this Agreement.
NOW, THEREFORE, in consideration of the foregoing, and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, and for other good and valuable consideration hereinafter
stated, the parties hereby agree as follows:
1. APPOINTMENT. Company and Parent hereby retain Consultant, and
Consultant hereby agrees to be retained by Company and Parent to provide the
services set forth in herein.
<PAGE>
2. TERM. Subject to the provisions relating to termination as
hereinafter provided, the term of the Agreement shall be for a period of two
(2) years from the date hereof. At the end of such period, the Agreement may
be renewed by mutual agreement among the parties. The initial term of the
Agreement plus any renewal terms is hereinafter referred to as the "Term."
3. SERVICES TO BE RENDERED; DIRECTORSHIP.
(a) Consultant shall render consulting and advisory services
relating to identifying and contacting businesses engaged in the Petroleum
Business for the purpose of initiating potential acquisitions thereof by the
Company in coordination with the Chairman and the President of the Company
("Consulting Services").
(b) Parent shall nominate and vote the shares of Company it holds
in favor of election of Consultant to the Company's Board of Directors at all
meetings of the Company's Shareholders at which Company Directors are elected.
(c) Consultant shall devote such time and energy necessary for
the provision of consulting and advisory services to be performed pursuant to
this Agreement.
(d) Consultant shall have no authority to enter into binding
commitments on behalf of Parent or the Company.
4. COMPENSATION AND REIMBURSEMENT OF EXPENSES. In consideration of
Consultant's performance of the services to be provided hereunder, the
Company shall pay or otherwise provide to Consultant:
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<PAGE>
(a) an annual fee of $10,000 for Consultant's service as a
Director of the Company plus $1,500 for each meeting of the Board of
Directors which Consultant attends in person, each payable quarterly in
arrears;
(b) a Consulting Services fee of $200 per hour, payable in arrears
on the first day of each month; PROVIDED, HOWEVER, that Consultant shall
receive no fees pursuant to this subparagraph 4(b) for services rendered as a
Director of the Company;
(c) a fee of $25.00 per hour, payable in arrears together with
the items referred to in Section 4(d) below for all travel time incurred by
Consultant that is requested by the Company in connection with Consultant's
performing the Consulting Services; and
(d) reimbursement for all reasonable out-of-pocket expenses
incurred by Consultant in providing services under this Agreement, promptly
after receipt of itemized expense reports from Consultant; PROVIDED, that
such expenses have been discussed with and approved by the Company's Chairman
or President.
5. OTHER BENEFITS. The Company shall provide Consultant with the use
of a Lincoln Town Car and the payment of maintenance costs thereon.
6. TERMINATION.
(a) This Agreement shall terminate immediately upon the death of
the Consultant.
(b) This Agreement shall be terminable at the option of the
Company: (i) upon 30 days' prior written notice if, because of
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<PAGE>
injury, illness or other incapacity, whether physical or mental, Consultant
becomes unable to perform all or substantially all of his duties hereunder
for a period of three (3) consecutive months or more; or (ii) immediately
upon written notice to Consultant in the event of (A) the failure by
Consultant to perform his duties hereunder (other than any such failure
resulting from Consultant's incapacity due to illness), provided that
Consultant shall have first received written notice from the Company which
specifically identifies the manner in which Company believes that Consultant
has not performed his duties and gives Consultant at least 10 business days to
correct the acts or omissions complained of, or (B) Consultant is convicted
of any felony, or (C) Consultant shall commit a material act of fraud on the
Company or Parent.
(c) The Consultant agrees that, upon termination of this
Agreement he shall resign as a Director of the Company if so requested by
Parent.
(d) Upon termination of this Agreement, Consultant shall be
entitled to receive any payments due pursuant to Section 4 of this Agreement
(in accordance with the terms hereof and at the time provided for herein) in
respect of services provided through the date of such termination.
7. NON-COMPETITION. Consultant and Company agree that they will
comply with the terms and conditions of the Non-Competition Agreement, dated
as of January 2, 1992, between Consultant and Company, attached hereto as
EXHIBIT A (the "Non-Competition Agreement"). Notwithstanding anything to the
contrary contained
-4-
<PAGE>
herein, the Non-Competition Agreement shall remain in full force and effect
for its stated term.
8. NOTICES. Any notice required or permitted to be given under this
Agreement shall be in writing and shall be deemed to have been duly given if
delivered personally or if sent by registered or certified mail, return
receipt requested, with first class postage prepaid and addressed (i) to
Consultant, at his residence, and (ii) to Company or Parent, at 2510 Schuster
Drive, Cheverly, Maryland 20781, Attention: President, with a copy to Russell
W. Parks, Jr., P.C., Akin, Gump, Strauss, Hauer & Feld, L.L.P., 1333 New
Hampshire Avenue, N.W., Suite 400 Washington, D.C. 20036. Any notice that is
required to be made within a stated period of time shall be deemed timely if
made before midnight of the last day of such period.
9. ALTERATION OR AMENDMENT. No change or modification of this
Agreement shall be valid unless the same is in writing and signed by all the
parties hereto. No waiver of any provision of this Agreement shall be valid
unless made in writing and signed by the person against whom it is sought to
be enforced. The failure of any party at any time to insist upon strict
performance of any condition, promise, agreement or understanding set forth
herein shall not be construed as a waiver or relinquishment of the right to
insist upon strict performance of the same condition, promise, agreement or
understanding at a future time.
-5-
<PAGE>
10. GOVERNING LAW. This Agreement shall be subject to and governed by
the laws of the State of Delaware without giving effect to applicable
conflict of laws rules thereunder.
11. BENEFIT AND BURDEN. This Agreement shall inure to the benefit of,
and shall be binding upon, the parties hereto and their respective
successors, heirs, and personal representatives. This Agreement shall not be
assignable.
12. ENTIRE AGREEMENT. This document contains the entire agreement
between the parties. No statement, promise or inducement made by any party
hereto, or agent of either party hereto, which is not contained in this
written contract, shall be valid or binding.
13. SEVERABILITY. If any provision of this Agreement, as applied to any
party or to any circumstances, shall be adjudged by a court to be void or
unenforceable, the same shall in no way affect any other provision of this
Agreement or the applicability of such provision to any other circumstances.
14. COUNTERPARTS. This Agreement may be executed and delivered in one
or more counterparts, each of which shall be deemed an original, but all of
which together will constitute one and the same instrument.
-6-
<PAGE>
IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement
to be executed on its behalf by its officers thereunto duly authorized, all
as of the day and year first above written.
GRIFFITH CONSUMERS COMPANY
By: /s/ Todd R. Berman
-----------------------------
Name: Todd R. Berman
Its: Chairman
GRIFFITH HOLDINGS, INC.
By: /s/ Todd R. Berman
-----------------------------
Name: Todd R. Berman
Its: President
CONSULTANT
By: /s/ Walter J. Meighan
-----------------------------
Walter J. Meighan
Residence Address:
9616 Ashmede Drive
--------------------------------
Ellicott City, MD
--------------------------------
21042-2350
--------------------------------
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<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
JUNE 30, 1996 10-K OF GRIFFITH CONSUMERS COMPANY AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENT.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> YEAR
<FISCAL-YEAR-END> JUN-30-1996
<PERIOD-START> JUL-01-1995
<PERIOD-END> JUN-30-1996
<CASH> 1,687
<SECURITIES> 0
<RECEIVABLES> 13,559
<ALLOWANCES> 691
<INVENTORY> 2,890
<CURRENT-ASSETS> 17,711
<PP&E> 23,531
<DEPRECIATION> 6,019
<TOTAL-ASSETS> 108,570
<CURRENT-LIABILITIES> 18,126
<BONDS> 31,452
0
0
<COMMON> 20,691
<OTHER-SE> (5,133)
<TOTAL-LIABILITY-AND-EQUITY> 108,570
<SALES> 193,611
<TOTAL-REVENUES> 198,017
<CGS> 153,550
<TOTAL-COSTS> 154,158
<OTHER-EXPENSES> 40,222
<LOSS-PROVISION> 336
<INTEREST-EXPENSE> 9,398
<INCOME-PRETAX> (5,093)
<INCOME-TAX> (1,428)
<INCOME-CONTINUING> (3,665)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (3,665)
<EPS-PRIMARY> 0
<EPS-DILUTED> 0
</TABLE>