<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-Q
(X) QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ending December 31, 1997
OR
( ) TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1934
For the transition period from to
------ -------
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 Identification No.)
incorporation or organization)
Griffith Consumers Company Carl King, Inc.
Frederick Terminals, Inc. 2336 Goddard Parkway
2510 Schuster Drive Salisbury, Maryland 21801
Cheverly, Maryland 20781 (410) 860-0400
(301) 322-3111
(Address, including zip code, and telephone number, including
area code, of registrants' principal executive offices)
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
--- ----
As of February 17, 1998, 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
<PAGE>
Griffith Consumers Company and Subsidiaries
December 31, 1997
Index
<TABLE>
<CAPTION>
<S> <C> <C>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
A. Consolidated Balance Sheets
December 31, 1997 and June 30, 1997 3--4
B. Consolidated Statements of Operations
Three months and six months ended
December 31, 1997 and 1996 5--6
C. Consolidated Statements of Changes in
Shareholder's Equity June 30, 1996 to
December 31, 1997 7
D. Consolidated Statements of Cash Flows
Six months ended December 31, 1997 and
1996 8
E. Notes to Consolidated Financial
Statements 9--16
Item 2. Management's Discussion and Analysis 17--23
PART II. OTHER INFORMATION
Item 1. Legal Proceedings 24
Item 2. Changes in Securities 24
Item 3. Defaults upon Senior Securities 24
Item 4. Submission of Matters to a Vote of
Security Holders 24
Item 5. Other Information 24
Item 6. Exhibits and Reports on Form 8-K 24
Signatures 25
</TABLE>
2
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31, JUNE 30,
1997 1997
ASSETS: (UNAUDITED)
- -------------------------------------------------------------------------------- --------------- --------------
<S> <C> <C>
CURRENT ASSETS
CASH........................................................................... $ 683,545 $ 3,212,107
ACCOUNTS AND NOTES RECEIVABLE, LESS ALLOWANCE FOR BAD DEBTS.................... 13,611,552 11,182,949
PETROLEUM PRODUCTS INVENTORY................................................... 1,852,322 1,704,747
REPAIR PARTS AND SUNDRY INVENTORY.............................................. 3,405,652 3,294,711
PREPAID EXPENSES AND OTHER..................................................... 1,873,471 1,336,380
INCOME TAXES RECEIVABLE........................................................ 63,076 95,603
OTHER TAXES RECEIVABLE......................................................... 286,625 906,050
DEFERRED TAX ASSET............................................................. 2,875,734 1,399,424
--------------- --------------
TOTAL CURRENT ASSETS............................................................ 24,651,977 23,131,971
PROPERTY, PLANT AND EQUIPMENT
LAND........................................................................... $ 5,622,871 $ 5,622,871
BUILDINGS...................................................................... 3,979,731 3,979,731
MACHINERY AND EQUIPMENT........................................................ 26,724,905 25,032,748
--------------- --------------
36,327,507 34,635,350
LESS: ACCUMULATED DEPRECIATION................................................. 14,587,292 11,523,797
--------------- --------------
21,740,215 23,111,553
INTANGIBLES--NOTE C
CUSTOMER AND SERVICE ACCOUNTS.................................................. 39,867,184 39,867,184
COVENANTS NOT TO COMPETE....................................................... 3,286,824 3,286,824
GOODWILL....................................................................... 49,249,316 49,249,316
OTHER INTANGIBLES.............................................................. 457,209 423,046
--------------- --------------
92,860,533 92,826,370
LESS: ACCUMULATED AMORTIZATION................................................. 22,693,702 18,863,920
--------------- --------------
70,166,831 73,962,450
LONG-TERM NOTES RECEIVABLE...................................................... 1,427,293 990,694
DEFERRED DEBT COSTS & OTHER..................................................... 3,721,535 4,080,416
--------------- --------------
TOTAL ASSETS.................................................................... $ 121,707,851 $ 125,277,084
--------------- --------------
--------------- --------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
3
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
1997 JUNE 30,
LIABILITIES AND SHAREHOLDER'S EQUITY: (UNAUDITED) 1997
- ----------------------------------------------------------------------------------- -------------- ------------
<S> <C> <C>
CURRENT LIABILITIES:
ACCOUNTS PAYABLE.................................................................. $ 7,476,872 $ 8,708,702
ACCRUED EXPENSES.................................................................. 3,169,941 3,400,181
DEFERRED REVENUE.................................................................. 4,999,008 3,189,405
OTHER TAXES PAYABLE............................................................... 2,279,492 1,536,084
CURRENT PORTION OF LONG-TERM DEBT-NOTE F.......................................... 2,009,571 5,448,956
-------------- ------------
TOTAL CURRENT LIABILITIES.......................................................... 19,934,884 22,283,328
LONG-TERM DEBT, LESS CURRENT PORTION-NOTE F....................................... 89,032,971 85,107,114
DEFERRED REVENUE................................................................... 849,414 1,089,414
DEFERRED INCOME TAXES.............................................................. 5,189,466 5,882,534
POST-RETIREMENT EMPLOYEE BENEFITS AND OTHER........................................ 1,751,242 1,803,830
-------------- ------------
TOTAL LIABILITIES.................................................................. 116,757,977 116,166,220
SHAREHOLDER'S EQUITY
COMMON STOCK, par value $.01 per share, 1,000 shares, authorized, issued and
outstanding...................................................................... 10 10
ADDITIONAL PAID-IN CAPITAL........................................................ 20,691,314 20,691,314
RETAINED DEFICIT.................................................................. (15,741,450) (11,580,460)
-------------- ------------
TOTAL SHAREHOLDER'S EQUITY......................................................... 4,949,874 9,110,864
-------------- ------------
TOTAL LIABILITIES AND SHAREHOLDER'S EQUITY......................................... $ 121,707,851 $125,277,084
-------------- ------------
-------------- ------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
4
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
OCT 1, 1997 - OCT 1, 1996 -
DEC 31, 1997 DEC 31, 1996
(Unaudited) (Unaudited)
------------- -------------
<S> <C> <C>
SALES FROM PETROLEUM PRODUCTS...................................................... $ 57,123,495 $ 62,719,576
SERVICE, EQUIPMENT, AND OTHER SALES................................................ 13,011,047 11,905,908
------------- -------------
TOTAL SALES...................................................................... 70,134,542 74,625,484
COST OF SALES...................................................................... 53,926,203 60,001,084
-------------- ------------
GROSS PROFIT..................................................................... 16,208,339 14,624,400
SELLING, GENERAL, AND ADMINISTRATIVE
EXPENSES......................................................................... 11,548,405 11,278,632
DEPRECIATION EXPENSE............................................................... 1,586,960 1,284,180
AMORTIZATION EXPENSE............................................................... 2,058,157 1,947,899
------------- -------------
OPERATING INCOME................................................................. 1,014,817 113,689
INTEREST EXPENSE................................................................. 2,695,619 2,693,786
OTHER INCOME..................................................................... 390,234 382,495
------------- -------------
LOSS BEFORE INCOME TAX........................................................... (1,290,568) (2,197,602)
INCOME TAX BENEFIT............................................................... (386,934) (765,777)
------------- -------------
NET LOSS......................................................................... $ (903,634) $ (1,431,825)
------------- -------------
------------- -------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
5
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
JUL 1, 1997 - JUL 1, 1996 -
DEC 31, 1997 DEC 31, 1996
(Unaudited) (Unaudited)
-------------- --------------
<S> <C> <C>
SALES FROM PETROLEUM PRODUCTS.................................................... $ 108,714,445 $ 110,722,953
SERVICE, EQUIPMENT, AND OTHER SALES.............................................. 27,897,225 24,444,065
-------------- --------------
TOTAL SALES.................................................................... 136,611,670 135,167,018
COST OF SALES.................................................................... 108,892,097 109,998,891
-------------- --------------
GROSS PROFIT................................................................... 27,719,573 25,168,127
SELLING, GENERAL, AND ADMINISTRATIVE EXPENSES.................................... 22,279,145 20,647,089
DEPRECIATION EXPENSE............................................................. 3,138,774 2,576,462
AMORTIZATION EXPENSE............................................................. 4,119,741 3,890,383
-------------- --------------
OPERATING LOSS................................................................. (1,818,087) (1,945,807)
INTEREST EXPENSE............................................................... 5,412,660 5,282,234
OTHER INCOME................................................................... 900,378 827,410
-------------- --------------
LOSS BEFORE INCOME TAX......................................................... (6,330,369) (6,400,631)
INCOME TAX BENEFIT............................................................. (2,169,379) (2,279,268)
-------------- --------------
NET LOSS......................................................................... $ (4,160,990) $ (4,121,363)
-------------- --------------
-------------- --------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
6
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
(Unaudited)
<TABLE>
<CAPTION>
ADDITIONAL RETAINED TOTAL
COMMON PAID-IN EARNINGS SHAREHOLDER'S
SHARES STOCK CAPITAL (DEFICIT) EQUITY
----------- ------------- ------------ ------------- -------------
<S> <C> <C> <C> <C> <C>
Balance June 30, 1996............................. 1,000 10 20,691,314 (5,132,900) 15,558,424
Net Loss.......................................... -- -- -- (6,447,560) (6,447,560)
--------- --------- ---------- ----------- -----------
Balance June 30, 1997............................. 1,000 10 20,691,314 (11,580,460) 9,110,864
Net Loss.......................................... -- -- -- (4,160,990) (4,160,990)
--------- --------- ---------- ----------- -----------
Balance December 31, 1997......................... 1,000 10 20,691,314 (15,741,450) 4,949,874
--------- --------- ---------- ----------- -----------
--------- --------- ---------- ----------- -----------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
7
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
JULY 1, 1997 JULY 1, 1996
THROUGH THROUGH
DECEMBER 31,1997 DECEMBER 31, 1996
---------------- -----------------
<S> <C> <C>
Operating activities
Net loss.................................................................. ($ 4,160,990) ($ 4,121,363)
Adjustments to reconcile net loss to net cash provided by (used in)
operating activities:
Depreciation............................................................. 3,138,774 2,576,462
Amortization............................................................. 4,119,741 3,890,383
Provision for bad debts.................................................. 178,000 143,514
Amortization of bond discount............................................ 91,055 91,054
Gain on sale of property, plant, equipment, and intangibles.............. (40,196) (86,523)
Changes in operating assets and liabilities
Accounts and notes receivable.......................................... (3,043,202) (4,121,973)
Inventory.............................................................. (258,516) (2,923,042)
Prepaid expenses and other............................................. (537,091) (218,213)
Refundable taxes, net.................................................. (824,358) (1,639,152)
Other assets........................................................... 34,759 826,207
Accounts payable....................................................... (1,231,830) 3,046,445
Accrued expenses....................................................... (230,240) (154,832)
Deferred revenue....................................................... 1,569,603 483,207
Other liabilities...................................................... (2,248) 18,638
---------------- -----------------
Net cash used in operating activities....................................... (1,196,739) (2,189,188)
Investing activities
Purchases of property, plant, and equipment............................... (2,151,555) (1,263,931)
Proceeds from sale of property, plant, and equipment, and intangible
assets.................................................................... 424,315 329,938
Acquisition of business................................................... -- (18,307,157)
Acquisition costs......................................................... -- (2,050,000)
---------------- -----------------
Net cash used in investing activities..................................... (1,727,240) (21,291,150)
Financing activities
Proceeds from line of credit.............................................. 1,100,000 4,000,000
Proceeds from term loans.................................................. 250,000 21,850,000
Payments on long-term debt................................................ (954,583) (2,423,730)
---------------- -----------------
Net cash provided by financing activities................................... 395,417 23,426,270
---------------- -----------------
Decrease in cash.......................................................... (2,528,562) (54,068)
Cash at beginning of period................................................. 3,212,107 1,687,443
---------------- -----------------
Cash at end of period....................................................... $ 683,545 $ 1,633,375
---------------- -----------------
</TABLE>
SEE NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
8
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
DECEMBER 31, 1997
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 "1994 Acquisition"). As a result of the 1994 Acquisition, Griffith
became a wholly owned subsidiary of GHI.
The 1994 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 Company's December 16, 1994 balance sheet were
adjusted when valuation studies were completed.
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 (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 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 (the "Regent Note") secured by first priority mortgages or deeds of
trust on certain stores. In addition, the Company also assumed $350,000 of
debt. The acquisition was financed through an amendment and restatement of
the Company's prior credit agreement ("Prior Credit Agreement", and as
amended and restated, "Credit Agreement"). See Note F-- Debt.
NOTE B--BASIS OF PRESENTATION
The accompanying unaudited consolidated financial statements have been
prepared in accordance with generally accepted accounting principles ("GAAP")
for interim financial information and with the
9
<PAGE>
instructions to Form 10-Q and Rule 10-01 of Regulation S-X. Accordingly, they
do not include all of the information and footnotes required by GAAP for
complete financial statements. In the opinion of management, all adjustments
considered necessary for the fair presentation of the consolidated financial
statements have been included and are of a normal and recurring nature.
Operating results for the six months ended December 31, 1997 do not
necessarily indicate the results that may be expected for the fiscal year
ending June 30, 1998. For further information with respect to the effect of
seasonality on the Company's financial results, please refer to the financial
statements and footnotes included in the Company's Form 10-K for the year
ended June 30, 1997.
NOTE C--SIGNIFICANT ACCOUNTING POLICIES
Intangible Assets: Customer and service accounts obtained through
acquisitions are amortized over their estimated useful lives of eight years.
Covenants not to compete are amortized over the period stated in the
agreements. Goodwill is being amortized over a thirty year period except the
goodwill related to the Shore Stop Acquisition which is amortized over 15
years. Other identified intangibles are amortized over periods not exceeding
ten years. All intangible assets are amortized using the straight-line
method. The Company adopted 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 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. The Company evaluates the potential
impairment of intangibles and other long-lived assets by comparing the
related undiscounted 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.
Debt Issuance Costs: The costs associated with the issuance of term debt are
amortized utilizing the effective interest method over the term of the
underlying debt instrument. The terms of the Company's existing debt, as
modified, incurred in December 1994 and July 1996, range from six to ten
years.
10
<PAGE>
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 which is not deductible for tax purposes.
Deferred income taxes relate primarily goodwill related to the 1994
Acquisition, depreciation associated with property, plant, and equipment,
allowances for bad debts and various accruals of salaries and related
benefits.
Reclassifications: Certain amounts in the consolidated balance sheet for the
year ended June 30, 1997 have been reclassified to conform to the December
31, 1997 presentations.
NOTE D--ACQUISITIONS--ALLOCATION OF PURCHASE PRICE
The Company made no material acquisitions during the first six months of
fiscal year 1998. During the first six months of fiscal year 1997, the
Company consummated the Shore Stop Acquisition and acquired the assets of
seven retail heating oil companies and two gasoline stations. These
acquisitions were accounted for as purchase transactions and, therefore, the
financial statements include the results of operations of each acquired
company from its acquisition date. The cost of the acquisitions for the six
months ended December 31, 1996:
<TABLE>
<CAPTION>
<S> <C>
Property, plant, and equipment........................ $6,048,157
Customer and service
accounts.......................................... 2,779,000
Covenants not to compete.............................. 350,000
Other Intangibles,
primarily goodwill.................................... 9,130,000
------------
$18,307,157
------------
------------
</TABLE>
NOTE E--SHORE STOP ACQUISITION--UNAUDITED PRO FORMA
The following condensed presentation of actual information for the six months
ended December 31, 1996 and pro forma information for the six months ended
December 31, 1997 was prepared to illustrate the estimated effects of the
Shore Stop Acquisition on the Company with the assumption that the Shore Stop
Acquisition occurred at July 1, 1996:
11
<PAGE>
<TABLE>
<CAPTION>
(000'S)
UNAUDITED
SIX MONTHS ENDED
DECEMBER 31,
---------------------
1997 1996
---------- ---------
<S> <C> <C>
Total Sales.................... $136,612 $ 138,036
Net Loss....................... (4,161) (4,117)
</TABLE>
NOTE F--DEBT
In connection with the 1994 Acquisition, the Company retired the
predecessor's existing operating line of credit and primary bank term loan
and negotiated a new term loan and operating line of credit with the
Company's primary bank lender (the "Prior Credit Agreement"). Mortgage notes
of the predecessor(the "Mortgage Notes") on several properties located in
Delaware, Maryland and West Virginia were assumed by the Company. As of July
8, 1996, in connection with funding of the Shore Stop Acquisition, the
Company amended and restated the Prior Credit Agreement (as amended and
restated, the "Credit Agreement") to increase the amount of term loan
borrowings outstanding thereunder from $34,450,000 to $54,450,000 and the
amount of revolving credit facility borrowings (including the maximum drawing
amount under outstanding letters of credit) available from $12,000,000 to
$13,000,000. 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
and those properties located in Delaware, Maryland, and Virginia securing the
Regent Note. Borrowings under the Credit Agreement are subordinated to the
Mortgage Notes and Regent Note on these properties. As of December 31, 1997,
the amount of the revolving credit facility borrowings outstanding was
$7,500,000 and the maximum drawing amount under outstanding letters of credit
was $2,590,000. From July 1, 1997 to December 31, 1997, the Company has paid
$2,314,000 of interest and $805,000 of principal on the term loan under the
Credit Agreement.
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 borrowings under the Prior Credit Agreement, the Company
financed the 1994 Acquisition with $34 million of 14 1/2%
12
<PAGE>
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 amended the Prior Credit Agreement (including its amendment
and restatement in connection with the Shore Stop Acquisition), the Credit
Agreement, and the Indenture on several occasions during the fiscal years
ended prior to June 30, 1997, which among other things, revised certain
financial covenants contained therein. On August 29, 1997 the Company amended
the Credit Agreement to increase the amount of term loan borrowings then
outstanding thereunder from $49,850,000 to $50,100,00. The amendment also
revised certain financial covenants contained therein and the term loan
repayment schedule. On September 26, 1997, the Company again amended the
Credit Agreement to revise the definition of eligible petroleum, which term
is used in calculating borrowing base. On December 15, 1997, the Company
further amended the Credit Agreement to temporarily increase the amount of
revolving credit facility borrowings available from $13,000,000 to
$16,000,000. The increase in borrowings is available from December 15, 1997
to March 31,1998. The Company is currently in compliance with the Credit
Agreement and the Indenture, as amended.
NOTE G--RELATED PARTY TRANSACTIONS
A management and consulting fee are paid to entities owned by certain of the
current directors and controlling shareholders. The Company paid $75,000 of
management and consulting fees quarterly for a total of $150,000 for the
first six months of fiscal years 1998 and 1997.
NOTE H--SEASONALITY OF REVENUE AND COST OF GOODS SOLD
The Company's heating oil sales volume is highly seasonal. Sales volume of
motor fuels is also seasonal, although it varies less than heating oil on a
month to month basis. The seasonality affects both revenue and cost of goods
sold; therefore, interim results are not indicative of the estimated results
for a full year.
NOTE I--ENVIRONMENTAL REGULATIONS
Management believes that the environmental reserve is sufficient to cover all
known liabilities under which it is probable that the Company will be
obligated to undertake remediation. Management's assessment of the
environmental liability is based, in part, on two comprehensive environmental
studies conducted on different
13
<PAGE>
segments of the Company's business by independent environmental consultants
that were completed during fiscal year 1995 and fiscal year 1996. Management
is not aware of any additional significant environmental exposures since the
completion of these studies.
The Company maintains a program to routinely detect releases of gasoline or
other regulated substances from underground storage 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 through the
computer at the Company's headquarters. Management believes that contingent
liabilities other than those recorded in the financial statements will not
have a material adverse effect on the Company's financial position or results
of operations.
NOTE J--SUBSIDIARIES, CONDENSED FINANCIAL STATEMENT DATA
Griffith's wholly owned subsidiaries, Carl King, Inc. ("King"), Frederick
Terminals, Inc. ("Frederick"), and Shore Stop Corporation ("Shore Stop" and,
collectively with King and Frederick, the "Subsidiaries") are full,
unconditional joint and several guarantors on the Notes. The only
subsidiaries of Griffith are King, Frederick, Shore Stop, and Regent
Transport, Inc. This footnote sets forth the combined condensed balance sheet
of King, Frederick, and Shore Stop as of December 31, 1997 and June 30, 1997,
the combined condensed statements of operations and cash flows for the
periods July 1, 1997 through December 31, 1997 and July 1, 1996 through
December 31, 1996 and the statement of changes in shareholder's equity from
June 30, 1996 to December 31, 1997.
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.
14
<PAGE>
CARL KING, INC., FREDERICK TERMINALS, INC., AND SHORE STOP CORPORATION
COMBINED CONDENSED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31 JUNE 30
1997 1997
ASSETS: (UNAUDITED)
- ----------------------------------------------------------------------------------- ------------- -------------
<S> <C> <C>
Current assets................................................................ $ 8,865,796 $ 8,420,729
Net property, plant and equipment............................................. 18,595,769 19,322,128
Net intangibles............................................................... 22,401,576 23,416,596
Other......................................................................... 2,264,860 2,372,638
------------- -------------
$ 52,128,001 $ 53,532,091
------------- -------------
------------- -------------
Liabilities and Shareholder's Equity:
Current liabilities........................................................... $ 10,312,263 $ 12,303,935
Due to Parents................................................................ 4,879,057 4,142,706
Long-term debt, less current portion.......................................... 35,183,766 34,681,538
Other liabilities............................................................. 1,125,723 1,117,377
Shareholder's equity.......................................................... 627,192 1,286,535
------------- -------------
$ 52,128,001 $ 53,532,091
------------- -------------
------------- -------------
</TABLE>
CARL KING, INC., FREDERICK TERMINALS, INC., AND SHORE STOP CORPORATION
COMBINED CONDENSED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
JUL 1, 1997 - JUL 1, 1996 -
DEC 31, 1997 DEC 31, 1996
(UNAUDITED) (UNAUDITED)
------------- -------------
<S> <C> <C>
Total sales...................................................................... $ 98,716,394 $ 91,229,827
Cost of sales.................................................................... 82,767,130 77,409,674
------------- -------------
Gross profit................................................................... 15,949,264 13,820,153
Selling, general, and administrative expenses.................................... 12,003,637 10,565,527
Depreciation expense............................................................. 2,397,913 1,864,835
Amortization expense............................................................. 1,159,473 1,070,876
------------- -------------
Operating income............................................................... 388,241 318,915
Interest expense............................................................... 2,034,455 2,049,774
Other income................................................................... 626,330 514,150
------------- -------------
(Loss) Income before income tax................................................ (1,019,884) (1,216,709)
Income tax (benefit) expense................................................... (360,541) (456,653)
------------- -------------
Net (loss) income.............................................................. $ (659,343) $ (760,056)
------------- -------------
------------- -------------
</TABLE>
15
<PAGE>
CARL KING, INC., FREDERICK TERMINALS, INC., AND SHORE STOP CORPORATION
COMBINED STATEMENTS OF CHANGES IN SHAREHOLDER'S EQUITY
Unaudited
<TABLE>
<CAPTION>
INVESTMENT RETAINED TOTAL
BY EARNINGS SHAREHOLDER'S
PARENT (DEFICIT) EQUITY
------------ ------------- ------------
<S> <C> <C> <C>
Balance June 30, 1996................................................ 5,792,610 ($ 1,989,160) 3,803,450
Net loss.............................................................. -- (2,516,915) (2,516,915)
------------ ------------- ------------
Balance June 30, 1997................................................ $ 5,792,610 ($ 4,506,075) $1,286,535
Net loss.............................................................. -- (659,343) (659,343)
------------ ------------- ------------
December 31, 1997..................................................... $ 5,792,610 ($ 5,165,418) $ 627,192
------------ ------------- ------------
------------ ------------- ------------
</TABLE>
CARL KING, INC., FREDERICK TERMINALS, INC., AND SHORE STOP CORPORATION
COMBINED CONDENSED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
JUL 1, 1997 - JUL 1, 1996 -
DEC 31, 1997 DEC 31, 1996
(UNAUDITED) (UNAUDITED)
------------ -------------
<S> <C> <C>
Operating activities................................................................. $ 1,317,301 ($ 765,491)
Investment activities................................................................ (1,613,688) (20,708,002)
Financing activities................................................................. (122,422) 21,134,000
------------ -------------
Increase in cash................................................................. (418,809) (339,493)
Cash at beginning of year............................................................ 941,748 $ 953,234
------------ -------------
Cash at end of year.................................................................. $ 522,939 $ 613,741
------------ -------------
------------ -------------
</TABLE>
16
<PAGE>
GRIFFITH CONSUMERS COMPANY AND SUBSIDIARIES
December 31, 1997
Management's Discussion and Analysis of
Financial Condition and Results of Operations
The fiscal year of Griffith Consumers Company ("Griffith", and together
with its subsidiaries, the "Company" or "Successor") ends June 30.
OVERVIEW
Except for historical information, statements in this Management's
Discussion and Analysis of Financial Condition and Results of Operations are
forward looking. 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 undertakes no obligation and does not
intend to update, revise or otherwise publicly release the result of any
revisions to any forward looking statement contained herein that may be made
to reflect future events or circumstances.
The Company's heating oil operations are highly seasonal with
approximately 75% of heating oil revenues generated 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. The Company's heating oil sales volume fluctuates depending upon
weather conditions. Colder winter temperatures increase consumer demand.
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 consolidated
subsidiaries, "Predecessor"), the predecessor to Griffith. 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, Griffith Maryland became a wholly-owned subsidiary of
GHI (the "1994 Acquisition"). Immediately thereafter, Griffith Maryland
merged with and into Griffith with Griffith as the surviving corporation.
On July 11, 1996, the Company, through its wholly-owned subsidiary, Shore
Stop Corporation ("Shore Stop"), acquired certain assets ("Shore Stop
Acquisition") used in the operations of a chain of 49 convenience stores and
retail gasoline stations within the states
17
<PAGE>
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 Operations") from Regent
Investments, Inc., Delaware Investments, Inc. and Mid-Atlantic Investments,
Inc., each a Virginia corporation (collectively, the "Sellers"). 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 (the "Regent Note") secured by first priority mortgages or
deeds of trust on certain stores. In addition, the Company also assumed
$350,000 of debt.
As a result of the Shore Stop Acquisition, the financial statements for
the six months ended December 31, 1997 are not directly comparable to the
consolidated financial statements of the Company for the six month period
ended December 31, 1996. The following discussion should be read in
connection with the historical financial information included in the
consolidated financial statements of the Company.
RESULTS OF OPERATIONS FOR THREE MONTHS ENDED DECEMBER 31 OF 1997 VERSUS 1996
References to particular years, unless otherwise indicated, are
references to the first quarter of the fiscal year for the year indicated.
The net loss for 1998 was $904,000, compared to a net loss of $1,432,000
for the same period in 1997. The decrease in net loss was due primarily to
the reasons outlined below.
Total sales decreased by $4,491,000 or 6% to $70,135,000 for 1998, from
$74,625,000 during 1997. The decrease was primarily due to an 11% and 12%
decrease in heating oil volume and price per gallon, respectively. The
weather was 8% warmer than normal in the month of December. In addition, the
price per gallon of motor fuels decreased by 4%. The decrease was offset by a
9% increase in service, equipment, and other sales from $11,906,000 to
$13,011,000. The increase is primarily due to an increase in sundry sales
which is related to an increase in the number of gasoline stations operated
by Carl King and Shore Stop, Inc. Shore Stop and Carl King, Inc. ("King")
acquired six additional gasoline stations in separate transactions at
different times and closed two stations for a net increase of four stations
in the period subsequent to December 31, 1996.
Cost of sales for 1998 was $53,926,000, a decrease of $6,075,000, or
10%,from 1997. The decrease in cost of sales was primarily due to a 11% and
10% decrease in the sales volume and cost per gallon of heating oil,
respectively. Additionally, the cost per gallon of motor fuels decreased by
8%. This decrease was partially offset by
18
<PAGE>
an increase in the cost of sundry sales due to increased sundry sales volume.
Gross profit for 1998 was $16,208,000, an increase of $1,584,000, or 11%,
from 1997. The increase is primarily due to the increased gross profit
derived from increased sundry sales and a 37% increase in motor fuels margin
per gallon.
Selling, general and administrative expenses ("SG&A") were $11,548,000,
an increase of $270,000, or 2%, compared to 1997. The increase was due
primarily to an increase in operating costs associated with the net addition
of four stations from 1997 to 1998.
Depreciation expense for 1998 was $1,587,000, an increase of $303,000, or
24%, from 1997. Amortization expense for 1998 increased by $110,000, or 6%,
to $2,058,000. The increases are due primarily to the depreciation and
amortization on assets acquired through capital expenditures made in the
twelve months ended December 31, 1997.
RESULTS OF OPERATIONS FOR SIX MONTHS ENDED DECEMBER 31 OF 1997 VERSUS 1996
References to particular years, unless otherwise indicated, are
references to the first six months of the fiscal year for the year indicated.
The net loss for 1998 was $4,161,000, compared to a net loss of
$4,121,000 for the same period in 1997. The increase in net loss was due
primarily to the reasons outlined below.
Total sales increased by $1,445,000 or 1% to $136,612,000 for 1998, from
$135,167,000 during 1997. The increase was primarily due to a 14% increase in
service, equipment, and other sales which increased from $24,444,000 to
$27,897,000. This $3,453,000 increase was primarily due to an increase in
sundry sales. The sundry sales increase was due to several factors, the
primary factor being the acquisition by Shore Stop and Carl King,
Inc.("King") of six additional gasoline stations in separate transactions at
different times and the closing of two stations for a net increase of four
stations in the period subsequent to December 31, 1996, which also accounted
for increased sales. Additionally, there were ten fewer days of Shore Stop
Operations in fiscal year 1997 because the Shore Stop Acquisition occurred on
July 11, 1996. In addition to the increase in sundry sales, revenues from
motor fuels increased because of a 5% and 3% increase in motor fuels volume
and price per gallon, respectively. These increases were partially offset by
a 12% and 10% decrease in heating oil volume and price per gallon,
respectively. The weather was 8% warmer than normal in the month of December.
19
<PAGE>
Cost of sales for 1998 was $108,892,000, a decrease of $1,107,000, or
1%,from 1997. The decrease in cost of sales was primarily due to a 12% and
20% decrease in the sales volume and cost per gallon of heating oil,
respectively. This decrease was partially offset by an increase in cost of
sundry sales due to increased sundry sales.
Gross profit for 1998 was $27,720,000, an increase of $2,551,000, or 10%,
from 1997. The increase is primarily due to the increased gross profit
derived from increased sundry sales. Additionally, gross profit from motor
fuels increased due to increased volume and higher margins per gallon.
Selling, general and administrative expenses ("SG&A") were $22,279,000,
an increase of $1,632,000, or 8%, compared to 1997. The increase was due
primarily to the net increase of four stations from fiscal year 1997 to
fiscal year 1998 and an increase in operating costs associated with increased
motor fuels volume. Additionally, there were increased operating costs
related to ten additional days of Shore Stop Operations in fiscal year 1998
in comparison to fiscal year 1997.
Depreciation expense for 1998 was $3,139,000, an increase of $562,000, or
22%, from 1997. Amortization expense for 1998 increased by $229,000, or 6%,
to $4,120,000. The increases were primarily the result of the depreciation
and amortization on assets acquired through capital expenditures made in the
twelve months ended December 31, 1997. Additionally, there were an additional
10 days of depreciation and amortization of assets acquired in the Shore Stop
Acquisition during 1998.
FINANCIAL CONDITION
Accounts and notes receivable increased $2,429,000, or 22%, to
$13,612,000 from June 30, 1997. The increase was due primarily to the
seasonal nature of the home heating oil business.
Prepaid expenses and other increased $537,000, or 40%, to $1,873,000. The
increase is due primarily to an increase in prepaid insurance related to the
timing of the payment of business insurance premiums.
Other taxes receivable decreased $619,000 from $906,000 at June 30, 1997
to $287,000 at December 31, 1997 due to the receipt of motor fuel tax refunds
during 1998.
Deferred tax asset increased $1,476,000 to $2,876,000 at December 31,
1997 due to the tax benefit of net operating losses incurred
20
<PAGE>
during the year.
Accounts payable decreased $1,232,000 to $7,477,000. The decrease in
payables is primarily due to a decrease in motor fuels payables related to
the seasonal nature of the business. This decrease was partially offset by an
increase in heating oil payables.
Accrued expenses decreased $230,000 from $3,400,000 to $3,170,000. The
decrease is due primarily to the payment of professional fees during fiscal
year 1998 that related to 1997.
Short term deferred revenue increased by $1,810,000, or 57%, primarily
due to payments received from major oil companies in connection with branding
certain company-operated gasoline stations. In addition, prepaid balances of
the Company's residential heating oil customers on the Company's budget plan
increased.
Other taxes payable increased $743,000, or 30%, to $2,279,000 due
primarily to an increase in excise and sales taxes due to states.
In August of 1997, the Company amended the Credit Agreement (as defined)
to increase the amount of term loan borrowings outstanding thereunder from
$49,850,000 to $50,100,000, and to revise the term loan repayment schedule
and certain financial covenants contained therein (the "August 1997
Amendment"). Current portion of long-term debt decreased $3,439,000 to
$2,010,000 primarily due to the revision of the term debt payment schedule
pursuant to the August 1997 Amendment. Long term debt, less current portion,
increased due to the revision of the term debt payment schedule and increased
term loan borrowings pursuant to the August 1997 Amendment, partially offset
by the payment of scheduled Credit Agreement principal payments.
Deferred income taxes decreased $694,000, or 12%, from $5,883,000 to
$5,189,000 related primarily to the amortization of intangible assets
relating to the 1994 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.
Net cash used in operating activities was $1,197,000 for the six months
ended December 31, 1997 compared to $2,189,000 of net cash used in operating
activities for the six months ended December 31, 1996, a decrease of
$992,000. Such decrease was primarily the result of a decrease in net loss,
after adjusting for non-cash
21
<PAGE>
expenses, and a net decrease in operating assets and liabilities, in 1998
from 1997.
Net cash used in investing activities decreased by $19,564,000 from
$21,291,000 for the six months ended December 31, 1996 to $1,727,000 for the
six months ended December 31, 1997. The decrease was primarily the result of
the Shore Stop Acquisition which occurred in July 1996 partially offset by
increased capital expenditures in the first six months of fiscal year 1998.
Net cash provided by financing activities was $395,000 for the six months
ended December 31, 1997. Net cash provided by financing activities was
$23,426,000 for the six months ended December 31, 1996. The decrease in cash
provided by financing activities was primarily the result of the financing of
the Shore Stop Acquisition in fiscal year 1997.
The Company believes that cash flow provided from operations,
supplemented by the Credit Agreement's revolving credit facility, will
provide sufficient funds to meet the Company's liquidity needs for current
operations and internal growth.
As of July 8, 1996, in connection with the Shore Stop Acquisition, the
Company amended and restated its then existing credit agreement (the "Prior
Credit Agreement"; and as amended and restated, the "Credit Agreement") to,
among other things, increase the amount of revolving credit facility
borrowings (including the maximum drawing amount under outstanding Letters of
Credit (as defined) available thereunder) from $12,000,000 to $13,000,000 and
the term loan thereunder from $34,450,000 to $54,450,000. The Credit
Agreement was subsequently amended by an amendment dated as of December 31,
1996 to, among other things, increase the amount of the revolving credit
facility provided thereunder from $13,000,000 to $16,000,000 during the
period from February 12, 1997 through March 31, 1997 and to revise certain
financial covenants contained therein. The Company again amended the Credit
Agreement and amended the Indenture (the "Indenture") governing the Company's
14 1/2% Senior Subordinated Notes due December 15, 2004 (the "Notes") as of
March 15, 1997 to revise certain financial covenants contained therein. In
addition, the August 1997 Amendment increased the amount of term borrowings
then outstanding thereunder from $49,850,000 to $50,100,00. The August 1997
Amendment also revised certain financial covenants contained therein and the
Credit Agreement's term loan repayment schedule. On September 26, 1997, the
Company further amended the Credit Agreement to revise the definition of
eligible petroleum inventory, which term is used in calculating borrowing
base. On December 15, 1997, the Company again amended the Credit Agreement
to, among other things, increase the amount of the revolving credit facility
from $13,000,000 to $16,000,000 during the period from December 15, 1997
through March 31, 1998. The Company is currently in compliance with the
covenants contained in the Credit Agreement and the Indentures as amended.
22
<PAGE>
Under the Credit Agreement, at the Company's request, the agent for the
lenders from time to time issues letters of credit (the "Letters of Credit").
During the period from July 1, 1997 through the date hereof, the Company's
peak total usage of the revolving credit facility was approximately $7.9
million in outstanding borrowings and $2.6 million in maximum drawing amount
under Letters of Credit. At January 31, 1997, there were $6.9 million in
borrowings and $2.6 million in letters of credit outstanding with respect to
the revolving credit facility, leaving subject to meeting certain borrowing
base tests, $6,500,000 available for use thereunder. The revolving portion of
the Credit Agreement expires in 1999 and the Company will likely be required
to replace the revolving portion at such time.
The Company purchases petroleum products 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.
Certain sections of this Form 10-Q, including "Notes to Consolidated
Financial Statements" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations," contain forward looking statements within
the meaning of Section 21E of the Securities Exchange Act of 1934, as amended,
with respect to the Company's expectations or beliefs concerning future events.
Although the Company believes that the expectations reflected in such forward
looking statements are reasonable, it can give no assurance that such
expectations will prove to have been correct. The Company cautions that these
forward looking statements contained herein are further qualified by important
factors that could cause actual results to differ materially from those in the
forward looking statements. The forward looking statements include, without
limitation, the effects of seasonality on revenue and cost of goods sold, the
amount of reserves, the effect of contingent liabilities and the ability to
meet the Company's future operating cash requirements. The Company does not
intend to update these forward looking statements.
23
<PAGE>
Griffith Consumers Company and Subsidiaries
December 31, 1997
PART II. OTHER INFORMATION
1. Legal Proceedings
None
2. Changes in Securities
None
3. Defaults upon Senior Securities
None
4. Submission of Matters to a Vote of Security Holders
None
5. Other Information
None
6. Exhibits and Reports on Form 8-K
(a) Exhibits
4.24 Fifth Amendment to Fourth Amended and Restated Revolving Credit
and Term Loan Agreement, dated December 15, 1997, by and among
Griffith Consumers Company, Carl King, Inc.,Shore Stop
Corporation, BankBoston, N.A., The Travelers Insurance Company,
The Travelers Indemnity Company, Senior Debt Portfolio, Riggs
Bank N.A., CypressTree Investment Management, Inc., CypressTree
Investment Partners I, LTD, and Deeprock & Company, and
BankBoston, N.A. as Agent.
Financial Data Schedule
(b) Report on Form 8-K
None
24
<PAGE>
SIGNATURES
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 thereunto duly authorized on the 17th day of February 1997.
GRIFFITH CONSUMERS COMPANY
Registrant
/S/ Raymond R. McKenzie, Jr.
- -----------------------------
Raymond R. McKenzie, Jr., Vice
President Finance (Authorized Officer and
Principal Financial Officer)
CARL KING, INC.
Registrant
/S/ Raymond R. McKenzie, Jr.
- -----------------------------
Raymond R. McKenzie, Jr., Vice
President (Authorized Officer and Principal
Financial Officer)
FREDERICK TERMINALS, INC.
Registrant
/S/ Raymond R. McKenzie, Jr.
- -----------------------------
Raymond R. McKenzie, Jr., Secretary
(Authorized Officer and Principal
Financial Officer)
25
<PAGE>
Exhibit 4.24
FIFTH AMENDMENT TO THE
FOURTH AMENDED AND RESTATED
REVOLVING CREDIT AND TERM LOAN AGREEMENT
This FIFTH AMENDMENT to the Fourth Amended and Restated Revolving Credit
and Term Loan Agreement, dated as of December 15, 1997 (the "Amendment"), by
and among (a) Griffith Consumers Company, Carl King, Inc., and Shore Stop
Corporation, each a Delaware corporation, (collectively, the "Borrowers"),
(b) BankBoston, N.A. (formerly known as The First National Bank of Boston),
The Travelers Insurance Company, The Travelers Indemnity Company, Senior Debt
Portfolio, Riggs Bank N.A., CypressTree Investment Management Company, Inc.
("CypressTree"), CypressTree Investment Partners I, Ltd. ("CypressTree I"),
and Deeprock & Company (collectively, the "Banks"), and (c) BankBoston, N.A.
as agent for the Banks (the "Agent").
WHEREAS, the Borrowers, the Banks and the Agent are parties to that
certain Fourth Amended and Restated Revolving Credit and Term Loan Agreement
dated as of July 8, 1996 (as amended and in effect prior to giving effect to
this Amendment, the "Credit Agreement"); and
WHEREAS, the Borrowers have requested and the Banks have agreed, subject
to the terms and conditions set forth herein, to temporarily increase the
Total Commitment; and
WHEREAS, the Borrowers have requested and the Banks have agreed, subject
to the terms and conditions set forth herein, to modify certain other
provisions of the Credit Agreement;
NOW, THEREFORE, the Borrowers, the Banks and the Agent hereby covenant and
agree as follows:
Section 1. Defined Terms. Capitalized terms which are used herein without
definition and which are defined in the Credit Agreement shall have the same
meanings herein as in the Credit Agreement.
Section 2. Amendment to the Credit Agreement.
(a) Section 1.1 (Definitions) of the Credit Agreement is hereby amended by
deleting the definitions of the terms "Additional Note Maturity Date",
"Overadvance Amount" and "Overadvance Expiration Date" in their entirety and
substituting the following respective definitions for such terms and by
inserting in the appropriate alphabetical order the definition of
"Participant" set forth below:
Additional Note Maturity Date, March 31, 1998.
<PAGE>
Overadvance Amount. (a) For the period from December 15, 1997,
through the Overadvance Expiration Date, $1,000,000 and (b) at
all other times, $0; provided that if at any time prior to the
Overadvance Expiration Date, the $1,000,000 participating
interest in the Revolving Credit Loans purchased by the
Participant pursuant to the terms of that certain Participation
Agreement dated as of December 15, 1997 among the Participant and
each Bank listed on Schedule 1(a) hereto does not remain fully
funded or the Participant is not in compliance with its
obligations under such Participation Agreement, the Overadvance
Amount shall immediately and automatically be reduced to $0.
Overadvance Expiration Date. March 31, 1998.
Participant. The Company identified or defined in the
Participation Agreement dated as of December 15, 1997, or its
affiliate, which is a party to that certain Participation
Agreement dated as of December 15, 1997 among such entity and
each Bank listed on Schedule 1(a) hereto.
(b) Section 2.1(a) of the Credit Agreement is hereby amended by
replacing clause (ii) in the first sentence thereof with the following:
(ii) the sum of the Borrowing Base plus the Overadvance Amount.
(c) Section 2.4 of the Credit Agreement is hereby amended as follows:
(i) by deleting the first sentence thereof in its entirety and
substituting the following sentence therefor:
The Revolving Credit Loans shall be evidenced by separate promissory notes
of the Borrowers in substantially the form of Exhibit H hereto dated as of
the Closing Date and completed with the appropriate insertions in the
aggregate principal amount of $13,000,000 (each such promissory note, a
"Revolving Credit Note"), and by separate additional promissory notes of
the Borrowers in substantially the form of Exhibit H-1 hereto dated as of
December 15, 1997 and completed with appropriate insertions in the
aggregate principal amount of $3,000,000 (with the term "Revolving Credit
Note" also including such additional promissory notes until they have
been paid in full).
(ii) by deleting the phrase "One Revolving Credit Note" from the
beginning of the second sentence thereof and replacing it with the phrase
"Revolving Credit Notes"
2
<PAGE>
(d) The undersigned hereby re-confirm the amendment to Section 3.2 of
the Credit Agreement made in the First Amendment as follows: Section 3.2 of
the Credit Agreement is hereby amended by (1) replacing the word "and"
between clauses (i) and (ii) thereof with a comma and (2) replacing clause
(ii) in the first sentence thereof with the following:
(ii) the sum of the Borrowing Base plus the Overadvance Amount, or (iii)
the amount permitted to be outstanding pursuant to Section 4.09 of the
Indenture dated as of December 15, 1994, among the Borrowers, Frederick
and The Bank of New York as successor trustee, as amended,
(e) The undersigned hereby re-confirm the amendment to Section 5.1.1 of
the Credit Agreement made in the First Amendment as follows: Section 5.1.1 of
the Credit Agreement is hereby amended by replacing clause (B) at the end of
the first proviso of the first sentence thereof with the following:
(B) the sum of the Borrowing Base plus the Overadvance Amount,
(f) Section 9.4 of the Credit Agreement is hereby amended by deleting
the last paragraph thereof which was inserted pursuant to the First Amendment
to the Credit Agreement and by adding the following new paragraph at the end
of such section:
In addition, during the period from December 15, 1997 through the
Additional Note Maturity Date, the Borrowers will deliver to each of the
Banks, simultaneously with the delivery of each of the Borrowing Base
Reports referred to in subsection (d) above during such period, a
Borrowing Base Report calculated in accordance with the definition of
"Borrowing Base" in the Subordinated Debt Documents.
(g) Schedule 1(a) (Revolving Credit Commitment; Revolving Credit
Commitment Percentage) to the Credit Agreement is hereby deleted in its
entirety and Schedule 1(a) attached hereto is substituted therefor.
(h) Exhibit H-1 to the Credit Agreement is hereby deleted in its
entirety and Exhibit H-1 attached hereto is substituted therefor.
Section 3. Additional Notes. The Borrowers shall execute and deliver to
each of the Banks listed on Schedule 1(a) to the Credit Agreement an
Additional Note in the form of Exhibit H-1 referred to in Section 2(h) hereof
(each, an "Additional Note") in an amount equal to such Bank's Revolving
Credit Commitment Percentage of $3,000,000.
Section 4. Participation Agreement. The Borrowers, each of the Parent,
Frederick and Regent Transport, the Agent and each Bank (a) acknowledge that
as a condition precedent to the effectiveness of this Amendment, the Banks
which are
3
<PAGE>
listed on Schedule 1(a) to the Credit Agreement (the "Revolving Credit
Banks") and the Participant (such term as used in this Amendment shall be
defined as set forth in Section 2 above) are entering into a Participation
Agreement in the form attached hereto as Exhibit A (as so executed and
delivered by such parties, the "Participation Agreement") and consent to such
Participation Agreement and (b) agree that notwithstanding anything to the
contrary in Section 20.5 of the Credit Agreement, in the event that at any
time prior to the Additional Note Maturity Date, the Participant fails to
comply with the terms of the Participation Agreement or keep its
participating interest purchased thereunder fully funded, the Revolving
Credit Commitment of each Revolving Credit Bank shall immediately and
automatically be reduced by such Revolving Credit Bank's Revolving Credit
Commitment Percentage of $3,000,000.
Section 5. Conditions to Effectiveness to Amendment. This Amendment
shall become effective upon satisfaction of the following conditions
precedent on the Amendment Closing Date:
(a) receipt by the agent of this Amendment, executed and delivered by
each of the Borrowers, the Agent and the Banks;
(b) receipt by each of the Revolving Credit Banks of the Additional Note
payable to such Bank, executed by the Borrowers;
(c) receipt by the Agent of an opinion of counsel to the Borrowers, in
form and substance satisfactory to the Agent;
(d) receipt by the Revolving Credit Banks of a Participation Agreement
substantially in the form of Exhibit A attached hereto executed by the
Participant and the Revolving Credit Banks and evidence that the Participant
has purchased the participating interests contemplated thereby;
(e) receipt by the Agent of an opinion of counsel to the Participant in
form and substance satisfactory to the Revolving Credit Banks;
(f) a certificate of the Secretary of State of Delaware as to the legal
existence and good standing of each Borrower;
(g) a certificate of an officer of each of the Borrowers certifying as
to (i) no changes to such Borrower's charter and bylaws since July 8, 1996,
(ii) the resolutions of the Board of Directors of such Borrower authorizing
and approving the execution, delivery and performance of this Amendment, the
Additional Notes, and the other documents contemplated hereby and (iii) the
incumbency and signature of officers authorized to execute and deliver this
Amendment and the other documents contemplated hereby;
4
<PAGE>
(h) payment of an amendment fee in the amount of $30,000 for the pro
rata account of each Revolving Credit Bank in accordance with each Revolving
Credit Bank's Revolving Credit Commitment Percentage; and
(i) receipt by the Agent of (i) a Borrowing Base Report dated as
of the date hereof pursuant to the Credit Agreement and (ii) a Borrowing Base
Report dated as of the date hereof calculated in accordance with the
definition of "Borrowing Base" in the Subordinated Debt Documents.
Section 6. Affirmation of the Borrowers. Each of the Borrowers hereby
affirms all of its obligations under the Credit Agreement, as amended hereby,
and the Notes and under each of the other Loan Documents to which it is a
party and hereby affirms its absolute and unconditional promise to pay to the
Banks the Loans and all other amounts due under the Credit Agreement, as
amended hereby. Each of the Borrowers hereby represents, warrants and
confirms that the Obligations, as amended hereby, are and remain secured
pursuant to the Security Documents.
Section 7. Representations and Warranties. Each of the Borrowers hereby
represents and warrants to the Banks and the Agent as follows:
(a) Representations and Warranties. The representations and warranties
contained in Section 8 of the Credit Agreement were true and correct in all
material respects when made. The representations and warranties contained in
Section 8 of the Credit Agreement, after giving effect to this Amendment, are
true and correct on the date hereof, except (i) for those representations and
warranties which relate specifically to a particular date, which
representations and warranties were true and correct as of such date and (ii)
as otherwise disclosed in writing by the Borrowers to each of the Banks and
the Agent subsequent to the Closing Date.
(b) Authority. The execution and delivery by each Borrower of this
Amendment and the Additional Notes, and the performance by each Borrower of
this Amendment the Additional Notes and the Credit Agreement, as amended
hereby, (i) are within the corporate authority of such Borrower, (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 is subject or any
judgment, order, writ, injunction, license or permit applicable to such
Borrower, and (iv) do not conflict with any provision of the corporate
charter or bylaws of such Borrower or any agreement or other instrument
binding upon such Borrower.
(c) Enforceability. This Amendment, the Additional Notes and the Credit
Agreement, as amended hereby, are valid and legally binding obligations of
each Borrower, enforceable against such Borrower in accordance with their
respective terms and provisions, except as enforceability is limited by
bankruptcy, insolvency, reorganization, moratorium or other laws relating to
or affecting generally the
5
<PAGE>
enforcement of creditor's 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.
(d) No Default. No Default or Event of Default exists or will exist
after giving effect to the execution and delivery of this Amendment.
SECTION 8. No Other Amendments. Except as expressly provided in this
Amendment, all of the terms and conditions of the Credit Agreement and the
other Loan Documents remain unchanged, and the terms and conditions of the
Credit Agreement as amended hereby and the other Loan Documents remain in
full force and effect.
SECTION 9. Execution in Counterparts. This Amendment may be executed in
any number of counterparts and by each party on a separate counterpart, each
of which when so executed and delivered shall be an original, but all of
which together shall constitute one instrument. In proving this Amendment,
it shall not be necessary to produce or account for more than one such
counterpart signed by the party against whom enforcement is sought.
SECTION 10. Miscellaneous. This Amendment shall be deemed to be a contract
under seal under the laws of The Commonwealth of Massachusetts and shall for
all purposes be construed in accordance with and governed by the laws of The
Commonwealth of Massachusetts. The captions in this Amendment are for
convenience of reference only and shall not define or limit the provisions
hereof. The Borrowers agree to pay to the Agent, on demand by the Agent, all
reasonable out-of-pocket costs and expenses incurred or sustained by the
Agent in connection with the preparation of this Amendment, including
reasonable legal fees.
6
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
GRIFFITH CONSUMERS COMPANY
By: /s/ Raymond R. McKenzie
--------------------------------
Title: Vice President -- Finance
Secretary & Treasurer
CARL KING, INC.
By: /s/ Raymond R. McKenzie
--------------------------------
Title: Vice President
SHORE STOP CORPORATION
By: /s/ Raymond R. McKenzie
--------------------------------
Title: Vice President
BANKBOSTON, N.A. (formerly known as
The First National Bank of Boston),
individually and as Agent
By: /s/ illegible
--------------------------------
Title:
THE TRAVELERS INSURANCE COMPANY
By: /s/ illegible
--------------------------------
Title:
THE TRAVELERS INDEMNITY COMPANY
By: /s/ illegible
--------------------------------
Title:
7
<PAGE>
SENIOR DEBT PORTFOLIO
By: Boston Management and Research,
as Investment Adviser
By: /s/ illegible
---------------------------------
Title:
RIGGS BANK N.A.
By: /s/ illegible
--------------------------------
Title:
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.
As: Attorney-in-Fact and on behalf of
First Allmerica Life Insurance Company
By: /s/ illegible
---------------------------------
Title:
CYPRESSTREE INVESTMENT
PARTNERS I,LTD.
By: CypressTree Investment
Management Company, Inc.,
as Portfolio Manager
By: /s/ illegible
----------------------------------
Title:
DEEPROCK & COMPANY
By: Eaton Vance Management, as
Investment Advisor
By: /s/ illegible
----------------------------------
Title:
8
<PAGE>
Each of the undersigned hereby (i) acknowledges the provisions of the
foregoing Amendment and (ii) ratifies and confirms all of its obligations
under each of the Loan Documents to which it is a party.
GRIFFITH HOLDINGS, INC.
By: /s/ Mike Shein
---------------------------------
Title: Vice President
FREDERICK TERMINALS, INC.
By: /s/ Raymond R. McKenzie
---------------------------------
Title:
REGENT TRANSPORT, INC.
By: /s/ Raymond R. McKenzie
--------------------------------
Title:
9
<PAGE>
SCHEDULE 1(a)
Revolving Credit Commitment;
Revolving Credit Commitment Percentage
For the period from December 15, 1997 to but excluding the Additional Note
Maturity Date:
<TABLE>
<CAPTION>
Revolving
Revolving Credit
Credit Commitment
Bank Commitment Percentage
---- ---------- ----------
<S> <C> <C>
BankBoston, N.A. $10,461,536 65.3846%
Riggs Bank N.A. $ 5,538,464 34.6154%
----------- -------
$16,000,000 100%
</TABLE>
For the period from and including the Additional Note Maturity Date through
the Revolving Credit Maturity Date:
<TABLE>
<CAPTION>
Revolving
Revolving Credit
Credit Commitment
Bank Commitment Percentage
---- ---------- ----------
<S> <C> <C>
BankBoston, N.A. $ 8,500,000 65.3846%
Riggs Bank N.A. $ 4,500,000 34.6154%
----------- -------
$13,000,000 100%
</TABLE>
<PAGE>
EXHIBIT H-1
FORM OF
ADDITIONAL
REVOLVING CREDIT NOTE
$________ As of _____________
FOR VALUE RECEIVED, the undersigned GRIFFITH CONSUMERS COMPANY, a Delaware
corporation ("Griffith), CARL KING, INC., a Delaware corporation ("King") and
SHORE STOP CORPORATION, a Delaware corporation ("SSC" and together with
Griffith and King and their respective successors in title and assigns,
hereinafter called the "Borrowers"), hereby jointly and severally promise to
pay to the order of __________, (hereinafter together with its successors in
title and assigns, called the "Bank"), at the Agent's Head Office:
(a) prior to or on the Additional Note Maturity Date (as defined
in the Credit Agreement referred to below), the principal amount of
______ Dollars ($__) or, if less, the amount by which the aggregate
unpaid principal amount of Revolving Credit Loans advanced by the Bank
to the Borrowers plus the amount of the Bank's Revolving Credit
Commitment Percentage of the sum of the Maximum Drawing Amount and all
Unpaid Reimbursement Obligations with respect to Letters of Credit
issued for the Borrowers pursuant to the Fourth Amended and Restated
Revolving Credit and Term Loan Agreement dated as of July 8, 1996 (as
amended and in effect from time to time, the "Credit Agreement"), by and
among the Borrowers, the Bank, certain other lending institutions from
time to time listed on Schedule 1 thereto and the Agent, exceeds the
Bank's Revolving Credit Commitment as in effect immediately after the
Additional Note Maturity Date; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which
all principal amounts owing hereunder are paid in full at the times and
at the rate provided in the Credit Agreement.
This Note evidences borrowings under and has been issued by the
Borrowers in accordance with the terms of the Credit Agreement. The Bank and
any holder hereof is entitled to the benefits of the Credit Agreement, the
Security Documents and the other Loan Documents, and may enforce the
agreements of the Borrowers contained therein, and any holder hereof may
exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the respective terms thereof. All
capitalized terms used in this Note and not otherwise defined herein shall
have the same meanings herein as in the Credit Agreement.
<PAGE>
The Borrowers irrevocably authorize the 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 of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid,
or any other similar record, including computer records, 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 the grid attached to this Note, or the continuation of such grid, or any
other similar record, including computer records, maintained by the Bank with
respect to any Revolving Credit Loans shall be prima facie evidence of the
principal amount thereof owing and unpaid to the Bank, but the failure to
record, or any error in so recording, any such amount on any such grid,
continuation or other record shall not limit or otherwise affect the
obligation of the Borrowers hereunder or under the Credit Agreement to make
payments of principal of and interest on this Note when due.
The Borrowers have the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
If any one or more of the Events of Default shall occur and be continuing,
the entire unpaid principal amount of this Note and all of the unpaid
interest accrued thereon may become or be declared due and payable in the
manner and with the effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of
any other rights of the Bank or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.
The Borrowers and every endorser and guarantor of this Note or the
obligation represented hereby waive presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assent to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to the addition or
release of any other party or person primarily or secondarily liable.
THIS NOTE AND THE JOINT AND SEVERAL OBLIGATIONS OF THE BORROWERS HEREUNDER
SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAW OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS APPLICABLE TO
CONFLICTS OR CHOICE OF LAW). THE BORROWERS AGREE THAT ANY SUIT FOR THE
ENFORCEMENT OF
2
<PAGE>
THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE COMMONWEALTH OF MASSACHUSETTS
OR ANY FEDERAL COURT SITTING THEREIN AND THE CONSENT TO THE NONEXCLUSIVE
JURISDICTION OF SUCH COURT AND THE SERVICE OF PROCESS IN ANY SUCH SUIT BEING
MADE UPON THE BORROWERS BY MAIL AT THE ADDRESS SPECIFIED IN SECTION 21 OF
THE CREDIT AGREEMENT. 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.
This Note shall be deemed to take effect as a sealed instrument under
the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, each of the Borrowers have caused this Revolving
Credit Note to be signed in its corporate name and its corporate seal to be
impressed thereon by its duly authorized officer as of the day and year first
above written.
GRIFFITH CONSUMERS COMPANY
By: /s/ Raymond R. McKenzie
-----------------------------------
Title:
CARL KING, INC.
By: /s/ Raymond R. McKenzie
-----------------------------------
Title:
SHORE STOP CORPORATION
By: /s/ Raymond R. McKenzie
----------------------------------
Title:
3
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made by:
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
4
<PAGE>
PARTICIPATION AGREEMENT
This PARTICIPATION AGREEMENT is between BANKBOSTON, N.A. AND RIGGS BANK
N.A. (the "Lenders") and CHARTWELL INVESTMENTS, INC., (the "Participant")
dated as of December __, 1997.
Each of the Lenders have entered into a Fourth Amended and Restated
Revolving Credit Agreement and Term Loan Agreement dated as of July 8, 1996,
(as amended or supplemented from time to time, the "Credit Agreement") by and
among (a) Griffith Consumers Company, Carl King, Inc., and Shore Stop
Corporation, each a Delaware corporation, (collectively, the "Borrowers"),
(b) BankBoston, N.A., The Travelers Insurance Company, The Travelers
Indemnity Company, Senior Debt Portfolio, Riggs Bank N.A., CypressTree
Investment Management Company, Inc., CypressTree Investment Partners I, Ltd.,
and Deeprock & Company (collectively, the "Banks"), and (c) BankBoston, N.A.
as agent for the Bank (the "Agent"). Capitalized terms used in this Agreement
without definition shall have the meanings assigned to them in the Credit
Agreement.
Pursuant to the terms of the Credit Agreement, the Lenders have made and
may in the future make Revolving Credit Loans to the Borrower. The aggregate
Indebtedness of the Borrower to the Lenders in respect of the Revolving
Credit Loans is hereinafter referred to as the "Borrower's Indebtedness".
The Participant hereby agrees to purchase from the Lenders and the
Lenders agree to sell to the participant participating interest in the
Revolving Credit Loans heretofore or hereafter made under the Credit
Agreement (the "Loans") subject to the terms hereof. The Participant's
participating interest hereunder shall be in the aggregate amount of
$1,000,000, which shall be comprised of a $653,846 interest to be purchased
from BankBoston, N.A. and a $346,154 interest to be purchased from Riggs Bank
N.A. Such participating interests are to be sold by the Lenders and purchased
by the Participant for its account and risk, on the following terms and
conditions:
1. Participation.
1.1. Nature of Participation. The participant shall purchase on the
date hereof from BankBoston, N.A. a participating interest in $653,846 of
the Revolving Credit Loans funded by BankBoston, N.A. The Participant
shall purchase on date hereof
<PAGE>
from Riggs Bank N.A. a participating interest in $346,154 of the Revolving
Credit Loans funded by Riggs Bank N.A. Such participating interests so
purchased shall at all times be in respect of the fully funded portion of the
Revolving Credit Loans and except as specifically set forth herein, the
Participant's interest in the Revolving Credit Loans shall remain fully
funded until such time as all other Revolving Credit Loans and the Term Loans
have been irrevocably repaid in full.
1.2. Exclusions from Participation. The Participant shall have no
interest in any Loans or fees provided for in the Credit Agreement, other
than as specifically set forth herein.
1.3. Voting Rights. The Participant shall have no voting rights as a
result of its participating interest, nor shall it be allowed to direct the
Lenders in their voting.
1.4. Interest. The Participant shall be paid interest on that portion of
the Revolving Credit Loans funded by the Participant at the same rate
applicable to the Revolving Credit Loans and subject to the same payment
terms as set forth in the Credit Agreement for the other Revolving Credit
Loans. The Participant is not entitled to receive any portion of the
commitment fee payable pursuant to Section 2.2 of the Credit Agreement.
1.5. Repayment. Notwithstanding anything to the contrary set forth in the
Credit Agreement, no payments received by the Agent or any Bank in respect of
the Revolving Credit Loans and no proceeds of any Collateral received by the
Agent or any Bank shall be applied to repay the Revolving Credit Loans funded
by the Participant pursuant to this Participation Agreement until such time
as all Term Loans and all other Revolving Credit Loans have been irrevocably
paid in full. In the event that those Revolving Credit Loans funded by the
Participant are the only remaining Revolving Credit Loans outstanding under
the Credit Agreement, any amounts received by any Bank or the Agent which
otherwise, in the absence of the agreement set forth in this Section 1.5,
would be applied to repay the Revolving Credit Loans shall be deemed to be a
repayment of the Term Loans and shall be so applied as provided in the
Credit Agreement. This section is for the benefit of all of the Banks and all
of the Banks are entitled to rely hereon.
1.6. Repurchase of participation Interests. Subject to the conditions set
forth herein, on March 31, 1998, each of the Lenders shall repurchase from
the Participant the participating
2
<PAGE>
interest sold to the Participant by such Lender hereunder for a price equal
to the then outstanding principal amount of such participating interest in
the Revolving Credit Loans plus accrued and unpaid interest thereon; provided
that no Lender shall have any obligation to make such repurchase unless (a)
the aggregate outstanding principal amount of the Revolving Credit Loans on
such date, after giving effect to such repurchase, does not exceed the lesser
of (i) the Total Commitment as reduced on such date to an amount equal to
$13,000,000 or less and (ii) the Borrowing Base and (b) no Default or Event
of Default under the Credit Agreement is then continuing. If the conditions
to such repurchase are not satisfied on March 31,1998, each Lender shall
repurchase the interest sold to the Participant by such Lender on the fifth
Business Day following the date on which such conditions are satisfied,
provided that such conditions continue to be satisfied on date of such
repurchase. The Lenders' obligations under this Section 1.6 are several and
no Lender shall have any liability or obligation with respect to the failure
by the other Lender to fulfill its obligation hereunder.
1.7 Amendment Fee. Upon the effectiveness of this Participation Agreement
and the funding by the Participant of the Revolving Credit Loans purchased by
it hereunder, BankBoston, N.A. and Riggs Bank N.A. shall pay to the
Participant a portion of the amendment fee paid to the Revolving Credit Banks
pursuant to the Fifth Amendment of the Credit Agreement as follows:
BankBoston, N.A. shall pay to the Participant a portion of such fee equal to
$6,538.46 and Riggs Bank, N.A. shall pay to the Participant a portion of such
fee equal to $3,461.54.
2. Payments to Lenders by Participant. On the date hereof, the Participant
shall pay to each Lender in immediately available funds the principal amount
of the Revolving Credit Loans purchased from such Lender. The Lenders shall
be entitled to retain all payments of interest accrued on such Revolving
Credit Loans prior to the date hereof.
3. Restrictions on Actions of Lenders. The Lenders may, in their reasonable
discretion and without the consent of the Participant, give or withhold
waivers, consents and approvals, amend the Credit Agreement, and the other
Loan Documents, and exercise or refrain from exercising rights and take or
refrain from taking, action with respect to the Loans and the Loan Documents
and shall have no liability whatsoever to the Participant in connection
therewith or in connection with the consequences thereof. The Lenders agree,
however, that they will not
3
<PAGE>
amend any provision of the Credit Agreement to reduce the principal amount of
the Borrowers' obligations thereunder or to reduce the interest on any of the
Revolving Credit Loans without the written consent of the Participant. The
Lenders shall, promptly after the Lenders' receipt thereof, provide the
Participant with copies of any amendments, consents, or waivers with respect
to the Loan Documents.
4. Reimbursement of Lenders. The Participant agrees that it will on demand
reimburse the Lenders, to the extent of its participation, for any and all
actual out-of-pocket costs, expenses and disbursements which may be incurred
or made by the Lenders in connection with the Revolving Credit Loans or Loan
Documents and the transactions contemplated thereby and any action which may
be taken by the Lenders to collect the amounts owing to the Lenders in
connection therewith, only if the Lenders are not reimbursed for such amounts
at such time by or on behalf of the Borrowers. The Participant shall not
be obligated to reimburse the Lenders for any of the so-called "overhead",
incidental and/or routine costs of administering the Loans under the Loan
Documents which are not specifically allocable to the Loans or the Loan
Documents and which do not entail out-of-pocket expenditures or disbursements
by the Lenders.
5. Standard of Care. The Lenders shall endeavor to exercise the same care in
administering the Loans, Loan Documents, and any collateral security for the
same as they exercise with respect to similar matters in which no
participations are allotted by them, and they shall have no further
responsibility to the Participant. The Lenders shall not be liable, in the
absence of bad faith, for any error of judgment or any action taken by them,
and in no event shall the Lenders be liable for consequential damages.
Without limiting the foregoing, the Lenders may rely upon the advice of
counsel concerning legal matters and upon any written document believed to be
genuine and to have been signed and sent by the proper person or persons.
6. Subordination; Lack of Interest in Collateral. The rights of the
Participant to receive any Collateral, property, or the proceeds of any
Collateral or property or to receive any payment during the continuance of
any Default or Event of Default under the Credit Agreement is hereby
subordinated to the Obligations owing to the Lenders and the other Banks
under the Credit Agreement in which the Participant does not participate.
The Participant shall have no interest in any property as such taken by the
Lenders as Collateral for the Borrowers' Indebtedness, the other Obligations
of the Borrower or for any other loans or extensions of credit made to or for
the Borrowers or any guarantor, or in any property in any
4
<PAGE>
Bank's or the Agent's possession or control, or in any deposit held or other
indebtedness owing by the Banks, which may be or become collateral for or
otherwise available for payment of the Borrowers' Indebtedness or the other
Obligations by reason of the general description of secured obligations
contained in any security agreement or other agreement or instrument held by
any Bank or the Agent or by reason of the right of set-off, counterclaim or
otherwise. Notwithstanding any other provisions of this Agreement, if any
such property, deposit or indebtedness or the proceeds thereof shall be
applied in reduction of the Obligations, then, after the irrevocable payment
in full of all other Obligations owing to the Lenders and the other Banks under
the Credit Agreement and the other Loan Documents, whether for principal,
interest, fees or otherwise owing in respect of the Revolving Credit Loans
and the Term Loans, the Participant shall be entitled to apply such property
or proceeds to repay Participant shall be entitled to apply such property or
proceeds to repay its actual share of the Borrowers' Indebtedness.
6.1 Amounts Received by Participant. If the Participant shall at
any time receive any amount from or for the account of the Borrowers with
respect to the participation (whether by direct payment, setoff, application
of proceeds of collateral or otherwise) other than payments of interest
contemplated hereby, the Participant shall immediately deliver such amount to
the Agent to be applied in accordance with the Credit Agreement and this
Participation Agreement and until such amount is so delivered the
Participant shall hold such amount in trust for the Agent and the Lenders.
6.2 No Impairment. Nothing contained in this Agreement shall impair or
otherwise affect the obligations of the Borrowers to the Lenders arising
under the Credit Agreement, the validity of any guaranty or collateral
security in favor of the Lenders or the perfection and priority of any
mortgage or security interest in favor of the Lenders.
7. Representations.
7.1 Representations of Participant. The Participant represents to the
Lenders that: it is entering into this Participation Agreement and
purchasing its participating interest for investment purposes for its own
account; that it has no present intention to and agrees that it will not
sell, assign, transfer of otherwise divide its interest in the Participation
Agreement or its participating interest; its entering into the Participation
Agreement and its making purchases of its participating interests are in
accordance
5
<PAGE>
with all laws, regulations and statutes affecting or otherwise applicable to
it; the Participant is an "accredited investor" as defined in Rule 501(a)
promulgated under the Securities Act of 1933, as amended (the "Securities
Act"), and has such knowledge and experience in financial and business
matters that it is capable of evaluating the merits and risks of the
transactions contemplated under this Participation Agreement; and the
Participant's financial condition is such that it is able to bear all
economic risks of investment in its participating interest purchased
hereunder, including a compete loss of its investments therein. The Lenders
have provided the Participant with adequate access to financial and other
information concerning the Revolving Credit Loans as requested and the
Participant has had the opportunity to ask questions of and receive answers
from the Lenders concerning the transactions contemplated by this Agreement
and to obtain therefrom any additional information necessary to make an
informed decision regarding an investment in the participating interests in
the Revolving Credit Loans.
7.2 Representations of Lenders. The Lenders represent to the Participant
that: the Lenders are the legal and beneficial owners of the participating
interest being issued to the Participant hereunder; that there exists no
encumbrance on such participating interest; and that the Lenders have full
power and authority to make the Loans and to issue to the Participant its
participating interest in the Loans.
7.3 Acknowledgment of Independent Analysis. The Participant acknowledges
that it has been furnished with a copy of the Credit Agreement and the other
documents executed and/or delivered by the Borrowers to the Lenders, the
Banks and the Agent in connection therewith. The Lenders make no
representation or warranty, and assumes no responsibility, with respect to
the due execution, sufficiency, legality, validity, enforceability or
collectibility of any Loans, Loan Documents, or any other documents relating
thereto, including without limitation any and all collateral Security
Documents, or the truth or correctness of any representations, statements,
or certificates made by the Borrowers in connection with any of the
foregoing. The Participant's decision to purchase its participating interests
hereunder is based upon its own independent analysis and evaluation of the
Borrowers and its financial position, and the Participant has not relied on
any investigation or analysis conducted by Lenders or on any advice or
communication by the Lenders. The Lenders assume no
6
<PAGE>
responsibility for the financial condition of the Borrowers or the
performance of the Borrowers' obligations. The Lenders agree to furnish
to the Participant copies of such documents as the Lenders shall receive
in connection with the Loans as the Participant may request. The Lenders
assume no responsibility with respect to the truth, correctness,
authenticity, legality, validity or enforceability thereof.
8. Governing Law. This Agreement shall be governed by and construed and
interpreted in accordance with the laws of the Commonwealth of Massachusetts.
7
<PAGE>
IN WITNESS WHEREOF, the Lenders and the Participant have executed this
Agreement on the date set forth above.
PARTICIPANT: CHARTWELL INVESTMENTS,
INC.
By: /s/ Mike Shein
----------------------------------
Name:
Title:
LENDERS:
BANKBOSTON, N.A.
By: /s/ illegible
----------------------------------
Name:
Title:
RIGGS BANK N.A.
By: /s/ illegible
----------------------------------
Name:
Title:
8
<PAGE>
SENIOR DEBT PORTFOLIO
By: Boston Management and Research
as Investment Adviser
By: /s/ illegible
-------------------------------
Title:
RIGGS BANK N.A.
By: /s/ illegible
-------------------------------
Title:
CYPRESSTREE INVESTMENT
MANAGEMENT COMPANY, INC.
As: Attorney-in-Fact and on behalf of
First Allmerica Life Insurance Company
By: /s/ illegible
-------------------------------
Title:
CYPRESSTREE INVESTMENT
PARTNERS I, LTD.
By: CypressTree Investment
Management Company, Inc.,
as Portfolio Manager
By: /s/ illegible
-------------------------------
Title:
DEEPROCK & COMPANY
By: Eaton Vance Management, as
Investment Advisor
By: /s/ illegible
-------------------------------
Title:
8
<PAGE>
Each of the undersigned hereby (i) acknowledges the provisions of the
foregoing Amendment and (ii) ratifies and confirms all of its obligations
under each of the Loan Documents to which it is a party.
GRIFFITH HOLDINGS, INC.
By: /s/ Mike Shein
------------------------------------
Title:
FREDERICK TERMINALS, INC.
By: /s/ Raymond R. McKenzie
-------------------------------------
Title: Secretary, Treasurer & Director
REGENT TRANSPORT, INC.
By: /s/ Raymond R. McKenzie
-------------------------------------
Title: Vice President & Director
9
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Amendment as of the
date first above written.
GRIFFITH CONSUMERS COMPANY
By: /s/ Raymond R. McKenzie
---------------------------------
Title: Vice President--Finance
Secretary & Treasurer
CARL KING, INC.
By: /s/ Raymond R. McKenzie
---------------------------------
Title: Vice President
SHORE STOP CORPORATION
By: /s/ Raymond R. McKenzie
---------------------------------
Title: Vice President
BANKBOSTON, N.A. (formerly known
as The First National Bank Of Boston),
individually and as Agent
By: /s/ illegible
---------------------------------
Title:
THE TRAVELERS INSURANCE
COMPANY
By: /s/ illegible
---------------------------------
Title:
THE TRAVELERS INDEMNITY
COMPANY
By: /s/ illegible
---------------------------------
Title:
7
<PAGE>
ADDITIONAL
REVOLVING CREDIT NOTE
$1,961,538 as of December ____, 1997
FOR VALUE RECEIVED, the undersigned GRIFFITH CONSUMERS COMPANY, a Delaware
corporation ("Griffith"), CARL KING, INC., a Delaware corporation ("King")
and SHORE STOP CORPORATION, a Delaware corporation ("SSC" and together with
Griffith and King and their respective successors in title and assigns,
hereinafter called the "Borrowers"), hereby jointly and severally promise to
pay to the order of BankBoston, N.A., (hereinafter together with its
successors in title and assigns, called the "Bank"), at the Agent's Head
Office:
(a) prior to or on the Additional Note Maturity Date (as defined
in the Credit Agreement referred to below), the principal amount of One
Million Nine Hundred Sixty-One Five Hundred Thirty-Eight Dollars
($1,961,538) or, if less, the amount by which the aggregate unpaid
principal amount of Revolving Credit Loans advanced by the Bank to the
Borrowers plus the amount of the Bank's Revolving Credit Commitment
Percentage of the sum of the Maximum Drawing Amount and all Unpaid
Reimbursement Obligations with respect to Letters of Credit issued for
the Borrowers pursuant to the Fourth Amended and Restated Revolving
Credit and Term Loan Agreement dated as of July 8, 1996 (as amended and
in effect from time to time, the "Credit Agreement"), by and among
the Borrowers, the Bank, certain other lending institutions form time
to time listed on Schedule 1 thereto and the Agent, exceeds the Bank's
Revolving Credit Commitment as in effect immediately after the
Additional Note Maturity Date; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on
which all principal amounts owing hereunder are paid in full at the
times and at the rate provided in the Credit Agreement.
This Note evidences borrowings under and has been issued by the Borrowers
in accordance with the terms of the Credit Agreement. The Bank and any
holder hereof is entitled to the benefits of the Credit Agreement, the
Security Documents and the other Loan Documents, and may enforce the
agreements of the Borrowers contained therein, and any holder hereof may
exercise the respective remedies provided for thereby or otherwise available
in respect thereof, all in accordance with the
<PAGE>
respective terms thereof. All capitalized terms used in this Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Borrowers irrevocably authorize the 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 of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid,
or any other similar record, including computer records, 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 the grid attached to this Note, or the continuation of such grid, or any
other similar record, including computer records, maintained by the Bank
with respect to any Revolving Credit Loans shall be prima facie evidence of
the principal amount thereof owing and unpaid to the Bank, but the failure to
record, or any error in so recording, any such amount on any such grid,
continuation or other record shall not limit or otherwise affect the
obligation of the Borrowers hereunder or under the Credit Agreement to make
payments of principal of and interest on this Note when due.
The Borrowers have the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
If any one or more of the Events of Default shall occur and be
continuing, the entire unpaid principal amount of this Note and all of the
unpaid interest accrued thereon may become or be declared due and payable in
the manner and with the effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of
any other rights of the Bank or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.
The Borrowers and every endorser and guarantor of this Note or the
obligation represented hereby waive presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and asset to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to
2
<PAGE>
the addition or release of any other party or person primarily or secondarily
liable.
THIS NOTE AND THE JOINT AND SEVERAL OBLIGATIONS OF THE BORROWERS
HEREUNDER SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWERS AGREE THAT ANY SUIT
FOR THE ENFORCEMENT OF THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SETTING THEREIN AND THE
CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE OF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWERS BY MAIL AT THE ADDRESS
SPECIFIED IN SECTION 21 OF THE CREDIT AGREEMENT. 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.
This Note shall be deemed to take effect as a sealed instrument under the
laws of the Commonwealth of Massachusetts.
3
<PAGE>
IN WITNESS WHEREOF, each of the Borrowers have caused this Revolving
Credit Note to be signed in its corporate name and its corporate seal to be
impressed thereon by its duly authorized officer as of the day and year first
above written.
GRIFFITH CONSUMERS COMPANY
By: /s/ Raymond R. McKenzie
------------------------------------
Title:
CARL KING, INC.
By: /s/ Raymond R. McKenzie
------------------------------------
Title:
SHORE STOP CORPORATION
By: /s/ Raymond R. McKenzie
------------------------------------
Title:
4
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made by:
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
ADDITIONAL
REVOLVING CREDIT NOTE
$1,038,462 as of December __, 1997
FOR VALUE RECEIVED, the undersigned GRIFFITH CONSUMERS COMPANY, a
Delaware corporation ("Griffith"), CARL KING, INC., a Delaware corporation
("King") and SHORE STOP CORPORATION, a Delaware corporation ("SSC" and
together with Griffith and King and their respective successors in title and
assigns, hereinafter called the "Borrowers"), hereby jointly and severally
promise to pay to the order of Riggs Bank N.A., (hereinafter together with
its successors in title and assigns, called the "Bank"), at the Agent's Head
Office:
(a) prior to or on the Additional Note Maturity Date (as defined in
the Credit Agreement referred to below), the principal amount of One
Million Thirty-Eight Thousand Four Hundred Sixty-Two Dollars ($1,038,462)
or, if less, the amount by which the aggregate unpaid principal amount of
Revolving Credit Loans advanced by the Bank to the Borrowers plus the
amount of the Bank's Revolving Credit Commitment Percentage of the sum
of the Maximum Drawing Amount and all Unpaid Reimbursement Obligations
with respect to Letters of Credit issued for the Borrowers pursuant to
the Fourth Amended and Restated Revolving Credit and Term Loan Agreement
dated as of July 8, 1996 (as amended and in effect from time to time, the
"Credit Agreement"), by and among the Borrowers, the Bank, certain other
lending institutions from time to time listed on Schedule 1 thereto and
the Agent, exceeds the Banks Revolving Credit Commitment as in effect
immediately after the Additional Note Maturity Date; and
(b) interest on the principal balance hereof from time to time
outstanding from the date hereof through and including the date on which
all principal amounts owing hereunder are paid in full at the times and
at the rate provided in the Credit Agreement.
This Note evidences borrowings under and has been issued by the Borrowers
in accordance with the terms of the Credit Agreement. The Bank and any holder
hereof is entitled to the benefits of the Credit Agreement, the Security
Documents and the other Loan Documents, and may enforce the agreements of the
Borrowers contained therein, and any holder hereof may exercise the
respective remedies provided for thereby or otherwise available in respect
thereof, all in accordance with the
<PAGE>
respective terms thereof. All capitalized terms used in this Note and not
otherwise defined herein shall have the same meanings herein as in the Credit
Agreement.
The Borrowers irrevocably authorize the 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 of this Note, an appropriate
notation on the grid attached to this Note, or the continuation of such grid,
or any other similar record, including computer records, 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 the grid attached to this Note, or the continuation of such grid, or any
other similar record, including computer records, maintained by the Bank with
respect to any Revolving Credit Loans shall be prima facie evidence of the
principal amount thereof owing and unpaid to the Bank, but the failure to
record, or any error in so recording, any such amount on any such grid,
continuation or other record shall not limit or otherwise affect the
obligation of the Borrowers hereunder or under the Credit Agreement to make
payments of principal of an interest on this Note when due.
The Borrowers have the right in certain circumstances and the obligation
under certain other circumstances to prepay the whole or part of the
principal of this Note on the terms and conditions specified in the Credit
Agreement.
If any one or more of the Events of Default shall occur and be continuing,
the entire unpaid principal amount of this Note and all of the unpaid
interest accrued thereon may become or be declared due and payable in the
manner and with the effect provided in the Credit Agreement.
No delay or omission on the part of the Bank or any holder hereof in
exercising any right hereunder shall operate as a waiver of such right or of
any other rights of the Bank or such holder, nor shall any delay, omission or
waiver on any one occasion be deemed a bar or waiver of the same or any other
right on any further occasion.
The Borrowers and every endorser and guarantor of this Note or the
obligation represented hereby waive presentment, demand, notice, protest and
all other demands and notices in connection with the delivery, acceptance,
performance, default or enforcement of this Note, and assent to any extension
or postponement of the time of payment or any other indulgence, to any
substitution, exchange or release of collateral and to
2
<PAGE>
the addition or release of any other party or person primarily or secondarily
liable.
THIS NOTE AND THE JOINT AND SEVERAL OBLIGATIONS OF THE BORROWERS
HEREUNDER SHALL FOR ALL PURPOSES BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAW OF THE COMMONWEALTH OF MASSACHUSETTS (EXCLUDING THE LAWS
APPLICABLE TO CONFLICTS OR CHOICE OF LAW). THE BORROWERS AGREE THAT ANY SUIT
FOR THE ENFORCEMENT OF THIS NOTE MAY BE BROUGHT IN THE COURTS OF THE
COMMONWEALTH OF MASSACHUSETTS OR ANY FEDERAL COURT SITTING THEREIN AND THE
CONSENT TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURT AND THE SERVICE IF
PROCESS IN ANY SUCH SUIT BEING MADE UPON THE BORROWERS BY MAIL AT THE ADDRESS
SPECIFIED IN SECTION 21 OF THE CREDIT AGREEMENT. THE BORROWERS HEREBY WAIVE
ANY OBJECTION THAT THEY MAY NOW OR HEREAFTER HAVE TO THE VENUE OF ANY SUCH
SUIT COURT OR THAT SUCH SUIT IS BROUGHT IN AN INCONVENIENT COURT.
This Note shall be deemed to take effect as a sealed instrument under the
laws of the Commonwealth of Massachusetts.
3
<PAGE>
IN WITNESS WHEREOF, each of the Borrowers have caused this Revolving
Credit Note to be signed in its corporate name and its corporate seal to be
impressed thereon by its duly authorized officer as of the day and year
first above written.
GRIFFITH CONSUMERS COMPANY
By: /s/ Raymond R. McKenzie
-----------------------------------
Title:
CARL KING, INC.
By: /s/ Raymond R. McKenzie
-----------------------------------
Title:
SHORE STOP CORPORATION
By: /s/ Raymond R. McKenzie
-----------------------------------
Title:
4
<PAGE>
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------
Amount of Balance of
Amount Principal Paid Principal Notation
Date of Loan or Prepaid Unpaid Made by:
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
5
</TABLE>
