AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON MAY 13, 1998
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------
FORM S-4
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
------------------------
THE HOLT GROUP, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
DELAWARE 4400 23-2932358
(State or Incorporation) (Primary Standard (I.R.S. Employer
Industrial Identification Number)
Classification Code
Number)
------------------------
701 NORTH BROADWAY, GLOUCESTER CITY, NEW JERSEY 08030
(609) 742-3000
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF REGISTRANT'S PRINCIPAL EXECUTIVE OFFICES)
SEE TABLE OF ADDITIONAL REGISTRANTS
------------------------
JOHN A. EVANS, ESQUIRE
GENERAL COUNSEL, VICE PRESIDENT & SECRETARY
THE HOLT GROUP, INC.
701 NORTH BROADWAY
GLOUCESTER CITY, NEW JERSEY 08030
(609) 742-3000
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
------------------------
With a copy to:
Lisa D. Kabnick, Esquire
Robert A. Friedel, Esquire
Pepper Hamilton LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, Pennsylvania 19103
(215) 981-4000
------------------------
APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: A soon as
practicable after this Registration Statement becomes effective.
------------------------
If the securities being registered on this form are being offered in
connection with the formation of a holding company and there is compliance with
General Instruction G, check the following box. / /
If this form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act, check the following box and
list the Securities Act registration statement number of the earlier effective
registration statement for the same offering. / /
If this form is a post-effective amendment filed pursuant to Rule 462(d)
under the Securities Act, check the following box and list the Securities Act
registration statement number of the earlier effective registration statement
for the same offering. / /
------------------------
CALCULATION OF REGISTRATION FEE
<TABLE>
===========================================================================================================================
TITLE OF EACH CLASS | AMOUNT TO | PROPOSED | PROPOSED |
OF SECURITIES | BE | MAXIMUM OFFERING| MAXIMUM AGGREGATE | AMOUNT OF
TO BE REGISTERED | REGISTERED | PRICE PER NOTE | OFFERING PRICE | REGISTRATION FEE
- ---------------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
9 3/4% Senior Notes due 2006.............. | $140,000,000| $100.00%(1) | $140,000,000(1) | $41,300
Guarantees of the 9 3/4% Senior Notes due | | | |
2006.................................... | $140,000,000| --(2) | -- | --
===========================================================================================================================
</TABLE>
(1) Estimated pursuant to Rule 457(f) solely for the purpose of calculating the
registration fee.
(2) Pursuant to Rule 457(n), no separate consideration is payable for the
guarantees.
THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF THE
SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE SECURITIES AND EXCHANGE COMMISSION, ACTING
PURSUANT TO SAID SECTION 8(A), MAY DETERMINE.
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE>
ADDITIONAL REGISTRANTS
<TABLE>
<CAPTION>
ADDRESS, INCLUDING ZIP
CODE, AND TELEPHONE
EXACT NAME OF STATE OR OTHER PRIMARY STANDARD NUMBER, INCLUDING AREA
REGISTRANT AS JURISDICTION OF INDUSTRIAL IRS EMPLOYER CODE, OF REGISTRANTS'
SPECIFIED IN ITS CORPORATION OR CLASSIFICATION IDENTIFICATION PRINCIPAL EXECUTIVE
CHARTER ORGANIZATION CODE NUMBER NUMBER OFFICES
- --------------------- -------------------- -------------------- -------------------- ----------------------------
<S> <C> <C> <C> <C>
Holt Cargo Delaware 4491 23-1664146 701 North Broadway
Systems, Inc. Gloucester City, New Jersey
(609) 742-3000
Holt Hauling and Pennsylvania 6519 22-1646716 701 North Broadway
Warehousing Gloucester City, New Jersey
System, Inc. (609) 742-3000
Murphy Marine Delaware 4491 51-0355907 701 North Broadway
Services, Inc. Gloucester City, New Jersey
(609) 742-3000
Wilmington Delaware 4491 51-0123806 701 North Broadway
Stevedores, Inc. Gloucester City, New Jersey
(609) 742-3000
NPR, Inc. Delaware 4424 22-3357134 212 Fernwood Ave.
Edison, NJ 08837
(732) 225-2121
NPR-Navieras Delaware 4499 22-3357120 212 Fernwood Ave.
Receivables, Inc. Edison, NJ 08837
(732) 225-2121
NPR Holding Delaware 4400 22-3351317 212 Fernwood Ave.
Corporation Edison, NJ 08837
(732) 225-2121
NPR, S.A., Inc. Delaware 4412 22-3549966 212 Fernwood Ave.
Edison, NJ 08837
(732) 225-2121
</TABLE>
<PAGE>
INFORMATION CONTAINED HEREIN IS SUBJECT TO COMPLETION OR AMENDMENT. A
REGISTRATION STATEMENT RELATING TO THESE SECURITIES HAS BEEN FILED WITH THE
SECURITIES AND EXCHANGE COMMISSION. THESE SECURITIES MAY NOT BE SOLD NOR MAY
OFFERS TO BUY BE ACCEPTED PRIOR TO THE TIME THE REGISTRATION STATEMENT BECOMES
EFFECTIVE. THIS PROSPECTUS SHALL NOT CONSTITUTE AN OFFER TO SELL OR THE
SOLICITATION OF AN OFFER TO BUY NOR SHALL THERE BE ANY SALE OF THESE SECURITIES
IN ANY STATE IN WHICH SUCH OFFER, SOLICITATION OR SALE WOULD BE UNLAWFUL PRIOR
TO REGISTRATION OR QUALIFICATION UNDER THE SECURITIES LAWS OF ANY SUCH STATE.
SUBJECT TO COMPLETION, DATED MAY 13, 1998
PROSPECTUS
OFFER TO EXCHANGE
9 3/4% SENIOR NOTES DUE 2006
($140,000,000 PRINCIPAL AMOUNT OUTSTANDING)
FOR ANY AND ALL OUTSTANDING
9 3/4% SENIOR NOTES DUE 2006 OF
THE HOLT GROUP, INC.
GUARANTEED BY HOLT CARGO SYSTEMS, INC.,
HOLT HAULING AND WAREHOUSING SYSTEM, INC., MURPHY MARINE
SERVICES, INC., WILMINGTON STEVEDORES, INC., NPR, INC.,
NPR-NAVIERAS RECEIVABLES, INC., NPR HOLDING CORPORATION
AND NPR S.A., INC. (COLLECTIVELY, THE "GUARANTORS")
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON [ ,
1998] (AS SUCH DATE MAY BE EXTENDED, THE "EXPIRATION DATE").
The Holt Group, Inc., a Delaware corporation (the "Company"), hereby offers
(the "Exchange Offer"), upon the terms and subject to the conditions set forth
in this Prospectus and the accompanying Letter of Transmittal (the"Letter of
Transmittal") to exchange its outstanding 9 3/4% Senior Notes Due 2006 (the "Old
Notes"), of which $140,000,000 aggregate principal amount is outstanding as of
the date hereof, for a like aggregate principal amount of its newly issued
9 3/4% Senior Notes Due 2006, which have been registered under the Securities
Act of 1933, as amended (the "New Notes"). The New Notes are being offered
hereby in order to satisfy certain obligations of the Company under the
Registration Rights Agreement (the "Registration Rights Agreement"), dated
January 21, 1998, among Donaldson, Lufkin & Jenrette Securities Corporation (the
"Initial Purchaser"), the Company and the Guarantors. The form and terms of the
New Notes will be the same as those of the Old Notes except that the New Notes
will have been registered under the Securities Act of 1933, as amended (the
"Securities Act"), and consequently will not be subject to certain transfer
restrictions, registration rights and related liquidated damages provisions
applicable to the Old Notes. The New Notes will evidence the same debt as the
Old Notes and will be entitled to the benefits of an indenture (the
"Indenture"), dated as of January 21, 1998, among the Company, the Guarantors
and The Bank of New York, as trustee (the "Trustee"). The Indenture provides for
the issuance of both the Old Notes and the New Notes. The Old Notes and the New
Notes are referred to herein collectively as the "Notes" and holders of the
Notes are sometimes referred to herein as the "Holders."
The Company will accept for exchange any and all Old Notes that are validly
tendered prior to 5:00 p.m., New York City time, on the Expiration Date. Tenders
of Old Notes may be withdrawn at any time prior to 5:00 p.m., New York City
time, on the Expiration Date. The Exchange Offer is not conditioned upon any
minimum principal amount of the Old Notes being tendered for exchange. However,
the Exchange Offer is subject to certain customary conditions, which may be
waived by the Company, and to the terms and provisions of the Registration
Rights Agreement. The Old Notes may be tendered only in multiples of $1,000. See
"The Exchange Offer."
------------------------
SEE "RISK FACTORS" BEGINNING ON PAGE 18 FOR A DISCUSSION OF CERTAIN FACTORS
THAT SHOULD BE CONSIDERED BY HOLDERS PRIOR TO TENDERING THEIR OLD NOTES IN THE
EXCHANGE OFFER.
------------------------
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE SECURITIES AND
EXCHANGE COMMISSION OR ANY STATE SECURITIES COMMISSION NOR HAS THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A
CRIMINAL OFFENSE.
The date of this Prospectus is , 1998
<PAGE>
TABLE OF CONTENTS
Available Information...................................................... 1
Disclosure Regarding Forward-Looking Statements............................ 2
Prospectus Summary......................................................... 3
Risk Factors............................................................... 18
The Acquisition and the Refinancings....................................... 29
Reorganization of the Company.............................................. 30
The Exchange Offer......................................................... 31
Capitalization............................................................. 39
Unaudited Pro Forma and Pro Forma Adjusted Condensed
Financial Data........................................................... 40
Selected Historical Financial Data......................................... 45
NPR Selected Historical Financial Data..................................... 46
Management's Discussion and Analysis of Financial Condition
and Results of Operations................................................ 47
Business................................................................... 59
Management................................................................. 79
Certain Transactions....................................................... 84
Sole Stockholder........................................................... 85
Description of Certain Indebtedness........................................ 85
Description of New Notes................................................... 91
Certain United States Federal Income Tax Considerations.................... 118
Plan of Distribution....................................................... 121
Legal Matters.............................................................. 122
Experts.................................................................... 122
Change of Accountants...................................................... 122
AVAILABLE INFORMATION
The Company has filed with the Commission a Registration Statement (which
term shall include any amendments thereto) on Form S-4 under the Securities Act
(the "Registration Statement") with respect to the securities offered by this
Prospectus. This Prospectus, which constitutes a part of the Registration
Statement, does not contain all the information set forth in the Registration
Statement and the exhibits and schedules thereto, to which reference is hereby
made. Each statement made in this Prospectus referring to a document filed as an
exhibit or schedule to the Registration Statement is not necessarily complete
and is qualified in its entirety by reference to the exhibit or schedule for a
complete statement of its terms and conditions. In addition, upon the
effectiveness of the Registration Statement filed with the Commission, the
Company and the Guarantors will become subject to the informational requirements
of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and, in
accordance therewith, the Company will file periodic reports and other
information with the Commission relating to its business, financial statements
and other matters, including therein, where applicable, summary consolidated
financial information of the Guarantors. Any interested parties may inspect
and/or copy the Registration Statement, its schedules and exhibits, and other
information filed in connection therewith, at the public reference facilities
maintained by the Commission at Room 1024, Judiciary Plaza, 450 Fifth Street,
N.W., Washington, D.C. 20549 and at the Commission's regional offices located at
Citicorp Center, 500 W. Madison Street, Suite 1400, Chicago, Illinois 60661, and
7 World Trade Center, Suite 1300, New York, New York 10048. Copies of such
materials can be obtained at prescribed rates by addressing written requests for
such copies to the Public Reference
1
<PAGE>
Section of the Commission at its principal office at Judiciary Plaza, 450 Fifth
Street, N.W., Room 1024, Washington, D.C. 20549. The Commission also maintains a
site on the World Wide Web, the address of which is http://www.sec.gov, that
contains reports, proxy and information statements and other information
regarding registrants that file electronically with the Commission. The
obligations of the Company and the Guarantors under the Exchange Act to file
periodic reports and other information with the Commission may, to the extent
that such obligations arise from the registration of the New Notes, be
suspended, under certain circumstances, if the New Notes are held of record by
fewer than 300 holders at the beginning of any fiscal year and are not listed on
a national securities exchange. The Company has agreed that, whether or not it
is required to do so by the rules and regulations of the Commission, for so long
as any of the Notes remain outstanding, it will furnish to the holders of the
Notes and file with the Commission (unless the Commission will not accept such a
filing) all annual, quarterly and current reports that the Company is or would
be required to file with the Commission pursuant to Section 13(a) or 15(d) of
the Exchange Act. In addition, for so long as the Company or any Guarantor is
subject to the reporting requirements of Section 13 or 15 of the Exchange Act
and any registrable securities remain outstanding, the Company and the
Guarantors have agreed that they will comply with the reporting obligations
under the Securities Act and Section 13(a) or 15(d) of the Exchange Act and the
rules and regulations adopted by the Commission thereunder, and that if it
ceases to be required to file periodic reports thereunder, it will upon the
request of any holder of registrable securities (a) make publicly available such
information as is necessary to permit sales pursuant to Rule 144 under the
Securities Act, (b) deliver such information to a prospective purchaser as is
necessary to permit sales pursuant to Rule 144A under the Securities Act, and
(c) take such further action that is reasonable in the circumstances, in each
case, to the extent required from time to time to enable such holder to sell its
registrable securities without registration under the Securities Act within the
limitation of the exemptions provided by (i) Rule 144 under the Securities Act,
as such rule may be amended from time to time, (ii) Rule 144A under the
Securities Act, as such rule may be amended from time to time, or (iii) any
similar rules or regulations hereafter adopted by the Commission.
NO PERSON HAS BEEN AUTHORIZED TO GIVE ANY INFORMATION OR TO MAKE ANY
REPRESENTATIONS, OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS. IF GIVEN OR
MADE, SUCH INFORMATION OR REPRESENTATIONS MAY NOT BE RELIED UPON AS HAVING BEEN
AUTHORIZED BY THE COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER OR
SOLICITATION WITH RESPECT TO ANY SECURITY OTHER THAN THE SECURITIES OFFERED
HEREBY OR AN OFFER TO OR SOLICITATION OF ANY PERSON IN ANY JURISDICTION IN WHICH
SUCH AN OFFER OR SOLICITATION WOULD BE UNLAWFUL. NEITHER THE DELIVERY OF THIS
PROSPECTUS NOR ANY DISTRIBUTION OF SECURITIES HEREUNDER SHALL UNDER ANY
CIRCUMSTANCES CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY TIME SUBSEQUENT TO THE DATE HEREOF OR THAT THERE HAS BEEN NO
CHANGE IN THE INFORMATION SET FORTH HEREIN OR IN THE AFFAIRS OF THE COMPANY
SINCE THE DATE HEREOF.
DISCLOSURE REGARDING FORWARD-LOOKING STATEMENTS
This Prospectus, including the "Prospectus Summary," "Management's
Discussion and Analysis of Financial Condition and Results of Operations" and
"Business" sections, contains "forward-looking statements," which can be
identified by the use of forward-looking terminology, such as "may," "intend,"
"will," "expect," "anticipate," "estimate" or "continue" or the negative thereof
or other variations thereon or comparable terminology. In particular, any
statement, express or implied, concerning future operating results or the
ability to generate revenues, income or cash flow to service the Notes
including, without limitation, the Pro Forma Adjusted Financial Data (as defined
herein), are forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, there
can be no assurance that such expectations will prove to have been correct. All
forward-looking statements are expressly qualified by such cautionary
statements. See "Risk Factors."
2
<PAGE>
PROSPECTUS SUMMARY
The following is a summary of certain information contained elsewhere
herein. This summary is qualified in its entirety by reference to such
information. Unless otherwise expressly stated or the context otherwise
requires, (i) the "Issuer" refers to The Holt Group, Inc.; (ii) "Holt" refers to
the following direct and indirect wholly owned subsidiaries of the Issuer (the
"Holt Subsidiaries"): Holt Hauling and Warehousing System, Inc., Holt Cargo
Systems, Inc., The Riverfront Development Corporation, Murphy Marine Services,
Inc. and Wilmington Stevedores, Inc. (a wholly-owned subsidiary of Murphy Marine
Services, Inc.) and; (iii) "NPR" refers to the following direct and indirect
wholly owned subsidiaries of the Issuer: NPR Holding Corporation, NPR-Navieras
Receivables, Inc. and NPR, Inc.; and (iv) the "Company" refers to the
consolidated entity consisting of the Issuer, Holt and NPR.
THE COMPANY
The Company is a leading provider of integrated cargo transportation and
logistics management services in the United States. The Company's predecessor
was founded in 1926 by Leo A. Holt, Sr., and the Company is wholly owned by his
son, Thomas J. Holt, Sr., the Company's Chairman, President and Chief Executive
Officer. Through Holt, the Company owns and operates marine terminal facilities,
including the largest private integrated marine terminal complex in the United
States, and provides related services. Through NPR, which commenced operations
through its predecessor in 1974 and was acquired by the Company on November 20,
1997 (the "Acquisition"), the Company is a leading operator of cargo ships in
the U.S.-Puerto Rico market under the trade name "Navieras." NPR provides
containerized cargo transportation and related services between the United
States, Puerto Rico, the Caribbean and, through a joint venture, South America.
As a result of the Acquisition, the Company expects to realize significant cost
savings and capitalize on new revenue opportunities. Pro forma for the
Acquisition, the Company's revenues and Adjusted EBITDA (as defined herein) for
the year ended December 31, 1997 would have been $364.3 million and $48.1
million.
Through Holt, the Company offers a variety of cargo services, including
stevedoring (the loading and unloading of ships), warehousing (the storage of
cargo) and inland trucking. Holt also leases port facilities to third-party
stevedores, warehousemen and other lessees (the "Lessee-Operators"). These
services are performed at three facilities (the "Holt Facilities"), all of which
are located on the Delaware River, a key waterway for commerce on the East Coast
of the United States. The Gloucester Marine Terminal (the "Gloucester Facility")
in Gloucester City, New Jersey, is owned by the Company and is leased to the
Lessee-Operators. The Packer Avenue Marine Terminal (the "Packer Avenue
Facility") in Philadelphia, Pennsylvania, which is owned by an agency of the
Commonwealth of Pennsylvania, is subleased by the Company for a term expiring in
2040 (including all renewal options). At the Packer Avenue Facility, Holt
provides stevedoring, warehousing and inland transportation of containerized and
other cargoes. The Company provides stevedoring services at the Port of
Wilmington, Delaware (the "Wilmington Facility"), owned by an agency of the
State of Delaware, where the Company's subsidiary, Wilmington Stevedores, Inc.
("Wilmington Stevedores"), has operated since 1974. In 1997, the Company and the
Lessee-Operators loaded and/or discharged an aggregate of 689 ships and 5.5
million tons of cargo at the Holt Facilities.
Since inception, the Company has invested over $130.0 million in the
Gloucester Facility and the Packer Avenue Facility. The Gloucester Facility
features 4,200 lineal feet of deep water frontage, 18 warehouses with
approximately one million square feet of dry space and approximately one million
square feet of refrigerated space, and two container cranes. The Packer Avenue
Facility features 3,800 lineal feet of deep water frontage, three dry warehouses
with approximately 278,000 square feet of storage space, one refrigerated
warehouse with approximately 168,000 square feet of storage space and seven
container cranes. With the most refrigerated warehouse space of any marine
terminal operator in the United States, the Company believes it is currently the
leader in providing refrigerated facilities and related services in the United
States, with approximately 40% of all frozen beef imported by ship and a
substantial portion of the fruit imported by ship to the East Coast passing
through the Holt Facilities.
3
<PAGE>
The Company believes it is the leading contract stevedore in the Wilmington
Facility, as it handled in excess of 95% of the aggregate container volume and
approximately 75% of the aggregate tonnage of cargo handled in the Wilmington
Facility during 1997.
Through NPR, the Company is a leading provider of containerized cargo
service between the United States, Puerto Rico, the Caribbean and through a
joint venture, South America. Containerized cargo encompasses a variety of goods
transported in standard sized containers. NPR currently operates four ships to
provide twice-weekly service between San Juan, Puerto Rico and the United States
via the ports of Jacksonville, Florida and Philadelphia, Pennsylvania and weekly
service between San Juan and Miami, Florida. These three ports of entry provide
efficient gateways to major commercial areas throughout the United States and
Canada, ranging from the New York metropolitan area to the West Coast. In
addition, through charter arrangements, NPR provides service three times a week
between San Juan and the Dominican Republic and also, through a slot charter
arrangement, services the Caribbean island of Trinidad and the United States
Virgin Islands. Through its 40% interest in Transroll Navieras Express, Inc.
("TNX"), a joint venture recently formed with Transroll Navegacao S.A. of Brazil
("Transroll"), NPR also provides cargo transportation service between numerous
ports in the United States, San Juan and certain ports in South America.
NPR's predecessor was formed in 1974 by the Puerto Rico Government and was
sold to an investor group (including certain members of NPR's current
management) in March 1995 (the "Privatization"). Since the Privatization, NPR's
management team has significantly improved the operating performance of NPR by
implementing a strategic turnaround plan which consisted of increasing its share
of the cargo transported between the United States and Puerto Rico and reducing
its operating costs. During 1997, NPR transported approximately 31.8% of the
fully containerized cargo carried between the United States and Puerto Rico, as
compared to approximately 26.8% of such cargo during 1996. After the
Privatization, NPR reduced the number of vessels in continuous operation from
five to four and the number of ports of call in the United States from five to
two (subsequently increased to three in April 1998), while at the same time
increasing the aggregate volume of cargo carried. In addition, NPR consolidated
customer service activities into one service center located in Tampa, Florida,
and trimmed corporate overhead by reducing the headcount from 676 at the time of
the Privatization to 448 at December 31, 1997. Additional savings were realized
through lower intermodal transportation costs due to commitment of higher cargo
volumes to railroads and trucking companies, reduced advertising costs and
elimination of excess container capacity. As a result of these initiatives,
NPR's EBITDA increased from $8.2 million for the year ended January 5, 1997 to
$13.1 million for the period beginning January 6, 1997 and ended November 20,
1997.
The Company believes numerous benefits will result from integration of the
operations of Holt and NPR, including cost savings and new revenue
opportunities. Immediately upon consummation of the Acquisition, the Company
relocated NPR's northeastern port of call from Elizabeth, New Jersey to the
Packer Avenue Facility. The Company believes that it has already realized cost
savings since the Acquisition and that additional cost savings of approximately
$14.0 million would have been realized during 1997 if the Acquisition had
occurred at the beginning of the year rather than in November 1997. The
Acquisition also provides opportunities for the Company to cross-market its
expanded services to Holt's and NPR's respective customer bases. The Company
believes that these expanded services create new revenue opportunities both in
its existing markets and through expansion into new markets.
OPERATING STRENGTHS
The Company's objective is to maintain and enhance its position as a
leading provider of integrated cargo transportation and logistics management
services, and to expand its service offerings through controlled internal
growth. The Company intends to achieve its objective by capitalizing on the
following operating strengths:
4
<PAGE>
MARKET LEADERSHIP
Holt and NPR are leaders in their respective businesses and the Company
believes that each has significant opportunities to continue to enhance its
market position. Over its 70-year history, Holt has established itself as a
market leader by pursuing a niche-market strategy that focuses on certain
segments of the cargo handling industry. For example, the Holt Facilities
provide the largest amount of refrigerated warehouse space of any marine
terminal operator in the United States, handling approximately 40% of all frozen
beef imported by ship and a substantial portion of the fruit imported by ship to
the East Coast. The Holt Facilities became leaders in the handling of
refrigerated cargo as a result of Holt's investment in extensive refrigerated
warehousing facilities and development of expertise in the optimal methods of
handling such cargo. NPR also attained a leading position by implementing a
successful operational turnaround since the Privatization which has resulted in
an increase in its market share. During 1997, NPR ranked first overall, having
transported approximately 31.8% of the fully containerized cargo carried between
the United States and Puerto Rico. Further improvements in NPR's market position
are expected both from continued emphasis on elements of the turnaround plan and
entry into new market segments. NPR also is exploring alternatives with respect
to entering the 53-foot container segment of its market. This "big box" segment,
which the Company believes has attractive growth prospects, currently
constitutes approximately 11.0% of the container market between the United
States and Puerto Rico. See "Business -- NPR -- Overview of Operations" and
"Risk Factors -- Growth Strategies."
LONG-TERM COMPETITIVE ADVANTAGES
The Company possesses certain long-term competitive advantages to help
sustain its leading market positions. Holt's competitive advantages include the
following: (i) control of scarce waterfront property through its ownership of
the Gloucester Facility and its long-term lease of the Packer Avenue Facility;
(ii) availability of extensive warehouse space, especially refrigerated
warehouse space; (iii) efficient operations derived from years of experience and
expertise; and (iv) superior customer service driven primarily by advanced
capabilities in logistics and management information systems, such as the cargo
tracking system ("CTS") offered to customers at the Holt Facilities. NPR's
competitive advantages include the following: (i) the quality of its service,
including its high-speed vessel service and its efficient routing system; (ii)
long-term customer relationships; (iii) control of approximately 60% of the
available waterfront container terminal facilities at Puerto Nuevo, San Juan,
the largest container port in Puerto Rico, which allows for the growth of the
Company's third-party stevedoring business; and (iv) the requirement that only
vessels meeting the requirements of the Jones Act (the "Jones Act") be used in
the domestic trade (i.e., generally, the ships must be United States built,
owned and crewed). All of NPR's ships meet such requirements, and the limited
availability of such vessels in the marketplace creates a competitive advantage
for NPR.
HIGH QUALITY, VALUE-ADDED SERVICES
The Company provides high quality, value-added services to its customers.
CTS offers customers at the Holt Facilities a state-of-the-art bar coding system
to provide up-to-the-minute tracking of cargo that can be accessed by customers
remotely via modem. CTS is expected to be accessible to customers at the Holt
Facilities through the Internet by year-end 1998. Services and facilities
offered at the Holt Facilities are attractive to customers due to (i) the
ability to stevedore, warehouse and transport cargo at the same facility, which
gives customers flexibility and convenience, (ii) the availability of
specialized services, including extensive refrigerated storage space, and (iii)
the efficiency of the operations at the Holt Facilities which provide
reliability and cost efficiency for customers. Holt's stevedoring operations at
the Packer Avenue Facility achieve productivity levels of up to 30 container
lifts per hour and truck turnaround time of 30 minutes or less. The Company
believes that these productivity measures are superior to those of other
operators in competing ports such as New York and Baltimore. In addition, in
connection with NPR's comprehensive operational turnaround since the
Privatization, NPR has improved the quality and enhanced the value of its
services by, among other things, (i) consolidating its customer service
functions in one location to monitor and maintain
5
<PAGE>
consistently high quality customer service, (ii) enhancing the on-time
performance of its high speed vessel service, and (iii) offering efficient
intermodal connections to trucking and rail carriers.
SIGNIFICANT BENEFITS OF THE ACQUISITION
The Company believes the Acquisition creates significant opportunities to
realize cost savings and capitalize on new revenue opportunities.
o Cost savings. The Company believes the combination of Holt and NPR has
created significant cost saving opportunities, including savings
resulting from the relocation of NPR's northeastern port of call from
Elizabeth, New Jersey to Philadelphia, Pennsylvania and efficiencies to
be realized from improving NPR's stevedoring operations in San Juan. NPR
initiated service on November 20, 1997 to the Packer Avenue Facility. The
Company believes that the lower operating costs resulting from the
relocation have already generated cost savings and that additional cost
savings of approximately $14.0 million would have been realized during
1997 if the Acquisition had occurred at the beginning of the year rather
than in November 1997. In addition, the Company believes that it can
significantly improve the efficiency of NPR's stevedoring operations in
San Juan, by among other things, moving two of Holt's high-speed cranes
to that terminal. These cranes are capable of lifting larger containers,
stacking containers on vessels an additional tier higher and operating at
greater speeds and with less maintenance than the cranes currently
operated by NPR.
o Revenue opportunities. The combination of Holt and NPR has created
significant opportunities for growth in revenues with little additional
capital investment. Foremost among these opportunities is the ability to
cross market Holt's and NPR's services to each other's customer base. The
Company now positions itself as a one-stop solution to its customers'
cargo transportation and handling needs. When CTS is integrated into
NPR's operations, the Company will have the ability to offer this feature
to all customers shipping to and from Puerto Rico, which the Company
believes will give NPR a competitive advantage. The CTS technology will
also enhance the Company's stevedoring business in San Juan, where it
currently handles third-party ships in addition to its own. The
contemplated move in the second quarter of 1998 of two of Holt's
high-speed cranes to San Juan will allow the Company to increase its
third-party stevedoring business, an incrementally profitable element of
the Company's strategic growth plan. Another new revenue opportunity
arises from the recent launch of TNX, which calls Philadelphia, where
Holt is the stevedore and terminal operator for TNX and its liner service
partners in Philadelphia.
The Company intends to expand its services, grow its businesses and
increase its revenues and cash flow primarily through controlled internal growth
that capitalizes on the foregoing operating strengths. In addition, although the
Company is not seeking actively to make acquisitions, the Company may, from time
to time, make opportunistic acquisitions of complementary businesses that the
Company believes will enhance its ability to provide fully integrated and
value-added cargo transportation services to its customers.
THE ACQUISITION AND THE REFINANCINGS
On November 20, 1997, the Company acquired NPR's outstanding common stock
for an aggregate purchase price of $69.0 million. In connection with the
Acquisition, the Company also repaid $39.7 million of NPR's outstanding
indebtedness, repaid $31.6 million of Holt's outstanding indebtedness and
redeemed NPR's outstanding preferred stock for $0.7 million (collectively, the
"Refinancings"). The Company obtained the funds required to complete the
Acquisition and the Refinancings from (i) the issuance of 10.5% senior unsecured
increasing rate notes (the "Bridge Notes") to an affiliate of the Initial
Purchaser in the principal amount of $100.0 million, (ii) the issuance of 12.5%
subordinated unsecured increasing rate notes to the former shareholders of NPR
in the principal amount of $25.0 million (the "Seller Notes"), and (iii) the
sale/leaseback of certain NPR
6
<PAGE>
containers, gensets and chassis that generated cash proceeds of $24.0 million.
See "The Acquisition and the Refinancings."
The following table sets forth the sources and uses of funds in connection
with the Acquisition and the Refinancings. See "Description of Certain
Indebtedness."
<TABLE>
<CAPTION>
(DOLLARS IN MILLIONS)
---------------------
<S> <C>
SOURCES OF FUNDS:
Sale/leaseback of equipment............................... $ 24.0
Seller Notes.............................................. 25.0
Bridge Notes.............................................. 100.0
------
Total Sources.......................................... $149.0
======
USES OF FUNDS:
Purchase NPR common stock................................. $ 69.0
Refinance NPR debt........................................ 39.7
Redeem NPR preferred stock................................ 0.7
Refinance Holt debt....................................... 31.6
Transaction expenses...................................... 4.8
Working capital........................................... 3.2
------
Total Uses............................................. $149.0
======
</TABLE>
REORGANIZATION OF THE COMPANY
The Issuer was capitalized in October 1997 to consolidate the operations of
the Holt Subsidiaries under the Issuer. On October 31, 1997, Thomas J. Holt, Sr.
contributed all of the outstanding shares of capital stock of each of the Holt
Subsidiaries to the Issuer, all of the outstanding stock of which is owned by
Mr. Holt (the "Reorganization"). Following the Reorganization, each of the Holt
Subsidiaries became a direct or indirect wholly-owned subsidiary of the Issuer.
See "Reorganization of the Company."
The Issuer was incorporated under the laws of the State of Delaware in
1997. The Issuer and all of its subsidiaries are treated for federal and certain
state income tax purposes as S corporations under subchapter S of the Internal
Revenue Code of 1986, as amended (the "Code"). Accordingly, the Company's
taxable income is reported by and taxed directly to the Company's sole
shareholder. The Company's headquarters are located at 701 North Broadway,
Gloucester City, New Jersey 08030, and its telephone number is (609) 742-3000.
INVESTMENT IN ATLANTIC CONTAINER LINE AB
In early 1997, The Riverfront Development Corporation ("Riverfront"), a
wholly owned subsidiary of the Issuer, purchased approximately 1.1 million
shares (the "ACL Shares"), or approximately 17% of the outstanding shares, of
Atlantic Container Line AB ("ACL"), a Swedish shipping line publicly traded on
The Oslo Stock Exchange, for a total of approximately $23.5 million. ACL
operates five roll-on, roll-off and container ships between North America and
Europe. Riverfront is not a Guarantor of the Notes.
The market value of the Company's investment in ACL as of May 7, 1998 was
$38.1 million. Riverfront financed a portion of its investment in ACL with funds
borrowed from Finansbanken ASA, of which $9.2 million was outstanding as of
December 31, 1997. In April 1998, the Company received a $5.0 million dividend
with respect to the ACL shares which was used to reduce the outstanding debt. In
the fall of 1996, Holt made an unsolicited offer to ACL's management to purchase
all of the remaining outstanding shares of ACL, subject to certain conditions,
including the ability to conduct due diligence on ACL. ACL's management
indicated that it was not interested in pursuing negotiations concerning such an
acquisition and, as a result, no such negotiations were held.
7
<PAGE>
Since that time, Holt has from time to time engaged in discussions with
ACL's management concerning the possible acquisition of ACL by the Company. The
Company is currently contemplating making another unsolicited offer to purchase
the outstanding ACL shares which it does not already own, subject to certain
conditions, including the ability to conduct due diligence on ACL. If such offer
is made, there can be no assurance that such offer will be accepted or that such
acquisition will occur.
ISSUANCE OF THE OLD NOTES
The Old Notes were issued in a transaction (the "Offering") pursuant to
which the Company issued an aggregate of $140.0 million principal amount of the
Old Notes to the Initial Purchaser on January 21, 1998 (the "Closing Date")
pursuant to a Purchase Agreement, dated January 21, 1998 (the "Purchase
Agreement") among the Company, the Guarantors and the Initial Purchaser. The net
proceeds of the Offering, after deducting underwriting discounts and offering
expenses, were approximately $135.0 million. Approximately $101.8 million of the
net proceeds was used to repay the Bridge Notes, including accrued interest of
$1.8 million and $25.5 million was used to repay the Seller Notes, including
accrued interest of $0.5 million. The balance of the net proceeds of the
Offering have been and are being used for working capital and general corporate
purposes. See "The Acquisition and the Refinancings." The Initial Purchaser
subsequently resold the Old Notes in reliance on Rule 144A under the Securities
Act and certain other exemptions under the Securities Act. The Company, the
Guarantors and the Initial Purchaser also entered into the Registration Rights
Agreement, pursuant to which the Company granted certain registration rights for
the benefit of the holders of the Old Notes. The Exchange Offer is intended to
satisfy certain of the Company's obligations under the Registration Rights
Agreement with respect to the Old Notes. See "The Exchange Offer -- Purpose and
Effect."
8
<PAGE>
THE EXCHANGE OFFER
The Exchange Offer............... The Company is offering, upon the terms and
subject to the conditions set forth herein
and in the accompanying letter of
transmittal (the "Letter of Transmittal"),
to exchange $1,000 in principal amount of
its 9 3/4% Senior Notes due 2006 (the "New
Notes," and together with the Old Notes,
sometimes collectively referred to herein as
the "Notes") for each $1,000 in principal
amount of the outstanding Old Notes (the
"Exchange Offer"). As of the date of this
Prospectus, $140.0 million in aggregate
principal amount of the Old Notes is
outstanding, the maximum amount authorized
by the Indenture for all Notes. As of April
20, 1998, CEDE & Co. ("CEDE") was the sole
registered holder of the Old Notes and held
$140.0 million of aggregate principal amount
of the Old Notes for 30 of its participants.
See "The Exchange Offer -- Terms of the
Exchange Offer."
Expiration Date.................. 5:00 p.m., New York City time, on
________________, 1998, as the same may be
extended. See "The Exchange Offer --
Expiration Date; Extensions; Amendments."
Conditions of the Exchange
Offer.......................... The Exchange Offer is not conditioned upon
any minimum principal amount of Old Notes
being tendered for exchange. However, the
Exchange Offer is subject to the condition
that it does not violate any applicable law
or interpretation of the staff of the
Commission. In addition, as a condition to
its participation in the Exchange Offer,
each Holder of Old Notes will be required to
furnish certain written representations to
the Company and the Guarantors. See "The
Exchange Offer -- Conditions of the Exchange
Offer."
Termination of Certain Rights.... Pursuant to the Registration Rights
Agreement and the Old Notes, Holders of Old
Notes (i) have rights to receive Liquidated
Damages (as defined herein) and (ii) have
certain rights intended for the holders of
unregistered securities. "Liquidated
Damages" means an amount equal to $0.05 per
week per $1,000 in principal amount of
Transfer Restricted Securities (as defined
herein) held by such Holder (amounting to
$1,000 per day in the aggregate for the
$140.0 million principal amount of Notes
outstanding) for each week or portion
thereof that a Registration Default (as
defined herein) continues for the first
90-day period immediately following the
occurrence of such Registration Default. The
amount of the Liquidated Damages shall
increase by an additional $0.05 per week per
$1,000 in principal amount of Transfer
Restricted Securities with respect to each
subsequent 90-day period until all
Registration Defaults have been cured, up to
a maximum amount of Liquidated Damages of
$0.50 per week, per $1,000 in principal
amount of Transfer Restricted Securities.
The Company shall not be required to pay
liquidated damages for more than one
Registration Default at any given time.
Following the cure of all Registration
Defaults, the accrual of Liquidated Damages
will cease. See "The Exchange Offer --
Termination of Certain Rights," "--
Procedures for Tendering Old Notes" and
9
<PAGE>
"Description of New Notes -- Registration
Rights; Liquidated Damages."
Accrued Interest on the Old
Notes.......................... The New Notes will bear interest at a rate
equal to 9 3/4% per annum from and including
their date of issuance. Holders whose Old
Notes are accepted for exchange will have
the right to receive interest accrued
thereon from the date of original issuance
of the Old Notes or the last Interest
Payment Date, as applicable, to, but not
including, the date of issuance of the New
Notes, such interest to be payable with the
first interest payment on the New Notes.
Interest on the Old Notes accepted for
exchange, which accrues at the rate of
9 3/4% per annum, will cease to accrue on
the day prior to the issuance of the New
Notes.
Procedures for Tendering Old
Notes.......................... Unless a tender of Old Notes is effected
pursuant to the procedures for book-entry
transfer as provided herein, each Holder
desiring to accept the Exchange Offer must
complete and sign the Letter of Transmittal,
have the signature thereon guaranteed if
required by the Letter of Transmittal, and
mail or deliver the Letter of Transmittal,
together with the Old Notes and any other
required documents (such as evidence of
authority to act, if the Letter of
Transmittal is signed by someone acting in a
fiduciary or representative capacity), to
the Exchange Agent (as defined) at the
address set forth on the back cover page of
this Prospectus prior to 5:00 p.m., New York
City time, on the Expiration Date. Any
Beneficial Owner (as defined) of the Old
Notes whose Old Notes are registered in the
name of a nominee, such as a broker, dealer,
commercial bank or trust company and who
wishes to tender Old Notes in the Exchange
Offer, should instruct such entity or person
to promptly tender on such Beneficial
Owner's behalf. See "The Exchange Offer --
Procedures for Tendering Old Notes." By
tendering Old Notes for exchange, each
registered holder will represent to the
Company that, among other things, (i)
neither the Holder nor any Beneficial Owner
is an affiliate of the Company or any
Guarantor within the meaning of Rule 405
under the Securities Act, (ii) any New Notes
to be received by the Holder or any
Beneficial Owner are being acquired in the
ordinary course of business, and (iii)
neither the Holder nor any Beneficial Owner
has an arrangement or understanding with any
person to participate in the distribution of
the New Notes.
Guaranteed Delivery Procedures... Holders of Old Notes who wish to tender
their Old Notes and (i) whose Old Notes are
not immediately available or (ii) who cannot
deliver their Old Notes or any other
documents required by the Letter of
Transmittal to the Exchange Agent prior to
the Expiration Date (or complete the
procedure for book-entry transfer on a
timely basis), may tender their Old Notes
according to the guaranteed delivery
procedures set forth in the Letter of
Transmittal. See "The Exchange Offer --
Procedures for Tendering Old Notes --
Guaranteed Delivery Procedures."
10
<PAGE>
Acceptance of Old Notes and
Delivery of New Notes.......... Upon satisfaction or waiver of all
conditions of the Exchange Offer, the
Company will accept any and all Old Notes
that are properly tendered in the Exchange
Offer prior to 5:00 p.m., New York City
time, on the Expiration Date. The New Notes
issued pursuant to the Exchange Offer will
be delivered as soon as practicable after
acceptance of the Old Notes. See "The
Exchange Offer -- Acceptance of Old Notes
for Exchange; Delivery of New Notes."
Withdrawal Rights................ Tenders of Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time,
on the Expiration Date. See "The Exchange
Offer -- Withdrawal Rights."
Certain Federal Income Tax
Considerations................. Generally, the exchange pursuant to the
Exchange Offer will not be a taxable event
for federal income tax purposes. See
"Certain United States Federal Income Tax
Considerations -- The Exchange Offer."
The Exchange Agent............... The Bank of New York is the exchange agent
(in such capacity, the "Exchange Agent").
The address and telephone number of the
Exchange Agent are set forth in "The
Exchange Offer -- The Exchange Agent;
Assistance."
Fees and Expenses................ All expenses incident to the Company's
consummation of the Exchange Offer and
compliance with the Registration Rights
Agreement will be borne by the Company. See
"The Exchange Offer -- Solicitation of
Tenders; Fees and Expenses."
Resales of the New Notes......... Based on interpretations by the staff of the
Commission set forth in no-action letters
issued to third parties, the Company
believes that New Notes issued pursuant to
the Exchange Offer to a Holder in exchange
for Old Notes may be offered for resale,
resold and otherwise transferred by such
Holder (other than (i) a broker-dealer who
purchased the Old Notes directly from the
Company for resale pursuant to Rule 144A
under the Securities Act or any other
available exemption under the Securities Act
or (ii) a person that is an affiliate of the
Company or any Guarantor within the meaning
of Rule 405 under the Securities Act),
without compliance with the registration and
prospectus delivery provisions of the
Securities Act, provided that the Holder is
acquiring the New Notes in the ordinary
course of business and is not participating,
and has no arrangement or understanding with
any person to participate, in a distribution
of the New Notes. Each broker-dealer that
receives New Notes for its own account in
exchange for Old Notes, where such Old Notes
were acquired by such broker as a result of
market making or other trading activities,
must acknowledge that it will deliver a
prospectus in connection with any resale of
such New Notes. See "Plan of Distribution."
11
<PAGE>
DESCRIPTION OF NEW NOTES
The Old Notes were issued under an indenture, dated as of January 21, 1998
(the "Indenture"), among the Company, the Guarantors and the Trustee. The New
Notes will be issued under the Indenture as it relates to the New Notes. The
form and terms of the New Notes will be identical in all material respects to
the form and terms of the Old Notes, except that (i) the New Notes have been
registered under the Securities Act and, therefore, will not bear legends
restricting the transfer thereof, (ii) subject to certain limited exceptions,
holders of New Notes will not be entitled to Liquidated Damages otherwise
payable under the terms of the Registration Rights Agreement in respect of Old
Notes held by such holders during any period in which a Registration Default is
continuing, and (iii) holders of New Notes will not be, and upon the
consummation of the Exchange Offer Holders of Old Notes will no longer be,
entitled to certain rights under the Registration Rights Agreement intended for
the holders of unregistered securities. The Exchange Offer shall be deemed
consummated upon the delivery of New Notes by the Company to the Registrar under
the Indenture in the same aggregate principal amount as the aggregate principal
amount of Old Notes that are validly tendered by holders thereof pursuant to the
Exchange Offer. See "The Exchange Offer -- Termination of Certain Rights" and
"-- Procedures for Tendering Old Notes" and "Description of New Notes."
Notes Offered.................... $140.0 million aggregate principal amount of
9 3/4% Senior Notes due 2006.
Issuer........................... The Holt Group, Inc. (for purposes of this
section, the "Company")
Maturity Date.................... January 15, 2006.
Interest Rate and Payment Dates.. Interest on the New Notes will accrue at
9 3/4% per annum, payable semi-annually in
arrears on January 15 and July 15 of each
year, commencing July 15, 1998.
Ranking.......................... The New Notes will be senior unsecured
obligations of the Company and will rank
pari passu with all existing and future
unsubordinated indebtedness of the Company
and senior in right of payment to all
existing and future subordinated
indebtedness of the Company. The New Notes,
however, will be effectively subordinated to
secured indebtedness of the Company and the
Guarantors (including indebtedness under the
Revolving Credit Facility and Other
Indebtedness) with respect to the assets
securing such indebtedness. The New Notes
also will be effectively subordinated to
claims of creditors of the Company's
subsidiaries, except to the extent that such
subsidiaries are Guarantors. As of December
31, 1997, the Company had outstanding $213.4
million of consolidated indebtedness, of
which $88.4 million was secured indebtedness
to which the Notes were effectively
subordinated. See "Description of Certain
Indebtedness."
Optional Redemption.............. The New Notes will be redeemable in whole or
in part, at the option of the Company, at
any time on or after January 15, 2002, at
the redemption prices set forth herein, plus
accrued and unpaid interest and Liquidated
Damages, if any, to the date of redemption.
See "Description of the New Notes --
Optional Redemption." In addition, at any
12
<PAGE>
time on or before January 15, 2001, the
Company may redeem up to 35% of the sum of
the originally issued aggregate principal
amount of (i) the Notes and (ii) any
Additional Notes (as defined herein) with
the net proceeds of a Public Equity Offering
(as defined herein), at a redemption price
equal to 109 3/4% of the principal amount
thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, to the date
of redemption; provided however, that not
less than 65% of the sum of the originally
issued aggregate principal amount of (i) the
Notes and (ii) any Additional Notes is
outstanding immediately after giving effect
to such redemption. See "Description of the
New Notes -- Optional Redemption."
Guarantees....................... The New Notes will be irrevocably and
unconditionally guaranteed on a joint and
several basis, as to the payment of
principal, premium, if any, and interest on
a senior basis by certain of the Company's
existing and future subsidiaries. See
"Description of the New Notes -- General"
and "-- Certain Covenants."
Change of Control................ Upon a Change of Control, each holder of the
Notes will have the right to require the
Company to repurchase all or a portion of
such holder's Notes at a purchase price
equal to 101% of the principal amount
thereof, plus accrued and unpaid interest
and Liquidated Damages, if any, to the date
of repurchase. See "Description of the New
Notes -- Certain Covenants."
Certain Covenants................ The Indenture under which the New Notes will
be issued (the "Indenture") contains certain
covenants that, among other things, limits:
(i) the incurrence of additional
indebtedness and the issuance of
Disqualified Capital Stock (as defined
herein) by the Company and the Guarantors;
(ii) the payment of dividends on, and
redemption of, capital stock of the Company
and the Guarantors and the redemption of
certain subordinated obligations of the
Company and Guarantors; (iii) restrictions
on the ability of the Subsidiaries of the
Company and the Guarantors to pay dividends
or make other restricted payments; (iv) the
incurrence of liens securing indebtedness;
(v) sales of assets and Subsidiary stock;
(vi) transactions with affiliates; (vii)
mergers, consolidations and transfers of all
or substantially all of the Company's
assets; (viii) investments; and (ix) lines
of business. These covenants are subject to
important exceptions and qualifications. See
"Description of the New Notes -- Certain
Covenants."
Registration Rights; Liquidated
Damages........................ The Company, the Guarantors and the Initial
Purchaser have entered into a Registration
Rights Agreement pursuant to which the
Company and the Guarantors agreed, for the
benefit of the Holders of the Notes, that
they would, at their
13
<PAGE>
cost, (i) no later than April 21, 1998, file
a registration statement under the
Securities Act (an "Exchange Offer
Registration Statement") with the Commission
with respect to a registered offer to
exchange (the "Exchange Offer") the Old
Notes for New Notes with terms substantially
identical to the Notes (including the
Guarantees), except that such New Notes will
not contain transfer restrictions, and (ii)
use their best efforts to cause such
Exchange Offer Registration Statement to be
declared effective under the Securities Act
no later than July 20, 1998 and to
consummate the Exchange Offer within 30
business days after the Exchange Offer
Registration Statement is declared
effective. In certain circumstances, the
Company and the Guarantors will, at their
expense, be required to file and use their
best efforts to cause to be declared
effective a shelf registration statement
covering resales of the Notes. If the
Company and the Guarantors fail to satisfy
their registration obligations under the
Registration Rights Agreement, the Company
will be required to pay Liquidated Damages
to holders of the Old Notes under certain
circumstances. Liquidated Damages accrue in
the amount of $1,000 per day in the
aggregate for the $140.0 million principal
amount of Notes outstanding during the first
90 days (and at a greater rate thereafter)
following a Registration Default and cease
accruing when all Registration Defaults are
cured. See "Description of New Notes --
Registration Rights; Liquidated Damages."
Absence of a Public Market for
the New Notes.................. The New Notes are new securities for which
there is currently no established trading
market. The Company does not intend to apply
for listing of the New Notes on any
securities exchange or for quotation through
The Nasdaq Stock Market. Accordingly, there
can be no assurance as to the development or
liquidity of any market for the New Notes.
Risk Factors..................... An investment in the New Notes involves a
high degree of risk. Prospective investors
should carefully consider the matters set
forth under "Risk Factors."
14
<PAGE>
SUMMARY PRO FORMA AND PRO FORMA ADJUSTED
CONDENSED FINANCIAL INFORMATION
The following summary pro forma and pro forma adjusted financial
information was derived in part from, and should be read in conjunction with,
the historical consolidated financial statements of the Company and the
historical consolidated financial statements of NPR and the respective notes
thereto, "Unaudited Pro Forma and Pro Forma Adjusted Condensed Financial Data"
and "Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus. The historical consolidated
financial statements of the Company for the year ended December 31, 1997 and of
NPR for the period beginning January 6, 1997 and ended November 20, 1997 have
been audited. The Pro Forma Financial Data (as defined herein) and Pro Forma
Adjusted Financial Data for the year ended December 31, 1997 give effect to the
Acquisition, the Refinancings and the Offering as if they had been completed as
of January 1, 1997. The Pro Forma Adjusted Financial Data for the year ended
December 31, 1997 give further effect to certain cost savings which the Company
believes would have been realized as a result of the Acquisition if the
Acquisition had been completed as of the beginning of the year. The Pro Forma
Financial Data and Pro Forma Adjusted Financial Data do not purport to be
indicative of the Company's results of operations that would actually have been
obtained had the Acquisition, the Refinancings and the Offering been completed
as of January 1, 1997, or to project the Company's results of operations for any
period subsequent to 1997.
<TABLE>
<CAPTION>
FOR THE YEAR ENDED DECEMBER 31, 1997
-----------------------------------------------
COMPANY
COMPANY PRO FORMA
COMPANY(1) NPR (2) PRO FORMA ADJUSTED(3)
---------- -------- --------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Revenues................................ $118,998 $245,341 $364,339 $364,339
Operating income........................ 18,414 5,476 21,327 35,335
OTHER FINANCIAL DATA:
EBITDA (4).............................. 27,066 13,094 34,089 --
Adjusted EBITDA (5)..................... -- -- -- 48,097
Interest expense, net................... 9,211 5,973 19,610 19,610
Depreciation and amortization........... 8,652 10,618 15,762 15,762
Capital expenditures.................... 9,674 854 10,520 10,520
Adjusted EBITDA/interest expense, net
(5).................................. -- -- -- 2.5x
Pro forma ratio of earnings to fixed
charges (6).......................... -- -- 1.2x --
MARGINS:
EBITDA (4).............................. 22.7% 5.3% 9.4% --
Adjusted EBITDA (5)..................... -- -- -- 13.4%
Operating income........................ 15.5% 2.2% 5.9% 9.9%
</TABLE>
15
<PAGE>
- ------------------
(1) Includes NPR from November 20, 1997, the date of its acquisition by the
Company. Also includes Riverfront, which is not a Guarantor, and which owns
the ACL Shares. At December 31, 1997, Riverfront had total assets of
approximately $44.1 million and stockholder's equity of approximately $20.0
million (including unrealized appreciation of approximately $16.6 million on
marketable securities). In 1997, Riverfront had dividends from marketable
securities of approximately $1.6 million (which is not included in revenues)
and net income of approximately $1.0 million (which is not included in
operating income). See "-- Investment in Atlantic Container Line AB."
(2) All data for NPR is for the period beginning January 6, 1997 and ended
November 20, 1997.
(3) The Pro Forma Adjusted Financial Data reflect cost savings which the Company
believes would have been realized as a result of the Acquisition if the
Acquisition had been completed as of the beginning of the periods presented.
Such adjustments are not provided for in the definition of "pro forma"
pursuant to Regulation S-X under the Securities Act and constitute
forward-looking statements within the meaning of the Private Securities
Litigation Reform Act of 1995. Although the Company believes that such
forward-looking statements are reasonable, there can be no assurance that
the cost savings actually would have been obtained had the Acquisition been
completed as of January 1, 1997 or that such cost savings would occur or
continue in the future. Actual results may differ materially from those
reflected in the Pro Forma Adjusted Financial Data due to risks, including,
without limitation, the potential that NPR's vessels may require more
stevedoring man hours than currently contemplated due to variations in the
configuration and operation of each vessel and the potential of other cost
increases at the Packer Avenue Facility. See "Disclosure Regarding
Forward-Looking Information" and "Risk Factors -- Risks Related to the
Acquisition and Integration of NPR."
(4) The term EBITDA as used herein represents operating income plus depreciation
and amortization, adjusted to exclude certain non-recurring revenues and
expense. EBITDA has been presented because the Company believes it is
commonly used in this or a similar format by investors to analyze and
compare operating performance and to determine a company's ability to
service and/or incur debt. However, EBITDA should not be considered in
isolation or as a substitute for net income, cash flow from operations or
any other measure of income or cash flow that is prepared in accordance with
generally accepted accounting principles, or as a measure of a company's
profitability or liquidity. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Unaudited Pro Forma and Pro
Forma Adjusted Condensed Financial Data" and the historical financial
statements of Holt and NPR and the related notes thereto included elsewhere
in this Prospectus.
(5) Adjusted EBITDA is derived from EBITDA, as described in Note 3 above, after
giving effect to certain further adjustments as described in Note 4 above.
(6) For purposes of this computation, fixed charges consist of interest expense,
amortization of deferred financing costs and one-third of rental expenses,
representing an approximation of that portion of rental expenses
attributable to interest. Earnings consist of income before income taxes,
extraordinary items and cumulative effect of changes in accounting
principles, plus fixed charges.
16
<PAGE>
SUMMARY HISTORICAL FINANCIAL INFORMATION
The following summary historical financial information was derived in part
from, and should be read in conjunction with the historical consolidated
financial statements of the Company and the historical consolidated financial
statements of NPR and the respective notes thereto, "Selected Historical
Financial Data," "NPR Selected Historical Financial Data" and "Management's
Discussion and Analysis of Financial Condition and Results of Operations"
included elsewhere in this Prospectus. The historical consolidated financial
statements of the Company as of and for each of the years ended December 31,
1993 through 1997 have been audited. The historical consolidated financial
statements of NPR for the period beginning March 3, 1995 and ended December 31,
1995, the year ended January 5, 1997 and the period beginning January 6, 1997
and ended November 20, 1997 have been audited.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------
1993 1994 1995 1996 1997
-------- -------- -------- -------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
COMPANY (1)
Income Statement Data:
Revenues.................................................. $ 50,235 54,409 69,350 73,076 118,998
Operating income (loss)................................... (2,744) 8,709 15,173 15,759 18,414
OTHER FINANCIAL DATA:
EBITDA (2)................................................ 1,490 12,839 19,548 19,784 27,066
Interest expense, net..................................... 5,340 6,090 7,875 8,154 9,211
Depreciation and amortization............................. 4,234 4,130 4,375 4,025 8,652
Capital expenditures...................................... 6,412 11,922 6,034 6,936 9,674
MARGINS:
EBITDA (2)................................................ 3.0% 23.6% 28.2% 27.1% 22.7%
Operating income (loss)................................... (5.5) 16.0 21.9 21.6 15.5
BALANCE SHEET DATA (END OF PERIOD):
Total assets.............................................. 147,509 145,556 164,754 172,479 382,378
Total debt................................................ 94,802 88,993 97,159 99,203 213,433
Equity (deficit).......................................... 35,786 38,455 44,172 49,422 72,729
</TABLE>
<TABLE>
<CAPTION>
MARCH 3, 1995 YEAR ENDED JANUARY 6, 1997
TO DECEMBER 31, JANUARY 5, TO NOVEMBER 20,
1995 1997 1997
--------------- ------------ ----------------
<S> <C> <C> <C>
NPR
INCOME STATEMENT DATA:
Revenues.................................................. $233,767 $269,097 245,341
Operating income (loss)................................... (6,394) (6,354) 5,476
OTHER FINANCIAL DATA:
EBITDA(2)................................................. 4,305 8,170 13,094
Interest expense, net..................................... 5,812 7,171 5,973
Depreciation and amortization............................. 10,669 14,524 10,618
Capital expenditures...................................... 4,063 3,342 854
Investment Loss........................................... -- -- 500
MARGINS:
EBITDA(2)................................................. 1.8% 3.0% 5.3%
Operating income (loss)................................... (2.7) (2.4) 2.2
BALANCE SHEET DATA (END OF PERIOD):
Total assets.............................................. $161,035 $146,135 $130,603
Total debt................................................ 49,485 58,717 40,613
Equity (deficit).......................................... 2,890 (11,989) (10,496)
</TABLE>
- ------------------
(1) Includes NPR from November 20, 1997, the date of its acquisition by the
Company. Also includes Riverfront, which is not a Guarantor, and which owns
the ACL Shares. At December 31, 1997, Riverfront had total assets of
approximately $44.1 million and stockholder's equity of approximately $20.0
million (including unrealized appreciation of approximately $16.6 million on
marketable securities). In 1997, Riverfront had dividends from marketable
securities of approximately $1.6 million (which is not included in revenues)
and net income of approximately $1.0 million (which is not included in
operating income). As of the end of and for all other periods presented,
Riverfront had no material amount of assets, stockholders' equity, revenues
or net income. See "-- Investment in Atlantic Container Line AB."
(2) The term EBITDA as used herein represents operating income plus depreciation
and amortization, adjusted to exclude certain non-recurring revenues and
expenses. EBITDA has been presented because the Company believes it is
commonly used in this or a similar format by investors to analyze and
compare operating performance and to determine a company's ability to
service and/or incur debt. However, EBITDA should not be considered in
isolation or as a substitute for net income, cash flow from operations or
any other measure of income or cash flow that is prepared in accordance with
generally accepted accounting principles, or as a measure of a company's
profitability or liquidity. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations," "Unaudited Pro Forma and Pro
Forma Adjusted Condensed Financial Data" and the historical financial
statements of Holt and NPR and the related notes thereto included elsewhere
in this Prospectus.
17
<PAGE>
RISK FACTORS
Prospective investors should consider carefully, in addition to the other
information contained in this Prospectus, the following factors before
purchasing the New Notes offered hereby. The matters set forth below constitute
cautionary statements identifying important factors with respect to certain
forward-looking statements appearing in this Prospectus, including certain risks
and uncertainties, that could cause actual results to differ materially from
those in such forward-looking statements.
SUBSTANTIAL LEVERAGE AND ABILITY TO SERVICE DEBT
The Company has substantial indebtedness and significant debt service
obligations. The Company had outstanding $213.4 million of consolidated
indebtedness as of December 31, 1997 and its ratio of earnings to fixed charges
was 1.6 for the year then ended. In addition, the Indenture permits the Company
to incur additional indebtedness, subject to certain limitations, from time to
time to finance working capital, capital expenditures and other general
corporate purposes. See "Capitalization" and "Description of the New Notes --
Certain Covenants."
The degree to which the Company is leveraged could have important
consequences to holders of the Notes, including the following: (i) a substantial
portion of the Company's cash flow from operations must be dedicated to the
payment of the principal of and interest on its outstanding indebtedness and
will not be available for other purposes; (ii) the Company's ability to obtain
additional financing in the future for working capital needs, capital
expenditures and general corporate purposes may be materially limited or
impaired or such financing may not be available on terms favorable to the
Company; (iii) indebtedness under the Revolving Credit Facility and certain of
the Other Indebtedness and Financings (as defined herein) will be secured and
will mature prior to the maturity of the Notes; (iv) certain of the Company's
borrowings may be at variable rates of interest, including future borrowings
under the Revolving Credit Facility and certain of the Other Indebtedness and
Financings, which will expose the Company to the risk of increased interest
rates; and (v) the Company's high degree of leverage may reduce its ability to
withstand competitive pressure and make it more vulnerable to a downturn in its
business or the economy in general. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations -- Liquidity and Capital
Resources."
The Company's ability to satisfy its interest payment obligations under its
indebtedness will depend largely on its future performance which, in turn, is
subject to prevailing economic conditions and to financial, business and other
factors beyond its control. In addition, certain amounts owed under the
Revolving Credit Facility and under certain Other Indebtedness and Financings
will become due before any principal payments on the Notes are scheduled to
become due and such amounts may need to be refinanced. Furthermore, the Company
does not expect to be able to repay the principal amount of the Notes at
maturity from available cash and, accordingly, will need to refinance the Notes,
or repay the Notes with the proceeds of an equity offering, at or prior to their
maturity. There can be no assurance that the Company will be able to generate
sufficient cash flow to service its interest payment obligations under its
indebtedness or that cash flows, future borrowings or equity financings will be
available for the payment or refinancing of the Company's indebtedness. To the
extent that the Company is not successful in repaying or negotiating renewals of
its borrowings or in arranging new financings, it may have to sell significant
assets, which would have a material adverse effect on the Company's business and
results of operations. Among the factors that will affect the Company's ability
to effect an offering of its capital stock or to refinance the Notes are
financial market conditions and the value and performance of the Company at the
time of such offering or refinancing. There can be no assurance that any such
offering or refinancing can be successfully completed. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources" and "Description of Certain Indebtedness."
18
<PAGE>
HOLDING COMPANY STRUCTURE
The Issuer is a holding company the only material assets of which are the
stock of its subsidiaries, which hold substantially all of the Company's
operating assets and generate its operating income. Accordingly, the Issuer is
dependent on dividends and other distributions from its subsidiaries to generate
the funds necessary to meet its obligations, including the interest and
principal payments on the Notes. The ability of the Issuer's subsidiaries to pay
dividends to the Issuer is subject to, among other things, the terms of the
Revolving Credit Facility and the Other Indebtedness and Financings to which
they are subject, as well as future debt instruments of the subsidiaries and
applicable law. Certain of the Other Indebtedness and financings restrict
distributions from the Issuer's subsidiaries to the Issuer to a percentage of
cumulative net income, subject to certain adjustments. There can be no assurance
that any such distributions will be adequate to fund the interest and principal
payments of the Notes when due. The Guarantees provide that if the Issuer fails
to satisfy any payment obligation under the Notes, the holders of the Notes
would have a direct claim against the Guarantors. However, if a court were to
invalidate the Guarantees under fraudulent conveyance laws or other legal
principles or if, by the terms of such Guarantees, the obligations thereunder
were reduced as necessary to prevent such avoidance, the claims of the other
creditors of the Guarantors, including trade creditors, would to such extent
have priority as to assets of such Guarantor over the claims of the holders of
the Notes (except to the extent that the Issuer had an enforceable claim as a
creditor of such Guarantor). The Guarantee of the Notes by any Guarantor will be
discharged upon the sale of such Guarantor in accordance with the provisions of
the Indenture. See "-- Fraudulent Transfer Considerations" and "Description of
the New Notes -- Guarantees; Certain Bankruptcy Limitations."
The Guarantees are senior unsecured obligations of the Guarantors. The
Indenture provides that the Guarantors shall not incur any Indebtedness that is
senior in right of payment to the Guarantees, except as set forth therein. See
"Description of the New Notes -- Certain Covenants -- Limitation on Incurrence
of Additional Indebtedness and Issuance of Disqualified Capital Stock."
ASSET ENCUMBRANCES
As of December 31, 1997, the Company had outstanding $213.4 million of
consolidated indebtedness, of which $88.4 million was secured indebtedness to
which the Notes were effectively subordinated. The Revolving Credit Facility
currently is secured by the Company's vessels and claims of the holders of the
Notes are effectively subordinated to the extent of such assets. The Other
Indebtedness and Financings are secured by mortgages on the Gloucester Facility,
certain material handling equipment and the ACL Shares. Claims of the holders of
the Notes also will be effectively subordinated to the extent of such assets.
The claims of holders of the Notes upon any distribution of assets of any
subsidiary of the Company in the event of liquidation or reorganization of such
subsidiary will be subordinated to the prior claims of present and future
creditors of such subsidiary to the extent such claims are secured. In such an
event, there may not be sufficient assets remaining to pay amounts due on any or
all of the Notes then outstanding. The Indenture permits subsidiaries of the
Issuer, under certain circumstances, to incur indebtedness and permits the
Issuer and its subsidiaries, under certain circumstances, to secure
indebtedness. See "Description of the New Notes -- Certain Covenants --
Limitation on Incurrence of Additional Indebtedness and Issuance of Disqualified
Capital Stock" and "Description of Certain Indebtedness."
RESTRICTIVE COVENANTS
The Indenture, the Revolving Credit Facility and certain of the Other
Indebtedness and Financings contain certain financial and other covenants,
including covenants requiring the Company to maintain certain financial ratios
and restricting the ability of the Company to incur indebtedness or to create or
suffer to exist certain liens. The ability of the Company to comply with such
provisions may be affected by events beyond its control. Should the Company be
unable to comply with the financial or other restrictive covenants under the
Indenture, the Revolving Credit Facility or the Other Indebtedness and
Financings at any time in the future, there can be no assurance that the lenders
thereunder would agree to any necessary amendments or waivers. In such a case,
the failure to obtain amendments or
19
<PAGE>
waivers could have a material adverse effect upon the Company and its ability to
meet its obligations in respect of the Notes. A failure to make any required
payment under the Revolving Credit Facility or the Other Indebtedness and
Financings or to comply with any of the financial and operating covenants
included in the Revolving Credit Facility or the Other Indebtedness and
Financings could result in an event of default thereunder, permitting the
lenders to accelerate the maturity of the indebtedness under the Revolving
Credit Facility and the Other Indebtedness and Financings and, depending upon
the action taken by such lenders, delaying or precluding payment of principal of
or interest on the Notes. Such an acceleration also would permit the
acceleration of the other indebtedness of the Company which contain
cross-acceleration or cross-default provisions, including the Indenture. The
Indenture also has certain covenants which, if not complied with, would result
in an event of default thereunder permitting holders of the Notes, under certain
circumstances, to accelerate the Notes. Any such event of default or
acceleration also could result in an event of default or acceleration of other
indebtedness of the Company. If the lenders under the Revolving Credit Facility
or the Other Indebtedness and Financings or the holders of the Notes accelerate
the maturity of the indebtedness thereunder there can be no assurance that the
Company will have sufficient assets to satisfy its obligations under the Notes.
In addition, other indebtedness of the Company that may be incurred in the
future may contain financial or other covenants more restrictive than those
applicable to the Revolving Credit Facility, the Other Indebtedness and
Financings or the Notes. See "Description of the New Notes -- Certain Covenants
- -- Limitation on Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock."
CAPITAL REQUIREMENTS
Each of the Company's businesses is capital intensive, and the Company will
continue to require substantial capital in order to operate and expand its
business. The stevedoring, trucking and shipping industries each require
extensive investment in capital equipment. The Company historically has relied
upon vessel charters and on debt and equipment leases to finance capital
equipment, and it has granted its lenders liens on substantially all of its
tangible assets. If in the future the Company were unable to borrow sufficient
funds, enter into acceptable lease arrangements, sell or trade its used
equipment at acceptable prices, or raise additional equity capital, the
resulting capital shortage would limit the Company's growth and force the
Company to operate its capital equipment for longer periods, which would be
likely to adversely affect the Company's growth and profitability.
RISKS RELATED TO THE ACQUISITION AND INTEGRATION OF NPR
The full benefits of a business combination of Holt and NPR require the
integration of each company's administrative, finance, sales and marketing
organizations, and the implementation of appropriate operations, financial and
management systems and controls in order to capture the efficiencies and the
cost reductions that are expected to result from the Acquisition. The Company
believes that the Acquisition and the relocation of NPR's northeastern port of
call from Elizabeth, New Jersey to the Packer Avenue Facility provide the
opportunity to realize cost savings and to capitalize on new revenue
opportunities. The Company believes that it has already realized cost savings
since the Acquisition and that additional cost savings of approximately $14.0
million would have been realized during 1997 if the Acquisition had occurred at
the beginning of the year rather than in November 1997.
However, the integration of NPR into the Company's operations will involve
a number of risks, including the possible diversion of management's attention
from other business concerns, the possible loss of key employees of NPR,
potential difficulties in integrating the operations of NPR with those of the
Company and the potential inability to replicate successfully Holt's operating
efficiencies in NPR's operations. Furthermore, the Company may not be able to
realize some or all of the anticipated cost savings or to successfully pursue
some or all of the anticipated revenue opportunities. Consequently, no assurance
can be given as to the effect of the integration of NPR on the Company's
business or results of operations. In addition, the Company's contractual
recourse against the former shareholders of NPR under the Acquisition agreement
is extremely limited. Accordingly, unanticipated events or liabilities related
to NPR's business could materially and adversely affect the Company.
20
<PAGE>
The Pro Forma Financial Data and the Pro Forma Adjusted Financial Data set
forth in the "Prospectus Summary" and under "Unaudited Pro Forma and Pro Forma
Adjusted Condensed Financial Data," and the Company's estimates of certain cost
savings and revenue opportunities from the Acquisition and the integration of
NPR, are based upon a number of assumptions and estimates that, while presented
with numerical specificity and considered reasonable by the Company when taken
as a whole, are inherently subject to significant business, economic and
competitive uncertainties and contingencies, any of which are beyond the control
of the Company, and are based upon assumptions with respect to future business
decisions that are subject to change. Such uncertainties and contingencies
include the risks described herein including, among others, the risks related to
the Acquisition and the integration of NPR such as the possible diversion of
management's attention from other business concerns, the possible loss of key
employees of NPR, potential difficulties in integrating the operations of NPR
with those of the Company and the potential inability to replicate successfully
Holt's operating efficiencies to NPR's operations. Any additional cost or
expense which may result from such risks are not taken into account in the
presentation of the Pro Forma Financial Data and Pro Forma Adjusted Financial
Data.
The Pro Forma Financial Data and Pro Forma Adjusted Financial Data, and
such other estimates assume that the Company will achieve certain cost savings
and operational efficiencies related to the integration of NPR. Certain of the
assumptions underlying the Pro Forma Financial Data and Pro Forma Adjusted
Financial Data are described in more detail under "Unaudited Pro Forma and Pro
Forma Adjusted Condensed Financial Data." Accordingly, the Pro Forma Financial
Data and Pro Forma Adjusted Financial Data, and such other estimates are only
estimates and are necessarily speculative in nature. It can be expected that
some or all of the assumptions of the Pro Forma Financial Data and Pro Forma
Adjusted Financial Data, and some or all of the assumptions underlying the other
estimates, will not materialize. Furthermore, actual results may differ
materially from those reflected in the Pro Forma Adjusted Financial Data due to
risks, including, without limitation, the potential that NPR's vessels may
require more stevedoring man hours than currently contemplated due to variations
in the configuration and operation of each vessel and the potential of other
cost increases at the Packer Avenue Facility. The Pro Forma Financial Data and
Pro Forma Adjusted Financial Data do not purport to represent what the Company's
results of operations actually would have been if the transactions had been
consummated on the date indicated, or what such results will be for any future
date or for any future period.
UNIONIZED WORK FORCE
At December 31, 1997, all of Holt's non-supervisory work force, 34.2% of
NPR's office workers and all of NPR's shipboard and non-supervisory stevedoring
employees were covered under collective bargaining agreements, and the number of
employees of the Company covered by collective bargaining agreements could
increase in the future. In the past, Holt has experienced labor strikes, the
most recent of which was with the International Longshoreman's Association
("ILA") and took place in 1996. In addition, Holt has in the past engaged in
legal proceedings with labor unions and its subsidiary, Holt Cargo Systems, Inc.
("Holt Cargo") is currently the claimant in an arbitration with the ILA.
Although Holt Cargo and certain of the other Holt Subsidiaries currently have
"no strike" clauses in all of their collective bargaining agreements, there can
be no assurance that the unions will not engage in a work stoppage or strike in
the future. Although the Company believes that relations with the unions are
satisfactory, a prolonged work stoppage or strike by its unionized work force
could have a material adverse effect on the Company's results of operations. See
"Business -- Holt -- Employees" and "-- NPR -- Employees and Labor Relations."
POTENTIAL WITHDRAWAL LIABILITY AT PORT OF NEW YORK
NPR has an obligation to contribute to the NYSA-ILA Pension Fund for the
benefit of unionized stevedores who handle NPR's ships in the port located in
Elizabeth, New Jersey. The Pension Fund is a multiemployer pension plan subject
to the withdrawal liability provisions of ERISA. In the event NPR incurs a
complete withdrawal from the Pension Fund, either by completely terminating all
contributing
21
<PAGE>
operations in the Port of New York, or by permanently ceasing to have a legal
obligation to contribute to the Pension Fund, NPR will incur a withdrawal
liability that currently is estimated at up to approximately $17.1 million plus
interest, payable over an eight-year period.
In the event NPR does not make contributions to the Pension Fund during
three consecutive years equal to at least 30% of the highest yearly level in
effect during the prior five years, NPR will incur a partial withdrawal
liability equal to a fraction of the complete withdrawal liability. The fraction
will be based on a comparison of NPR's contributing operations in the year after
the partial withdrawal to the five-year average level of operations prior to the
year of withdrawal (or prior to the three-year decline). Partial withdrawal also
would be payable over the same period as a complete withdrawal, commencing at
least one full year after the year of partial withdrawal.
Pursuant to a settlement agreement with NPR's predecessor, the Puerto Rico
government has established an escrow account with the Pension Fund. If NPR
incurs a complete withdrawal or partial withdrawal and does not pay the assessed
liability when due, the Pension Fund is entitled to collect against the escrow
account. NPR is required to indemnify the Puerto Rico government for its
liability in this regard and the Puerto Rico government is entitled to confess
judgement against NPR for such liability. In addition, any withdrawal liability
obligations are joint and several liabilities of all members of NPR's control
group, including the Company, pursuant to ERISA.
Although the Company plans to structure the relocation of NPR's
northeastern port of call from Elizabeth, New Jersey to the Packer Avenue
Facility in a manner designed to ensure that a partial or complete withdrawal
will not occur, there can be no assurance that such plans will be successful or
that such plans will not change. Accordingly, there can be no assurance (i) that
the Company will not incur a partial withdrawal liability or the full withdrawal
liability (currently estimated at up to approximately $17.1 million plus
interest, payable over eight years), (ii) that the full withdrawal liability
will not exceed $17.1 million plus interest or (iii) that any withdrawal
liability incurred would not be required to be paid over less than eight years.
NPR'S RELIANCE ON LIMITED MARKETS
Most of NPR's revenues currently are attributable to freight moving either
to or from Puerto Rico, accounting for 88.2% of NPR's ocean revenues in 1996 and
88.8% in 1997. Accordingly, NPR's results are affected by economic conditions
and business cycles in Puerto Rico that may or may not be similar to those in
the continental United States. NPR's reliance on the Puerto Rico market makes it
susceptible to changes to which it would not otherwise be exposed if it operated
in a more geographically diverse market, including a downturn in the local
economy, local competitive factors, changes in government regulations and
changes in government administrations and other political changes. For example,
over time, there has been a significant increase in the amount of foreign (non-
United States) exports into Puerto Rico such that, based on the Company's
estimates, foreign cargo (containerized and non-containerized), has grown from
approximately 24% of total imports to Puerto Rico in 1992 to approximately 29%
in 1996. In addition, the United States Congress has passed legislation that
establishes a phase-out of Section 936 of the Code which allows for favorable
United States tax treatment of profits resulting from manufacturing operations
in Puerto Rico. The phase-out began in January 1996 and continues until January
2006. This favorable tax provision has contributed to economic growth in Puerto
Rico in the past by enticing United States corporations to establish
manufacturing operations in Puerto Rico. Furthermore, any change in Puerto
Rico's political status with the United States, or the ongoing debate on such
status, could affect the economy of Puerto Rico. The ultimate effect of the
phase-out of Section 936 or of possible changes in Puerto Rico's governmental
and political status is uncertain and, accordingly, there can be no assurance
that such issues will not adversely affect NPR.
In addition to the Puerto Rico trade, NPR's vessels transport freight to
and from selected Caribbean locations. In 1996 and 1997, freight moving to or
from Caribbean locations accounted for 11.8% and 11.2%, respectively, of NPR's
ocean revenues. NPR also has recently initiated service to and from Brazil
through its TNX joint venture. Although NPR expects to reduce its reliance on
the
22
<PAGE>
Puerto Rico trade through the expansion of its Caribbean and South American
business, and potentially through expansion to other trade routes, there can be
no assurance that such business will be expanded or that NPR's reliance on the
Puerto Rico trade will decline.
POTENTIAL LOSS OF JONES ACT PROTECTION
The Company's marine operations are conducted primarily in the United
States domestic trade, which, by virtue of a set of federal laws known as the
Jones Act, require that only United States built, owned and crewed vessels move
freight between ports in the United States, including the non-contiguous areas
of Puerto Rico, Alaska, Hawaii and Guam. There have been repeated attempts to
modify these laws, and efforts to effect such modifications are expected to
continue in the future. The Company already is subject to vigorous competition,
and modification or relaxation of Jones Act requirements could lead to potential
additional competition in its marine operations, including competition by
companies with financial resources greater than the Company that could be
committed to the construction of new vessels. While the Company believes that
the modification or relaxation of the Jones Act is unlikely at this time,
significant modification or relaxation of the Jones Act could result in
additional competition from larger or lower cost carriers. There is no assurance
that any modification or relaxation of the Jones Act would not have a material
adverse effect on the value of the Company's vessels or on the results of
operations of the Company in the domestic trades it now serves or expects to
serve in the future.
GROWTH STRATEGIES
The Company intends to expand its services and grow its businesses
primarily through controlled internal growth and pursuit of growth opportunities
created by the Acquisition. See "Business -- The Company -- Operating
Strengths." The Company also may, from time to time, make opportunistic
acquisitions of complementary businesses. Each of these growth strategies
requires both capital investments and commitment of management resources, and
there can be no assurance that, even after such investments and commitment of
resources, such strategies will be successful.
The Company has in the past engaged in discussions with ACL's management
concerning the possible acquisition of ACL by the Company. The Company is
currently contemplating making another unsolicited offer to purchase the
outstanding ACL shares which it does not already own, subject to certain
conditions, including the ability to conduct due diligence on ACL. If such offer
is made, there can be no assurance that such offer will be accepted or that such
acquisition will occur. Any such acquisition would involve the requirement of a
substantial capital investment and commitment of management resources. See
"Prospectus Summary -- Investment in Atlantic Container Line AB."
In order to facilitate its expansion to the 53-foot "big box" container
market, NPR has solicited bids relating to the modification of its vessels to
accommodate 53-foot containers in addition to all other standard-sized
containers and the charter by NPR of an additional vessel that would hold
53-foot containers in addition to all other standard-sized containers. The
Company's pursuit of this expansion strategy is very preliminary and there can
be no assurance that the Company will not change its strategy with regard to
this segment of the container shipping market, or that such a charter otherwise
will be successfully consummated. If such modifications are made and such
additional vessel is chartered, there can be no assurance that new business
opportunities will be developed to justify the investment. See "Business -- NPR
- -- Overview of Operations."
RELATED ENTITY TRANSACTIONS
Significant assets utilized by the Company, including the lease for the
Packer Avenue Facility and the ownership of the management information systems
used in Holt's operations, including CTS, are held by Astro Holdings, Inc.
("AHI") or SLS Services, Inc. ("SLS"), both of which are owned by Thomas J.
Holt, Jr., Leo A. Holt and Michael J. Holt, each of whom is a director of the
Company and a son of Thomas J. Holt, Sr., the Chairman, President and Chief
Executive Officer of the Company. AHI
23
<PAGE>
subleases the Packer Avenue Facility (which includes four container cranes) and
leases certain additional equipment to Holt. SLS provides the Company with
certain administrative services such as accounting, billing, MIS (including CTS)
and risk management services. In addition, certain other companies which are
majority owned by Thomas J. Holt, Sr. (the "Non-consolidated Affiliates")
provide to or procure from the Company various assets and services, including
warehouse space, building and equipment maintenance and stevedoring services.
See "Certain Transactions" and Note 9 of "Notes to Consolidated Financial
Statements" of the Company.
The Company may enter into other material transactions and agreements with
these companies (or other companies under the control of such directors and
executive officers of the Company) from time to time in the future. The terms of
any future transactions and agreements may be more or less favorable to the
Company than the terms of the arrangements and agreements currently in effect.
The ability of the Company to enter into transactions with related parties is
limited pursuant to the Indenture. See "Description of the New Notes -- Certain
Covenants -- Limitation on Transactions with Affiliates."
The interests of certain of the Company's directors in AHI, SLS and/or the
Non-consolidated Affiliates (or other companies under their control) could give
rise to conflicts of interest. Such conflicts could arise for example, in
transactions involving business dealings between the Company and such companies
or in connection with potential acquisitions or other business opportunities.
There can be no assurance that any such conflicts of interest would be resolved
in a manner satisfactory to the holders of the Notes.
DEPENDENCE ON CERTAIN CUSTOMERS
For the years ended December 31, 1995, 1996 and 1997, Holt's 15 largest
customers accounted for 52.0%, 50.1% and 48.8% respectively, of total revenues.
No customer accounted for more than 10% of Holt's total revenues for the years
ended December 31, 1995, 1996 or 1997, other than Columbus Line, Inc., which
accounted for 11.8%, 10.5% and 10.5% of such revenue during such respective
periods. For the period from March 3, 1995 to December 31, 1995, the year ended
January 5, 1997 and the period beginning January 6, 1997 and ended November 20,
1997, NPR's 15 largest customers accounted for 29.9%, 26.6% and 28.5%,
respectively, of NPR's total revenues. No customer accounted for more than 10%
of NPR's total revenues in any such period.
Most of Holt's customer contracts have terms of one to five years, but are
terminable on notice of between 30 and 180 days by either party. There can be no
assurance that existing customer contracts will not be terminated prior to the
end of their term or that such customer contracts will be renewed or that new
customer contracts will be entered into on terms favorable to the Company. A
majority of NPR's customers are parties to Time-Volume Agreements ("TVAs") or
fixed rate contracts which are generally one year in duration and terminable by
the customer at any time upon payment of a specified penalty. The sudden loss of
or reduction in demand for its services from a significant group of customers of
any of the Company's subsidiaries could have a material adverse effect on the
Company's or such subsidiary's business and results of operations. See "Business
- -- Holt -- Customers" and "-- NPR -- Customers."
EFFECTS OF ECONOMIC FACTORS
Economic recession, changes in fuel prices and the supply of fuel,
increases in fuel or energy taxes, interest rate fluctuations, changes in the
cost of insurance and customers' business cycles are economic factors that
affect the Company's business, but over which the Company has little or no
control. NPR, like its competitors, currently passes fuel price increases
through to substantially all of its customers, including customers who are
parties to TVAs or fixed rate contracts. To the extent that increased expenses
resulting from these factors cannot be passed through to customers, there could
be a material adverse effect on the Company's profitability. See "Management's
Discussion and Analysis of Financial Condition and Results of Operations."
24
<PAGE>
COMPETITION
Each of the industries in which the Company operates is highly competitive.
Competition in the cargo handling and transportation industry is based upon,
among other things, price, timeliness of delivery, adequacy and location of
facilities and quality of service. NPR faces price competition from competitors
in the Puerto Rico market some of which are part of larger transportation
organizations which possess greater financial resources than the Company. There
can be no assurance that the Company will be able to compete successfully
against current and future sources of competition or that the current and future
competitive pressures faced by the Company will not adversely affect its
profitability or financial performance. See "Business -- Holt -- Competition"
and "-- NPR -- Competition."
RISK MANAGEMENT AND CLAIMS EXPOSURE
The Company's current operations utilize a limited number of major items of
capital equipment, including container cranes and oceangoing vessels, the loss
of any of which could have a material adverse effect on the Company. The
operation of any marine vessel involves the risk of catastrophic events due to
various perils of the sea. In addition, certain of the Company's ports are
vulnerable to the risk of hurricanes. The hazards associated with these events
include (i) the risk of loss of or damage to the Company's facilities, vessels
or third parties (including customers) from impact, fire or explosion, (ii) loss
or contamination of cargo, (iii) personal injury of employees or third parties,
and (iv) pollution and other environmental damages. In the event of either a
total loss of or major damage to any vessel, container crane or port facility,
there can be no assurance that the Company could locate a suitable replacement
or, if available, that such replacement could be obtained on suitable terms. The
Company maintains insurance coverage against these hazards, but does not
maintain business interruption insurance on NPR's operations. Although the
Company owns a fifth vessel which is available to be rotated into service when
one of the four others vessels currently in operation is in need of maintenance
or repair, there can be no assurance that the loss of, damage to or significant
required repair to any of the Company's vessels, container cranes or port
facilities in the future would not have a material adverse effect on the
Company. In addition, to the extent that the Company experiences a significant
increase in the frequency or severity of accidents or workers' compensation
claims, or unfavorable developments on existing claims, the Company's operating
results and financial condition could be materially adversely affected.
Significant increases in the Company's claims and insurance cost, to the extent
not offset by rate increases, would reduce the Company's profitability.
ENVIRONMENTAL MATTERS
The Company's operations are subject to various environmental laws and
regulations dealing with the transportation, storage, presence, use, disposal
and handling of hazardous materials and hazardous wastes, discharge of storm
water and vessel fuel delivery. The Company is not aware of any material fuel
spills on land or at sea or any material hazardous substance contamination on
its properties and believes that its operations are in material compliance with
existing environmental laws and regulations. However, if any material hazardous
substance contamination were found on the Company's properties or if the Company
were found to be in material violation of applicable laws and regulations, the
Company could be responsible for material clean-up costs, property damage, and
fines or other penalties, any one of which could have a material adverse effect
on the Company. See "Business -- Holt -- Environmental Matters" and "-- NPR --
Environmental Matters."
GOVERNMENT REGULATION
The Company is subject to regulation by various federal and state agencies,
including the Surface Transportation Board, the United States Maritime
Administration ("MARAD"), the Federal Maritime Commission and the United States
Coast Guard. These regulatory authorities have broad powers, generally governing
activities such as authority to engage in motor carrier operations, operational
safety, accounting systems, tariff filings of freight rates, certain mergers,
consolidations and acquisitions, contraband, environmental contamination and
financial reporting. NPR's containerized
25
<PAGE>
shipping operations are conducted primarily in the United States domestic trade,
which, by virtue of the Jones Act, require that only United States built, owned
and crewed vessels move freight between ports in the United States, including
the noncontiguous areas of Puerto Rico, Alaska, Hawaii and Guam. The Company
also is subject to regulations promulgated by the United States Environmental
Protection Agency ("EPA") and similar state agencies. Although the Company
believes that its operations are in material compliance with current laws and
regulations, there can be no assurance that current regulatory requirements will
not change or that any noncompliance with such requirements will not occur or be
discovered. See "Business -- Holt -- Government Regulation" and "-- NPR --
Government Regulation."
DEPENDENCE ON KEY PERSONNEL
The success of the Company is dependent upon its senior management team, as
well as its ability to attract and retain qualified personnel. The Company's
Chairman, President and Chief Executive Officer, Thomas J. Holt, Sr., and
certain of the Company's other executive officers have extensive experience in
the maritime cargo handling industry. The Company does not maintain "key man"
life insurance on Mr. Holt or any other member of the Company's senior
management team. Loss of the services of certain of these individuals could have
a material adverse effect on the Company's operations. Additionally, there is
substantial competition for qualified personnel in the cargo handling and
transportation industry. There can be no assurance that the Company will be able
to retain its existing senior management team or attract additional qualified
personnel. See "Management."
CONTROLLING STOCKHOLDER; CHANGE OF CONTROL
Thomas J. Holt, Sr. owns 100% of the outstanding common stock of the
Company, which is the only class of capital stock of the Company outstanding.
See "Sole Stockholder." As a result, Mr. Holt has the ability to elect the Board
of Directors of the Company, to approve or disapprove other matters requiring
stockholder approval, and to control the affairs and policies of the Company.
The interests of Mr. Holt as the sole equity holder of the Company may differ
from the interests of holders of Notes.
There can be no assurance that Mr. Holt will continue to control the
Company. A change of control would be an event of default under the Revolving
Credit Facility and certain of the Other Indebtedness and Financings, permitting
the lenders under the Revolving Credit Facility and certain Other Indebtedness
and Financings to exercise remedies, and would require the Company to make an
offer to purchase all of the outstanding Notes under the Indenture. The
inability to repay indebtedness under the Revolving Credit Facility and certain
Other Indebtedness and Financings, if accelerated, or to purchase all of the
Notes, would also constitute an event of default under the Indenture. See
"Description of Certain Indebtedness" and "Description of the Notes -- Certain
Covenants." No assurance can be given that the Company will be able to comply
with its obligations under the Revolving Credit Facility and Other Indebtedness
and Financings in the event of a change of control or to refinance any of its
obligations thereunder or other obligations that might become due by the reason
of these provisions. Thus, in the event the Company was unable to meet its
obligations, there may not be any resources available to meet claims for payment
on the Notes.
FRAUDULENT TRANSFER CONSIDERATIONS
The obligations of any Guarantor under its Guarantee may be subject to
avoidance under state fraudulent transfer or conveyance laws or federal
bankruptcy law. If a court were to find, in a lawsuit by an unpaid creditor of a
Guarantor or a representative of creditors, such as a trustee in bankruptcy, (i)
that such Guarantor incurred the indebtedness represented by its Guarantee with
the intent to hinder, delay or defraud present or future creditors, or received
less than a reasonably equivalent value or fair consideration for any such
indebtedness and (ii) at the time of such incurrence (a) was insolvent, (b) was
rendered insolvent by reason of such incurrence, (c) was engaged or about to
engage in a business or transaction for which its remaining assets constituted
unreasonably small capital to carry on its business, or (d) intended to incur,
or believed or reasonably should have believed that it would incur debts beyond
its ability to pay as such debts matured, such court could avoid such
Guarantor's
26
<PAGE>
obligations under its Guarantee, subordinate such Guarantee to all other
indebtedness of such Guarantor or take other action detrimental to the holders
of the Notes. In such an event, there can be no assurance that any payment on
such Guarantee could ever be recovered by holders of the Notes. In addition, any
payments by any Guarantor pursuant to such Guarantor's Guarantee could be
avoided and may be required to be returned to such Guarantor or to a fund for
the benefit of its creditors.
The measures of insolvency for purposes of the foregoing considerations
will vary depending upon the law applied in any proceeding with respect to the
foregoing. Generally, however, a Guarantor would be considered insolvent if the
sum of its debts, including contingent liabilities, were greater than the fair
salable value of all of its assets at a fair valuation or if the present fair
salable value of its assets were less than the amount that would be required to
pay its probable liability on its existing debts, including contingent
liabilities, as they become absolute and mature. Although the Company believes
that each of the Guarantors is solvent under the foregoing standards, there can
be no assurance as to what standard a court would apply in making such
determination or that a court would reach the same conclusion. See "Description
of the Notes -- Guarantees; Certain Bankruptcy Limitations."
In rendering their opinions with respect to the validity of the Notes and
the Guarantees, counsel for the Issuer and the Guarantors and counsel for the
Initial Purchaser will not express any opinion as to the applicability of
federal or state statutes relating to fraudulent conveyances and obligations.
ABSENCE OF PUBLIC MARKET FOR THE NOTES
The New Notes are a new issue of securities, have no established trading
market, and may not be widely distributed. The Company does not intend to list
the New Notes on any national securities exchange or to seek the admission
thereof to trading in The Nasdaq Stock Market. No assurance can be given that an
active public or other market will develop for the New Notes or as to the
liquidity of or the trading market for the New Notes. If a trading market does
not develop or is not maintained, holders of the New Notes may experience
difficulty in reselling the New Notes or may be unable to sell them at all. If a
market for the New Notes develops, any such market may be discontinued at any
time. If a public trading market develops for the New Notes, future trading
prices of the New Notes will depend on many factors, including, among other
things, prevailing interest rates, the Company's results of operations and the
market for similar securities, and the price at which the holders of New Notes
will be able to sell such New Notes is not assured and the New Notes could trade
at a premium or discount to their purchase price or face value. Depending on
prevailing interest rates, the market for similar securities and other facts,
including the financial condition of the Company, the New Notes may trade at a
discount from their principal amount.
ABSENCE OF REGISTRATION UNDER STATE SECURITIES LAWS
The New Notes have not been registered or qualified under any state
securities laws. The Exchange Offer is being made both to U.S. institutional
investors, pursuant to exemptions from such laws for sales to such investors,
and to non-U.S. persons (within the meaning of Regulation S under the Securities
Act), as state securities laws do not apply to sales to persons who are not
residents of any state. In order to acquire the Old Notes, each Holder of Old
Notes was required to represent to the Company that it was either (i) a
"qualified institutional buyer" within the meaning of the Rule 144A under the
Securities Act, (ii) an institutional "accredited investor" within the meaning
of subparagraph (a)(1), (2), (3) or (7) of Rule 501 under the Securities Act or
(iii) a non-U.S. person within the meaning of Regulation S under the Securities
Act. Holders who wish to exchange their Old Notes for New Notes pursuant to the
Exchange Offer will be required to represent to the Company that they remain
institutional investors or non-U.S. persons, as they represented at the time
they acquired their Old Notes. Any Holder who no longer qualifies as such an
institutional investor (e.g., a bank whose charter has been revoked) or who is
no longer a non-U.S. person, as the case may be, will not be entitled to
exchange such Old Notes for New Notes in the Exchange Offer, unless another
state securities law exemption is available. If no such exemption is available,
the Holder will continue to hold the Old Notes, which will continue to be
subject to the restrictions on transfer as set forth in the legend thereon.
27
<PAGE>
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the issuance of the Old Notes pursuant to exemptions from, or in
transactions not subject to, the registration requirements of the Securities Act
and applicable state securities laws. In general, the Old Notes may not be
offered or sold, unless registered under the Securities Act, except pursuant to
an exemption from, or in a transaction not subject to, the Securities Act and
applicable state securities laws. The Company does not currently anticipate that
it will register the Old Notes for resale under the Securities Act. New Notes
issued pursuant to the Exchange Offer in exchange for Old Notes may be offered
for resale, resold or otherwise transferred by holders thereof (other than any
such holder which is an "affiliate" of the Company within the meaning of Rule
405 under the Securities Act and other than any broker-dealer who purchased Old
Notes directly from the Company for resale pursuant to Rule 144A under the
Securities Act or any other available exemption under the Securities Act)
without compliance with the registration and prospectus delivery provisions of
the Securities Act provided that such New Notes are acquired in the ordinary
course of such holders' business and such holders have no arrangement with any
person to participate in the distribution of such Notes. Each broker-dealer that
acquired Old Notes for its own account as a result of market making or other
trading activities and that receives New Notes for its own account pursuant to
the Exchange Offer must acknowledge that it will deliver a prospectus in
connection with any resale of such New Notes. The Letter of Transmittal states
that, by so acknowledging and by delivering a prospectus, a broker-dealer will
not be deemed to admit that it is an "underwriter" within the meaning of the
Securities Act. This Prospectus, as it may be amended or supplemented from time
to time, may be used by a broker-dealer in connection with resales of New Notes
received in exchange for Old Notes where such Old Notes were acquired by such
broker-dealer as a result of market-making activities or other trading
activities. The Company has agreed that, for a period of 180 days after the
effective date of this Prospectus, it will make this Prospectus, as it may be
amended or supplemented from time to time, available to any broker-dealer for
use in connection with any such resale. See "Plan of Distribution." However, to
comply with the securities laws of certain jurisdictions, if applicable, the New
Notes may not be offered or sold unless they have been registered or qualified
for sale in such jurisdictions or an exemption from registration or
qualification is available and is complied with. To the extent that Old Notes
are tendered and accepted in the Exchange Offer, the trading market for
untendered and tendered but unaccepted Old Notes will be adversely affected.
28
<PAGE>
THE ACQUISITION AND THE REFINANCINGS
On November 20, 1997, the Issuer acquired NPR pursuant to a Stock Purchase
Agreement dated September 25, 1997, with NPR Holding Corporation and the former
shareholders (the "Sellers") of NPR Holding Corporation (as amended, the
"Agreement"). Pursuant to the Agreement, on November 20, 1997, the Issuer paid
to the Sellers $44.0 million in cash and issued to the Sellers $25.0 million in
aggregate principal amount of Seller Notes. In connection with the Acquisition,
the Issuer also contributed $39.7 million to NPR which was used to repay
outstanding indebtedness of NPR, repaid $31.6 million of Holt's outstanding
indebtedness and redeemed NPR's outstanding preferred stock for $0.7 million
(collectively, the "Refinancings"). The Issuer obtained the funds required to
complete the Acquisition and the Refinancings from: (i) the issuance by the
Company of Bridge Notes to an affiliate of the Initial Purchaser in the
principal amount of $100.0 million; (ii) the issuance of $25.0 million of Seller
Notes to the Sellers; and (iii) the sale/leaseback of certain NPR containers,
gensets and chassis which generated cash proceeds of $24.0 million.
In addition, in connection with the Acquisition, NPR entered into five-year
employment agreements with certain members of NPR management ("NPR Senior
Management") including the key employees of NPR set forth under "Management --
Executive Officers, Directors and Key Employees." In addition, NPR granted NPR
Senior Management "Phantom Stock Units" representing the right to receive, in
the aggregate, the fair market value of up to 10% of the NPR common stock
outstanding on the grant date, computed on a fully diluted basis as if the
Phantom Stock Units were outstanding shares of NPR common stock, subject to
vesting based on the achievement of specified performance goals and subject to
certain conditions. See "Management -- NPR 1997 Phantom Stock Plan." Pursuant to
the terms of the Agreement, NPR also distributed to the Sellers 10% of the
outstanding capital stock of TNX and retained a 40% ownership interest in TNX.
Contemporaneous with the closing, NPR caused $670,000 in cash bonuses to be
distributed to certain management employees of NPR (excluding NPR Senior
Management).
The Issuer's contractual recourse against the Sellers under the Agreement
is extremely limited. The Agreement does not provide for contractual
indemnification from the Sellers and provides that no representations and
warranties of the Sellers survive closing, except as to title to the acquired
shares.
The following table sets forth the sources and uses of funds in connection
with the Acquisition and the Refinancings. See "Description of Certain
Indebtedness."
(DOLLARS IN MILLIONS)
---------------------
SOURCES OF FUNDS:
Sale/leaseback of equipment........................ $ 24.0
Seller Notes....................................... 25.0
Bridge Notes....................................... 100.0
------
Total Sources................................... $149.0
======
USES OF FUNDS:
Purchase NPR common stock.......................... $ 69.0
Refinance NPR debt................................. 39.7
Redeem NPR preferred stock......................... 0.7
Refinance Holt debt................................ 31.6
Transaction expenses............................... 4.8
Working capital.................................... 3.2
------
Total Uses...................................... $149.0
======
29
<PAGE>
REORGANIZATION OF THE COMPANY
The Issuer was capitalized in October 1997 to consolidate the operations of
the Holt Subsidiaries under the Issuer. On October 31, 1997, pursuant to the
Reorganization, Thomas J. Holt, Sr. contributed all of the outstanding shares of
capital stock of each of the Holt Subsidiaries to the Issuer, all of the
outstanding stock of which is owned by Mr. Holt. Following the Reorganization,
each of the Holt Subsidiaries became a direct or indirect wholly-owned
subsidiary of the Issuer. The Holt Subsidiaries remain liable for all of their
existing and contingent liabilities relating to periods prior to the
Reorganization. The Issuer is a holding company and conducts no business and
holds no assets other than the outstanding capital stock of Holt and NPR. See
"Risk Factors -- Holding Company Structure." Upon consummation of the
Acquisition, NPR became a wholly owned subsidiary of the Issuer. See "The
Acquisition and the Refinancings."
Historically, the Holt Subsidiaries and the Non-consolidated Affiliates
were operated as a group under the common control of Thomas J. Holt, Sr. The
Non-consolidated Affiliates are engaged in businesses which are not directly
related to the Company's business, including steamship agency and chartering,
ice manufacturing, real estate rental and warehouse labor subcontracting. The
Non-consolidated Affiliates will continue to be controlled by Thomas J. Holt,
Sr. after completion of the Offering. Holt and the Non-consolidated Affiliates
provide services and goods to each other. See "Risk Factors -- Related Entity
Transactions" and "Certain Transactions."
30
<PAGE>
THE EXCHANGE OFFER
PURPOSE AND EFFECT
The Old Notes were sold by the Company to the Initial Purchasers on January
21, 1998, pursuant to the Purchase Agreement. The Initial Purchaser subsequently
resold the Old Notes in reliance on Rule 144A under the Securities Act and
certain other exemptions under the Securities Act. The Company and the Initial
Purchaser also entered into the Registration Rights Agreement, pursuant to which
the Company agreed, with respect to the Old Notes, to (i) cause to be filed, on
or prior to April 21, 1998, a registration statement with the Commission under
the Securities Act concerning the Exchange Offer, (ii) use its reasonable best
efforts to cause such registration statement to be declared effective by the
Commission on or prior to July 20, 1998 and (iii) to cause the Exchange Offer to
remain open for a period of not less than 30 days. This Exchange Offer is
intended to satisfy the Company's exchange offer obligations under the
Registration Rights Agreement.
TERMS OF THE EXCHANGE OFFER
The Company hereby offers, upon the terms and subject to the conditions set
forth herein and in the accompanying Letter of Transmittal, to exchange $1,000
in principal amount of the New Notes for each $1,000 in principal amount of the
outstanding Old Notes. The Company will accept for exchange any and all Old
Notes that are validly tendered on or prior to 5:00 p.m., New York City time, on
the Expiration Date. Tenders of the Old Notes may be withdrawn at any time prior
to 5:00 p.m., New York City time, on the Expiration Date. The Exchange Offer is
not conditioned upon any minimum principal amount of Old Notes being tendered
for exchange. However, the Exchange Offer is subject to the conditions, terms
and provisions of the Registration Rights Agreement. The form and terms of the
New Notes will be identical in all material respects to the form and terms of
the Old Notes, except that (i) the New Notes have been registered under the
Securities Act and, therefore, will not bear legends restricting the transfer
thereof, (ii) subject to certain limited exceptions, holders of New Notes will
not be entitled to Liquidated Damages, and (iii) holders of New Notes will not
be, and upon consummation of the Exchange Offer, Holders of Old Notes will no
longer be, entitled to certain rights under the Registration Rights Agreement
intended for holders of unregistered securities. See "-- Conditions of the
Exchange Offer."
Old Notes may be tendered only in multiples of $1,000. Subject to the
foregoing, Holders may tender less than the aggregate principal amount
represented by the Old Notes held by them, provided that they appropriately
indicate this fact on the Letter of Transmittal accompanying the tendered Old
Notes (or so indicate pursuant to the procedures for book-entry transfer).
As of the date of this Prospectus, $140.0 million in aggregate principal
amount of the Old Notes is outstanding, the maximum amount authorized by the
Indenture for all Notes. As of April 20, 1998, CEDE was the sole registered
holder of the Old Notes and held $140.0 million of aggregate principal amount of
the Old Notes for 30 of its participants. Solely for reasons of administration
(and for no other purpose), the Company has fixed the close of business on
_________, 1998, as the record date (the "Record Date") for purposes of
determining the persons to whom this Prospectus and the Letter of Transmittal
will be mailed initially. Only a Holder of the Old Notes (or such Holder's legal
representative or attorney-in-fact) may participate in the Exchange Offer. There
will be no fixed record date for determining Holders of the Old Notes entitled
to participate in the Exchange Offer. The Company believes that, as of the date
of this Prospectus, no such the Holder is an affiliate (as defined in Rule 405
under the Securities Act) of the Company.
The Company shall be deemed to have accepted validly tendered Old Notes
when, as and if the Company has given oral or written notice thereof to the
Exchange Agent. The Exchange Agent will act as agent for the tendering Holders
of Old Notes and for the purposes of receiving the New Notes from the Company.
If any tendered Old Notes are not accepted for exchange because of an
invalid tender, the occurrence of certain other events set forth herein or
otherwise, certificates for any such unaccepted
31
<PAGE>
Old Notes will be returned, without expense, to the tendering Holder thereof as
promptly as practicable after the Expiration Date.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS
The Expiration Date shall be ___________, 1998 at 5:00 p.m., New York City
time, unless the Company, in its sole discretion, extends the Exchange Offer, in
which case the Expiration Date shall be the latest date and time to which the
Exchange Offer is extended.
In order to extend the Exchange Offer, the Company will notify the Exchange
Agent of any extension by oral or written notice and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the previously scheduled Expiration Date. Such notice and
public announcement shall set forth the new Expiration Date of the Exchange
Offer.
The Company reserves the right, in its sole discretion, (i) to delay
accepting any Old Notes, (ii) to extend the Exchange Offer, (iii) if any of the
conditions set forth below under "Conditions of the Exchange Offer" shall not
have been satisfied, to terminate the Exchange Offer by giving oral or written
notice of such delay, extension or termination to the Exchange Agent, and (iv)
to amend the terms of the Exchange Offer in any manner. If the Exchange Offer is
amended in a manner determined by the Company to constitute a material change,
the Company will, in accordance with applicable law, file a post-effective
amendment to the registration statement (a "Post-effective Amendment") and
resolicit the registered holders of the Old Notes. If the Company files a
Post-effective Amendment, it will notify the Exchange Agent of an extension of
the Exchange Offer by oral or written notice, and will make a public
announcement thereof, each prior to 9:00 a.m., New York City time, on the next
business day after the effectiveness of such Post-effective Amendment. Such
notice and public announcement shall set forth the new Expiration Date, which
new Expiration Date shall be no less than five days after the then applicable
Expiration Date.
CONDITIONS OF THE EXCHANGE OFFER
The Exchange Offer is not conditioned upon any minimum principal amount of
Old Notes being tendered for exchange. However, the Exchange Offer is subject to
the condition that it does not violate any applicable law or interpretation of
the staff of the Commission.
Further, as a condition to its participation in the Exchange Offer, each
Holder of Old Notes (including, without limitation, any Holder who is a
Broker-Dealer) will be required to furnish a written representation to the
Company and the Guarantors (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the effect that
(i) it is not an affiliate of the Company, (ii) it is not engaged in, or does
not intend to engage in, and has no arrangement or understanding with any person
to participate in, a distribution of the New Notes to be issued in the Exchange
Offer and (iii) it is acquiring the New Notes in its ordinary course of
business. Each Holder using the Exchange Offer to participate in a distribution
of the New Notes will be required to acknowledge and agree that, if the resales
are of New Notes obtained by such Holder in exchange for Old Notes acquired
directly from the Company or an affiliate thereof, it (1) could not, under
Securities and Exchange Commission policy as in effect on the date of the
Registration Rights Agreement, rely on the position of the Commission enunciated
in Morgan Stanley and Co., Incorporated (available June 5, 1991) and Exxon
Capital Holdings Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling (available July 2, 1993) and K-III
Communications Corporation (available May 14, 1993), or similar no-action or
interpretive letters, and (2) must comply with the registration and prospectus
delivery requirements of the Exchange Act in connection with a secondary resale
transaction and that such a secondary sale transaction must be covered by an
effective registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation S-K,
unless an exemption from registration is otherwise available.
In addition, each Holder of Old Notes will be required to furnish a written
representation to the Company and the Guarantors (which may be contained in the
Letter of Transmittal contemplated by the Exchange Offer Registration Statement)
to the effect that they are either (A) a "qualified
32
<PAGE>
institutional buyer" within the meaning of Rule 144A under the Securities Act,
(B) an institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act or (C) a non-U.S.
person within the meaning of Regulation S under the Securities Act.
TERMINATION OF CERTAIN RIGHTS
The Registration Rights Agreement provides that, subject to certain
exceptions, in the event of a Registration Default (as defined below), Holders
of Old Notes are entitled to receive Liquidated Damages. A Registration Default
will be deemed to have occurred if (i) any Registration Statement required by
the Registration Rights Agreement is not filed with the Commission on or prior
to the applicable Filing Deadline (as defined in the Registration Rights
Agreement), (ii) any Registration Statement has not been declared effective by
the Commission on or prior to the applicable Effectiveness Deadline (as defined
in the Registration Rights Agreement), (iii) the Exchange Offer has not been
consummated within 30 days after the Exchange Offer Registration Statement is
first declared effective by the Commission or (iv) any Registration Statement
required by the Registration Rights Agreement is filed and declared effective
but shall thereafter cease to be effective or fail to be usable for its intended
purpose without being succeeded immediately by a post-effective amendment to
such Registration Statement that cures such failure and that is itself declared
effective immediately. Liquidated Damages shall be calculated as an amount equal
to $.05 per week per $1,000 in principal amount of Transfer Restricted
Securities held by a Holder for each week or portion thereof that the
Registration Default continues (amounting to an aggregate of $1,000 per day for
the $140.0 million principal amount of Notes outstanding) for the first 90-day
period immediately following the occurrence of such Registration Default. The
amount of liquidated damages shall increase by an additional $.05 per week per
$1,000 in principal amount of Transfer Restricted Securities with respect to
each subsequent 90-day period until all Registration Defaults have been cured,
up to a maximum amount of liquidated damages of $.50 per week per $1,000 in
principal amount of Transfer Restricted Securities. The Exchange Offer shall be
deemed consummated upon the occurrence of the delivery by the Company to the
Registrar under the Indenture of New Notes in the same aggregate principal
amount as the aggregate principal amount of Old Notes that are validly tendered
by holders thereof pursuant to the Exchange Offer.
ACCRUED INTEREST ON THE OLD NOTES
The New Notes will bear interest at a rate equal to 9 3/4% per annum from
and including their date of issuance. Holders whose Old Notes are accepted for
exchange will have the right to receive interest accrued thereon from the date
of their original issuance or the last Interest Payment Date, as applicable, to,
but not including, the date of issuance of the New Notes, such interest to be
payable with the first interest payment on the New Notes. Interest on the Old
Notes accepted for exchange, which interest accrued at the rate of 9 3/4% per
annum, will cease to accrue on the day prior to the issuance of the New Notes.
See "Description of New Notes -- General."
PROCEDURES FOR TENDERING OLD NOTES
The tender of a Holder's Old Notes as set forth below and the acceptance
thereof by the Company will constitute a binding agreement between the tendering
Holder and the Company upon the terms and subject to the conditions set forth in
this Prospectus and in the accompanying Letter of Transmittal. Except as set
forth below, a Holder who wishes to tender Old Notes for exchange pursuant to
the Exchange Offer must transmit such Old Notes, together with a properly
completed and duly executed Letter of Transmittal, including all other documents
required by such Letter of Transmittal, to the Exchange Agent at the address set
forth on the back cover page of this Prospectus prior to 5:00 p.m., New York
City time, on the Expiration Date. THE METHOD OF DELIVERY OF OLD NOTES, LETTERS
OF TRANSMITTAL AND ALL OTHER REQUIRED DOCUMENTS IS AT THE ELECTION AND RISK OF
THE HOLDER. IF SUCH DELIVERY IS BY MAIL, IT IS RECOMMENDED THAT REGISTERED MAIL,
PROPERLY INSURED, WITH RETURN RECEIPT REQUESTED, BE USED. INSTEAD OF DELIVERY BY
MAIL, IT IS RECOMMENDED
33
<PAGE>
THAT THE HOLDER USE AN OVERNIGHT OR HAND DELIVERY SERVICE. IN ALL CASES,
SUFFICIENT TIME SHOULD BE ALLOWED TO ASSURE TIMELY DELIVERY.
Each signature on a Letter of Transmittal or a notice of withdrawal, as the
case may be, must be guaranteed unless the Old Notes surrendered for exchange
pursuant hereto are tendered (i) by a registered holder of the Old Notes who has
not completed either the box entitled "Special Exchange Instructions" or the box
entitled "Special Delivery Instructions" in the Letter of Transmittal or (ii) by
an Eligible Institution (as defined). In the event that a signature on a Letter
of Transmittal or a notice of withdrawal, as the case may be, is required to be
guaranteed, such guarantee must be by a firm which is a member of a registered
national securities exchange or the Nasdaq Stock Market, a commercial bank or
trust company having an office or correspondent in the United States or
otherwise be an "eligible guarantor institution" within the meaning of Rule
17Ad-15 under the Exchange Act (collectively, "Eligible Institutions"). If the
Letter of Transmittal is signed by a person other than the registered holder of
the Old Notes, the Old Notes surrendered for exchange must either (i) be
endorsed by the registered holder, with the signature thereon guaranteed by an
Eligible Institution or (ii) be accompanied by a bond power, in satisfactory
form as determined by the Company in its sole discretion, duly executed by the
registered holder, with the signature thereon guaranteed by an Eligible
Institution. The term "registered holder" as used herein with respect to the Old
Notes means any person in whose name the Old Notes are registered on the books
of the Registrar.
All questions as to the validity, form, eligibility (including time of
receipt), acceptance and withdrawal of Old Notes tendered for exchange will be
determined by the Company in its sole discretion, which determination shall be
final and binding. The Company reserves the absolute right to reject any and all
Old Notes not properly tendered and to reject any Old Notes the Company's
acceptance of which might, in the judgment of the Company or its counsel, be
unlawful. The Company also reserves the absolute right to waive any defects or
irregularities or conditions of the Exchange Offer as to particular Old Notes
either before or after the Expiration Date (including the right to waive the
ineligibility of any holder who seeks to tender Old Notes in the Exchange
Offer). The interpretation of the terms and conditions of the Exchange Offer
(including the Letter of Transmittal and the instructions thereto) by the
Company shall be final and binding on all parties. Unless waived, any defects or
irregularities in connection with tenders of Old Notes for exchange must be
cured within such period of time as the Company shall determine. The Company
will use reasonable efforts to give notification of defects or irregularities
with respect to tenders of Old Notes for exchange but shall not incur any
liability for failure to give such notification. Tenders of the Old Notes will
not be deemed to have been made until such irregularities have been cured or
waived.
If any Letter of Transmittal, endorsement, bond power, power of attorney or
any other document required by the Letter of Transmittal is signed by a trustee,
executor, corporation or other person acting in a fiduciary or representative
capacity, such person should so indicate when signing, and, unless waived by the
Company, proper evidence satisfactory to the Company, in its sole discretion, of
such person's authority to so act must be submitted.
Any beneficial owner of the Old Notes (a "Beneficial Owner") whose Old
Notes are registered in the name of a broker, dealer, commercial bank, trust
company or other nominee and who wishes to tender Old Notes in the Exchange
Offer should contact such registered holder promptly and instruct such
registered holder to tender on such Beneficial Owner's behalf. If such
Beneficial Owner wishes to tender directly, such Beneficial Owner must, prior to
completing and executing the Letter of Transmittal and tendering Old Notes, make
appropriate arrangements to register ownership of the Old Notes in such
Beneficial Owner's name. Beneficial Owners should be aware that the transfer of
registered ownership may take considerable time.
By tendering, each registered holder will represent to the Company that,
among other things (i) the New Notes to be acquired in connection with the
Exchange Offer by the Holder and each Beneficial Owner of the Old Notes are
being acquired by the Holder and each Beneficial Owner in the ordinary course of
business of the Holder and each Beneficial Owner, (ii) the Holder and each
Beneficial Owner are not participating, do not intend to participate, and have
no arrangement or
34
<PAGE>
understanding with any person to participate, in the distribution of the New
Notes, (iii) the Holder and each Beneficial Owner acknowledge and agree that any
person participating in the Exchange Offer for the purpose of distributing the
New Notes must comply with the registration and prospectus delivery requirements
of the Securities Act in connection with a secondary resale transaction of the
New Notes acquired by such person and cannot rely on the position of the staff
of the Commission set forth in no-action letters that are discussed herein under
"Resales of New Notes," (iv) that if the Holder is a broker-dealer that acquired
Old Notes as a result of market making or other trading activities, it will
deliver a prospectus in connection with any resale of New Notes acquired in the
Exchange Offer, (v) the Holder and each Beneficial Owner understand that a
secondary resale transaction described in clause (iii) above should be covered
by an effective registration statement containing the selling security holder
information required by Item 507 of Regulation S-K of the Commission, and (vi)
neither the Holder nor any Beneficial Owner is an "affiliate," as defined under
Rule 405 of the Securities Act, of the Company except as otherwise disclosed to
the Company in writing. In connection with a book-entry transfer, each
participant will confirm that it makes the representations and warranties
contained in the Letter of Transmittal.
Guaranteed Delivery Procedures. Holders who wish to tender their Old Notes
and (i) whose Old Notes are not immediately available or (ii) who cannot deliver
their Old Notes or any other documents required by the Letter of Transmittal to
the Exchange Agent prior to the Expiration Date (or complete the procedure for
book-entry transfer on a timely basis), may tender their Old Notes according to
the guaranteed delivery procedures set forth in the Letter of Transmittal.
Pursuant to such procedures: (i) such tender must be made by or through an
Eligible Institution and a Notice of Guaranteed Delivery (as defined in the
Letter of Transmittal) must be signed by such Holder, (ii) on or prior to the
Expiration Date, the Exchange Agent must have received from the Holder and the
Eligible Institution a properly completed and duly executed Notice of Guaranteed
Delivery (by facsimile transmission, mail or hand delivery) setting forth the
name and address of the Holder, the certificate number or numbers of the
tendered Old Notes, and the principal amount of tendered Old Notes, stating that
the tender is being made thereby and guaranteeing that, within three business
days after the date of delivery of the Notice of Guaranteed Delivery, the
tendered Old Notes, a duly executed Letter of Transmittal and any other required
documents will be deposited by the Eligible Institution with the Exchange Agent,
and (iii) such properly completed and executed documents required by the Letter
of Transmittal and the tendered Old Notes in proper form for transfer (or
confirmation of a book-entry transfer of such Old Notes into the Exchange
Agent's account at DTC) must be received by the Exchange Agent within three
business days after the Expiration Date. Any Holder who wishes to tender Old
Notes pursuant to the guaranteed delivery procedures described above must ensure
that the Exchange Agent receives the Notice of Guaranteed Delivery and Letter of
Transmittal relating to such Old Notes prior to 5:00 p.m., New York City time,
on the Expiration Date.
Book-Entry Delivery. The Exchange Agent will establish an account with
respect to the Old Notes at the DTC ("Book-Entry Transfer Facility") for
purposes of the Exchange Offer promptly after the date of this Prospectus. Any
financial institution that is a participant in the Book-Entry Transfer
Facility's system may make book-entry delivery of the Old Notes by causing such
facility to transfer Old Notes into the Exchange Agent's account in accordance
with such facility's procedure for such transfer. Even though delivery of Old
Notes may be effected through book-entry transfer into the Exchange Agent's
account at the Book-Entry Transfer Facility, a properly completed and duly
executed Letter of Transmittal (or a manually signed facsimile thereof), with
any required signature guarantees, or an Agent's Message (as defined below) in
connection with a book-entry transfer, and other documents required by the
Letter of Transmittal, must, in any case, be transmitted to and received by the
Exchange Agent at one of its addresses set forth on the back cover of this
Prospectus before the Expiration Date, or the guaranteed delivery procedure set
forth above must be followed. Delivery of the Letter of Transmittal and any
other required documents to the Book-Entry Transfer Facility does not constitute
delivery to the Exchange Agent. The term "Agent's Message" means a message
transmitted by the Book-Entry Transfer Facility to, and received by, the
Exchange Agent and forming a part of a book-entry confirmation, which states
that such Book-Entry Transfer Facility has received an express acknowledgment
from the participant in such Book-Entry Transfer Facility
35
<PAGE>
tendering the Old Notes that such participant has received and agrees to be
bound by the terms of the Letter of Transmittal and that the Company may enforce
such agreement against such participant.
ACCEPTANCE OF OLD NOTES FOR EXCHANGE; DELIVERY OF NEW NOTES
Upon satisfaction or waiver of all the conditions to the Exchange Offer,
the Company will accept any and all Old Notes that are properly tendered in the
Exchange Offer prior to 5:00 p.m., New York City time, on the Expiration Date.
The New Notes issued pursuant to the Exchange Offer will be delivered as soon as
practicable after acceptance of the Old Notes. For purposes of the Exchange
Offer, the Company shall be deemed to have accepted validly tendered Old Notes,
when, as, and if the Company has given oral or written notice thereof to the
Exchange Agent.
In all cases, issuances of New Notes for Old Notes that are accepted for
exchange pursuant to the Exchange Offer will be made only after timely receipt
by the Exchange Agent of such Old Notes, a properly completed and duly executed
Letter of Transmittal and all other required documents (or of confirmation of a
book-entry transfer of such Old Notes into the Exchange Agent's account at DTC);
provided, however, that the Company reserves the absolute right to waive any
defects or irregularities in the tender or conditions of the Exchange Offer. If
any tendered Old Notes are not accepted for any reason, such unaccepted Old
Notes will be returned without expense to the tendering Holder thereof as
promptly as practicable after the expiration or termination of the Exchange
Offer.
WITHDRAWAL RIGHTS
Tenders of the Old Notes may be withdrawn by delivery of a written notice
to the Exchange Agent, at its address set forth on the back cover page of this
Prospectus, at any time prior to 5:00 p.m., New York City time, on the
Expiration Date. Any such notice of withdrawal must (i) specify the name of the
person having deposited the Old Notes to be withdrawn (the "Depositor"), (ii)
identify the Old Notes to be withdrawn (including the certificate number or
numbers and principal amount of such Old Notes, as applicable), (iii) be signed
by the Holder in the same manner as the original signature on the Letter of
Transmittal by which such Old Notes were tendered (including any required
signature guarantees) or be accompanied by a bond power in the name of the
person withdrawing the tender, in satisfactory form as determined by the Company
in its sole discretion, duly executed by the registered holder, with the
signature thereon guaranteed by an Eligible Institution together with the other
documents required upon transfer by the Indenture, and (iv) specify the name in
which such Old Notes are to be re-registered, if different from the Depositor,
pursuant to such documents of transfer. Any questions as to the validity, form
and eligibility (including time of receipt) of such notices will be determined
by the Company, in its sole discretion. The Old Notes so withdrawn will be
deemed not to have been validly tendered for exchange for purposes of the
Exchange Offer. Any Old Notes which have been tendered for exchange but which
are withdrawn will be returned to the Holder thereof without cost to such Holder
as soon as practicable after withdrawal. Properly withdrawn Old Notes may be
retendered by following one of the procedures described under "The Exchange
Offer -- Procedures for Tendering Old Notes" at any time on or prior to the
Expiration Date.
THE EXCHANGE AGENT; ASSISTANCE
The Bank of New York is the Exchange Agent. All tendered Old Notes,
executed Letters of Transmittal and other related documents should be directed
to the Exchange Agent. Questions and requests for assistance and requests for
additional copies of the Prospectus, the Letter of Transmittal and other related
documents should be addressed to the Exchange Agent as follows:
<TABLE>
<S> <C> <C>
By Registered or Certified Mail: By Hand/Overnight Facsimile Transmission:
Express:
The Bank of New York The Bank of New York (212) 815-6339
101 Barclay Street 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286 To confirm receipt:
Ground Level Attention: (212) 815-5924
New York, New York 10286 Reorganization
Attention: Jackie Warren Section
</TABLE>
36
<PAGE>
SOLICITATION OF TENDERS; FEES AND EXPENSES
No person has been authorized to give any information or to make any
representation in connection with the Exchange Offer other than those contained
in this Prospectus. If given or made, such information or representations should
not be relied upon as having been authorized by the Company. Neither the
delivery of this Prospectus nor any exchange made hereunder shall, under any
circumstances, create any implication that there has been no change in the
affairs of the Company since the respective dates as of which information is
given herein. The Exchange Offer is not being made to (nor will offers be
accepted from or on behalf of) holders of Notes in any jurisdiction in which the
making of the Exchange Offer or the acceptance thereof would not be in
compliance with the laws of such jurisdiction. However, the Company may, at its
discretion, take such action as it may deem necessary to make the Exchange Offer
in any such jurisdiction and extend the Exchange Offer to holders of Notes in
such jurisdiction.
All expenses incident to the Company's consummation of the Exchange Offer
and compliance with the Registration Rights Agreement will be borne by the
Company, including, without limitation: (i) all registration and filing fees
(including, without limitation, fees and expenses of compliance with state
securities laws), (ii) printing expenses (including, without limitation,
expenses of printing certificates for the New Notes in a form eligible for
deposit with DTC and of printing Prospectuses), (iii) messenger, telephone and
delivery expenses, (iv) fees and disbursements of counsel for the Company and
the Guarantors, (v) fees and disbursements of independent certified public
accountants, (vi) rating agency fees, (vii) internal expenses of the Company and
the Guarantors (including, without limitation, all salaries and expenses of
officers and employees of the Company performing legal or accounting duties),
and (ix) fees and expenses incurred in connection with the listing, if any, of
the New Notes on a securities exchange.
The Company has not retained any dealer-manager in connection with the
Exchange Offer and will not make any payments to brokers, dealers or others
soliciting acceptance of the Exchange Offer. The Company, however, will pay the
Exchange Agent reasonable and customary fees for its services and will reimburse
it for its reasonable out-of-pocket expenses in connection therewith.
ACCOUNTING TREATMENT
The New Notes will be recorded at the same carrying value as the Old Notes,
as reflected in the Company's accounting records on the date of the exchange.
Accordingly, no gain or loss will be recognized by the Company for accounting
purposes. The expenses of the Exchange Offer will be amortized over the term of
the New Notes.
RESALES OF THE NEW NOTES
Based on interpretations by the staff of the Commission set forth in
no-action letters issued to third parties, the Company believes that the New
Notes issued pursuant to the Exchange Offer to a Holder in exchange for Old
Notes may be offered for resale, resold and otherwise transferred by such Holder
(other than (i) a broker-dealer who purchased Old Notes directly from the
Company for resale pursuant to Rule 144A under the Securities Act or any other
available exemption under the Securities Act, or (ii) a person that is an
affiliate of the Company within the meaning of Rule 405 under the Securities
Act) without compliance with the registration and prospectus delivery provisions
of the Securities Act, provided that the Holder is acquiring the New Notes in
the ordinary course of business and is not participating, and has no arrangement
or understanding with any person to participate, in the distribution of the New
Notes. The Company has not requested or obtained an interpretive letter from the
Commission staff with respect to this Exchange Offer, and the Company and the
Holders are not entitled to rely on interpretive advice provided by the staff to
other persons, which advice was based on the facts and conditions represented in
such letters. However, the Exchange Offer is being conducted in a manner
intended to be consistent with the facts and conditions represented in such
letters. If any Holder acquires New Notes in the Exchange Offer for the purpose
of distributing or participating in a distribution of the New Notes, such Holder
cannot rely on the position of the staff of the Commission
37
<PAGE>
enunciated in Morgan Stanley & Co., Incorporated (available June 5, 1991) and
Exxon Capital Holdings Corporation (available May 13, 1988), as interpreted in
the Commission's letters to Shearman and Sterling (available July 2, 1993) and
K-III Communications Corporation (available May 14, 1993), or similar no-action
or interpretive letters and must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction, unless an exemption from registration is otherwise
available. Each broker-dealer that receives New Notes for its own account in
exchange for Old Notes, where such Old Notes were acquired by such broker-dealer
as a result of market making or other trading activities, must acknowledge that
it will deliver a prospectus in connection with any resale of such New Notes.
The Company has agreed that for a period of 180 days after the effective date of
this Prospectus, it will make this Prospectus, as amended and supplemented,
available to any broker-dealer who receives New Notes in the Exchange Offer for
use in connection with any such resale. See "Plan of Distribution."
CONSEQUENCES OF FAILURE TO EXCHANGE
Holders of Old Notes who do not exchange their Old Notes for New Notes
pursuant to the Exchange Offer will continue to be subject to the restrictions
on transfer of such Old Notes as set forth in the legend thereon as a
consequence of the offer or sale of the Old Notes pursuant to an exemption from,
or in a transaction not subject to, the registration requirements of the
Securities Act and applicable state securities laws. In general, the Old Notes
may not be offered or sold, unless registered under the Securities Act, except
pursuant to an exception from, or in a transaction not subject to, the
Securities Act and applicable states securities laws. The Company does not
currently anticipate that it will register the Old Notes under the Securities
Act. See "Risk Factors -- Consequences of Failure to Exchange."
OTHER
Participation in the Exchange Offer is voluntary, and holders of Old Notes
should carefully consider whether to participate. Holders of the Old Notes are
urged to consult their financial and tax advisers in making their own decisions
on what action to take.
As a result of the making of, and upon acceptance for exchange of all
validly tendered Old Notes pursuant to the terms of, this Exchange Offer, the
Company will have fulfilled a covenant contained in the Registration Rights
Agreement. Holders of Old Notes who do not tender their Old Notes in the
Exchange Offer will continue to hold such Notes and will be entitled to all the
rights, and limitations applicable thereto, under the Indenture, except for any
such rights under the Registration Rights Agreement that by their terms
terminate or cease to have further effectiveness as a result of the making of
this Exchange Offer. See "Description of New Notes." All untendered Old Notes
will continue to be subject to the restrictions on transfer set forth in the
Indenture. To the extent that Old Notes are tendered and accepted in the
Exchange Offer, the trading market for untendered Old Notes could be adversely
affected.
The Company may in the future seek to acquire untendered Old Notes in open
market or privately negotiated transactions, through subsequent exchange offers
or otherwise. The Company has no present plan to acquire any Old Notes which are
not tendered in the Exchange Offer.
38
<PAGE>
CAPITALIZATION
The following table sets forth as of December 31, 1997 (i) the actual
capitalization of the Company and (ii) the pro forma capitalization of the
Company, as adjusted to reflect the Offering and the application of the
estimated net proceeds therefrom. This table should be read in conjunction with
the historical consolidated financial statements of the Company, together with
the notes thereto, and the information contained in "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
herein.
AS OF DECEMBER 31, 1997
------------------------
ACTUAL AS ADJUSTED
--------- ------------
(DOLLARS IN THOUSANDS)
Cash and cash equivalents........................... $ 8,005 $ 23,005
Marketable securities............................... 40,156 40,156
-------- --------
Total............................................. $ 48,161 $ 63,161
======== ========
Debt (including current maturities).................
Revolving Credit Facility......................... $ 8,500 $ 8,500
Senior secured debt............................... 79,933 79,933
Bridge Notes...................................... 100,000 --
Notes issued in the Offering...................... -- 140,000
Seller Notes...................................... 25,000 --
-------- --------
Total debt..................................... 213,433 228,433
Total stockholder's equity.......................... 72,729(1) 72,729(1)
-------- --------
Total capitalization................................ $334,323 $364,323
======== ========
- ------------------
(1) Includes approximately $20.0 million of stockholder's equity (including
unrealized appreciation of approximately $16.6 million) of Riverfront, which
is not a Guarantor.
39
<PAGE>
UNAUDITED PRO FORMA AND PRO FORMA ADJUSTED
CONDENSED FINANCIAL DATA
The following unaudited pro forma condensed financial data (the "Pro Forma
Financial Data") have been derived by the application of pro forma adjustments
to the historical financial statements of the Company which give effect to the
Acquisition and the Offering as if they had been completed as of January 1,
1997. The Pro Forma Adjustments and Eliminations give effect to the November 20,
1997 acquisition of NPR's common stock by the Company.
The following pro forma adjusted consolidated financial data (the "Pro
Forma Adjusted Financial Data") have been derived by application of certain
further adjustments to the Pro Forma Financial Data which reflect certain
additional cost savings the Company believes would have been realized during
1997 as a result of the Acquisition if the Acquisition had been completed as of
the beginning of the year rather than in November 1997. These further
adjustments, which are described in the accompanying notes, are not provided for
in the definition of "pro forma" pursuant to Regulation S-X under the Securities
Act and constitute forward-looking statements within the meaning of the Private
Securities Litigation Reform Act of 1995. Although the Company believes that
such forward-looking statements are reasonable, there can be no assurance that
the cost savings actually would have been obtained had the Acquisition been
completed as of January 1, 1997 or that such cost savings would occur or
continue in the future. Actual results may differ materially from those
reflected in the Pro Forma Adjusted Financial Data due to risks, including,
without limitation, the potential that NPR's vessels may require more
stevedoring man hours than currently contemplated due to variations in the
configuration and operation of each vessel and the potential of other cost
increases at the Packer Avenue Facility. See "Risk Factors -- Risks Related to
the Acquisition and Integration of NPR."
The unaudited pro forma and pro forma adjusted statement of operations for
the year ended December 31, 1997 assumes the Acquisition, the Refinancings and
the Offering had occurred as of January 1, 1997. The pro forma adjustments are
described in the accompanying notes.
The Pro Forma Financial Data and Pro Forma Adjusted Financial Data are
subject to numerous assumptions and estimates that are subject to change and, in
many cases, are beyond the control of the Company. The Pro Forma Financial Data
and Pro Forma Adjusted Financial Data should be read in conjunction with the
historical financial statements of the Company and NPR and the notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere in this Prospectus.
40
<PAGE>
UNAUDITED PRO FORMA AND PRO FORMA ADJUSTED
CONDENSED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
(Dollars in thousands)
<TABLE>
<CAPTION>
PRO FORMA
ADJUSTMENTS COMPANY
AND COMPANY OTHER PRO FORMA
COMPANY(a) NPR ELIMINATIONS PRO FORMA ADJUSTMENTS(b) ADJUSTED(b)
---------- -------- ------------ --------- -------------- -----------
<S> <C> <C> <C> <C> <C> <C>
Revenues...................... $118,998 $245,341 $364,339 $ -- $364,339
Operating expenses............ 100,584 239,865 7,724 (1) 343,012 (11,339)(6) 329,004
(3,508)(2) (2,149)(7)
(1,715)(8)
(1,653)(3) (777)(9)
199 (9)
1,773 (11)
-------- -------- ------- -------- ------- --------
Income (loss) from
operations.................. 18,414 5,476 (2,563) 21,327 14,008 35,335
Interest expense, net......... 9,211 5,973 13,650 (4) 19,610 19,610
(3,966)(4)
(5,683)(4)
425 (5)
Other (income)................ (1,545) 500 (1,045) (1,045)
Miscellaneous expense
(income), net............... (7) (2,490) (2,497) (2,497)
-------- -------- ------- -------- ------- --------
Net income (loss)........... $ 10,755 $ 1,493 $(6,989) $ 5,259 $14,008 $ 19,267
======== ======== ======= ======== ======= ========
Calculation of EBITDA:
Operating income (loss)....... 18,414 5,476 (2,563) 21,327 14,008 35,335
Depreciation and
amortization................ 8,652 10,618 (3,508) 15,762 15,762
Nonrecurring other revenue.... (3,000) (3,000) (3,000)
-------- -------- ------- -------- ------- --------
EBITDA........................ $ 27,066 $ 13,094 $(6,071) $ 34,089 $14,008 $ 48,097
======== ======== ======= ======== ======= ========
</TABLE>
- ------------------
(a) Includes NPR from November 20, 1997, the date of its acquisition by the
Company.
(b) The Other Adjustments reflect additional cost savings which the Company
believes would have been realized during 1997 as a result of the Acquisition
if the Acquisition had been completed as of the beginning of the year rather
than in November 1997. Such adjustments are not provided for in the
definition of "pro forma" in accordance with Regulation S-X pursuant to the
Securities Act and constitute forward-looking statements within the meaning
of the Private Securities Litigation Reform Act of 1995. Although the
Company believes that such forward-looking statements are reasonable, there
can be no assurance that the cost savings actually would have been obtained
had the Acquisition been completed as of January 1, 1997 or that such cost
savings would occur or continue in the future. Actual results may differ
materially from those reflected in the Pro Forma Adjusted Financial Data due
to risks, including, without limitation, the potential that NPR's vessels
may require more stevedoring man hours than currently contemplated due to
variations in the configuration and operation of each vessel and the
potential of other cost increases at the Packer Avenue Facility. See
"Disclosure Regarding Forward-Looking Statements" and "Risk Factors -- Risks
Related to the Acquisition and Integration of NPR."
41
<PAGE>
NOTES TO UNAUDITED PRO FORMA AND PRO FORMA ADJUSTED
CONDENSED STATEMENT OF OPERATIONS
For the Year Ended December 31, 1997
(Dollars in thousands)
(1) Pro forma adjustment reflects the operating lease payments to a related
party of $738 per month related to the sale/leaseback transaction with a
term of 60 months less amounts previously expensed in the historical
accounts of NPR. In order to fund in part the Acquisition and the
Refinancings, the Company entered into a sale/leaseback of certain NPR
containers, gensets and chassis for consideration of $35 million that
consisted of $24 million in cash and $11 million of a subordinated note
issued to NPR. The Company has the option to terminate the lease after 48
months and return the equipment for approximately $2.8 million.
<TABLE>
<CAPTION>
DEBIT CREDIT
-------- --------
<S> <C> <C>
Operating expenses................................... 7,724
</TABLE>
(2) Pro forma adjustment eliminates amortization on the capitalized overhaul
costs and NPR's historical goodwill and reflects the change in depreciation
and amortization expense resulting from (i) a new depreciable basis based on
an independent valuation of NPR's fixed assets and (ii) a sale/leaseback
transaction effected at the time of the Acquisition. (See Note 1)
<TABLE>
<S> <C> <C>
Depreciation and amortization of property, plant and
equipment based on the new basis of $101,540 over
estimated useful lives ranging from 5 to 15 years........ (7,110)
Depreciation and amortization based on the historical
cost basis per NPR's financial statements................ 10,618
--------
Net decrease in depreciation and amortization............ 3,508
========
DEBIT CREDIT
-------- --------
Depreciation and amortization............................ 3,508
</TABLE>
(3) Pro forma adjustment eliminates the 1997 pension expenses and reflects the
reduction or elimination of required contributions to the NPR defined
benefit pension plan resulting from elimination of future benefit accruals
as of January 31, 1998.
<TABLE>
<CAPTION>
DEBIT CREDIT
-------- --------
<S> <C> <C>
Operating expenses................................... 1,653
</TABLE>
(4) Pro forma adjustment reflects interest expense on the $140.0 million of the
Notes and the elimination of Holt's and NPR's historical interest expense
relating to the debt repaid in connection with the Acquisition and the
Refinancings.
<TABLE>
<CAPTION>
DEBIT CREDIT
-------- --------
<S> <C> <C>
Total interest expense on the Notes.............. 13,650
Holt's historical interest expense............... 3,966
NPR's historical interest expense................ 5,683
</TABLE>
This adjustment does not include a $1.1 million expense relating to the
write-off of debt issuance costs incurred in connection with the Refinancing.
(5) Pro forma adjustment reflects the amortization of $3.4 million of debt
issuance costs associated with the Offering over an estimated useful life of
eight years.
<TABLE>
<CAPTION>
DEBIT CREDIT
-------- --------
<S> <C> <C>
Interest expense..................................... 425
</TABLE>
42
<PAGE>
OTHER ADJUSTMENTS
The Other Adjustments reflect cost savings which the Company believes would
have been realized as a result of the Acquisition if the Acquisition had been
completed as of the beginning of the period presented. Such adjustments are not
provided for in the definition of "pro forma" in accordance with Regulation S-X
pursuant to the Securities Act and constitute forward-looking statements within
the meaning of the Private Securities Litigation Reform Act of 1995. Although
the Company believes that such forward-looking statements are reasonable, there
can be no assurance that the cost savings actually would have been obtained had
the Acquisition been completed as of the beginning of the period presented or
that such cost savings would occur or continue in the future. Actual results may
differ materially from those reflected in the Pro Forma Adjusted Financial Data
due to risks, including, without limitation, the potential that NPR's vessels
may require more stevedoring man hours than currently contemplated due to
variations in the configuration and operation of each vessel and the potential
of other cost increases at the Packer Avenue Facility. See "Disclosure Regarding
Forward Looking Statements" and "Risk Factors -- Risks Related to Acquisition
and Integration of NPR."
(6) Other adjustment reflects estimated cost savings which the Company believes
would have been realized as certain services purchased by NPR in the Port of
Elizabeth, New Jersey would have cost less at the Packer Avenue Facility.
The table below summarizes these estimated cost savings.
NPR HOLT
ACTUAL ESTIMATED COST
COSTS COSTS SAVINGS
------- --------- -------
Stevedoring(a)................................. $11,156 $4,522 $ 6,634
Assessments(b)................................. 5,026 1,325 3,701
Port charges(c)................................ 910 453 457
Land fixed(d).................................. 178 -- 178
Warehouse(e)................................... 118 59 59
Terminal yard(f)............................... 569 259 310
------- ------ -------
Total........................................ $17,957 $6,618 $11,339
======= ====== =======
DEBIT CREDIT
------- -------
Operating expenses.................................... $11,339
(a) Savings in stevedoring reflect Holt's costs to service NPR's vessels at
the Packer Avenue Facility compared to NPR's historical cost at the
Port of Elizabeth, New Jersey and are based on the experience Holt has
had servicing NPR's vessels since NPR began to call at the Packer
Avenue Facility. Stevedoring savings are comprised of two components:
(i) elimination of the third party margin and (ii) lower per hour labor
costs. Per hour labor savings at the Packer Avenue Facility are
achieved in three categories: (i) the loading and unloading of the
ships, (ii) gate moves, and (iii) lashing.
(b) Savings in assessments reflect the elimination of substantially all of
the pension and other assessments which are required to be made under
collective bargaining agreements in effect at the Port of Elizabeth,
New Jersey, but not at the Port of Philadelphia.
(c) Savings in port charges reflect (i) the elimination of dockage charges
paid by NPR at the Port of Elizabeth, New Jersey and (ii) the reduction
of line handling costs.
(d) Savings in fixed land charges reflect the elimination of this expense
at the Packer Avenue Facility.
(e) Savings in warehouse expenses reflect an approximately 50% lower rate
at the Packer Avenue Facility versus NPR's historical cost.
43
<PAGE>
(f) Savings in terminal yard expenses reflect (i) terminal wage rates at
the Packer Avenue Facility being approximately 43% lower than the
terminal wage rates at the Port of Elizabeth, New Jersey and (ii)
greater productivity of approximately 20% at the Packer Avenue
Facility.
(7) Other adjustment reflects estimated savings in trucking expenses which the
company believes would have been realized from the relocation of NPR's
northeastern port of call from Elizabeth, New Jersey to the Packer Avenue
Facility. Holt's trucking expenses are approximately 17% lower than NPR's
historical trucking expenses per load as a result of Holt's ability to hire
leased operators resulting in estimated savings in trucking expenses of
$2,149, net of costs incurred to realize these savings.
DEBIT CREDIT
------- -------
Operating expenses..................................... $ 2,149
Because the Company did not hire leased operators until mid-May 1998, these
cost savings have not yet been fully realized.
(8) Other adjustment reflects estimated savings in Maintenance & Repair ("M&R")
expenses which the Company believes would have been realized from the
relocation of NPR's northeastern port of call from Elizabeth, New Jersey to
the Packer Avenue Facility. Such adjustment includes cost savings of
approximately 60% of off-site M&R labor rates and 15% of off-site non-labor
M&R costs, of $1,655 and $60, respectively, net of costs incurred to realize
these savings.
DEBIT CREDIT
------- -------
Operating expenses -- off-site repairs and maintenance
(labor).............................................. $ 1,655
Operating expenses -- off-site repairs and maintenance
(non-labor).......................................... 60
-------
$ 1,715
=======
Because the Company did not relocate these M&R services to the Packer Avenue
Facility until mid-May 1998, these cost savings have not yet been fully
realized.
(9) Other adjustment reflects the elimination of historical general and
administrative expenses associated with certain administrative personnel (15
people) previously employed by NPR in connection with its Elizabeth, New
Jersey stevedoring activities. As a result of the Acquisition and the
relocation of NPR's northeastern port of call from Elizabeth, New Jersey to
the Packer Avenue Facility, such personnel were determined to be
duplicative, and terminated on December 18, 1997. Both the related savings
and termination costs are reflected in this adjustment.
DEBIT CREDIT
------- -------
Operating expenses -- termination costs................ $ 199
Operating expenses -- cost savings..................... $ 777
(10) The relocation of NPR's northeastern port of call from Elizabeth, New
Jersey, to the Packer Avenue Facility could result in a withdrawal
liability estimated at $17.1 million plus interest, that the Company
believes would be payable over an eight year period. The Company does not
believe that it will incur such liability, and as such, no such liability
is reflected in the Pro Forma Financial Data. See "Risk Factors --
Potential Withdrawal Liability at Port of New York."
(11) Additional costs incurred as a result of the transportation of cargo to and
from Elizabeth, New Jersey for customers who have not yet agreed to convert
their bills of lading to the Port of Philadelphia.
DEBIT CREDIT
------- -------
Operating expenses..................................... $ 1,773
44
<PAGE>
SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth the selected historical consolidated
financial and operating data of the Company as of and for each of the five years
ended December 31, 1997 which have been derived in part from the audited
historical consolidated financial statements of the Company and the notes
thereto included elsewhere in this Prospectus. The selected historical
consolidated financial and operating data as of and for the years ended December
31, 1993 and 1994 are also audited and not included elsewhere herein. The data
presented below should be read in conjunction with the historical consolidated
financial statements of the Company and the related notes thereto and
"Management's Discussion and Analysis of Financial Condition and Results of
Operations" included elsewhere herein.
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
--------------------------------------------------------------
1993 1994 1995 1996 1997
---------- ---------- ---------- ---------- ----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C>
INCOME STATEMENT DATA (1):
Revenues................................. $ 50,235 $ 54,409 $ 69,350 $ 73,076 $ 118,998
Operating expenses:
Terminal expenses........................ 20,149 13,102 19,753 24,125 30,431
General and administrative expenses...... 7,737 7,875 9,591 8,865 26,112
Equipment maintenance.................... 5,277 7,722 9,470 10,720 15,796
Insurance and safety..................... 5,412 5,415 4,291 4,797 2,998
Vessel................................... 0 0 0 0 5,815
Transportation........................... 2,885 2,506 2,857 2,917 9,346
Depreciation and amortization............ 4,234 4,130 4,375 4,025 8,652
Other operating expenses................. 7,285 4,950 3,840 1,868 1,434
---------- ---------- ---------- ---------- ----------
Total operating expenses................. 52,979 45,700 54,177 57,317 100,584
---------- ---------- ---------- ---------- ----------
Operating income (loss).................. (2,744) 8,709 15,173 15,759 18,414
Interest expense, net.................... 5,340 6,090 7,875 8,154 9,211
Other (income)........................... (1,905) (1,256) (19) (694) (1,552)
---------- ---------- ---------- ---------- ----------
Income before taxes and minority
interest............................... (6,180) 3,875 7,317 8,299 10,755
(Provision for) recovery of income
taxes.................................. 556 44 0 0 0
---------- ---------- ---------- ---------- ----------
Net income (loss)........................ $ (5,624) $ 3,919 $ 7,317 $ 8,299 $ 10,755
========== ========== ========== ========== ==========
OTHER DATA(1):
EBITDA (2)............................... $ 1,490 $ 12,839 $ 19,548 $ 19,784 $ 27,066
EBITDA margin (2)........................ 3.0% 23.6% 28.2% 27.1% 22.7%
Capital expenditures..................... $ 6,412 $ 11,922 $ 6,034 $ 6,936 9,674
Number of ship calls..................... 270 317 481 706 689
Tonnage of cargo handled................. 1,284,814 1,251,160 3,099,226 5,048,135 5,456,721
Ratio of earnings to fixed charges (3)... --(4) 1.4x 1.7x 1.7x 1.6x
BALANCE SHEET DATA (END OF PERIOD) (1):
Fixed assets, net........................ $ 102,357 $ 85,327 $ 87,013 $ 90,056 $ 194,427
Total assets............................. 147,509 145,556 164,754 172,479 382,378
Total debt............................... 94,802 88,993 97,159 99,203 213,433
Stockholder's equity..................... 35,786 38,455 44,172 49,422 72,729
</TABLE>
- ------------------
(1) Includes NPR from November 20, 1997, the date of its acquisition by the
Company. Also includes Riverfront, which is not a Guarantor, and which owns
the ACL Shares. At December 31, 1997, Riverfront had total assets of
approximately $44.1 million and stockholder's equity of approximately $20.0
million (including unrealized appreciation of approximately $16.6 million on
marketable securities). For the year ended December 31, 1997, Riverfront had
dividends from marketable securities of approximately $1.6 million and net
income of approximately $1.0 million. As of the end of and for all other
periods presented, Riverfront had no material amount of assets,
stockholder's equity, revenues or net income. See "Prospectus Summary --
Investment in Atlantic Container Line AB."
(2) The term EBITDA as used herein represents operating income plus depreciation
and amortization, adjusted to exclude certain non-recurring revenues and
expenses. EBITDA has been presented because the Company believes it is
commonly used in this or a similar format by investors to analyze and
compare operating performance and to determine a company's ability to
service and/or incur debt. However, EBITDA should not be considered in
isolation or as a substitute for net income, cash flow from operations or
any other measure of income or cash flow that is prepared in accordance with
generally accepted accounting principles, or as a measure of a company's
profitability or liquidity. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the historical financial
statements of Holt and NPR and the related notes thereto included elsewhere
in this Prospectus.
(3) For purposes of this computation, fixed charges consist of interest expense,
amortization of deferred financing costs and one-third of rental expenses,
representing an approximation of that portion of rental expenses
attributable to interest. Earnings consist of income before income taxes,
extraordinary items and cumulative effect of changes in accounting
principles, plus fixed charges.
(4) Earnings were inadequate to cover fixed charges by $6.2 million in 1993.
45
<PAGE>
NPR SELECTED HISTORICAL FINANCIAL DATA
The following table sets forth the selected historical consolidated
financial and operating data of NPR for the period beginning March 3, 1995 and
ended December 31, 1995, the year ended January 5, 1997 and the period beginning
January 6, 1997 and ended November 20, 1997, which have been derived in part
from the audited historical consolidated financial statements of NPR and the
notes thereto included elsewhere in this Prospectus. The data presented below
should be read in conjunction with the historical consolidated financial
statements of NPR and the related notes thereto and "Management's Discussion and
Analysis of Financial Condition and Results of Operations" included elsewhere
herein.
<TABLE>
<CAPTION>
MARCH 3, 1995 JANUARY 6, 1997
TO YEAR ENDED TO
DECEMBER 31, 1995 JANUARY 5, 1997 NOVEMBER 20, 1997
----------------- ----------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
INCOME STATEMENT DATA (1):
Revenue................................ $233,767 $269,097 $245,341
Operating expenses:
Vessel................................. 48,012 48,941 43,915
Cargo handling......................... 49,006 57,662 50,287
Terminal............................... 55,010 56,145 52,793
Transportation......................... 34,512 49,535 42,144
Selling, general and administrative.... 42,922 48,644 40,108
Depreciation and amortization.......... 10,699 14,524 10,618
-------- -------- --------
Total operating expenses............... 240,161 275,451 239,865
-------- -------- --------
Operating income (loss)................ (6,394) (6,354) 5,476
-------- -------- --------
Other (income) expenses:
Interest expense, net.................. 5,812 7,171 5,973
Other, net............................. (33) (1,407) 1,990
-------- -------- --------
Total other (income) expense........... 5,779 8,578 3,983
-------- -------- --------
Net income (loss)...................... $(12,173) $(14,932) 1,493
======== ======== ========
OTHER DATA:
EBITDA (1)............................. $ 4,305 $ 8,170 $ 13,094
EBITDA margin.......................... 1.8% 3.0% 5.3%
Capital expenditures................... $ 534 $ 3,342 854
Total container volume transportated... 97,641 115,595 107,156
Southbound container volume
transported......................... 72,330 84,426 77,235
Northbound container volume
transported......................... 25,311 31,169 29,921
Average ocean revenue/container........ $ 2,337 $ 2,293 2,199
BALANCE SHEET DATA (END OF PERIOD):
Fixed assets, net...................... $101,447 $ 94,249 $ 83,446
Total assets........................... 161,035 146,135 130,603
Total debt............................. 49,485 58,717 40,613
Shareholders' equity (deficit)......... 2,890 (11,989) (10,546)
</TABLE>
- ------------------
(1) The term EBITDA as used herein represents operating income plus depreciation
and amortization, adjusted to exclude certain non-recurring revenues and
expenses. EBITDA has been presented because the Company believes it is
commonly used in this or a similar format by investors to analyze and
compare operating performance and to determine a company's ability to
service and/or incur debt. However, EBITDA should not be considered in
isolation or as a substitute for net income, cash flow from operations or
any other measure of income or cash flow that is prepared in accordance with
generally accepted accounting principles, or as a measure of a company's
profitability or liquidity. See "Management's Discussion and Analysis of
Financial Condition and Results of Operations" and the historical financial
statements of the Company and NPR and the related notes thereto included
elsewhere in this Prospectus.
46
<PAGE>
MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following should be read in conjunction with the "Unaudited Pro Forma
and Pro Forma Adjusted Condensed Financial Data" and the historical consolidated
financial statements of the Company and the historical consolidated financial
statements of NPR and the related notes thereto included elsewhere in this
Prospectus.
OVERVIEW
Holt began operations in Philadelphia, Pennsylvania in 1926 as a one
man/one truck cargo hauling operation run by its founder, Leo A. Holt, Sr. In
the early 1950s, Holt entered the warehousing business with the acquisition of
its first warehouse in Philadelphia, Pennsylvania. As management of Holt passed
from the founder to his sons, Leo A. Holt, Jr. and Thomas J. Holt, Sr., Holt
continued to expand its warehousing business with the acquisition of additional
warehouses in Philadelphia and Camden, New Jersey. In 1967, Holt entered the
stevedoring business through the acquisition of the Gloucester Facility. Holt
has continued the expansion of its services since then through upgrades of its
existing facilities and additions of new facilities. In 1973, Holt broadened the
types of cargo it handled to include perishables, including meat and fruit, by
acquiring its first refrigerated warehouse. In recognition of a significant
trend toward containerization in the cargo transportation business, Holt
undertook a major construction program from 1977 to 1984 that enabled the
Gloucester Facility to handle containerized cargo. Upon the retirement of Leo A.
Holt, Jr. in 1982, Thomas J. Holt, Sr. became the majority stockholder of Holt,
and Thomas J. Holt, Sr. currently owns 100% of the capital stock of the Company.
The Packer Avenue Facility, owned by an agency of the Commonwealth of
Pennsylvania, is leased by AHI pursuant to a lease expiring in 2040, including
all renewal options. AHI subleases the Packer Avenue Facility to Holt. See "Risk
Factors -- Related Entity Transactions" and "Certain Transactions." In 1991,
Holt consolidated its container operations at the Packer Avenue Facility. In
1993, Holt began to lease the Gloucester Facility to Lessee-Operators. In 1994,
Holt established a base in the port of Wilmington, Delaware through its
formation of Murphy Marine Services, Inc. ("Murphy Marine") which, subsequent to
its acquisition of Wilmington Stevedores, Inc. in July 1995, has grown to become
that port's largest stevedore.
Holt has been an innovator in the methods of properly handling refrigerated
cargo, enabling the Lessee-Operators to reduce labor costs and pass through some
of their savings to their customers. In 1994, Holt implemented an intra-terminal
transit system to directly discharge refrigerated cargo in one movement from the
ship into the warehouse via a transit shed, while maintaining the product at a
constant temperature. This bypasses the need to truck the cargo from the pier to
an offsite warehouse, which helps minimize handling costs. Holt has constructed
three warehouse extensions to existing transit sheds, one each in 1994, 1996 and
1997. The implementation of this system has resulted in increases in rental fees
paid to Holt by the Lessee-Operators at the Gloucester Facility, as customers
find it increasingly attractive to transport and store their refrigerated cargo
through that facility.
In addition, CTS is available at the Holt Facilities and utilizes a special
bar-coding technology that provides customers with an innovative tracking system
for their cargo. The system is especially effective when the cargo is unitized
or characterized by contents of different weights, moisture content, or other
unique characteristics.
Today, Holt offers a broad range of services, including stevedoring,
warehousing and inland trucking of cargo. Holt also leases port facilities to
the Lessee-Operators at the Gloucester Facility. Through their operations at the
Holt Facilities, the Company and its Lessee-Operators handle various types of
cargoes, including refrigerated perishables, wood, steel, automobiles and
containerized cargo. Stevedoring and warehousing services are billed on a per
container basis for containerized cargo and a per weight or per unit basis for
breakbulk cargo. Holt's stevedoring services, which are charged for each
movement of cargo, consist of the loading or unloading of a ship and may include
pick-up of cargo from or delivery of cargo to, a destination in the marine
terminal. Fees for Holt's warehousing services, which consist of the handling
and storage of cargo, are based on a handling charge (both in
47
<PAGE>
and out of the warehouse) and a storage charge. Holt's trucking services are
billed on either a tonnage or a per load basis. In addition, the Gloucester
Facility is leased to the Lessee-Operators for periods of one to five years on
the basis of a fixed lease charge and, in some cases, a variable charge based on
the tonnage of cargo moved through the marine terminal. Holt also receives
revenues from ancillary activities, such as the maintenance and repair of
customer equipment.
The following table sets forth, for the periods indicated, operating
revenues and rental income, in thousands of dollars, by type of service and as a
percentage of total operating revenues and rental income:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
----------------------------------------------------------
1995 1996 1997
--------------- --------------- ----------------
$ % $ % $ %
------- ----- ------- ----- -------- -----
<S> <C> <C> <C> <C> <C> <C>
Stevedoring...................................... $44,993 66.2% $44,001 60.5% 44,481 38.3%
Warehousing...................................... 9,847 14.5% 9,984 13.7% 11,887 10.2%
Inland trucking.................................. 2,477 3.7% 2,779 3.8% 3,285 2.8%
Other operating revenues......................... 2,224 3.3% 1,039 1.4% 1,269 1.1%
Rental income.................................... 8,385 12.3% 14,995 20.6% 24,007 20.6%
Ocean revenues................................... -- -- -- -- 31,404 27.0%
------- ----- ------- ----- -------- -----
Total operating revenues and rental income....... $67,926 100.0% $72,798 100.0% $116,333 100.0%
======= ===== ======= ===== ======== =====
</TABLE>
Holt's major operating expense categories are as follows: (i) terminal;
(ii) general and administrative; (iii) equipment maintenance; (iv)
insurance/safety; and (v) transportation. Holt's terminal expenses consist
primarily of labor charges related to stevedoring and warehousing. General and
administrative expenses are comprised, for the most part, of corporate overhead.
Holt's equipment maintenance expenses are routine expenses which include the
maintenance of Holt's forklifts, cranes, truck, tractors, trailers, etc. The
insurance/safety expense provides for Holt's cost of insurance or claims filed
against it. Finally, Holt's transportation expense is comprised of the costs
associated with Holt's trucking operations, including labor, fuel, maintenance
and other expenses associated with its own fleet and fees paid to owner
operators.
In November 1997, the Company entered the marine transportation business
through the acquisition of NPR, whose predecessor was formed in 1974 by the
Puerto Rico Government in recognition of the vital importance of maritime
transportation to the economic development of Puerto Rico. When NPR's
predecessor commenced operations, it had a virtual monopoly. Over time, however,
the reemergence of competition, bureaucratic management and periodic turnover in
political administrations negatively affected its competitive position and
operating performance. In November 1992, the Puerto Rico Government began
publicly evaluating the merits of liquidating or divesting its interest in the
shipping business. Uncertainty surrounding the Puerto Rico Government's
intentions and the possibility of liquidation provided competitors with the
opportunity to increase their market shares. In March 1995, an investor group,
including certain members of NPR management, purchased NPR's business from the
Puerto Rico Government in the Privatization.
Since the Privatization, NPR's management has implemented various programs
to improve its operating performance. During 1997, NPR transported approximately
31.8% of the fully containerized cargo carried between the United States and
Puerto Rico, as compared to approximately 26.8% of such cargo during 1996.
Management has reduced operating costs by (i) decreasing vessel expenses by
reducing the number of vessels in operation from five to four and reducing the
number of ports of call in the United States from five to two, while at the same
time increasing the aggregate volume of cargo carried, (ii) consolidating
customer service activities into one service center located in Tampa, Florida,
(iii) trimming other corporate overhead by reducing headcount from 676 at the
time of the Privatization to 448 at December 31, 1997, (iv) reducing intermodal
transportation costs through the commitment of high cargo volumes to railroads
and trucking companies, (v) reducing advertising costs and (vi) eliminating
excess container capacity.
48
<PAGE>
NPR provides twice-weekly service between San Juan, Puerto Rico and the
United States via the ports of Jacksonville, Florida and Philadelphia,
Pennsylvania and weekly service between San Juan and Miami, Florida. In
addition, through charter arrangements, NPR provides service three times a week
between San Juan and the Dominican Republic and, through a slot charter
arrangement, also services the Caribbean island of Trinidad and the United
States Virgin Islands.
NPR's ocean revenues are realized primarily through its northbound and
southbound ocean freight operations. In general, NPR bases its pricing on (i)
direction of the cargo (i.e. northbound or southbound), (ii) type of commodity
transported, (iii) destination of the transported cargo and (iv) market
conditions. In addition, a majority of the cargo transported by NPR in 1997 was
subject to time volume agreements ("TVAs") or fixed rate contracts which provide
NPR's customers with rates which are lower than NPR's "any quantity" tariff
rates, so long as the customer agrees to ship a minimum quantity of cargo over a
specified time period. NPR generates other revenues through third party
stevedoring in San Juan (which the Company expects will increase in importance
once two of Holt's high speed cranes are moved to Puerto Rico) and demurrage
(penalties assessed against customers for holding NPR equipment beyond the
contracted period). In addition, the results of TNX, which commenced operations
in October 1997, also will be included on an equity basis on NPR's consolidated
statements of operations from the date of the Acquisition.
NPR's operating expenses can be broadly categorized as follows: (i) vessel,
(ii) cargo handling, (iii) terminal, (iv) transportation and (v) selling,
general and administrative. Vessel expenses are directly attributable to the
operation and/or dry docking of vessels such as fuel expenses, crew wages and
repair costs. Cargo handling expenses are comprised of all of the costs
associated with loading and unloading a vessel, including stevedoring charges,
port assessments, wharfage and dockage. Terminal expenses include expenses
associated with NPR's land-based operations, including facilities and equipment
maintenance and repairs, warehousing, etc. Transportation expenses are all the
expenses associated with the in-land movement of cargo off-site via rail or
truck. Finally, selling, general and administrative expenses are comprised of
NPR's corporate overhead as well as its marketing expenditures.
The Company believes the Acquisition presents the opportunity to realize
cost savings and to capitalize on new revenue opportunities and that some of
these cost savings already have begun to be realized, such as those derived from
the relocation of NPR's northeastern port of call from Elizabeth, New Jersey to
the Packer Avenue Facility. The Company believes that additional cost savings of
approximately $14.0 million would have been realized during 1997 if the
Acquisition had occurred at the beginning of the year rather than in November
1997. The majority of these savings are in the cargo handling, terminal expense
and transportation categories. NPR's cargo handling expenses are reduced in part
due to lower wage rates and lower port assessments at the Packer Avenue Facility
as compared to Elizabeth, New Jersey. Maintenance and repair expenses will be
lower due to lower labor wage rates at the Packer Avenue Facility, while
transportation expenses will be lower as Holt has its own trucking operations.
The Acquisition also provides opportunities for the Company to increase its
revenues, as the Company can now cross-market its expanded services to Holt's
and NPR's respective customer bases. See "Business -- The Company," "Unaudited
Pro Forma and Pro Forma Adjusted Condensed Financial Data" and "Risk Factors --
Risks Related to Acquisition and Integration of NPR."
49
<PAGE>
RESULTS OF OPERATIONS OF THE COMPANY
The following table sets forth, for the periods indicated, the Company's
actual operating results in thousands of dollars and as a percentage of total
revenues:
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------------------------------
1995 1996 1997
--------------- --------------- ---------------
$ % $ % $ %
------- ----- ------- ----- ------- -----
<S> <C> <C> <C> <C> <C> <C>
Operating revenues................................ $59,541 85.9% $57,803 79.1% 92,326 77.6%
Rental income..................................... 8,385 12.0 14,995 20.5 24,007 20.2
Other revenues.................................... 674 1.0 269 0.4 2,610 2.2
Revenues from non-consolidated affiliates......... 750 1.1 9 -- 55 --
------- ----- ------- ----- ------- -----
Total revenues.................................... 69,350 100.0 73,076 100.0 118,998 100.0
------- ----- ------- ----- ------- -----
Operating expenses:
Terminal........................................ 19,753 28.5 24,125 33.0 30,431 25.6
General and administrative...................... 9,591 13.8 8,865 12.1 26,112 21.9
Equipment maintenance........................... 9,470 13.7 10,720 14.7 15,796 13.3
Insurance and safety............................ 4,291 6.2 4,797 6.6 2,998 2.5
Vessel.......................................... -- -- -- -- 5,815 4.9
Transportation.................................. 2,857 4.1 2,917 4.0 9,346 7.9
Depreciation and amortization................... 4,375 6.3 4,025 5.5 8,652 7.3
Other operating expenses........................ 3,840 5.5 1,868 2.6 1,434 1.2
------- ----- ------- ----- ------- -----
Total operating expenses...................... 54,177 78.1 57,317 78.4 100,584 84.5
------- ----- ------- ----- ------- -----
Operating income.................................. $15,173 21.9% $15,759 21.6% $18,414 15.5%
======= ===== ======= ===== ======= =====
Calculation of EBITDA:
Operating income................................ 15,173 15,759 18,414
Depreciation and amortization................... 4,375 4,025 8,652
EBITDA........................................ 19,548 28.2 19,784 27.1 27,066 22.7
</TABLE>
YEAR ENDED DECEMBER 31, 1997 COMPARED TO YEAR ENDED DECEMBER 31, 1996
Revenues. Revenues increased to $119.0 million in 1997 from $73.1 million
in 1996, an increase of $45.9 million, or 62.8%. Operating revenues increased
$34.5 million which was due primarily to the November 20, 1997 acquisition of
NPR which accounted for $31.4 million of the increase. Rental income increased
to $24.0 million for 1997 from $15.0 in 1996, an increase of $9.0 million, or
60%. This was due to increased leasing revenues from the Lessee-Operators at the
Gloucester Facility associated with increased tonnage of cargo handled and the
continued roll-out of a more efficient intra-terminal handling system. Other
revenue increased $2.3 million which was due to the acquisition of NPR which
accounted for $1.3 million due to demurrage and miscellaneous sales. The
remaining increase of $1.0 million was due to proceeds from the sale of scrap
materials.
Terminal expenses. Terminal expenses increased to $30.4 million in 1997
from $24.1 million in 1996, an increase of $6.3 million, or 26.1% the increase
was attributable to the inclusion of $6.9 million of NPR terminal expenses.
Terminal expenses as a percentage of revenue were 25.6% in 1997 compared to
33.0% in 1996. This decrease was attributable primarily to reduced labor costs
resulting from the negotiation of favorable work rules with the ILA by the Port
of Philadelphia effective October 1, 1996.
General and Administrative Expenses. General and administrative expenses
increased to $26.1 million in 1997 from $8.9 million in 1996, an increase of
$17.2 million, or 194.5% The increase was attributable to the inclusion of $12.9
million of NPR general and administrative expenses. The remaining $4.3 million
increase was due to (i) a $1.0 million increase in bad debt expense resulting
from the loss of one container customer that filed for bankruptcy and ceased
operations, (ii) increased legal expenses incurred in connection with the
acquisition of NPR and (iii) general increases. General and administrative
expenses as a percentage of revenue were 21.9% in 1997 compared to 12.1% in
50
<PAGE>
1996. The increase in general and administrative expenses as a percentage of
revenue was due to the inclusion of NPR which incurs a higher percentage of
general and administrative expenses to total revenue.
Equipment Maintenance Expenses. Equipment maintenance expenses increased
to $15.8 million in 1997 from $10.7 million in 1996 an increase of $5.1 million,
or 47.3%. The increase was due to (i) $2.7 million in warehouse operating lease
payments incurred in connection with the sub-lease of an additional warehouse
and (ii) $2.2 million in equipment rental expenses due to increased volume of
business at the Packer Avenue Facility due to NPR's change in port of call from
Elizabeth to Philadelphia as well as overall volume increases. Equipment and
maintenance expenses as a percentage of revenue were 13.3% in 1997 and 14.7% in
1996. The decrease in equipment and maintenance expense as a percentage of
revenue was the result of leveraging of the equipment maintenance expenses over
increased revenues.
Insurance and Safety Expenses. Insurance and safety expenses decreased to
$3.0 million in 1997, from $4.8 million in 1996, a decrease of $1.8 million, or
37.5%. Insurance and safety expenses as a percentage of revenue was 2.5% in 1997
compared to 6.6% in 1996. The decrease in insurance and safety expenses was the
result of the decrease in premiums due to lower overall experience rates.
Vessel Expenses. Vessel expenses were $5.8 million in 1997 and were
incurred due to the acquisition of NPR. Holt did not have any vessel expenses
prior to the acquisition of NPR.
Transportation Expense. Transportation expense increased to $9.3 million
in 1997 from $2.9 million in 1996, an increase of $6.4 million, or 220.4%. The
increase was due primarily to the acquisition of NPR which accounted for $6.0
million of the increase. Transportation expense as a percentage of revenue was
7.9% in 1997 compared to 4.0% in 1996. The increase was due to the greater
percentage of transportation expense from NPR's shipping operations, compared to
Holt's stevedoring and warehousing operations.
Depreciation and Amortization Expenses. Depreciation and amortization
expenses increased to $8.7 million in 1997 from $4.0 million in 1996, an
increase of $4.7 million, or 115%. Depreciation and amortization expenses as a
percentage of revenues were 7.3% for the 1997 period compared to 5.5% for the
1996 period. The increase in depreciation and amortization expenses was
primarily due to (i) the amortization of $2.3 million of capitalized costs
associated with the acquisition of NPR, (ii) NPR depreciation of $1.0 million
and (iii) $1.3 million resulting from additions of machinery and equipment
during 1996 and 1997.
Other Operating Expenses. Other operating expenses, which consist of
operating taxes and licenses, traffic and sales expenses and charges from
Non-consolidated Affiliates, decreased to $1.4 million in 1997 from $1.9 million
in 1996, a decrease of $0.5 million, or 23.2%. Other operating expenses as a
percentage of revenues were 1.2% for the 1997 period compared to 2.6% for the
1996 period.
EBITDA. EBITDA increased to $27.1 million in 1997 from $19.8 million in
1996. EBITDA as a percentage of revenue was 22.7% in 1997 compared to 27.1% in
1996. The changes in EBITDA were attributable to the changes in revenues and
expenses as discussed above.
YEAR ENDED DECEMBER 31, 1996 COMPARED TO YEAR ENDED DECEMBER 31, 1995
Revenues. Revenues increased to $73.1 million in 1996 from $69.4 million
in 1995, an increase of $3.7 million, or 5.4%. This increase was attributable
primarily to increased rental income which increased to $15.0 million in 1996
from $8.4 million in 1995, an increase of $6.6 million, or 78.8%. This increase
was attributable primarily to increased leasing revenues from the
Lessee-Operators at the Gloucester Facility associated with increased tonnage of
cargo handled due to the implementation of a more efficient intra-terminal
handling system for refrigerated cargo. This increase was partially offset by a
decrease in operating revenues, which decreased to $57.8 million in 1996 from
$59.5 million in 1995, a decrease of $1.7 million, or 2.9%. This decrease in
operating revenues was attributable
51
<PAGE>
primarily to a decrease in tonnage handled at the Packer Avenue Facility, which
resulted from the loss of one container customer that filed for bankruptcy and
ceased operations.
Terminal Expenses. Terminal expenses increased to $24.1 million in 1996
from $19.8 million in 1995, an increase of $4.4 million, or 22.1%. This increase
was attributable primarily to the inclusion of a full year of terminal expenses
associated with the operations of Wilmington Stevedores, which was acquired in
July 1995. Terminal expenses as a percentage of revenues were 33.0% in 1996
compared to 28.5% in 1995. This increase as a percentage of revenues was
attributable primarily to lower operating margins at the Wilmington Facility, as
compared to the Packer Avenue Facility, because the Company's services at that
location are limited to stevedoring services, which are lower margin services
than the value added services provided at the Packer Avenue Facility.
General and Administrative Expenses. General and administrative expenses
decreased to $8.9 million in 1996 from $9.6 million in 1995, a decrease of $0.7
million, or 7.6%. General and administrative expenses as a percentage of
revenues were 12.1% in 1996 compared to 13.8% in 1995. This decrease as a
percentage of revenues was due to the leveraging of the general and
administrative expenses over increased revenues.
Equipment Maintenance Expenses. Equipment maintenance expenses increased
to $10.7 million in 1996 from $9.5 million in 1995, an increase of $1.3 million,
or 13.2%. Equipment maintenance expenses as a percentage of revenues were 14.7%
in 1996 and 13.7% in 1995. This increase as a percentage of revenues was
attributable primarily to (i) increased use of equipment at the Wilmington
Facility resulting from a full year of operations of Wilmington Stevedores and
(ii) normal maintenance expenses related to Holt's cranes.
Insurance and Safety Expenses. Insurance and safety expenses increased to
$4.8 million in 1996, from $4.3 million in 1995, an increase of $0.5 million, or
11.8%. This increase was attributable primarily to an increase in premiums
resulting from insurance obtained with respect to Holt's operations at the
Wilmington Facility. Insurance and safety expenses as a percentage of revenues
were 6.6% in 1996, compared to 6.2% in 1995.
Transportation Expenses. Transportation expenses remained constant at $2.9
million in 1996 and 1995. Transportation expenses as a percentage of revenues
were 4.0% in 1996, compared to 4.1% in 1995. This decrease as a percentage of
revenues was due to the increase in revenues at the Wilmington Facility, where
there are no transportation revenues or expenses as Holt does not engage in
trucking operations at that location.
Depreciation and Amortization Expenses. Depreciation and amortization
expenses decreased to $4.0 million in 1996 from $4.4 million in 1995, a decrease
of $0.4 million, or 8.0%. Depreciation and amortization expenses as a percentage
of revenues were 5.5% for the 1996 period compared to 6.3% for the 1995 period.
Other Operating Expenses. Other operating expenses, which consist of
operating taxes and licenses, traffic and sales expenses and charges from
Non-consolidated Affiliates, decreased to $1.9 million in 1996 from $3.8 million
in 1995, a decrease of $2.0 million, or 51.4%. Other operating expenses as a
percentage of revenues were 2.6% in 1996 compared to 5.5% for the 1995.
EBITDA. EBITDA increased to $19.8 million in 1996 from $19.5 million in
1995, an increase of $0.2 million, or 1.2%. EBITDA as a percentage of revenues
was 27.1% in 1996 compared to 28.2% in 1995. The increase in EBITDA was
attributable to the changes in revenues and expenses as discussed above.
YEAR ENDED DECEMBER 31, 1995 COMPARED TO YEAR ENDED DECEMBER 31, 1994
Revenues. Revenues increased to $69.4 million in 1995 from $54.4 million
in 1994, an increase of $14.9 million, or 27.5%. This increase was attributable
primarily to increased operating revenues, which increased to $59.5 million in
1995, compared to $47.0 million in the comparable period in 1994, an increase of
$12.6 million, or 26.8%. This increase in operating revenues was attributable
partially to
52
<PAGE>
operations at the Wilmington Facility as the result of the acquisition of
Wilmington Stevedores in July 1995 and the contribution of a full year of
operations of Murphy Marine Services, which was formed in July 1994. In
addition, revenues at the Packer Avenue Facility increased due to (i) the
opening of the Ameriport rail transfer intermodal facility and (ii) enhanced
Canadian business, as the Canadian Pacific railroad commenced operations,
providing direct links to major Canadian cities such as Toronto and Montreal.
Terminal Expenses. Terminal expenses increased to $19.8 million in 1995
from $13.1 million in 1994, an increase of $6.7 million, or 50.8%. This increase
was attributable primarily to the inclusion of terminal expenses associated with
the Wilmington Facility as described above and increased terminal expenses
associated with higher container volume at the Packer Avenue Facility. Terminal
expenses as a percentage of revenues were 28.5% in 1995 compared to 24.1% in
1994. This increase as a percentage of revenues was attributable to lower
operating margins at the Wilmington Facility, compared to the Packer Avenue
Facility, as described above.
General and Administrative Expenses. General and administrative expenses
increased to $9.6 million in 1995 from $7.9 million in 1994, an increase of $1.7
million, or 21.8%. This increase was attributable primarily to administrative
expenses associated with the expanded operations at the Wilmington Facility in
1995 described above. General and administrative expenses as a percentage of
revenues were 13.8% in 1995 compared to 14.2% in 1994. This decrease as a
percentage of revenues was attributable to the leveraging of the general and
administrative expenses over increased revenues.
Equipment Maintenance Expenses. Equipment maintenance expenses increased
to $9.5 million in 1995 from $7.7 million in 1994, an increase of $1.8 million,
or 22.6%. This increase was attributable primarily to the increase in revenues
at the Packer Avenue Facility and the Wilmington Facility and the associated
increase in the use of equipment. Equipment maintenance expenses as a percentage
of revenues remained relatively constant at 13.7% in 1995, compared to 14.2% in
1994.
Insurance and Safety Expenses. Insurance and safety expenses decreased to
$4.3 million in 1995, from $5.4 million in 1994, a decrease of $1.1 million, or
20.8%. This decrease was attributable primarily to lower premiums based on
Holt's favorable claims experience. Insurance and safety expenses as a
percentage of revenues was 6.2% in 1995 compared to 10.0% in 1994. This decrease
as a percentage of revenues was attributable primarily to the leveraging of
reduced expenses over increased revenues.
Transportation Expenses. Transportation expenses increased to $2.9 million
in 1995 from $2.5 million in 1994, an increase of $0.4 million, or 14.0%.
Transportation expense as a percentage of revenues were 4.1% in 1995 compared to
4.6% in 1994. This decrease as a percentage of revenues was attributable
primarily to the increase in revenues from expanded operations at the Wilmington
Facility, where there are no transportation revenues or expenses as Holt does
not engage in trucking operations at that location.
Depreciation and Amortization Expenses. Depreciation and amortization
expenses increased to $4.4 million in 1995 from $4.1 million in 1994, an
increase of $0.2 million, or 5.9%. Depreciation and amortization expenses as a
percentage of revenues decreased to 6.3% in 1995 from 7.6% in 1994.
Other Operating Expenses. Other operating expenses, which consist of
operating taxes and licenses, traffic and sales expenses and charges from
Non-consolidated Affiliates, decreased to $3.8 million in 1995 from $5.0 million
in 1994, a decrease of $1.2 million, or 22.4%. Other operating expenses as a
percentage of revenues were 5.5% in 1995 compared to 9.1% in 1994.
EBITDA. EBITDA increased to $19.5 million in 1995 from $12.8 million in
1994 an increase of $6.7 million, or 52.3%. EBITDA as a percentage of revenues
was 28.2% in 1995 compared to 25.3% in 1994. The increase in EBITDA was
attributable to the changes in revenues and expenses as discussed above.
53
<PAGE>
RESULTS OF OPERATIONS OF NPR
The following table sets forth, for the periods indicated, NPR's actual
operating results in thousands of dollars and as a percentage of total revenues:
<TABLE>
<CAPTION>
MAR. 3 TO DEC. 31, YEAR ENDED JAN. 6 TO NOV. 20,
1995 JANUARY 5, 1997 1997
------------------ ---------------- ------------------
<S> <C> <C> <C> <C> <C> <C>
Ocean revenues................................. $228,228 97.6% $265,110 98.5% 238,670 97.3%
Other revenues................................. 5,539 2.4 3,987 1.5 6,671 3.7
-------- ----- -------- ----- -------- -----
Total revenues................................. 233,767 100.0 269,097 100.0 245,341 100.0
-------- ----- -------- ----- -------- -----
Operating expenses:
Vessel....................................... 48,012 20.5% 48,941 18.2% 43,915 17.9%
Cargo handling............................... 49,006 21.0 57,662 21.4 50,287 20.5
Terminal..................................... 55,010 23.5 56,145 20.9 52,793 21.5
Transportation............................... 34,512 14.8 49,535 18.4 42,144 17.2
Selling, general and administrative.......... 42,922 18.3 48,644 18.1 40,108 16.4
Depreciation and amortization................ 10,699 4.6 14,524 5.4 10,618 4.3
-------- ----- -------- ----- -------- -----
Total operating expenses................... 240,161 102.7 275,451 102.4 239,865 97.8
-------- ----- -------- ----- -------- -----
Operating income (loss)........................ (6,394) (2.7) (6,354) (2.4) 5,476 2.2
-------- ----- -------- ----- -------- -----
Calculation of EBITDA:
Operating income (loss)...................... $ (6,394) $ (6,354) 5,476
Depreciation and amortization................ 10,699 14,524 10,618
Non-recurring other revenue.................. -- -- (3,000)
-------- -------- --------
EBITDA..................................... 4,305 1.8 8,170 3.0 13,094 6.6
</TABLE>
The following table sets forth, for the periods indicated, NPR's actual
operating results in thousands of dollars and such results expressed per load
(i.e. per loaded container shipped):
<TABLE>
<CAPTION>
MAR. 3 TO DEC. 31, YEAR ENDED JAN. 6 TO NOV. 20,
1995 JANUARY 5, 1997 1997
------------------- ----------------- -------------------
$/LOAD $/LOAD $/LOAD
------- ------ -------
<S> <C> <C> <C> <C> <C> <C>
Loads.......................................... 97,641 115,595 107,156
-------- -------- --------
Ocean revenues................................. $228,228 $2,337 $265,110 $2,293 $238,670 $2,227
Other revenues................................. 5,539 57 3,987 35 6,671 62
-------- ------ -------- ------ -------- ------
Total revenues............................. 233,767 2,394 269,097 2,328 245,341 2,289
-------- ------ -------- ------ -------- ------
Operating expenses:
Vessel....................................... 48,012 492 48,941 423 43,915 410
Cargo handling............................... 49,006 502 57,662 499 50,287 469
Terminal..................................... 55,010 563 56,145 486 52,793 493
Transportation............................... 34,512 353 49,535 429 42,144 393
Selling, general and administrative.......... 42,922 440 48,644 421 40,188 374
Depreciation and amortization................ 10,699 110 14,524 126 10,618 99
-------- ------ -------- ------ -------- ------
Total operating expenses................... 240,161 2,460 275,451 2,384 239,865 2,238
-------- ------ -------- ------ -------- ------
Operating income (loss)........................ (6,394) (65) (6,354) (55) 5,476 51
-------- ------ -------- ------ -------- ------
Calculation of EBITDA:
Operating income (loss)...................... $ (6,394) $ (6,354) 5,476
Depreciation and amortization................ 10,699 14,524 10,618
Non-recurring other revenue.................. -- -- (3,000)
-------- -------- --------
EBITDA..................................... 4,305 44 8,170 71 13,094 150
</TABLE>
54
<PAGE>
PERIOD FROM JANUARY 6, 1997 TO NOVEMBER 20, 1997 COMPARED TO
YEAR ENDED JANUARY 5, 1997
The Company believes that the comparison of NPR's results of operations in
the period from January 6, 1997 to November 20, 1997 to NPR's results of
operations for the year ended January 5, 1997 is not meaningful due to the
significant difference in the length of time in each such period. However, the
discussion below includes a discussion of each of the operating items on a per
load basis to the extent that the Company believes it is meaningful to the
understanding of such items.
Revenues. Ocean revenue per load (i.e. per container shipped during the
relevant period) decreased to $2,227 per load for the 1997 period, from $2,293
per load for the 1996 period. This decrease per load was attributable primarily
to: (i) a higher proportion of NPR's total loads coming from northbound cargo,
which typically yields less revenue per load than southbound cargo and (ii) and
competitive pressure on pricing, offset in part by an upward adjustment
resulting from a pricing settlement. Ocean revenues generated in other markets,
such as the Dominican Republic, Trinidad and the Virgin Islands, remained
relatively stable for the period ended November 20, 1997 versus the comparable
period in 1996. Other revenue increased to $6.7 million for the 10.6 months
ended November 20, 1997 from $4.0 million for the twelve months ended December
31, 1996, an increase of $2.7 million. This increase was attributable primarily
to increased third party stevedoring services at the San Juan terminal.
Vessel Expenses. As a percentage of revenues, vessel expenses decreased to
17.9% for the 1997 period from 18.2% for the 1996 period. Vessel expenses per
load decreased to $410 per load for the 10.5 months ended 1997, from $423 per
load for the 1996 period. The decrease per load was attributable primarily to
the higher volume of cargo carried in the 1997 period.
Cargo Handling Expenses. As a percentage of revenues, cargo handling
expenses decreased to 20.5% for the 1997 period from 21.4% for the 1996 period.
On a per load basis, cargo handling expenses decreased to $469 per load for the
1997 period, from $499 per load for the 1996 period. This decrease as a
percentage of revenues was attributable primarily to higher stevedoring
productivity as more cargo was routed through the Port of Jacksonville instead
of the Port of Elizabeth, New Jersey which has lower stevedoring productivity as
well as higher stevedoring costs and port assessments.
Terminal Expenses. As a percentage of revenues, terminal expenses increased
to 21.5% for the 1997 period from 20.9% for the 1996 period. On a per load
basis, terminal expenses increased to $493 per load for the 1997 period from
$486 per load for the 1996 period. This increase was attributable primarily to:
(i) costs related to the implementation of a new tire program, (ii) expenses
related to preventive maintenance on rolling stock and (iii) additional labor
costs resulting from the re-negotiation of its labor contract effective October
1, 1996.
Transportation Expenses. As a percentage of revenues, transportation
expenses decreased to 17.2% for the 1997 period from 18.4% for the 1996 period.
On a per load basis, transportation expenses decreased to $393 per load for the
1997 period, from $429 per load for the 1996 period. This decrease was
attributable primarily to the increased volume and the routing of more cargo to
Jacksonville from more midwestern points in order to save on cargo handling
expenses and assessments in Elizabeth.
Selling, General, and Administrative Expenses. As a percentage of
revenues, selling, general and administrative expenses decreased to 16.4% for
the 1997 period from 18.1% for the 1996 period. On a per load basis, selling,
general and administrative expenses decreased to $374 per load for the 1997
period, from $421 per load for the 1996 period. This decrease resulted from
reduced headcount due to continued streamlining of corporate functions, combined
with higher revenues from an increased number of loads during the 1997 period.
Depreciation and Amortization Expenses. As a percentage of revenues,
depreciation and amortization expenses decreased to 4.3% for the 1997 period
from 5.4% for the 1996 period. On a per load basis, depreciation and
amortization expense decreased to $99 per load for the 1997 period from $126 per
load for the 1996 period. This decrease was attributable primarily to reduced
amortization of drydock costs and elimination of certain assets.
55
<PAGE>
EBITDA. As a percentage of revenues. EBITDA increased to 6.6% for the 1997
period from 3.0% for the 1996 period. On a per load basis, EBITDA increased to
$150 per load for the 1997 period from $71 for the 1996 period.
YEAR ENDED JANUARY 5, 1997 COMPARED TO THE PERIOD FROM MARCH 3, 1995 TO
DECEMBER 31, 1995
The Company believes that the comparison of NPR's results of operations for
the year ended January 5, 1997 to NPR's results of operations for the period
from March 3, 1995 (the date of the Privatization) to December 31, 1995 is not
meaningful due to the significant difference in the length of time in each such
period. However, the discussion below includes a discussion of each of the
operating items on a per load basis to the extent that the Company believes it
is meaningful to the understanding of such items.
Revenues. Ocean revenues were $265.1 million for the 1996 period and
$228.2 million for the 1995 period remaining constant during the implementation
of NPR's twice-weekly service in 1996. Average ocean revenue per load decreased
to $2,293 per load for the 1996 period, from $2,337 per load for the 1995
period. This decrease in average ocean revenue per load was attributable
primarily to the increase in northbound cargo transported by NPR, which yields
less per load than southbound cargo. This was a result of NPR's efforts to
improve its service and to focus its sales efforts on increasing its share of
the northbound market, which historically had been neglected while NPR was
operated by the Puerto Rico Government.
Vessel Expenses. Vessel expenses were $48.9 million for the 1996 period
and $48.0 million for the 1995 period. As a percentage of revenues, vessel
expenses decreased to 18.2% in 1996 from 20.5% in 1995. On a per load basis,
vessel expenses decreased to $423 for the 1996 period from $492 for the 1995
period. This decrease was attributable primarily to the elimination of one
vessel from deployment beginning in January 1996.
Cargo Handling Expenses. Cargo handling expenses were $57.7 million for
the 1996 period and $49.0 million for the 1995 period. As a percentage of
revenues, cargo handling expenses increased to 21.4% in 1996 from 21.0% in 1995.
On a per load basis, cargo handling expenses decreased slightly to $499 in the
1996 period from $502 in the 1995 period. This decrease on a per load basis was
attributable primarily to increased stevedoring productivity and the re-routing
of cargo through fewer port facilities as NPR stopped calling the ports of
Baltimore, Maryland in August 1995, Charleston, South Carolina in September 1995
and New Orleans in January 1996.
Terminal Expenses. Terminal expenses were $56.1 million for the 1996
period and $55.0 million for the 1995 period. As a percentage of revenues,
terminal expenses decreased to 20.9% in 1996 from 23.5% in 1995. On a per load
basis, terminal expenses decreased to $486 for the 1996 period from $563 for the
1995 period. This decrease was attributable primarily to the elimination of
three operating port facilities as discussed above.
Transportation Expenses. Transportation expenses were $49.5 million for
the 1996 period and $34.5 million for the 1995 period. As a percentage of
revenues, transportation expenses increased to 18.4% in 1996 from 14.8% in 1995.
On a per load basis, transportation expenses increased to $429 for the 1996
period from $353 for the 1995 period. This increase was attributable primarily
to increased variable land transportation costs incurred in lieu of vessel
expenses resulting from the closing of the three operating ports of Baltimore,
Charleston and New Orleans.
Selling, General and Administrative Expenses. Selling, general and
administrative expenses were $48.6 million for the 1996 period from $42.9
million for the 1995 period. As a percentage of revenues, selling, general and
administrative expenses decreased to 18.1% in 1996 from 18.3% in 1995. On a per
load basis, such expenses increased to $421 for the 1996 period from $440 for
the 1995 period.
Depreciation and Amortization Expenses. Depreciation and amortization
expenses were $14.5 million for the 1996 period and $10.7 for the 1995 period.
As a percentage of revenues, depreciation and amortization expenses increased to
5.4% in 1996 from 4.6% in 1995. On a per load basis, depreciation and
amortization expenses increased to $126 per load in 1996 from $110 per load in
1995. This increase is attributable primarily to additional depreciation on
newly acquired rolling stock and (ii) additional amortization on drydock costs.
56
<PAGE>
EBITDA. EBITDA was $8.2 million in 1996 and $4.3 million in 1995. As a
percentage of revenues, EBITDA increased to 3.0% in 1996 from 1.8% in 1995.
EBITDA increased to $71 per load in 1996 from $44 per load in 1995.
SEASONALITY
Holt handles a variety of cargoes throughout the year ranging from
refrigerated meat and produce to steel and wood products. Holt believes that
this diversified mix of cargoes has negated the effects of seasonality
associated with specific types of cargoes.
Although NPR historically realized a seasonal impact on its revenues during
December (due to Christmas) and May (due to Mother's Day), this seasonal impact
has diminished significantly over the past two years. The Company believes that
this decrease is attributable partially to greater use of TVAs and fixed rate
contracts in NPR's trade, which reduces the fluctuation in cargo volumes
throughout the year.
LIQUIDITY AND CAPITAL RESOURCES
The Company's primary source of liquidity is cash flow from operations and
borrowings under the Revolving Credit Facility. Financing available under the
Revolving Credit Facility consists of a $25.0 million revolver, under which $6.3
million in letters of credit and approximately $8.5 million of borrowings were
outstanding at December 31, 1997. The Company intends to use cash flow from
operations and borrowings under the Revolving Credit Facility to finance working
capital requirements.
The Company's liquidity needs relate primarily to payment of principal and
interest on outstanding indebtedness, including principal and interest payments
on the Notes, the funding of capital expenditures, the funding of obligations to
TNX and the funding of distributions to the Company's sole shareholder to pay
income taxes.
As of December 31, 1997, the Company had outstanding $213.4 million of
consolidated indebtedness, consisting of (i) $125.0 million principal amount of
the Notes, and (ii) $85.4 million of senior secured indebtedness. See "Risk
Factors -- Substantial Leverage and Ability to Service Debt," "-- Asset
Encumbrances" and "Description of Certain Indebtedness."
The Company's mandatory debt service requirements for the years ending
December 31, 1998, 1999 and 2000 are $13.6 million, $2.5 million and $3.0
million, respectively.
As substantially all of the Company's operating income is generated by its
subsidiaries, the Company is dependent on dividends and other distributions from
its subsidiaries to generate the funds necessary to meet its obligations. The
ability of the subsidiaries to pay dividends to the Company is subject to, among
other things, the terms of the Revolving Credit Facility and Other Indebtedness
and Financings to which they are subject. Certain of the Other Indebtedness and
Financings restrict distributions from the Issuer's subsidiaries to the Issuer
to a percentage of cumulative net income, subject to certain adjustments.
The Company's aggregate capital expenditures for the years ended December
31, 1995, 1996 and 1997 were $6.0 million, $6.9 million and $9.7 million,
respectively. The Company's capital spending in each period related principally
to the construction of certain improvements and purchase of forklift and other
moving equipment at the Gloucester Facility and the Packer Avenue Facility.
NPR's aggregate capital expenditures were $4.1 million for the period from March
6, 1995 to December 31, 1995, $3.3 million for fiscal 1996 and $0.9 million for
fiscal 1997. NPR's capital expenditures related principally to the acquisition
of rolling stock.
The Company anticipates that it will incur capital expenditures of
approximately $12.6 million in 1998, consisting of $3.2 million for material and
container handling equipment, $4.0 million for the relocation of two container
cranes to San Juan (including extension of crane rails), $4.6 million for the
addition of a refrigerated warehouse at the Packer Avenue Facility and $750,000
for the addition of a storage rack system for the refrigerated warehouse. In
addition, if NPR proceeds in 1998 with its initiative to modify four of its
vessels to accommodate 53-foot containers in addition to all other
standard-sized containers, an additional approximately $3.5 million would be
incurred. Management plans to fund these capital expenditures with cash flow
from operations and, if necessary, purchase money indebtedness.
57
<PAGE>
The Revolving Credit Facility, the Indenture and certain of the Other
Indebtedness and Financings contain various covenants which impose certain
restrictions on the Company, including with respect to the incurrence of
additional indebtedness, the payment of dividends and the ability to make
acquisitions. In addition, the Revolving Credit Facility requires the
maintenance of certain financial ratios. See "Risk Factors."
In accordance with the TNX joint venture agreement, each of NPR and
Transroll invested $500,000 in TNX as a capital contribution and advanced
additional amounts to TNX as a loan. At December 31, 1997, advances from NPR to
TNX were $1.5 million. In addition, each guaranteed TNX's charter obligations
for up to $1.5 million. See "The Company -- NPR -- TNX Joint Venture."
IMPACT OF YEAR 2000 ON THE COMPANY'S SYSTEMS
Management is in the process of determining whether all of the Company's
accounting and operational systems are year 2000 compliant. Management does not
expect the costs associated with any required conversions of systems to ensure
year 2000 compliance to be significant.
ENVIRONMENTAL MATTERS
The Company's operations are subject to various federal and state
environmental laws and regulations, including but not limited to, the federal
Comprehensive Environmental Response, Compensation and Liability Act ("CERCLA"),
which creates liability on the part of the owner or operator of a facility for
the investigation and remediation of hazardous substances, as well as creating
the authority and funding for unilateral response action by the United States
Environmental Protection Agency ("EPA"). In addition, portions of the Gloucester
Facility are part of a multi-property action pursuant to CERCLA to address
historic contamination via radioactive material. Holt has voluntarily entered
into a consent order with the EPA requiring the performance of certain
investigative measures and the proposal of certain remedial measures in
connection with the Gloucester Facility. The Company has conducted recent
environmental assessments at each of its facilities and believes it is in
material compliance with all environmental laws and does not anticipate material
expenditures for environmental compliance in the foreseeable future. See
"Business -- Holt -- Environmental Matters" and "-- NPR -- Environmental
Matters."
RECENT ACCOUNTING PRONOUNCEMENTS
Set forth below are recent accounting pronouncements which may have a
future effect on the Company's reporting requirements. These pronouncements
should be read in conjunction with the significant accounting policies which the
Company has adopted that are set forth in the "Notes to Consolidated
Financial Statements" of the Company.
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS No. 130) is effective for financial statements with
fiscal years beginning after December 15, 1997. Earlier application is
permitted. SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. The Company will present comprehensive income, which
includes unrealized appreciation on marketable securities, which is material,
and unrealized foreign exchange gains, which are immaterial.
Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information" (SFAS No. 131) is effective
for financial statements beginning after December 15, 1997. The new standard
requires that public business enterprises report certain information about
operating segments in complete sets of financial statements of the enterprise
and in condensed financial statements of interim periods issued to stockholders.
It also requires that public business enterprises report certain information
about their products and services, the geographic areas in which they operate
and their major customers. The Company does not expect the impact of SFAS No.
131 to have a material effect on its financial reporting.
Statement of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" (SFAS No. 132) is
effective for financial statements with fiscal years beginning after December
15, 1997. Earlier application is permitted. SFAS No. 132 amends the disclosure
requirements on SFAS No. 87, "Employees Accounting for Pension," No. 88,
"Employees Accounting for Settlements and Curtailments of Denied Benefit Pension
Plan and Termination Benefits," and No. 106, "Employers Accounting for
Postretirement Benefits other than Pensions." This statement revises employers'
disclosures about pension and other postretirement benefit plans. The impact of
SFAS No. 132 will be to clarify the existing disclosures on the Company's
pension and other postretirement benefit plans.
58
<PAGE>
BUSINESS
THE COMPANY
The Company is a leading provider of integrated cargo transportation and
logistics management services in the United States. The Company's predecessor
was founded in 1926 by Leo A. Holt, Sr., and the Company is wholly owned by his
son, Thomas J. Holt, Sr., the Company's Chairman, President and Chief Executive
Officer. Through Holt, the Company owns and operates marine terminal facilities,
including the largest private integrated marine terminal complex in the United
States, and provides related services. Through NPR, which commenced operations
through its predecessor in 1974 and was acquired by the Company in November
1997, the Company is a leading operator of cargo ships in the U.S.-Puerto Rico
market under the trade name "Navieras." NPR provides containerized cargo
transportation and related services between the United States, Puerto Rico, the
Caribbean and, through a joint venture, South America. As a result of the
Acquisition, the Company expects to realize significant cost savings and
capitalize on new revenue opportunities. Pro forma for the Acquisition, the
Company's revenues and Adjusted EBITDA (as defined herein) for the year ended
December 31, 1997 would have been $364.3 million and $48.1 million,
respectively.
Through Holt, the Company offers a variety of cargo services, including
stevedoring (the loading and unloading of ships), warehousing (the storage of
cargo) and inland trucking. Holt also leases port facilities to the
Lessee-Operators. These services are performed at the Holt Facilities, all of
which are located on the Delaware River, a key waterway for commerce on the East
Coast of the United States. The Gloucester Facility in Gloucester City, New
Jersey, is owned by the Company and is leased to the Lessee-Operators. The
Packer Avenue Facility in Philadelphia, Pennsylvania, which is owned by an
agency of the Commonwealth of Pennsylvania, is subleased by the Company for a
term expiring in 2040, including all renewal options. At the Packer Avenue
Facility, Holt provides stevedoring, warehousing and inland transportation of
containerized and other cargoes. The Company provides stevedoring services at
the Wilmington Facility, owned by an agency of the State of Delaware, where the
Company's subsidiary, Wilmington Stevedores, has operated since 1974. In 1997,
the Company and the Lessee-Operators loaded and/or discharged an aggregate of
689 ships and 5.5 million tons of cargo at the Holt Facilities.
Since inception, the Company has invested over $130.0 million in the
Gloucester Facility and the Packer Avenue Facility. The Gloucester Facility
features 4,200 lineal feet of deep water frontage, 18 warehouses with
approximately one million square feet of dry space and approximately one million
square feet of refrigerated space, and two container cranes. The Packer Avenue
Facility features 3,800 lineal feet of deep water frontage, three dry warehouses
with approximately 278,000 square feet of storage space, one refrigerated
warehouse with approximately 168,000 square feet of storage space and seven
container cranes. With the most refrigerated warehouse space of any marine
terminal operator in the United States, the Company believes it is currently the
leader in providing refrigerated facilities and related services in the United
States, with approximately 40% of all frozen beef imported by ship and a
substantial portion of the fruit imported by ship to the East Coast passing
through the Holt Facilities. The Company is the leading stevedore in the
Wilmington Facility, handling in excess of 95% of the aggregate container volume
and approximately 75% of the aggregate tonnage of cargo handled in the
Wilmington Facility during 1997.
Through NPR, the Company is a leading provider of containerized cargo
service between the United States, Puerto Rico, the Caribbean and through a
joint venture, South America. Containerized cargo encompasses a variety of goods
transported in standard sized containers. NPR currently operates four ships to
provide twice-weekly service between San Juan, Puerto Rico and the United States
via the ports of Jacksonville, Florida and Philadelphia, Pennsylvania and weekly
service between San Juan and Miami, Florida. These three ports of entry provide
efficient gateways to major commercial areas throughout the United States and
Canada, ranging from the New York metropolitan area to the West Coast. In
addition, through charter arrangements, NPR provides service three times a week
between San Juan and the Dominican Republic and also, through a slot charter
arrangement, services the Caribbean island of Trinidad and the United States
Virgin Islands. Through its 40% interest in TNX, a
59
<PAGE>
joint venture recently formed with Transroll, NPR also provides cargo
transportation service between numerous ports in the United States, San Juan and
certain ports in South America.
NPR's predecessor was formed in 1974 by the Puerto Rico Government and was
sold to an investor group (including certain members of NPR's current
management) in the Privatization in March 1995. Since the Privatization, NPR's
management team has significantly improved the operating performance of NPR by
implementing a strategic turnaround plan which consisted of increasing its share
of the cargo transported between the United States and Puerto Rico and reducing
its operating costs. During 1997, NPR transported approximately 31.8% of the
fully containerized cargo carried between the United States and Puerto Rico, as
compared to approximately 26.8% of such cargo during 1996. NPR reduced the
number of vessels in continuous operation from five to four and the number of
ports of call in the United States from five to two (subsequently increased to
three in April 1998), while at the same time increasing the aggregate volume of
cargo carried. In addition, NPR consolidated customer service activities into
one service center located in Tampa, Florida, and trimmed corporate overhead by
reducing the headcount from 676 at the time of the Privatization to 448 at
December 31, 1997. Additional savings were realized through lower intermodal
transportation unit costs due to commitment of higher cargo volumes to railroads
and trucking companies, reduced advertising costs and elimination of excess
container capacity. As a result of these initiatives, NPR's EBITDA increased
from $8.2 million for the year ended January 5, 1997 to $13.1 million for the
period beginning January 6, 1997 and ended November 20, 1997.
The Company believes numerous benefits will result from integration of the
operations of Holt and NPR, including cost savings and new revenue
opportunities. Immediately upon consummation of the Acquisition, the Company
relocated NPR's northeastern port of call from Elizabeth, New Jersey to the
Packer Avenue Facility. The Company believes that it has already realized cost
savings since the Acquisition and that additional cost savings of approximately
$14.0 million would have been realized during 1997 if the Acquisition had
occurred at the beginning of the year rather than in November 1997. The
Acquisition also provides opportunities for the Company to cross-market its
expanded services to Holt's and NPR's respective customer bases. The Company
believes that these expanded services create new revenue opportunities both in
its existing markets and through expansion into new markets.
OPERATING STRENGTHS
The Company's objective is to maintain and enhance its position as a
leading provider of integrated cargo transportation and logistics management
services, and to expand its service offerings through controlled internal
growth. The Company intends to achieve its objective by capitalizing on the
following operating strengths:
MARKET LEADERSHIP
Holt and NPR are leaders in their respective businesses and the Company
believes that each has significant opportunities to continue to enhance its
market position. Over its 70-year history, Holt has established itself as a
market leader by pursuing a niche-market strategy that focuses on certain
segments of the cargo handling industry. For example, the Holt Facilities
provide the largest amount of refrigerated warehouse space of any marine
terminal operator in the United States, handling approximately 40% of all frozen
beef imported by ship and a substantial portion of the fruit imported by ship to
the East Coast. The Holt Facilities became leaders in the handling of
refrigerated cargo as a result of Holt's investment in extensive refrigerated
warehousing facilities and development of expertise in the optimal methods of
handling such cargo. NPR also attained a leading position by implementing a
successful operational turnaround since the Privatization which has resulted in
an increase in its market share. During 1997, NPR ranked first overall, having
transported approximately 31.8% of the fully containerized cargo carried between
the United States and Puerto Rico. Further improvements in NPR's market position
are expected both from continued emphasis on elements of the turnaround plan and
entry into new market segments. NPR also is exploring alternatives with respect
to entering the 53-foot container segment of its market. This "big box" segment,
which the Company believes has attractive growth prospects, currently
constitutes approximately 11.0% of the container
60
<PAGE>
market between the United States and Puerto Rico. See "-- NPR -- Overview of
Operations" and "Risk Factors -- Growth Strategies."
LONG-TERM COMPETITIVE ADVANTAGES
The Company possesses certain long-term competitive advantages to help
sustain its leading market positions. Holt's competitive advantages include the
following: (i) control of scarce waterfront property through its ownership of
the Gloucester Facility and its long-term lease of the Packer Avenue Facility;
(ii) availability of extensive warehouse space, especially refrigerated
warehouse space; (iii) efficient operations derived from years of experience and
expertise; and (iv) superior customer service driven primarily by advanced
capabilities in logistics and management information systems, such as the CTS
cargo tracking system offered to customers at the Holt Facilities. NPR's
competitive advantages include (i) the quality of its service, including its
high-speed vessel service and its efficient routing system; (ii) long-term
customer relationships; (iii) control of approximately 60% of the available
waterfront container terminal facilities at Puerto Nuevo, San Juan, the largest
container port in Puerto Rico which allows for the growth of the Company's
third-party stevedoring business; and (iv) the requirement that only vessels
meeting the requirements of the Jones Act be used in the domestic trade (i.e.,
generally, the ships must be United States built, owned and crewed). All of
NPR's ships meet such requirements, and the limited availability of such vessels
in the marketplace creates a competitive advantage for NPR.
HIGH QUALITY, VALUE-ADDED SERVICES
The Company provides high quality, value-added services to its customers.
CTS offers customers at the Holt Facilities a state-of-the-art bar coding system
to provide up-to-the-minute tracking of cargo that can be accessed by customers
remotely via modem. CTS is expected to be accessible to customers at the Holt
Facilities through the Internet by year-end 1998. Services and facilities
offered at the Holt Facilities are attractive to customers due to (i) the
ability to stevedore, warehouse and transport cargo at the same facility, which
gives customers flexibility and convenience, (ii) the availability of
specialized services, including extensive refrigerated storage space, and (iii)
the efficiency of the operations at the Holt Facilities which provide
reliability and cost efficiency for customers. Holt's stevedoring operations at
the Packer Avenue Facility achieve productivity levels of up to 30 container
lifts per hour and truck turnaround time through its gates of 30 minutes or
less. The Company believes that these productivity measures are superior to
those of other operators in competing ports such as New York and Baltimore. In
addition, in connection with NPR's comprehensive operational turnaround since
the Privatization, NPR has improved the quality and enhanced the value of its
services by, among other things, (i) consolidating its customer service
functions in one location to monitor and maintain consistently high quality
customer service, (ii) enhancing the on-time performance of its high speed
vessel service, and (iii) offering efficient intermodal connections to trucking
and rail carriers.
SIGNIFICANT BENEFITS OF THE ACQUISITION
The Company believes the Acquisition creates significant opportunities to
realize cost savings and capitalize on new revenue opportunities.
o Cost savings. The Company believes the combination of Holt and NPR has
created significant cost saving opportunities, including savings
resulting from the relocation of NPR's northeastern port of call from
Elizabeth, New Jersey to Philadelphia, Pennsylvania and efficiencies to
be realized from improving NPR's stevedoring operations in San Juan. NPR
initiated service on November 20, 1997 to the Packer Avenue Facility. The
Company believes that the lower operating costs resulting from the
relocation have already generated cost savings and that additional cost
savings of approximately $14.0 million would have been realized during
1997 if the Acquisition had occurred at the beginning of the year rather
than in November 1997. In addition, the Company believes that it can
significantly improve the efficiency of NPR's stevedoring operations in
San Juan, by among other things, moving two of
61
<PAGE>
Holt's high-speed cranes to that terminal. These cranes are capable of
lifting larger containers, stacking containers on vessels an additional
tier higher and operating at greater speeds and with less maintenance
than the cranes currently operated by NPR.
o Revenue opportunities. The combination of Holt and NPR has created
significant opportunities for growth in revenues with little additional
capital investment. Foremost among these opportunities is the ability to
cross market Holt's and NPR's services to each other's customer base. The
Company now positions itself as a one-stop solution to its customers'
cargo transportation and handling needs. When CTS is integrated into
NPR's operations, the Company will have the ability to offer this feature
to all customers shipping to and from Puerto Rico, which the Company
believes will give NPR a competitive advantage. The CTS technology will
also enhance the Company's stevedoring business in San Juan, where it
currently handles third-party ships in addition to its own. The
contemplated move in the second quarter of 1988 of two of Holt's
high-speed cranes to San Juan will allow the Company to increase its
third-party stevedoring business, an incrementally profitable element of
the Company's strategic growth plan. Another new revenue opportunity
arises from the recent launch of TNX, which calls Philadelphia, where
Holt is the stevedore and terminal operator for TNX and its liner service
partners in Philadelphia.
The Company intends to expand its services, grow its businesses and
increase its revenues and cash flow primarily through controlled internal growth
that capitalizes on the foregoing operating strengths. In addition, although the
Company is not seeking actively to make acquisitions, the Company may, from time
to time, make opportunistic acquisitions of complementary businesses that the
Company believes will enhance its ability to provide fully integrated and
value-added cargo transportation services to its customers.
HOLT
GENERAL
Holt's predecessor was founded in 1926 by Leo A. Holt, Sr., as a one
man/one truck business, and grew to include warehousing in the 1950s. In 1967,
Holt entered the stevedoring business when it acquired the Gloucester Facility.
From 1967 to 1989, Holt rapidly grew and customized the Gloucester Facility to
include over one million square feet of warehouse space (of which 115,000 square
feet was refrigerated space) and two container cranes. In 1990, to accommodate
planned expansions, Holt began to operate the Packer Avenue Facility, located
directly across the Delaware River from the Gloucester Facility. Holt
consolidated its container operations at this facility in September 1991. The
Packer Avenue Facility is strategically located next to two major interstate
highways and Ameriport, an intermodal facility which services three Class I
railroads including Conrail, CSX and CP Rail. Together, these major interstate
highways and three railroad lines provide an efficient means of land
transportation for the containers and other cargoes loaded and unloaded at the
Packer Avenue Facility. In 1993, Holt began to lease the Gloucester Facility to
Lessee-Operators. From 1994 to 1997, Holt continued to expand and renovate both
the Gloucester Facility and the Packer Avenue Facility. Today, the two
facilities feature an aggregate of 22 warehouses with approximately 2.4 million
square feet of warehouse space, 9 container cranes, approximately 8,000 lineal
feet of river frontage with 18 berths, serviced by a fleet of approximately 150
trucks per day. In 1995, Holt's subsidiary, Murphy Marine, acquired Wilmington
Stevedores, which operates as a contract stevedore at the Wilmington Facility
and provides stevedoring services for a majority of the cargo handled at the
port of Wilmington. During 1997, the Company and the Lessee-Operators loaded
and/or discharged an aggregate of 689 ships and 5.5 million tons of ocean-going
cargo at the Holt Facilities.
OVERVIEW OF OPERATIONS
At the Packer Avenue Facility, Holt offers a variety of cargo services,
including stevedoring (the loading and unloading of ships); warehousing (the
storage of cargo), and inland trucking. At the Gloucester Facility, Holt leases
port facilities to the Lessee-Operators, which provide all stevedoring
62
<PAGE>
and warehousing services. Through these facilities, a customer is able to move
inbound cargo from an arriving ship to its final destination via rail or truck
and outbound cargo from the customer's location to its final destination via
rail, truck or ship. When a ship docks at the Gloucester Facility or the Packer
Avenue Facility, Holt, or in the case of the Gloucester Facility, the
Lessee-Operators, provide services to (i) unload cargo from the ship, (ii) move
cargo into a warehouse, (iii) store cargo in refrigerated or dry warehouses,
(iv) load cargo onto another ship, or onto a truck or train for transportation
to its final destination, and (v) transport cargo on an owned or leased truck.
At the Wilmington Facility, Holt provides stevedoring services only.
STEVEDORING
A stevedore contracts with an owner of or an agent for a ship for the
purpose of loading or unloading the ship's cargo. A stevedore employs
longshoremen to load and unload cargoes to or from barges or oceangoing vessels.
In addition to these traditional stevedoring services, Holt and the Lessee-
Operators provide value-added services such as the supervision, equipment and
machinery necessary for conducting cargo handling operations at terminals, and
typically provide most of the portside services the shipping lines require.
These portside services include vessel berthing and line handling, preparing of
cargo stowage plans, documenting cargo and providing other data processing
services, weighing cargoes, providing for security for the cargo, assisting
government agencies such as the United States Customs Service and the Department
of Agriculture, and receiving and delivering the cargo at and from the marine
terminal. Additional services for containerized cargo include parking, storing
and maintaining inventory of containers and chassis, moving containers
throughout the terminal, maintaining and repairing containers and chassis, and
stuffing (loading individual containers) and stripping (unloading individual
containers) cargo.
The principal types of cargo that are handled at the Holt Facilities are as
follows:
o Containerized Cargo. Containerized cargo comprised approximately 43% of
aggregate tonnage handled by Holt and the Lessee-Operators at the Holt
Facilities during 1997. A container is a standardized metal box capable
of carrying up to 32 tons of cargo and is conducive to intermodal
handling (shipment by rail, truck and ship). Containers can hold a wide
variety of cargo from computers to food stuffs. Containers are unloaded
by shore-cranes with a specially designed spreader lifting mechanism and
then moved to a storage or marshaling area by straddle carriers, large
forklifts or top loaders. Alternatively, the container may be placed
directly on a wheeled chassis and then moved by a truck operator to the
storage or marshaling area.
o Breakbulk or Unitized Cargo. Breakbulk cargo, sometimes referred to as
unitized cargo, comprised approximately 40% of aggregate tonnage handled
by Holt and the Lessee-Operators at the Holt Facilities during 1997.
Breakbulk cargo is typically boxed, bagged, or palletized and utilizes
equipment (shore-based cranes, forklifts, etc.) owned or leased by the
stevedore. Breakbulk ships also typically have on-board booms or cranes
(one per hatch) which may be utilized to access the hold. Fruit, steel
and wood constitute the majority of breakbulk cargo handled at the Holt
Facilities.
o Other Cargo. Two other types of cargo handled by Holt are bulk and
roll-on/roll-off cargo. Bulk cargoes typically are not in any containers,
and such cargo can be either dry (such as grain, fertilizer and iron ore)
or wet (such as petroleum products, chemicals and liquid food products).
Roll-on/roll-off cargoes (such as automobiles, trucks and farm equipment)
are driven under their own power on board specialized vessels. These
other cargoes comprised approximately 14% of aggregate tonnage handled by
Holt and the Lessee-Operators at the Holt Facilities during 1997.
63
<PAGE>
WAREHOUSING
Holt and the Lessee-Operators operate 22 warehouses with approximately 2.4
million square feet of warehouse space, which includes approximately 1.1 million
square feet of refrigerated warehouse space, representing the most refrigerated
warehouse space of any marine terminal operation in the United States. The
warehousing facilities operated by Holt and the Lessee-Operators at the Packer
Avenue Facility and the Gloucester Facility provide customers with additional
services which the Company believes create a substantial competitive advantage.
A shipper directing cargo to one of these facilities, if it so desires, can have
the vessel unloaded, the containers (in the case of containerized cargo)
unstuffed and the cargo stored until it is ready to be delivered to its final
destination. At that point, the cargo can be shipped to its final destination by
Holt or the Lessee-Operators by rail, motor freight line or Holt's own fleet of
trucks.
The utilization of CTS makes the warehousing capabilities at the Packer
Avenue and Gloucester Facilities more efficient and effective. CTS enables Holt,
the Lessee-Operators and the shipper to track specific cargo from the ship to
the warehouse and beyond. This system is especially effective with breakbulk
cargo, such as pallets of fruit, which commonly pass through these facilities.
See "-- Management Information Systems and Technology."
INLAND TRANSPORTATION
Holt's own fleet of 30 tractors and 100 trailers, augmented by
approximately 150 owner-operators, transport truckload freight between the Holt
Facilities and inland points in the United States. Holt maintains a centralized
dispatch and customer service operation located at the Packer Avenue Facility to
schedule pickup and delivery of customer freight. The operations center features
a fully integrated computerized dispatch and customer service network. Customer
service representatives solicit and accept freight, quote freight rates and
serve as the primary contact with customers. Holt intends to utilize the
flexibility of adding and removing owner-operators from its driver work force to
address driver and equipment needs in the future. Owner-operators receive a flat
rate per trip to cover equipment costs, fuel and maintenance.
FACILITY LEASING
Substantially all of the Gloucester Facility is leased to Lessee-Operators
who in turn provide services to their customers. The Lessee-Operators include
container and breakbulk stevedores, warehouse service companies, equipment
rental companies, fruit importers and service companies and a home products
manufacturing company. The Company also provides courtesy offices to the United
States Customs Service and the United States Department of Agriculture. Due to
the size and quality of the Gloucester Facility and the scarce availability of
suitable port facilities in the Philadelphia area, the Company believes that it
has entered into its leases on favorable terms and that any renewals and/or new
contracts could be entered into on substantially similar terms. See "-- Overview
of Port Facilities -- The Gloucester Facility."
OVERVIEW OF PORT FACILITIES
Holt's marine terminal operations are conducted at the Holt Facilities, all
of which are located on the Delaware River, a key waterway for commerce on the
East Coast of the United States. Holt's port operations along the Delaware River
are centrally located within the largest consumption market in the United
States. Same-day delivery can be achieved within a 250 mile radius, which
includes points as far west as Pittsburgh, Pennsylvania, as far north as
Syracuse, New York, and as far south as Norfolk, Virginia. This access is
extremely important to perishable goods importers who look to rush their product
to market in fresh condition. Shippers of non-perishable goods also find the
Holt Facilities attractive because of their accessibility to the United States
interstate highway system and to major railroads. For example, the Packer Avenue
Facility has direct access to three major Class I railroads (Conrail, CSX and CP
Rail), which makes rail shipment cost effective to shippers throughout North
America, including Toronto and Montreal, Canada. The Company believes the Packer
Avenue Facility is the only marine terminal facility in the country that has
three Class I railroads servicing it, which provides Holt with a major
competitive advantage.
64
<PAGE>
Below is a description of each of the Holt Facilities:
THE GLOUCESTER FACILITY
The Gloucester Facility, which is owned by Holt, consists of approximately
150 acres and features approximately 4,200 lineal feet of deep water frontage,
18 warehouses with approximately one million square feet of dry space,
approximately one million square feet of refrigerated space and two container
cranes. The refrigerated warehouses are located directly adjacent to five deep
water berths and provide for the quick and efficient unloading of refrigerated
cargo directly from vessels to the warehouse. There are also approximately 60
acres of open ground suitable for storing containers, chassis and break-bulk
cargoes which do not need to be stored indoors. The Gloucester Facility has
direct access to rail lines connected to Conrail's South Jersey Line rail yard
and is also in close proximity to major interstate highways, facilitating the
movement of cargoes to and from the Gloucester Facility. Substantially all of
the Gloucester Facility is leased to Lessee-Operators who in turn provide
service to their customers.
The majority of the Lessee-Operators either conduct stevedoring operations
for containerized cargoes and for breakbulk cargo such as steel, wood, and fruit
products or provide long term and temporary warehouse storage at the Gloucester
Facility. Typically, the Lessee-Operators enter into leases, which range in term
from one to five years, for each building or combination of buildings as
necessary to accommodate their business needs. Leases currently in effect
contain expiration dates ranging from 1998 to 2001. Certain of the leases are
terminable by either party at any time upon 90 days prior written notice. In
addition to a fixed lease charge, certain of the Lessee-Operators are required
to pay a variable charge based on the tonnage of cargo or number of containers
moved through the Gloucester Facility by the applicable Lessee-Operators.
Certain of the other Lessee-Operators do not provide stevedoring or
warehousing services. For example, one of the Lessee-Operators at the Gloucester
Facility performs maintenance repair services for forklifts, tractors, chassis,
containers and other types of material handling equipment under a year-to-year
lease. Another Lessee-Operator manufactures wood products for the home building
industry. This manufacturer leases three buildings totaling approximately
200,000 square feet under a lease expiring in 2001. Certain fruit shipping
customers which utilize the Gloucester Facility also rent office space on a
short-term basis from the Company during the fruit import season. The Company
also provides courtesy offices to the United States Department of Agriculture
and United States Customs Service at the Gloucester Facility. These agencies
provide necessary services to the customers at the Gloucester Facility.
THE PACKER AVENUE FACILITY
The Packer Avenue Facility, which is owned by an agency of the Commonwealth
of Pennsylvania, is subleased by Holt pursuant to a sublease expiring in 2040,
including all renewal options. The Packer Avenue Facility occupies approximately
110 acres, featuring approximately 3,800 lineal feet of deep water frontage,
three dry warehouses with approximately 278,000 square feet of storage space,
one refrigerated warehouse with approximately 168,000 square feet of storage
space, an approximately 45,000 square foot maintenance and repair facility and
seven container cranes. The Packer Avenue Facility's direct access to three
major Class I railroads (Conrail, CSX and CP Rail) makes rail shipping cost
effective to shippers throughout North America including Toronto and Montreal,
Canada. At the Packer Avenue Facility, Holt provides stevedoring, warehousing
and inland transportation of containerized and other cargoes through its
subsidiary Holt Cargo Systems, Inc. ("Holt Cargo"). Holt Cargo handles weekly
shipments of containerized general commodities as well as unitized steel.
THE WILMINGTON FACILITY
The Wilmington Facility, which is owned by an agency of the State of
Delaware, occupies approximately 80 acres, featuring approximately 2,700 lineal
feet of deep water frontage, four dry warehouses, a bulk orange juice facility,
and two container cranes. The Wilmington Facility is an open terminal which is
available to the Company as well as other stevedoring companies. At the
Wilmington
65
<PAGE>
Facility, Holt provides the services of stevedoring, maintenance and repair, and
intraport trucking through its subsidiaries Murphy Marine and Wilmington
Stevedores. These subsidiaries handle weekly shipments of containerized bananas
for Dole Fresh Fruit Company and Chiquita Brands International, Inc.
Additionally, Wilmington Stevedores unloads seasonal fruit, bulk cargoes,
unitized steel and wood cargoes as well as Volkswagen automobiles. The Company
believes it is the leading contract stevedore in the Wilmington Facility, as it
handled in excess of 95% of the aggregate container volume and approximately 75%
of the aggregate tonnage of cargo handled in the Wilmington Facility during
1997.
CUSTOMERS
Holt's wide range of services coupled with its willingness to anticipate
customer needs and develop services and facilities to accommodate those needs,
has helped Holt to maintain and expand its customer base and develop strong,
long-term customer relationships. In 1997, Holt's top 15 customers accounted for
$41.4 million, or 48.8%, of total revenues. Holt estimates that it has provided
these top 15 customers with services for between two and 25 years. No customer
accounted for more than 10% of Holt's total revenue for the years ended December
31, 1995, 1996 and 1997, other than Columbus Line, Inc., which accounted for
11.8%, 10.5% and 10.5% of such revenue during such respective periods. Holt
obtains new stevedoring business by negotiating liner service contracts with
shippers (importers and exporters of goods) or attracting spot-market vessels.
Holt typically enters into one to five year contracts with its customers,
with cancellation clauses varying from 30 to 180 days. These contracts also
typically contain provisions with respect to the specific services to be
provided, the volume of and pricing for such services and minimum productivity
levels to be achieved by the Company.
MANAGEMENT INFORMATION SYSTEMS AND TECHNOLOGY
Holt and the Lessee-Operators utilize automated information systems,
including CTS, which facilitate the movement of cargo to and from the Holt
Facilities and increase the efficiency of the operations at those facilities,
through contracts with SLS. This capability helps differentiate the Holt
Facilities from their competitors with less advanced technology. CTS is owned by
SLS and made available to the Company. See "Risk Factors -- Related Entity
Transactions" and "Certain Transactions."
CTS utilizes a special bar-coding technology which provides customers with
an innovative tracking system for their cargo. The system is especially
effective when the cargo is unitized or characterized by contents of different
weights, moisture content, or other unique characteristics. The system utilizes
bar-code technology and a radio frequency environment linked directly to a
computer. The entire logistic process for cargo, beginning with ship
discharging, then sorting and segregation, and eventually all movements of the
cargo to transit sheds, warehouses or trucks, is captured in real time and
reported to the various cargo receivers immediately. The Company believes that
none of its competitors can provide this level of detail regarding the location
of specific cargo.
CTS allows Holt and the Lessee-Operators to sort cargo by customer type,
grade and destination. Prior to shipment each pallet of cargo is assigned a bar
code on board the vessel. While the cargo is in transit, CTS receives the
vessel's hold layout and location of specific goods, making it easier to
implement an efficient stevedoring plan. Upon arrival, forklift operators scan
these bar codes to determine where the pallets should be stored in the
warehouse. CTS not only allows Holt and the Lessee-Operators to expedite the
stevedoring process but also to optimize the allocation of warehouse space, thus
reducing labor and storage costs. For the customer, CTS provides a process of
pre-sorting inventory. Thus, when trucks arrive for cargo pick-up, the loading
and delivery processes are streamlined, thereby reducing costs.
In addition, a state-of-the-art container computer system is utilized to
control container cargo and equipment movements throughout the Holt Facilities.
The main components of this system include: computerized gate and yard
operations, usage of radio frequency computer terminals to track containers and
chassis movements, on-line inventory and activity reporting to customers, vessel
planning and stowage linked to gate and yard movements for containers, use of
the latest electronic data interchange technology to exchange shipping manifest
and information regarding container
66
<PAGE>
movement, booking, and stowage plans with the container lines, and a direct link
to the United States Customs Automated Manifest System to facilitate cargo
releases. Holt intends to introduce the container computer system at NPR's port
in San Juan, where currently there is no similar system in place.
SALES AND MARKETING
Holt's sales and marketing efforts address customer desires and employ a
great deal of personal contact. Holt's sales and marketing personnel convey the
Company's ability and desire to provide cost effective, high quality cargo
handling and transport services. Holt's sales and marketing team is supplemented
by marketing services provided by SLS. See "Certain Transactions." Holt has
always provided significant resources for domestic and foreign travel in order
to bring its services, facilities and family ethics direct to the customer.
Holt focuses on developing long term relationships with customers in
certain product niches including perishable products, wood products, steel
products and containerized cargoes by providing specialized services. For
example, each of the warehouses that the Company uses to store frozen imported
meat has an integrated USDA Meat Inspection Department inspection room and
resident inspector. In addition, the Company actively participates in trade
organizations of its niche customers' industries, including the Produce
Marketing Association of America, the International Hardwood Producers
Association, the Meat Importers Council of America, the International
Refrigerated Warehouse Association and the National Industrial Transportation
League.
COMPETITION
Holt competes in two separate arenas: (i) inter-port competition and (ii)
intra-port competition. Holt believes the United States ports of Boston, New
York (including Northern New Jersey), Baltimore and Norfolk as well as the
Canadian ports of Saint John and Halifax are Holt's main inter-port competitors.
Inter-port competition is based upon the following factors: (i) price; (ii)
destination of the cargo; (iii) access to other modes of transportation such as
rail and trucks; (iv) geographic location; (v) facilities to accommodate
specific types of cargoes; (vi) quality of service; and (vii) quality of labor
relations. In Wilmington, Holt competes against several stevedoring companies.
In the Philadelphia port, the Gloucester and Packer Avenue Facilities compete
against governmental and privately owned facilities. Intra-port competition is
based upon the following factors: (i) adequacy of terminal facilities; (ii)
quality of service; (iii) presence of value-added services; and (iv) price.
The market for ocean-going cargo handling services is very competitive but
Holt believes it maintains several competitive advantages, including the
following: (i) ownership/long term lease of a substantial portion of the
available waterfront property in the Philadelphia port; (ii) long-standing
customer relationships; and (iii) the largest refrigerated warehousing
capabilities of any marine terminal in the United States.
EMPLOYEE AND LABOR RELATIONS
The stevedoring and terminal operator industries are dominated by two large
unions (the International Longshore Worker's Union ("ILWU") on the west coast,
and the ILA in the remaining United States ports). Master labor agreements are
negotiated by the unions not only with the stevedores and marine terminal
operators, but also with steamship lines and steamship agencies. In recent
years, management has negotiated for the introduction of new technology and the
modification of work rules to improve the efficiency of operations.
Holt Cargo has relationships with four unions: (i) the ILA with a contract
expiring September 30, 2001; (ii) the International Association of Machinists
(the "IAM" or the "Machinists") with a contract expiring September 30, 2000;
(iii) the Teamsters with contracts expiring July 30, 1998 and December 31, 1997
(currently under negotiation to extend the term for at least one year); and (iv)
the Security Officers and Police Guard Union with a contract expiring January
31, 2000. At the Packer Avenue Facility, Holt Cargo employs the ILA for its
stevedoring operations and the IAM for maintenance and repair operations. At the
Gloucester Facility, the Lessee-Operators employ Teamsters for unloading the
ships and warehousing the cargo. Holt presently believes that Holt Cargo and the
67
<PAGE>
Lessee-Operators have satisfactory relations with their unions, notwithstanding
two work stoppages by the ILA which occurred in 1993 and 1996, respectively.
The first work stoppage resulted after Holt Cargo terminated its lease at
the Gloucester Facility and Holt Hauling and Warehousing System, Inc. ("Holt
Hauling") commenced leasing the facility to the Lessee-Operators, which have
contracts with unions other than the ILA. The ILA claimed this to be in
violation of the collective bargaining agreement between the ILA and Holt Cargo
("CBA") and staged an illegal work stoppage. The resulting arbitrations were
resolved in favor of Holt Cargo, as Holt Hauling was found to have no
obligations under the CBA.
Also in 1993, Holt Cargo withdrew from the Philadelphia Marine Trade
Association ("PMTA"), the local multi-employer collective bargaining unit that
has historically negotiated and signed ILA contracts on behalf of Holt Cargo and
other operators in the Port of Philadelphia. In 1993, while Holt Cargo opted out
of the PMTA, it continued to operate under the terms of the existing CBA in
effect at that time and scheduled to expire on September 30, 1994. At the
expiration of the CBA in September of 1994, Holt Cargo negotiated its own
contract directly with the ILA. When Holt Cargo's contract with the ILA expired
in 1996 (concurrently with the PMTA contract), Holt Cargo attempted to again
negotiate its own contract directly with the ILA. This strategy precipitated the
second incident, a 23-day work stoppage by ILA workers at the Packer Avenue
Facility. During the work stoppage, ships were unloaded and cargo was delivered
by management. The work stoppage was resolved when Holt Cargo rejoined the PMTA
and agreed to be bound by the five-year contract concluded by the PMTA that is
in effect until 2001.
In addition, Murphy Marine and Wilmington Stevedores are members of the
PMTA and are covered by the PMTA contract with the ILA.
Holt's employee workforce engages in (i) stevedoring, (ii) trucking, (iii)
warehousing, (iv) mechanical repairs to material handling equipment and (v)
routine maintenance and repair of the Gloucester Facility and the Packer Avenue
Facility. Stevedoring operations are performed by ILA union longshoremen and
non-union supervisory personnel. Longshoremen are hired on an as-needed basis,
and depending upon the number of vessels being loaded or unloaded at any time,
Holt may employ up to approximately 300 longshoremen.
PROPERTIES
GLOUCESTER FACILITY
Holt is headquartered at its Gloucester Facility in Gloucester City, New
Jersey. The Gloucester Facility is comprised of approximately 150 acres of land
and features approximately 4,200 lineal feet of deep water frontage, 18
warehouses with approximately one million square feet of dry space and
approximately one million square feet of refrigerated space, and two container
cranes. The two container cranes facilitate the loading and unloading of vessels
and have the capability of traveling along two thousand feet of crane rail
directly at the wharf. The majority of the warehouses have been constructed
within the last five to seven years. Several of the warehouses are insulated and
have heating capability. Overhead cranes with lifting capability of up to 25
tons are located within several of these dry warehouses.
In order to accommodate customers using the Gloucester Facility, the
facility includes a two-story office building comprising approximately 10,000
square feet and a maintenance and repair shop comprising approximately 41,000
square feet where repairs are made to customers' chassis and containers as well
as the material handling equipment used by the Lessee-Operators. The Gloucester
Facility is located within one mile of a major interstate highway and is
directly across from the Packer Avenue Facility on the Delaware River.
PACKER AVENUE FACILITY
The Packer Avenue Facility, located in Philadelphia, Pennsylvania, is
leased by AHI from the Philadelphia Regional Port Authority (the "PRPA")
pursuant to a lease (the "PRPA Lease") and is subleased by Holt from AHI under a
long term sublease (the "Sublease") which commenced in 1991
68
<PAGE>
and expires in 2000. The terms of the PRPA Lease and the Sublease are renewable
until 2040 through four 10-year renewal options, the last two of which are
exercisable provided that Holt completes certain required capital improvements.
See "Risk Factors -- Related Entity Transactions" and "Certain Transactions."
The Packer Avenue Facility comprises approximately 110 acres and features
approximately 3,800 lineal feet of deep water frontage, three dry warehouses
with approximately 278,000 square feet of storage space, and one refrigerated
warehouse with approximately 168,000 square feet of storage space. Five cranes
at the Packer Avenue Facility are leased by Holt from AHI, including four cranes
which are leased by AHI from the PRPA under the PRPA Lease. In addition to the
cranes provided to Holt by AHI, Holt leases two other cranes which are also at
the Packer Avenue Facility. The cranes have the capability of traveling up to
2,500 feet along the wharf providing direct shipside loading and unloading. The
Packer Avenue Facility also has approximately 15,000 square feet of office space
to service customers using the facility. The Packer Avenue Facility is located
directly adjacent to Ameriport, an intermodal yard serving three Class I
railroads and within one half mile of major interstate highways.
The rent payable by Holt under the Sublease is equivalent to the rent
payable by AHI under the PRPA Lease plus fifteen percent of that amount and
consists of several components, including base rent, a container pick fee, a
breakbulk cargo fee and certain other fees. Base rent is payable in equal
monthly installments and increases annually provided that the PRPA completes
certain capital improvements at the facility. Holt also pays a fixed monthly
rental for the container crane owned by AHI. A container pick fee ranging from
$1 to $10 per container is to be paid by Holt upon completion by the PRPA of
certain capital improvements at the Packer Avenue Facility with respect to all
containers loaded or unloaded onto or off any vessels at the Packer Avenue
Facility in excess of 89,999 containers in any one year. Holt has not paid any
container pick fees as of this date as the capital improvements have not been
completed and the threshold level of container picks has not been met. Once the
PRPA has completed these capital improvements, Holt has guaranteed that it will
handle 225,000 container picks at the Packer Avenue Facility during each
consecutive 36-month period. In the event Holt does not handle the required
number of picks, then Holt is obligated to pay $10 per container multiplied by
the difference between 225,000 and the number of containers actually handled. A
"breakbulk cargo fee" is also payable by Holt at a rate of $1.50 per ton of
temperature controlled breakbulk cargo handled at the Packer Avenue Facility,
plus $0.20 per ton or $0.70 per ton, depending upon the type of cargo subject to
certain minimum fees. Holt has agreed to be responsible for certain obligations
such as the requirement to (i) carry general liability and other insurance
applicable to similar companies in the industry, (ii) repair and maintain
certain components of the Packer Avenue Facility such as the fire protection
system, water, sewer and electrical utilities, but excluding structural
maintenance and repair to the buildings and the wharf unless damaged by Holt,
(iii) conduct its business in accordance with all federal, state and local
environmental laws, (iv) not place cargo loads in excess of those permitted at
the Packer Avenue Facility, (v) maintain and repair the cranes located at the
Packer Avenue Facility, (vi) provide access to the Packer Avenue Facility for
the PRPA and its agents, contractors and employees, (vii) pay all utility costs,
(viii) pay any taxes, levies or assessments in connection with the Company's
activities at the Facility, and (ix) not transfer its interest in the Sublease
to any other party except as permitted and with notice to the PRPA.
In the event that AHI or the Company fails to pay rent or perform its other
obligations as required under the PRPA Lease or the Sublease, the PRPA and AHI,
respectively, have the right to exercise remedies typically available to a
commercial landlord including the right to terminate the PRPA Lease or the
Sublease and to confess a judgment against AHI or Holt to recover possession of
the Packer Avenue Facility. The PRPA Lease and the Sublease provide that the
PRPA and AHI can only exercise remedies provided that AHI or Holt, respectively,
has been given notice and time to cure the default, except that no notice or
cure period applies after the third monetary default in any twelve-month period.
The Company and AHI are engaged in litigation with the PRPA relating to the PRPA
Lease. See "-- Legal Proceedings."
69
<PAGE>
WILMINGTON FACILITY
The Wilmington Facility is an open terminal, owned by an agency of the
State of Delaware, which is available to the Company as well as other
stevedoring companies operating at that facility. The Wilmington Facility
occupies approximately 80 acres, featuring approximately 2,700 lineal feet of
deep water frontage, four dry warehouses, a bulk orange juice facility, and two
container cranes.
GOVERNMENT REGULATION
Holt is subject to regulation by various federal and state agencies,
including the Surface Transportation Board, the Federal Maritime Commission, the
United States Coast Guard and various similar federal and state agencies. These
regulatory authorities have broad powers, generally governing activities such as
authority to engage in motor carrier operations, operational safety, tariff
filings of freight rates, and financial reporting. In addition, the Company's
drivers, including owner-operators, also must comply with the safety and fitness
regulations promulgated by the Department of Transportation, including those
relating to drug testing and hours of service.
ENVIRONMENTAL MATTERS
Holt's operations are also subject to various federal, state and local
environmental laws and regulations, promulgated by the Environmental Protection
Agency and similar state regulatory agencies. These regulations govern the
management of hazardous wastes, discharge of pollutants into the air, surface
and underground waters, and the disposal of certain substances. The Company is
not aware of any material water or land fuel spills or hazardous substance
contamination on its properties and believes that its operations are in material
compliance with current environmental laws and regulations.
Portions of the Gloucester Facility, including the Armstrong Building which
houses Holt's corporate offices, are considered to be within a broad area which
was designated by the EPA for investigation and possible remediation under the
federal Comprehensive Environmental Response, Compensation and Liability Act
("CERCLA"). This area, which covers over 65 properties in the Camden/Gloucester
City area, was listed on EPA's National Priorities List ("NPL") on June 17,
1996, thereby invoking eligibility for investigation and remediation utilizing
the federal "Superfund." Superfund activity is necessitated by the discovery, in
1981, that the Camden/Gloucester area contains levels of gamma radiation and
radon/thorium decay products attributable to pre-1940 manufacturing activities
of the former Wellsbach Company. The current Armstrong Building was part of the
former manufacturing facility. Other than the small portion of the building
occupied by office space, the building is primarily empty and unused. Future
plans contemplate demolition of the building. In order to assess the need for
special demolition requirements in light of ongoing EPA activity, in September
1997 Holt commenced a Remedial Investigation/Feasibility Study ("RI/FS"),
addressing the Armstrong Building pursuant to an Administrative Consent Order
with the EPA. The EPA continues to sample, independently, various outside soil
areas, in addition to its ongoing activities in other portions of the NPL site
area. Pending completion of the RI/FS, Holt has performed recent sampling and
preliminary cost estimate analyses which indicate that it could cost up to
approximately $210,000 to address contaminated areas in conjunction with
building demolition.
LEGAL PROCEEDINGS
Holt Cargo, Holt Hauling and AHI (collectively, the "Plaintiffs") commenced
an action in December 1994 in the United States District Court for the Eastern
District of Pennsylvania against the Delaware River Port Authority ("DRPA"), the
Philadelphia Regional Port Authority ("PRPA") and the Port of Philadelphia and
Camden ("PPC") (collectively, the "Defendants"). Certain counts alleging
violations of the Sherman Act and Clayton Act (the "Antitrust Counts") and
breach of the PRPA Lease by the PRPA (the "Breach Counts") filed in the initial
complaint were voluntarily withdrawn by the Plaintiffs after a hearing on the
Defendants' motion to dismiss was conducted by the Court. However the court did
maintain jurisdiction over those counts in the complaint wherein the Plaintiffs
allege that the Defendants along with other non-defendant co-conspirators,
acting under color of state law committed predatory acts under a conspiracy
designed to injure, harass, and appropriate
70
<PAGE>
the property of the Plaintiffs. The Plaintiffs are seeking to enjoin this
conduct and damages in an unspecified amount for the Defendants' conduct which
constitutes a violation of the Plaintiffs' substantive due process, equal
protection and procedural due process rights under 42 U.S.C. Section 1983.
Specifically, the Plaintiffs allege that in 1994, after the execution of
the PRPA Lease, Pennsylvania and New Jersey agreed to unify their ports in an
effort to eliminate intra-port competition and to enhance their ability to
compete against other ports and adopted legislation to effectuate this
agreement. The Plaintiffs allege that the DRPA produced a "Strategic Business
Plan" in conjunction with the PRPA, South Jersey Port Corporation, and the PPC
which provided for a unified government agency to take over the entire Port
District by waiting for the existing leases of the PRPA to expire, buying out
the existing leases, or renegotiating out of the leases, or a combination which
formed the basis of a scheme to attempt to terminate the PRPA Lease. The PRPA
Lease does not allow for condemnation and therefore prevents the government port
agencies from implementing their Plan to operate all of the government-owned
facilities in the port as part of the unification process. According to the
Plaintiffs, this scheme was contrary to the underlying express principle of the
unifying legislation and related compact, which was designed to encourage
private enterprise. The Plaintiffs further allege that, in an effort to control
the entire Port District, the Defendants conspired to drive Holt Cargo and AHI
out of the Packer Avenue Facility and other holdings, and to remove Holt Cargo,
AHI, and Holt Hauling from their position within the Port District so government
agencies could control the port district.
The Defendants filed a response to the Complaint and the PRPA asserted a
counterclaim alleging that the Plaintiffs breached their obligations under the
PRPA Lease by operating the Packer Avenue Facility in a manner intended to
benefit the Plaintiffs' other facilities, refusing to operate the Packer Avenue
Facility so as to maximize its use, failing to market the Packer Avenue Facility
in a first class manner and soliciting container business for the Gloucester
Facility to the detriment of the Packer Avenue Facility. PRPA seeks compensatory
damages and a ruling enjoining the Plaintiffs from continuing their alleged
detrimental conduct.
On March 23, 1998, the Court issued a Memorandum and Order granting the
Defendants' Motions for Summary Judgment and dismissing PRPA's counterclaim. The
Plaintiffs have filed their Notice of Appeal with the Court.
As a result of the withdrawal of the Antitrust Counts and the Breach Counts
in the federal action, the Plaintiffs filed a Complaint on May 31, 1996 with the
Federal Maritime Commission against Defendants and Pasha Auto Warehousing Inc.
alleging violations of Section 10 of the Shipping Act of 1984 and Sections 16
and 17 of the Shipping Act of 1916 generally by engaging in unjust and
unreasonable practices, discrimination and unreasonable refusals to deal with
and giving unreasonable preferences to others to the detriment of the Plaintiffs
and breaching the PRPA Lease.
The Plaintiffs have requested the Federal Maritime Commission to issue an
order commanding the Defendants to cease and desist from the aforesaid
violations, to establish and put in force such practices as the Federal Maritime
Commission determines to be reasonable and to pay damages to the Plaintiffs by
way of reparation. Discovery in this matter is ongoing and in fact is being
conducted in conjunction with the action pending in federal court as described
above.
71
<PAGE>
NPR
GENERAL
NPR, operating under the trade name "Navieras," provides containerized
cargo service between the United States, Puerto Rico, the Caribbean and through
the TNX joint venture, South America. Based on the total volume of fully
containerized cargo carried between the United States and Puerto Rico during the
year ended December 31, 1997, NPR ranked first overall, having transported
approximately 31.8% of such cargo. At the Puerto Nuevo San Juan facility, NPR
controls approximately 60% of the available waterfront container terminal
facilities which provides significant operating efficiencies and competitive
advantages.
NPR's predecessor was formed in 1974 by the Puerto Rico Government in
recognition of the vital importance of maritime transportation to the economic
development of Puerto Rico. When NPR's predecessor commenced operations, it had
a virtual monopoly. Over time, however, the development of competition combined
with the bureaucratic management style associated with a government controlled
entity had a negative impact on its competitive position and operating
performance. In November 1992, the Puerto Rico Government began to evaluate
publicly the merits of liquidating or divesting its shipping operations.
Uncertainty surrounding the Puerto Rico Government's intentions and the
possibility of liquidation provided competitors with the opportunity to increase
market shares and resulted in significant deterioration in financial
performance. In March 1995, pursuant to the Privatization, an investment group
(including members of NPR's current management) purchased NPR's business. Since
the Privatization, NPR's management has implemented various programs to
significantly improve NPR's performance.
OVERVIEW OF OPERATIONS
NPR operates four ships which carry primarily containerized cargo in
standard size containers, employing 20-foot, 40-foot, 40HC, refrigerated and
45-foot marine containers. For ocean-going transportation, these containers can
be placed both inside the cargo hold and on the deck of a container ship, and
for land transportation are placed on chassis and pulled by conventional
tractors, or on rail cars in single or double stacks. NPR offers twice-weekly
service between San Juan, Puerto Rico and the United States via the ports of
Jacksonville, Florida and Philadelphia, Pennsylvania and weekly service between
San Juan and Miami, Florida. In April 1998, NPR added Miami as a new port of
call in order to increase market penetration in the South Florida market and
reduce intermodal transportation costs. These three ports of entry provide
efficient gateways to major commercial areas throughout the United States and
Canada. In connection with the Acquisition, NPR now calls at the Packer Avenue
Facility in Philadelphia instead of its previous port of call of Elizabeth, New
Jersey, in order to capitalize on several areas of expected cost savings.
Through charter arrangements, NPR provides service three times a week between
San Juan and the Dominican Republic and also, through a slot charter
arrangement, services the Caribbean island of Trinidad and the United States
Virgin Islands. Through the TNX joint venture, NPR recently commenced service to
South America.
In addition, NPR has developed and enhanced a sophisticated, efficient
intermodal network which permits NPR to offer daily in-land transportation to
and from the ports of Jacksonville, Miami and Philadelphia via high speed rail
and truck connections throughout the United States. Furthermore, as an operator
of ocean-going vessels, which have sailing times that are generally more
predictable than barges, NPR provides its customers with the convenience of
on-time scheduled departures at all ports served.
72
<PAGE>
NPR owns five vessels, four of which currently are in operation and one of
which is available to be rotated into service to minimize service disruptions
when an operating vessel is in need of maintenance or repairs. All five are
Jones Act vessels. The following table sets forth information regarding the five
ships that NPR currently owns:
<TABLE>
<CAPTION>
NUEVO SAN JUAN CAROLINA GUAYAMA HUMACAO MAYAGUEZ
-------------- -------- ------- ------- --------
<S> <C> <C> <C> <C> <C>
Date Built..................................... 10/70 3/71 6/69 5/68 12/68
Age............................................ 27 yrs. 26 yrs. 28 yrs. 29 yrs. 29 yrs.
Gross tons..................................... 19,444 19,454 19,283 19,046 19,203
Net tons....................................... 13,939 13,948 13,806 13,544 13,726
Displacement tons.............................. 33,400 33,400 32,565 32,565 32,565
Twenty-foot equivalent units ("TEUs").......... 1,326 1,330 1,292 1,257 1,292
Refrigerated slots ("Reefers") (1)............. 90 90 90 90 90
Length ("LOA")................................. 704.5' 704.5' 700.5' 700.5' 700.5'
Beam........................................... 90' 90' 90' 90' 90'
Draft.......................................... 35.846' 35.846' 35.846' 32.094' 32.094'
Rated Speed.................................... 22 kts. 22 kts. 22 kts. 22 kts. 22 kts.
Shaft H.P...................................... 27,300 27,300 27,300 27,300 27,300
Crew........................................... 28 28 28 28 28
</TABLE>
- ------------------
(1) Included in TEUs indicated above.
In San Juan, Puerto Rico, NPR leases approximately 60% of the available
waterfront container terminal facilities at Puerto Nuevo through long-term
leases with the Puerto Rico Ports Authority which run through 2018-2021. See "--
Properties". The San Juan port is Puerto Rico's primary port serving Puerto
Rico's 3.7 million residents and businesses. In San Juan, NPR performs its own
stevedoring operations on an approximately 110-acre facility, utilizing three
container cranes, with limited access to another three container cranes that it
shares with a neighboring facility. Due to its space advantage, NPR is able to
offer a fully wheeled operation which keeps the containers on chassis at all
times and allows for immediate pick-up and delivery. Stevedoring services for
NPR's vessels in Jacksonville are performed by third parties, while in
Philadelphia, they are performed by Holt at the Packer Avenue Facility.
Utilizing its vessels, valuable port space in San Juan and over 20,000
containers and truck chassis, NPR provides cargo transportation services for
over 2,500 customers.
Since the Privatization, NPR management has successfully implemented a
number of initiatives to reduce operating expenses. As a result of these
initiatives, NPR's EBITDA increased from $8.2 million for the year ended January
5, 1997 to $13.1 million for the period beginning January 6, 1997 and ended
November 20, 1997. These initiatives included the following:
o Increased Routing Efficiency. At the time of the Privatization,
NPR's ships were calling five different ports in the United States:
Elizabeth, New Jersey; Jacksonville, Florida; Baltimore, Maryland;
Charleston, South Carolina; and New Orleans, Louisiana. After the
Privatizations, the current management team reduced the number of
ports of call in the United States from five to two, and was able to
do so with minimal impact on revenues due to effective use of
in-land transportation, a concept commonly referred to as
intermodalism. In April 1998, NPR added Miami, Florida as a third
port of call in order to increase market penetration in the South
Florida market and reduce intermodal transportation costs. In
addition to the reductions in the ports of call, NPR has implemented
improved vessel deployment, whereby each of its ships alternates
between the San Juan-Jacksonville route and the San Juan-Elizabeth
(now Philadelphia) route. These initiatives have allowed NPR to
reduce the number of operational vessels from five to four,
resulting in reduced vessel expenses combined with increased
capacity utilization while providing the same weekly level of
service to Puerto Rico. The fifth vessel is rotated into service
when one of the other vessels is in need of maintenance or repair,
thereby maintaining continuity of service.
73
<PAGE>
o Closure of port facilities. As a result of the 1995 and 1996
closing of port facilities in Baltimore, Charleston and New Orleans,
NPR eliminated annual rent of approximately $1.3 million. In
addition, the Company closed seven sales and administrative offices
and consolidated customer service operations at one service center
in Tampa, Florida, resulting in annual savings of approximately
$141,000. These initiatives, while reducing costs, have resulted in
more efficient operations and improved customer service.
o Reduction in staff. Subsequent to the Privatization, management
reduced overhead expenses through reductions in office headcount.
The number of employees at NPR was reduced by 228, from 676 to 448,
between the time of the Privatization and December 31, 1997. This
headcount reduction has resulted in annual savings of approximately
$11.7 million.
o Reduced intermodal transportation costs. Due to the substantial
volume of intermodal cargo handled by NPR in the United States, NPR
has derived significant savings by entering into high-volume
contracts with trucking companies and railroads at favorable rates.
NPR has entered into long-term contracts with the railroads which
fixes its rail rates through the middle of 2000.
o Reduced advertising costs. NPR has curtailed advertising expenses
it perceived as ineffective, resulting in a decrease in advertising
expenses from $458,000 in 1995 to $194,000 in 1997.
OVERVIEW OF PORT FACILITIES
Puerto Nuevo terminal in San Juan, Puerto Rico is the hub for all cargo
handled by NPR. Cargo received from and destined to the United States mainland
and the Caribbean islands passes through this facility en route to its final
destination. At Puerto Nuevo, NPR controls 110 acres, or approximately 60% of
the waterfront container terminal facilities available to these cargo
operations. At the terminal, NPR's facilities include approximately 3,300 feet
of deep water berthing area, office space, gate, maintenance and storage
facilities and three cranes. Two of the cranes are under long-term lease and the
one is owned by NPR. The Company intends to move two additional cranes to Puerto
Nuevo during the second quarter of 1998 and will return one of the leased cranes
to the lessor. San Juan is the only deep water port on the favored north coast
of Puerto Rico.
NPR's terminal in Jacksonville, Florida, known as the Blount Island
Terminal, is leased through 2005 and consists of approximately 42 acres. NPR is
entitled to use approximately 5,500 feet of deep water berthing space and has
preferential berthing and use of three cranes on four days of each week. Fees
for dockage, wharfage and cranes are charged on a per load basis. The facility
also includes facilities for maintenance, storage of cargo, office space and a
computerized gate.
In Miami, Florida, NPR's cargo is stevedored by a third-party stevedore.
NPR does not currently operate a terminal in Miami.
TNX JOINT VENTURE
On August 6, 1997, NPR and Transroll announced the formation of the TNX
joint venture, which provides cargo transportation service between numerous
ports in the United States, San Juan and certain ports in South America. The
joint venture was formed in order to capitalize on NPR's extensive experience
and customer relationships in the U.S.-Puerto Rico market and Transroll's over
20 years of experience and customer relationships in the Brazilian and South
American transportation industry. Currently, TNX leases three self-sustaining
container vessels and, together with its wholly-owned subsidiary TNX
Transportes, Ltda. ("Transportes") shares an additional three vessels with
Compenhia Maritima Nacional (Grupo-Libra Nacional) under a Vessel Sharing
Agreement (the "Grupo Agreement") in the 1,000 to 1,500 TEU range. TNX recently
began and currently provides weekly express service between the United States
ports of Philadelphia, Norfolk, Miami, Jacksonville, San
74
<PAGE>
Juan, Freeport and the South American ports of Fortaleza/Vitoria, Buenos Aires,
Rio Grande, Imbituba/Sao Francisco de Sul, Santos and Rio de Janeiro ("Brazil
Trade").
TNX and Transportes have entered into a Vessel Sharing Agreement with
Compagnie Generale Maritime of Paris, France ("CGM") in connection with their
operations in the Brazil Trade. Pursuant to this agreement, during an initial
"slot charter phase," CGM will provide no vessels TNX and Transportes will be
required to provide three vessels, and TNX and Transportes will be required to
charter 25% of their total capacity under the Grupo Agreement to CGM. As early
as July 1, 1998 and as late as December 31, 1998, under a subsequent "vessel
sharing phase," CGM has the option to provide one vessel. If CGM provides a
vessel, then TNX or Transportes will withdraw one vessel. As a result, each
party will assume the costs of its own vessel's operation, and CGM will continue
to have 25% of the total vessel capacity. In addition, TNX and Transportes have
entered into a Slot Charter Agreement with Caribbean General Maritime Ltd. of
St. Lucia ("CAGEMA") pursuant to which TNX and Transportes will be required to
purchase from CAGEMA a minimum of 50 slots per week on vessels in the trade
between certain United States ports and certain ports in the Caribbean, Vera
Cruz, Mexico and Altamira, Mexico.
The common stock of TNX is owned 39.992% by NPR, 50.01% by Transroll and
9.998% by the former shareholders of NPR. The former shareholders of NPR
received their shares of TNX in connection with the Acquisition. See "The
Acquisition and the Refinancings." Such former shareholders have granted an
irrevocable proxy in favor of NPR to vote their shares of TNX, which provides
NPR with voting control of 49.99% of the TNX common stock. In accordance with
the joint venture agreement among the shareholders of TNX, any action to be
taken by the shareholders of TNX requires the affirmative vote of at least 75%
of the outstanding common stock. The Board of Directors of TNX consists of four
members, two of which are nominated by NPR and the other two of which are
nominated by Transroll. Approval of any matter by the Board of Directors of TNX
requires the affirmative vote of a majority of all directors on the Board.
The shareholders of TNX are generally prohibited from selling or otherwise
transferring their TNX shares (the "Offered Shares") to a third party without
first providing the other shareholders a right of first refusal to purchase the
Offered Shares, and a right to sell all of their TNX shares to the proposed
transferee, in each case at the same per share price as the third party is
offering to pay for the Offered Shares. Pursuant to a shareholders agreement
among NPR and the former shareholders of NPR, for a period of 60 days after
November 20, 2001, NPR has the right to purchase all of the TNX shares owned by
such former shareholders of NPR, and such former shareholders have the right to
require NPR to purchase such shares, in each case at the appraised fair market
value of such shares. The Shareholders Agreement also provides "tag-along"
rights to the former shareholders of NPR with respect to any proposed transfer
or series of transfers by NPR of 10% or more of the TNX shares owned by NPR.
Additionally, the Shareholders Agreement provides "drag-along" rights to NPR
with respect to the TNX shares owned by the former shareholders of NPR in
connection with any single arms-length transaction with an unaffiliated entity
pursuant to which NPR proposes to sell all of the TNX shares it owns, provided
that NPR owns at least 50% of the TNX shares it owned on November 20, 1997 at
the time of such proposed transaction.
The shareholders of TNX are also generally prohibited from competing with
TNX with respect to the carriage of cargo between North America, Central America
and the Caribbean Islands, on the one hand, and Brazil, Argentina, Uruguay and
Paraguay, on the other hand.
CUSTOMERS
NPR has a diversified customer base consisting of both United States-based
and Puerto Rico-based shippers of a variety of goods. Typical shipments to
Puerto Rico include furniture, consumer goods, refrigerated and other food
products, toys, new and used cars and apparel. Typical shipments from Puerto
Rico include health products, electronics, shoes and scrap aluminum. The Company
intends to continue NPR's efforts both to increase business with existing
customers and add new customers. NPR's top 15 customers accounted for 28.5% of
total revenues in 1997. No customer
75
<PAGE>
accounted for more than 10% of NPR's total revenues in 1997. NPR maintains a
diversified customer base of over 2,500 companies, including several Fortune 500
companies.
NPR has TVAs or fixed rate contracts covering the majority of its business.
TVAs or fixed rate contracts generally specify service standards and provide
customers with reduced rates in exchange for guaranteed minimum quantities
during a specified time period. A TVA or fixed rate contract typically runs for
a term of at least one year and provides for penalties to shippers in the event
that the terms of the TVA or contract are not met. In 1997, a majority of NPR's
revenues were from customers who were party to one or more TVAs or fixed rate
contracts.
SALES AND MARKETING
NPR's sales and marketing function is led by sales professionals who market
NPR to shippers as a customer-oriented provider of value-priced premium and
dependable service. NPR targets major shippers with high value cargo and high
volume, repetitive shipments. The Company believes that price, speed of service
and reliability are important determinants in marketing its services. The
Company believes that NPR has developed a reputation among shippers in the
United States-Puerto Rico market as a reliable provider of high quality and
responsive service. The reliability of NPR's vessels is particularly important
to its customers who depend on their efficient operation and the effective
management of logistical complexities to deliver cargo in a timely and safe
manner. The Company believes that NPR's commitment to high quality customer
service and support is an important factor in maintaining relationships with
major customers which enables it to market the best available rates as well as
obtain timely information regarding its customers' future vessel requirements.
COMPETITION
NPR currently competes with four carriers moving freight between the United
States and Puerto Rico. The current operators in the Puerto Rico trade are
Sea-Land Services, Inc. ("Sea-Land"), Crowley American Transport, Inc.
("Crowley"), Marine Transportation Services Sea-Barge, Inc. ("Sea-Barge") and
Trailer Bridge, Inc ("Trailer Bridge"). Of these operators, NPR and Sea-Land
operate high-speed container vessels while Crowley, Sea-Barge and Trailer Bridge
operate towed, low-speed barges. Competition is based upon the following
factors: (i) price; (ii) timeliness of delivery; (iii) quality of service; and
(iv) locations of ports within the United States. NPR believes it maintains a
competitive advantage by operating vessels which are faster and more reliable
than barges. There can be no assurance that NPR will be able to compete
successfully against current and future service of competition or that the
current and future competitive pressure faced by NPR will not adversely affect
its profitability or financial performance.
NPR management believes other competitors are unlikely to enter the market
as a result of limited port space in Puerto Rico and the requirement that all
cargo traveling between Puerto Rico and the United States be carried exclusively
by Jones Act vessels. Any new market entrant would need significant financial
and other resources to effectively compete. Furthermore, the U.S.-Puerto Rico
market is dominated by TVAs, creating a barrier to entry for any new market
contract. Nevertheless, NPR faces the risk of price competition from, and
potential capacity expansion by, competitors already in the Puerto Rico market,
some of which are part of larger transportation organizations which possess
greater financial resources than the Company.
Sea-Land and Crowley are currently participants in a subsidy program
administered by MARAD which subsidizes certain of these carriers' vessels
operating in international routes. In order to continue receiving these
subsidies, Sea-Land and Crowley are subject to limitations on the number of
container slots they may offer in the U.S.-Puerto Rico market. To the extent
these carriers elect to continue receiving these subsidies, the Company believes
that NPR will enjoy a competitive advantage, as NPR is not subject to any
MARAD-imposed limitation on the number of container slots it may offer to
customers.
76
<PAGE>
GOVERNMENT REGULATION
The Company's marine operations are conducted in the United States domestic
and foreign trade. A set of federal laws known as the Jones Act requires that
only United States built, owned and crewed vessels move freight in the domestic
trade between ports in the United States, including the noncontiguous areas of
Puerto Rico, Alaska, Hawaii and Guam. These marine operations are subject to
regulation by various federal agencies, including the Surface Transportation
Board, the successor agency to the Interstate Commerce Commission, MARAD and the
United States Coast Guard. The marine operations in the United States foreign
trade are, in addition, subject to regulation by the Federal Maritime
Commission. These regulatory authorities have broad powers governing activities
such as operational safety, tariff filings of freight rates, certain mergers,
consolidations and acquisitions, contraband and financial reporting. Management
believes that its operations are in material compliance with current marine laws
and regulations, but there can be no assurance that current regulatory
requirements will not change. See "Risk Factors -- Potential Loss of Jones Act
Protection."
Pursuant to an agreement between NPR and MARAD, two of NPR's vessels are
deemed to be "qualified agreement vessels" within the meaning of Section 607 of
the United States Merchant Marine Act of 1936, as amended (which pertains to
MARAD's Capital Construction Fund Program). As a result, such vessels are
prohibited until March 3, 2000 from engaging in the contiguous domestic trade.
The vessels are deemed "qualified agreement vessels" due to the use of Capital
Construction Fund monies by the prior owner of the vessels in acquiring the
vessels. The Company believes that the agreement will not have an adverse impact
on NPR's operations as NPR's vessels are engaged in the non-contiguous domestic
trade and the Company has no present intention of engaging in the contiguous
domestic trade.
EMPLOYEE AND LABOR RELATIONS
Approximately 34.2% of NPR's permanent employees are represented by labor
unions, including five unions related to shipping operations and two unions
related to land operations. At sea, NPR employs: (i) Masters, Mates & Pilots
("MMP") with a contract expiring June 30, 1999; (ii) Marine Engineers Beneficial
Association ("MEBA"), with contracts expiring June 15, 1999; (iii) Seafarers
International Union (SIU) with a contract expiring June 15, 2001; and (iv) two
radio officer unions, the American Radio Association and Radio Officers Union,
both with contracts expiring December 31, 1998. On land, NPR employs: (i) the
ILA with a contract expiring September 30, 2001 and (ii) the Office and
Professional Employees International Union ("OPEIU") (the clerical workers'
union) with a contract expiring August 31, 2000. NPR regards its relations with
its unions as satisfactory. The ILA's last strike against NPR was in 1977 and
the OPEIU's last strike against NPR was in 1989.
At December 31, 1997, NPR had 448 employees engaged in sales,
transportation logistics, equipment management, administrative support and
customer service. In addition, NPR employs 112 union shipboard employees.
Longshoremen are hired on an as-needed basis, and depending upon the number of
vessels being loaded or unloaded at any one time, NPR may employ up to 230
longshoremen.
ENVIRONMENTAL MATTERS
NPR's operations are subject to various federal, state and local
environmental laws and regulations, promulgated by the Environmental Protection
Agency and similar state regulatory agencies. These regulations govern the
management of hazardous wastes, discharge of pollutants into the air, surface
and underground waters, and the disposal of certain substances. Management is
not aware of any material water or land fuel spills or hazardous substance
contamination on its properties and believes that its operations are in material
compliance with current environmental laws and regulations.
In connection with NPR's acquisition of its business in the Privatization
in March 1995, NPR agreed to assume responsibility for the administration of
certain asbestos-related tort claims against the
77
<PAGE>
Puerto Rico Government and the payment of the first $2 million of such claims.
The Puerto Rico Government has retained liability for claims above the $2
million level. Currently, the number of filed asbestosis claims is approximately
1,150. A majority of the claims have been filed as independent actions in the
United States District Court for the Northern District of Ohio.
LEGAL PROCEEDINGS
NPR is the defendant in a lawsuit filed in November 1996 in the United
States District Court for the District of Puerto Rico (Ocean Logistics
Management, Inc. v. NPR, Inc., No. 96-2388 DRD). The plaintiff seeks damages
arising out of an agreement between the plaintiff and NPR whereby NPR offered a
discounted freight rate to the plaintiff in exchange for shipment of a
guaranteed volume of containers between the mainland United States and Puerto
Rico. The plaintiff claims that NPR unilaterally terminated the agreement
approximately two and one-half months before its termination date, allegedly
causing damages to the plaintiff. In its first amended complaint, the plaintiff
asserted causes of action claiming breach of contract, breach of a distribution
contract pursuant to Puerto Rico law, tortious interference with contractual
relations, liability for outstanding commissions and trucking allowances and
violations of the Sherman Act. The plaintiff seeks $4 million for each of the
first four claims and $12 million for the fifth claim (presumably because of the
treble damages provisions of the Sherman Act). NPR has filed a motion to dismiss
the complaint, which remains pending. NPR intends to vigorously defend itself
against the lawsuit. Although the Company believes that any liability of NPR in
connection with the lawsuit will be substantially less than $4 million, there
can be no assurance in that regard or that the resolution of this lawsuit will
not have a material adverse effect on the Company's financial condition or
results of operations.
PROPERTIES
NPR is headquartered in Edison, New Jersey in a one-story leased building
of approximately 65,000 square feet. Currently, 181 administrative employees
work at this facility and approximately 70% of the facility is utilized. The
headquarters' lease expires in February 2001. NPR's San Juan, Puerto Rico
terminal is leased pursuant to multiple agreements with the Puerto Rico Ports
Authority with total acreage of approximately 110 acres, including both
preferential use berthing areas (20 acres for vessels) and exclusive use acreage
(90 acres), with terms expiring from 2018 to 2021, including all renewal
options. A parking lot is leased through 2005.
NPR's approximately 42-acre terminal in Jacksonville, Florida, known as the
Blount Island Terminal, is leased through year 2005. NPR is entitled to use
approximately 5,500 feet of deep water berthing space and has preferential
berthing and use of three cranes on four days of each week.
NPR leases an additional approximately 13,000 square feet of administrative
office space for 37 employees in San Juan, Puerto Rico under a lease which
expires in April 2002, including a renewal option. This office space is
approximately 95% utilized. Six small sales and administrative offices are
leased in Chicago, Miami, Houston, Long Beach, metropolitan Atlanta and
Washington, D.C. under leases with terms expiring from 1998 to 1999. NPR also
leases an approximately 20,000 square feet fully integrated, computerized
customer service center, located in a modern office building in Tampa, Florida,
housing 67 employees, under a lease which expires in February 2003.
78
<PAGE>
MANAGEMENT
EXECUTIVE OFFICERS, DIRECTORS AND KEY EMPLOYEES
The following table sets forth certain information regarding the directors
and executive officers of the Company:
<TABLE>
<CAPTION>
NAME AGE POSITION
---- --- --------
<S> <C> <C>
Thomas J. Holt......................... 61 Chairman, President and Chief Executive
Officer
Lorraine Robins........................ 67 Executive Vice President and Director
Bernard Gelman......................... 57 Vice President, Chief Financial
Officer, Treasurer and Director
John A. Evans.......................... 51 General Counsel, Vice President,
Corporate Secretary and Director
Thomas J. Holt, Jr..................... 34 Director
Leo A. Holt............................ 33 Director
Michael J. Holt........................ 24 Director
The key employees of NPR are as follows:
Ronald M. Katims....................... 63 President and Chief Executive Officer
of NPR
Paul J. Wittig......................... 52 Executive Vice President and Chief
Financial Officer of NPR
Edward W. O'Donnell.................... 48 Executive Vice President and Commercial
Director of NPR
Edward G. Cawthon...................... 57 Executive Vice President of Operations
of NPR
Carl R. Fox............................ 45 Senior Vice President of Strategic
Planning and Administration of NPR
</TABLE>
Thomas J. Holt, Sr. has been Chairman, President and Chief Executive
Officer of the Issuer since its capitalization in October 1997. He is the son of
the founder of the Holt business. He has been actively involved with Holt for
over 43 years and has served as an executive officer and director of each of the
Holt Subsidiaries since 1965. He is a member of the Philadelphia District Export
Council, World Trade Association of Philadelphia, Inc., Pacific Maritime
Association and Imported Products Association. Mr. Holt is the father of Thomas
J. Holt, Jr., Leo A. Holt and Michael J. Holt, each a director of the Company.
Lorraine Robins has been Executive Vice President and a director of the
Issuer since its capitalization in October 1997. She has worked for Holt for the
last 35 years and has served as Executive Vice President of each of the Holt
Subsidiaries since 1983. She is a member of the World Trade Association of
Philadelphia, Inc., and received the "Woman of the Year" award for outstanding
achievement from the Women's International Trade Association.
Bernard Gelman has been Vice President, Chief Financial Officer, Treasurer
and a director of the Issuer since its capitalization in October 1997. He has
worked for Holt for 29 years and has served as Vice President, Chief Financial
Officer and Treasurer of Holt since 1970. He is a member of both the
Pennsylvania Institute of Certified Public Accountants and The American
Institute of Certified Public Accountants.
79
<PAGE>
John A. Evans has been General Counsel, Corporate Secretary and a director
of the Issuer since its capitalization in October 1997 and Vice President since
January 1998. He has worked for Holt for 23 years and has served as Corporate
Secretary and General Counsel since 1983. He is both an attorney and a certified
public accountant. He is a member of the American Institute of Certified Public
Accountants, New Jersey Bar Association, Pennsylvania Bar Association and the
American Bar Association.
Thomas J. Holt, Jr. has been a director of the Issuer since its
capitalization in October 1997. He is a director, executive officer and
shareholder of AHI and SLS and has been involved in the stevedoring, marine
terminal and warehousing business for over 14 years. He is a member of the
Philadelphia Maritime Society and the World Trade Association of Philadelphia.
He is the son of Thomas J. Holt, Sr., Chairman, President and Chief Executive
Officer of the Issuer and the brother of Leo A. Holt and Michael J. Holt, each a
director of the Issuer.
Leo A. Holt has been a director of the Issuer since its capitalization in
October 1997. He is a director, executive officer and shareholder of AHI and SLS
and has been involved in the stevedoring, marine terminal and warehousing
business for over 13 years. He is a trustee with the Philadelphia Seaman's
Church Institute, a member of both the World Trade Association of Philadelphia
and the Produce Marketing Association. He is the son of Thomas J. Holt, Sr.,
Chairman, President and Chief Executive Officer of the Issuer and the brother of
Thomas J. Holt, Jr., and Michael J. Holt, each a director of the Company.
Michael J. Holt has been a director of the Issuer since its capitalization
in October 1997. He is a director, executive officer and shareholder of AHI and
SLS and has been involved with the stevedoring, marine terminal and warehousing
business for over three years. He is the son of Thomas J. Holt, Sr., Chairman,
President and Chief Executive Officer of the Issuer and the brother of Thomas J.
Holt, Jr., and Leo A. Holt, each a director of the Issuer.
Ronald M. Katims has been President and Chief Executive Officer of NPR
since the Privatization in March 1995. He has over 35 years experience in the
maritime industry as a manager, an entrepreneur and a consultant. He served as
President and Executive Vice President of Operations at NPR's predecessor from
1974 to 1978 and in 1989. He has also served as the Vice President of
Engineering and Purchasing for Sea-Land, where his responsibilities included
design and development, acquisition, expansion and construction of all
facilities, cranes and equipment. As a consultant, his experience included
operational and technical studies for Maersk, United States Lines ("USL"),
Matson, Trailer Bridge, ZIM, Lykes, American President Lines and Hanjin.
Paul J. Wittig has been Executive Vice President and Chief Financial
Officer of NPR since the Privatization in March 1995. He began his career in the
audit and tax departments at Ernst & Young from 1971 to 1977, where his tax
clients included Sea-Land, and Puerto Rico Marine Management, Inc. He previously
served as Tax Manager at Union Camp Corp. from 1977 to 1980, and Vice President,
Taxes at USL from 1980 to 1987. He was Chief Tax Executive at Journal Register
Company from 1988 to 1994, where he had a concentration on financial
transactions including acquisitions, financial restructurings and divestitures.
Edward W. O'Donnell has been Executive Vice President and Commercial
Director of NPR since the Privatization in March 1995. He has over 25 years
experience in the maritime industry previously serving in executive capacities
with several major shipping companies including Sea-Land, from 1972 to 1977, USL
from 1979 to 1987 and Crowley from 1987 to 1990. He has particular experience in
developing business in the Latin American markets including Brazil, Argentina
and Venezuela. Prior to joining NPR, he was a consultant to Transroll, NPR's
current joint venture partner, where he consulted on business matters affecting
the United States-Brazil and Argentina trade.
Edward G. Cawthon has been Executive Vice President of Operations of NPR
since November 1995. He has over 30 years experience in the maritime industry.
He previously served as Senior Vice President of Operations for USL from 1975 to
1987, Director of Intermodal Terminal Operations for
80
<PAGE>
American President Lines from 1987 to 1989, and President of Atlantic Towing
Turecamo Environmental Services from 1989 to 1995.
Carl R. Fox has been Senior Vice President of Business Planning and
Administration of NPR since May 1995. He has 22 years experience in the maritime
industry. In this position at NPR he is involved in directing the strategic
planning initiative focusing on development of short and long-term strategy; and
the management of Information Technology, Human Resources, Administrative
Services, and Reengineering. In addition, he has worked in a number of Financial
and Planning positions at Crowley and USL.
COMPENSATION COMMITTEE INTERLOCKS AND INSIDER PARTICIPATION
Prior to the capitalization of the Issuer in October 1997, the Issuer did
not pay any compensation to its executive officers. In 1996, decisions
concerning compensation of executive officers were made by the Board of
Directors of Holt, consisting, at that time, of Thomas J. Holt, Sr., Lorraine
Robins and Bernard Gelman. See "Certain Transactions."
DIRECTOR COMPENSATION
Directors of the Issuer are not currently compensated for their services as
such. The Issuer reimburses directors for their expenses incurred in connection
with their activities as directors. In the future, the Issuer may elect to
compensate directors for their services as directors.
EXECUTIVE COMPENSATION
The Issuer was capitalized in October 1997 and accordingly, paid no
compensation during the years ended December 31, 1995 and 1996. Prior to the
Reorganization, all of the Company's executive officers were compensated by
Holt. The following table sets forth, with respect to services rendered during
1996 and 1997, the total compensation paid by Holt to or for the account of the
Company's Chief Executive Officer and the Company's three other executive
officers (the "Named Executive Officers"). None of the Named Executive Officers
is a party to an employment agreement with the Company. The named Executive
Officers also provide services to, and receive additional compensation from
certain of the Non-combined Affiliates. See "Certain Transactions."
<TABLE>
<CAPTION>
ANNUAL COMPENSATION
-------------------- ALL OTHER
NAME AND PRINCIPAL POSITION YEAR SALARY($) BONUS($) COMPENSATION(1)
--------------------------- ---- --------- -------- ---------------
<S> <C> <C> <C> <C>
Thomas J. Holt, Sr ........................ 1997 $254,782 $ -- $ 2,906
Chairman of the Board, President 1996 $261,773 -- $ 2,659
and Chief Executive Officer
Lorraine Robins ........................... 1997 $ 98,530 $ -- $ 1,626
Executive Vice President 1996 101,820 -- 1,557
Bernard Gelman ............................ 1997 $116,252 $ -- $ 2,013
Vice President, Chief Financial 1996 120,200 -- 1,926
Officer and Treasurer
John A. Evans ............................. 1997 $110,450 $ -- $ 1,596
General Counsel and Secretary 1996 108,786 -- 1,552
</TABLE>
- ------------------
(1) Amounts indicated for 1997 include employer 401(k) contribution in the
following amounts: Mr. Holt, $2,660; Ms. Robins, $1,380; Mr. Gelman, $1,767;
and Mr. Evans, $1,350. Also includes $246 in group life insurance premiums
for each Named Executive Officer.
81
<PAGE>
401(K) PLAN
The Company maintains a 401(k) Profit-Sharing Plan ("401(k) Plan") for the
benefit of eligible employees of Holt which consists of a 401(k) component and a
profit-sharing component. The 401(k) Plan, which is intended to be qualified
under the Code, is a salary reduction plan and profit-sharing plan covering
employees of Holt who have completed one year of service, and whose employment
is not governed by a collective bargaining agreement.
Under the 401(k) component, participants may elect to defer between 1% and
10% of their compensation up to a maximum of $9,500 per year, as adjusted by the
IRS for changes in the cost of living, and to deposit such amount in the 401(k)
Plan fund. The Company also currently matches contributions of between 75% and
200% (depending on the participant's years of service) of the first 1% of
compensation deferred by a participant. Under the profit-sharing provisions of
the 401(k) Plan, the Company may make contributions in amounts to be determined
by the Company in its sole discretion. Any such Company profit-sharing
contributions will be allocated among all eligible employees, in proportion to
that employee's compensation from the Company. The Company's matching
contributions and profit-sharing contributions allocated to each participant
vest over six years, or earlier upon attainment of the appropriate retirement
age, upon retirement for disability, upon death or upon termination of the
401(k) Plan.
All contributions under the 401(k) Plan are currently invested, subject to
participant-directed elections, in collective funds managed by PaineWebber
Trust. Payment of 401(k) Plan benefits are generally made in a single lump sum
or installments. Distribution of a participant's vested interest in his or her
account generally occurs on the earlier of termination of employment for any
reason (including retirement, death or disability) or by the April 1 following
the calendar year the participant reaches age 70 1/2 if he or she is still
employed.
NPR 1997 PHANTOM STOCK PLAN
GENERAL
Under the NPR Holding Corporation 1997 Phantom Stock Plan (the "Plan"), NPR
Senior Management, including the key employees of NPR listed under "-- Executive
Officers, Directors and Key Employees" (the "Participants"), received grants of
"Phantom Stock Units" in connection with the Acquisition. Each Phantom Stock
Unit represents a conditional contractual right to the payment of compensation
in the future, based on the value of the Phantom Stock Unit at the time payments
are made under the Plan. No Participant contribution or payment is required in
connection with the grant or receipt of payment with respect to Phantom Stock
Units. The Phantom Stock Units granted to NPR Senior Management represent the
value of 10% of the NPR common stock outstanding at the grant date, computed on
a fully diluted basis as if the Phantom Stock Units were outstanding shares of
NPR common stock, subject to adjustment for stock dividends, stock splits and
similar dilutive events.
VESTING OF PHANTOM STOCK UNITS
In general, a participant's Phantom Stock Units will "vest" based on NPR's
achievement of certain financial performance goals. If, for any calendar year
beginning on or after January 1, 1998 and ending December 31, 2002, NPR achieves
the financial performance target listed in the table below, Participants who are
active employees on the last day of that calendar year, or who terminated
employment after June 30 of the calendar year due to disability, death,
resignation with good reason or termination by the Company without cause, will
vest in the corresponding percentage of their Phantom Stock Units, as listed in
the table below. Once an applicable financial performance target has been met
with respect to a year, the applicable percentage of a participant's award is
permanently vested. NPR's meeting (or failure to meet) the financial performance
target with respect to subsequent years does not result in any additional
vesting (or loss of the prior vesting). The financial performance target is
based
82
<PAGE>
on NPR's net earnings, before interest, depreciation and amortization as defined
in the Plan (for purposes of this section, "EBITDA").
<TABLE>
<CAPTION>
EBITDA TARGET VESTING PERCENTAGE
------------- ------------------
<S> <C>
$19.8 million................................ 20%
29.0 million................................ 40
29.4 million................................ 60
40.6 million................................ 80
44.1 million................................ 100
</TABLE>
In the event of (i) a public offering of equity securities of the Issuer,
NPR or an affiliate of either (a "Public Offering"), (ii) the liquidation of
NPR, (iii) a merger of NPR, (iv) a change of control of NPR or (v) the sale of
substantially all of the assets of NPR, any of which occurs before January 1,
2003, unvested Phantom Stock Units held by Participants who are active
employees, or who terminated employment with NPR due to disability, death,
resignation with good reason or termination by NPR without cause within six
months of the applicable event, will become fully vested.
PAYMENT OF VALUE OF VESTED PHANTOM STOCK UNITS
As of any date, the value of all Phantom Stock Units in the aggregate is
equal to the sum of (i) five times EBITDA per share of NPR (including, for this
purpose, outstanding shares and Phantom Stock Units) for the immediately
preceding twelve-month period, plus (ii) an amount designed to reflect one-half
of the additional net after-federal-income-tax cost to the Participants of
recognizing income on the payment of the value of the vested Phantom Stock Units
at ordinary income tax rates instead of the income tax rates applicable to the
recognition of long-term capital gains with respect to capital assets that have
been held for more than 18 months.
In general, if a Participant continues in service as an active employee
through December 31, 2002, the value of the vested Phantom Stock Units will be
paid in a cash lump sum within 60 days following the participant's termination
of employment. If a Participant's employment with NPR terminates on or before
December 31, 2002, then depending on the nature of such termination, the value
of the vested Phantom Stock Units will be determined either (i) as of the end of
the year in which the termination occurred, (ii) as of the end of the year
preceding the termination date or (iii) as of December 31, 2002, and such value
will be paid either (a) in a cash lump sum within 60 days following the date of
the Participant's termination of employment, or (b) at a later date, up to 60
days following December 31, 2002.
If there is (i) a liquidation of NPR, (ii) a merger of NPR, (iii) a change
of control of NPR or (iv) the sale of substantially all of the assets of NPR
before January 1, 2003, then the value of the vested Phantom Stock Units,
measured as of the date of such event, will be paid to Participants in a cash
lump sum as soon as reasonably practicable thereafter.
Notwithstanding the foregoing, if the payment of the value of the vested
Phantom Stock Units in a cash lump sum as described above would violate any
agreement to which the Issuer or NPR is a party, which evidences or governs
indebtedness for borrowed money (and which agreement was effective as of
November 20, 1997, or which is a refinancing or replacement, in whole or in
part, of such an agreement), NPR will pay the Participant as much of the amount
as it can without violating the debt agreement, and pay the balance, plus
interest at three points over the prime rate (as in effect when the payment
would have been made but for the debt agreement) in periodic installments over
the longer of (i) three years or (ii) a period measured by the duration of time
between the Participant's termination of employment and December 31, 2002.
83
<PAGE>
FEDERAL INCOME TAX CONSEQUENCES
A participant will recognize income for federal income tax purposes when
and to the extent he receives payments pursuant to the Plan. Assuming that the
payment reflects reasonable compensation for services, NPR will be entitled to
deduct the payments as a compensation expense at the time of payment.
CERTAIN TRANSACTIONS
The Issuer and each of its subsidiaries (the "S Corp. Businesses") are
corporations subject to taxation under Subchapter S of the Code. As a result,
the net taxable income of each S Corp. Business must be included in the taxable
income of its shareholders as the S Corp. Businesses are not subject to tax at
the corporate level with respect to such income. The S Corp. Businesses had
historically made earnings distributions to their shareholders in amounts equal
to or greater than the amount of the shareholders' Federal and State income tax
liabilities arising from the S Corp. Business' status as S Corporations (other
than NPR, Murphy Marine and Wilmington Stevedores, which became S corporations
effective in January 1998). The amount of these distributions were $1.6 million,
$3.0 million and $4.5 million for 1995, 1996 and 1997, respectively. The terms
of the Notes generally will permit the S Corp. Businesses to make distributions
to their shareholders with respect to their tax liabilities attributable to the
S Corp. Businesses, subject to certain requirements described herein. Under
current tax rates, the amount of the distributions are likely to exceed the tax
liability which the S Corp. Businesses would have if they were not S
corporations. See "Description of New Notes."
Holt and the Non-consolidated Affiliates provide services and goods to each
other. Holt provides to the Non-consolidated Affiliates stevedoring services,
rental of warehouse space and building and equipment repair services. In 1995,
1996 and 1997, Holt received a total of $750,000, $9,000 and $55,000,
respectively, for these services. The Non-consolidated Affiliates provide Holt
with rental of warehouse space, building and equipment repairs, management
services and the sale of ice. For 1995, 1996 and 1997, Holt paid the
Non-consolidated Affiliates $3.2 million, $1.7 million and $1.2 million for
these services and goods, respectively. In addition, certain of the Company's
executive officers provide services to and receive compensation from the
Non-consolidated Affiliates. See Note 9 of "Notes to Consolidated Financial
Statements" of the Company.
Holt and the Non-consolidated Affiliates historically have made advances to
each other for working capital purposes and have accrued amounts payable to each
other arising out of the sale of services and goods. The outstanding advances
and payables by the Non-consolidated Affiliates to Holt at December 31, 1995 and
1996 and 1997 were $13.4 million, $21.1 million and $21.3 million, respectively.
None of these advances bears interest. The outstanding advances and payables by
Holt to the Non-consolidated Affiliates at December 31, 1995 and 1996 and 1997
were $11.2 million, $10.3 million and $12.2 million, respectively. See Note 9 of
"Notes to Consolidated Financial Statements" of the Company.
AHI subleases the Packer Avenue Facility (which includes four container
cranes) and leases an additional crane to the Company. Pursuant to the PRPA
Lease, which expires in 2040 (including all renewal options), the PRPA leases
the Packer Avenue Facility to AHI and has granted to AHI rights to develop
certain undeveloped additional waterfront property. Under the Sublease between
AHI and Holt, Holt pays AHI the rental payable by AHI to the PRPA plus fifteen
percent of that amount. See "Business -- Holt -- Properties." Thomas J. Holt,
Jr., Leo A. Holt and Michael J. Holt, each a director of the Company and a son
of Thomas J. Holt Sr., own all of the issued and outstanding shares of capital
stock of AHI. Rental expenses and fees paid by Holt to AHI amounted to $2.4
million, $2.5 million and $3.0 million for the years ended December 31, 1995,
1996 and 1997, respectively. See Note 10 of "Notes to Consolidated Financial
Statements" of the Company.
Pursuant to agreements between Holt and SLS, SLS provides Holt with
services relating to accounting, billing, management information processing,
insurance risk analysis and coverage and marketing. All logistics and management
information services provided to the Company's customers,
84
<PAGE>
including CTS and the Container Computer System, and certain of the Company's
sales and marketing activities, are provided by SLS on behalf of the Company. As
compensation for these services, Holt pays SLS an amount equal to five percent
of Holt's gross revenue on a monthly basis. The terms of the consulting
agreements expire in 2002. Thomas J. Holt, Jr., Leo A. Holt and Michael J. Holt,
each a director of the Company and a son of Thomas J. Holt, Sr., own all of the
issued and outstanding shares of capital stock of SLS. Fees paid by Holt to SLS
for these services amounted to $2.8 million, $3.7 million and $4.5 million for
the years ended December 31, 1995, 1996 and 1997, respectively. See Note 10 of
"Notes to Consolidated Financial Statements" of the Company.
Holt and certain of the Non-consolidated Affiliates guarantee certain of
each other's indebtedness. See "Description of Certain Indebtedness."
SOLE STOCKHOLDER
Thomas J. Holt, Sr., the Company's Chairman, President and Chief Executive
Officer, owns 100% of the outstanding common stock of the Company. Other than
the common stock, no other class of capital stock of the Company is authorized.
The business address of the sole stockholder is 701 North Broadway, Gloucester
City, New Jersey 08030.
DESCRIPTION OF CERTAIN INDEBTEDNESS
In addition to the Notes, the Company is also subject to the following
indebtedness and obligations (collectively, the "Other Indebtedness and
Financings").
OBLIGATIONS OF THE COMPANY
REVOLVING CREDIT FACILITY
In connection with the Acquisition, the Company entered into a revolving
credit facility with CoreStates Bank, N.A. (the "Revolving Credit Facility"),
which provides for up to $25 million of revolving loans and letters of credit.
Borrowings under the Revolving Credit Facility may be used for general corporate
purposes, including working capital, and the issuance of up to $10 million in
letters of credit. Amounts outstanding under the Revolving Credit Facility will
bear interest at a variable rate at the Company's election of (i) the Base Rate
(as defined therein) or (ii) the LIBO Rate (as defined therein) plus 2.50% per
annum. The Company will be required to pay a letter of credit fee of 2% per
annum on letters of credit outstanding and a commitment fee of 0.25% per annum
of the unused portion of the facility. The Revolving Credit Facility will mature
in November 1998. As of November 20, 1997, letters of credit rolled over from
predecessor Holt and NPR facilities in the amount of $6.4 million were
outstanding under the Revolving Credit Facility.
The Revolving Credit Facility is secured by the five United States
Registered Vessels (the "Vessels") owned by NPR pursuant to the terms of First
Preferred Ship Mortgages. Availability under the Revolving Credit Facility is
limited to 65% or 70% of the appraised value of the Vessels, depending on NPR
attaining certain debt to tangible net worth ratios. Borrowings under the
Revolving Credit Facility are subject to the further condition that no material
adverse change has occurred.
The Revolving Credit Facility contains financial covenants including a
minimum net worth test, a debt to tangible net worth test and an interest
coverage ratio test. In addition, the Revolving Credit Facility contains
covenants that restrict certain mergers, acquisitions and sales of assets, the
incurrence of indebtedness and making of guarantees, the payment of dividends,
the repurchase of stock, the making of loans to shareholders and the granting of
liens. In addition, the Revolving Credit Facility contains customary events of
default, including any non-payment of principal, interest or fees when due,
non-compliance with covenants, material breach of a representation or warranty,
occurrence of certain bankruptcy and insolvency events, cross-defaults to other
indebtedness, the existence of certain unstayed and undischarged liens and
judgments, and the occurrence of a material adverse change.
85
<PAGE>
INDUSTRIAL REVENUE BONDS
Holt Hauling financed the development of the Gloucester Facility, in
significant part, through a series of Industrial Revenue Bonds (the "NJEDA
Bonds") issued by the New Jersey Economic Development Authority ("NJEDA")
commencing in 1983, with the most recent refunding bonds issued in 1997. The
NJEDA Bonds outstanding as of December 31, 1997, including their interest rates
and maturity dates, are as follows:
o $10,000,000 Economic Development Bonds (Holt Hauling & Warehousing
System, Inc., 1983 Project), Series G Refunding (non-AMT), bearing
interest at 8.4% and maturing on December 15, 2015;
o $9,000,000 Economic Development Bonds (Holt Hauling & Warehousing
System, Inc., 1983 Project), Series H Refunding (AMT), bearing
interest at 8.6% and maturing on December 15, 2017;
o $5,000,000 Economic Development Revenue Refunding Bonds (Holt
Hauling & Warehousing System, Inc., 1983 Project), 1995 Fixed Rate
Series J, bearing interest at 8.5% and maturing on November 1, 2023;
o $27,250,000 Economic Development Revenue Refunding Bonds (Holt
Hauling & Warehousing System, Inc. -- 1983 Project), 1997 Series K,
maturing on March 1, 2027, of which $18,750,000 bears interest at
7.75% and the remaining $8,500,000 bears interest at 7.90%.
Each of the NJEDA Bonds is secured by mortgages on the Gloucester Facility.
The bond indebtedness thereunder is guaranteed by the other Holt Subsidiaries as
well as the Non-consolidated Affiliates. The respective Loan Agreements and
related documents contain financial covenants including a minimum net worth
test, a debt-to-tangible net worth test and an interest coverage ratio test. In
addition, the applicable documents contain customary events of default,
including any non-payment of principal, interest or fees when due,
non-compliance with covenants, breach of representation or warranty in any
material respect, occurrence of certain bankruptcy and insolvency events,
cross-defaults to other indebtedness, and the existence of certain unstayed and
undischarged liens and judgments.
EQUIPMENT FINANCINGS
Pursuant to a Container Lease Purchase Agreement dated as of June 5, 1996
with Interpool Limited ("Interpool"), NPR leased certain equipment from
Interpool on a rolling basis up to a maximum principal amount of approximately
$4.6 million. As of December 31, 1997, approximately $2.7 million was
outstanding under this agreement.
Holt Cargo, pursuant to a series of sale-leaseback, capital lease and loan
transactions with Advanta Business Services Corp., The Bank of Gloucester,
General Electric Capital Corporation (subsequently assigned to Michigan National
Bank and MBC (as defined herein)), MetLife Capital Corporation, U.S. Fleet
Leasing and Transamerica Business Credit Corporation, has financed its
acquisition of a significant portion of its equipment. The terms of these
financings are consistent with generally prevailing market terms and range from
36 to 60 months in term, with interest rates ranging from 7.5% to 8.0% fixed, to
variable rates of straight prime or LIBOR plus 0.5% to 1.0%. The indebtedness
under each of these facilities is secured by the specific equipment purchased or
financed under such facilities, respectively.
While some of these financing arrangements contain no financial covenants
and other operational restrictions, a number of the agreements do contain
customary covenants, including limitations on (i) the incurring additional
indebtedness, (ii) creating liens, (iii) making restricted payments, including
the payments of dividends, (iv) making investments, (v) engaging in mergers,
consolidations and asset sales, and (vi) engaging in loans, investments and
other transactions with affiliated parties. Certain of the financings include
guarantees by certain of the Non-consolidated Affiliates and the applicable
86
<PAGE>
guarantees contain similar limitations and restrictions on the guarantors
thereunder. As of December 31, 1997, the aggregate amount outstanding under
these facilities was approximately $11.7 million.
URBAN DEVELOPMENT ACTION GRANTS AND RELATED LOANS
On December 28, 1983, the City of Gloucester City, New Jersey (the "City")
entered into a Grant Agreement with the United States Department of Housing and
Urban Development ("HUD") for an Urban Development Action Grant, the proceeds of
which were to be loaned to Holt Hauling to assist in the financing of certain
land and equipment acquisitions and port development improvements to the
Gloucester Facility. The low cost loan in the aggregate amount of approximately
$3.6 million (the "UDAG I Loan") was made to Holt Hauling pursuant to a Loan
Agreement dated January 3, 1984, between the City and Holt Hauling.
On August 3, 1984, the City entered into a second Grant Agreement with HUD
for an Urban Development Action Grant, the proceeds of which were to be loaned
to Holt Hauling to assist in the financing of certain additional equipment
acquisitions and an extension of the marginal pier at the Gloucester Facility.
The low cost loan in the amount of $2.0 million (the "UDAG II Loan") was made to
Holt Hauling pursuant to a Loan Agreement dated January 3, 1984, between the
City and Holt Hauling.
Pursuant to a Second Amendment to Loan Agreements dated August 1, 1996, the
UDAG I Loan and UDAG II Loans were consolidated and the promissory notes
executed in connection therewith were refinanced by the issuance of an amended
and restated Promissory Note in the restated principal amount of approximately
$5.1 million (the "Restated Note"). The Restated Note bears interest at the rate
of 6% per annum commencing on March 30, 1997, and is payable in 180 equal
monthly payments based on a 25-year amortization, with a balloon payment due on
March 31, 2012. The outstanding balance as of December 31, 1997 under the
Restated Note was approximately $5.0 million.
MULTI-CURRENCY FACILITY
Riverfront is party to a Multi-Currency Secured Revolving Credit Facility,
dated as of April 16, 1997, with Finansbanken ASA and an Amendment No. 1 to the
Multi-Currency Secured Revolving Credit Facility, dated as of April 23, 1997,
which provide Riverfront with access to a credit facility in the maximum
principal amount of NOK 69.0 million. Riverfront's obligations under this Credit
Facility are secured by a pledge of the shares of the stock of ACL owned by
Riverfront. In addition, Holt Hauling and Holt Cargo serve as guarantors of the
obligations of Riverfront. This credit facility requires Riverfront to maintain
a loan to value ratio of 45% (based on the market value of the ACL stock), and
contains a restriction on dividends but otherwise does not contain financial
covenants. As of December 31, 1997, the outstanding balance was $9.2 million.
OTHER TERM LOANS
Holt Hauling entered into a Business Loan Agreement dated March 13, 1997
with Wilmington Savings Fund Society, FSB ("WSFS") pursuant to which WSFS
extended a term loan in the original principal amount of approximately $208,000.
The loan is payable in 35 equal installments of $2,355.66 each, with a final
maturity date of March 13, 2000 and bears interest at a floating rate of prime
plus 0.5% per annum. The WSFS loan is secured by a mortgage on real property and
improvements thereon located at 329 and 701 North King Street, in Gloucester
City, New Jersey. The indebtedness outstanding pursuant to such loan as of
December 31, 1997 was approximately $200,000.
CERTAIN OPERATING LEASES
EQUIPMENT FINANCING -- EMERALD EQUIPMENT LEASING, INC.
On November 20, 1997, NPR sold certain of its assets consisting of
containers, gensets and chassis (the "Emerald Equipment"), to Emerald Equipment
Leasing, Inc. ("Emerald") for a purchase price of $35 million. The Emerald
Equipment was then leased back to NPR and to Holt Cargo
87
<PAGE>
(collectively, the "Lessees"), pursuant to an Equipment Lease Agreement dated as
of November 20, 1997 (the "Equipment Lease"). Under the Equipment Lease, the
Lessees are obligated to make monthly payments to Emerald in the amount of
approximately $738,000 per month for a term of 60 months. The Equipment Lease
also provides that the Lessees may terminate the Equipment Lease effective as of
the fourth anniversary of the Equipment Lease commencement date, provided that
no default of the Lessees exists thereunder and provided that the Lessees make a
lease termination payment to Emerald in the amount of $2.8 million. The
Equipment Lease and payments have been assigned to MBC Leasing Corp. ("MBC"),
which financed Emerald's acquisition of the Emerald Equipment pursuant to a Loan
and Security Agreement dated as of November 20, 1997 (the "MBC Credit
Agreement"), in the maximum principal amount of up to $35.0 million (the
"Equipment Loan"). The Lessees' obligations under the Equipment Lease are
guaranteed by the Issuer and each of its subsidiaries other than the Lessees,
(the "Lease Guarantors") pursuant to a Lease Guaranty Agreement dated as of
November 20, 1997 (the "Lease Guaranty"), which Lease Guaranty is also assigned
to MBC as additional collateral.
Of the $35.0 million available under the MBC Credit Agreement, $24.0
million was advanced on November 20, 1997 and an additional $6.9 million was
advanced through March 31, 1998. The remaining $4.1 million will be advanced
from time to time by MBC to Emerald upon MBC's obtaining a perfected security
interest in certain of the Emerald Equipment, namely, the chassis, which are
included in the collateral security for the loan. A majority of the outstanding
capital stock of Emerald is owned by certain employees of SLS (who are not
executive officers or directors of SLS).
The Equipment Lease payments were calculated to provide for full
pass-through amortization of the amounts outstanding under the Equipment Loan as
though it had been fully advanced. The initial advance of the Equipment Loan
will bear interest at an annual rate of 9.25%. Subsequent advances will bear
interest at a rate per annum equal to the interest rate for five year Treasury
constant maturities plus 332 basis points. The entire outstanding principal
balance of the Equipment Loan is due and payable on November 20, 2002.
The MBC Credit Agreement contains customary covenants, including
limitations on (i) the incurrence of additional indebtedness, (ii) the creation
of liens, (iii) making restricted payments, including the payments of dividends,
(iv) making investments, (v) engaging in mergers, consolidations and asset
sales, and (vi) engaging in loans, investments and other transactions with
affiliated parties. Similar limitations are imposed on the Lessees and the Lease
Guarantors in the Equipment Lease and the Lease Guaranty. In addition, the Lease
Guarantors, on a consolidated basis, are required to comply with certain
financial covenants including without limitation, (i) a ratio of indebtedness to
tangible net worth, (ii) an interest coverage ratio, and (iii) minimum tangible
net worth, in each case, as specified in the Lease Guaranty.
Emerald will use proceeds of subsequent advances under the MBC Credit
Agreement to make mandatory prepayments of principal outstanding under the
subordinated note in the amount of $11 million issued by Emerald in favor of NPR
on November 20, 1997 (the "Subordinated Note"), which, in turn, will be used to
retire some of the Other Indebtedness relating to Equipment financing described
below. The Subordinated Note bears interest at the Prime Rate as announced from
time to time by CoreStates, and matures on December 31, 1998.
CCIA OPERATING LEASES
Holt Hauling obtained additional financing for terminal improvements
through the issuance by the Camden County Improvement Authority ("CCIA") of
$24.5 million of its Lease Revenue Bonds (Holt Hauling and Warehousing System,
Inc. Project), 1996 Series A (the "CCIA-HHW Bonds"). Almost one-third of the
CCIA-HHW Bonds ($7.6 million) bear interest at a rate of 9.625% per annum and
mature on January 1, 2011. The remaining $16.9 million of the CCIA-HHW Bonds
bear interest at a rate of 9.875% and mature on January 1, 2021. The CCIA-HHW
Bonds are secured by a mortgage granted by CCIA on its interest in the terminal
improvements and on its leasehold interest in the land on which such
improvements are located. Payment of the CCIA-HHW Bonds is guaranteed by Holt
88
<PAGE>
Hauling and the Non-combined Affiliates. Holt Hauling granted a mortgage on its
fee interest in the Gloucester Facility to secure repayment of the CCIA-HHW
Bonds.
The Company also financed its development of an additional seven acres of
real property located in the City of Camden (the "Kaighn Point Property")
through the issuance by the CCIA of $19.6 million of its Lease Revenue Bonds,
1997 Series A and 1997 Series B (the "CCIA-KPP Bonds" and, together with the
CCIA-DRW Bonds (as defined herein) and CCIA-HHW Bonds, the "CCIA Bonds"). Of the
$17.9 million of Series A Bonds issued, $500,000 mature on June 1, 2007 and bear
interest at a rate of 7.375% per annum and $17.4 million mature on June 1, 2027
and bear interest at 8% per annum. The $1.6 million of Series B Bonds bear
interest at 11.0% per annum and have a maturity date of June 1, 2004. The
CCIA-KPP Bonds are secured by a fee mortgage granted by CCIA and a leasehold
mortgage granted by Holt Hauling on the Kaighn Point Property. Payment of the
CCIA-KPP Bonds is guaranteed by Holt Hauling and the Non-combined Affiliates.
Holt Hauling and one of the Non-combined Affiliates granted a mortgage on their
respective interest in the Gloucester Facility to secure repayment of the
CCIA-KPP Bonds.
The applicable documentation for each of the CCIA Bonds contain financial
covenants including a minimum net worth test, a debt to tangible net worth test
and an interest coverage ratio test. There are also restrictions on certain
mergers, acquisitions and sales of assets, incurrence of additional indebtedness
and the making of guarantees, the payment of dividends, the repurchase of stock,
the making of loans to shareholders and the granting of liens. The documents
contain customary events of default consistent with those contained in the NJEDA
Bond documents.
OBLIGATIONS GUARANTEED BY THE COMPANY
DRW BONDS
One of the Lessee-Operators financed its development of a refrigerated
warehouse located at the Gloucester Facility through the issuance by the CCIA of
$18.5 million of its Lease Revenue Bonds (Dockside Refrigerated Warehouses, Inc.
Project), Series 1994 (the "CCIA-DRW Bonds"). The CCIA-DRW Bonds bear interest
at a rate of 8.4% per annum and mature on April 1, 2024. The CCIA-DRW Bonds are
secured by a mortgage granted by CCIA on the warehouse and its leasehold
interests in the real property on which the warehouse is located. In addition,
Holt Hauling and one of the Non-combined Affiliates granted a mortgage in their
interest in the Gloucester Facility to secure repayment of the CCIA-DRW Bonds,
which is guaranteed by Holt Hauling and the Non-combined Affiliates.
PAID BONDS
The Philadelphia Authority for Industrial Development issued $7.0 million
of its Revenue Bonds (Refrigerated Enterprises, Inc. Project) Series of 1992
(the "PAID Bonds") for the benefit of one of the Non-combined Affiliates. The
PAID Bonds are secured by a mortgage on the Non-combined Affiliate's interest in
the property financed with the PAID Bonds. Interest accrues at a rate of 9.05%
per annum (8.75% following an "Exemption Event" as defined therein). The PAID
Bonds have a maturity date of December 1, 2019. Repayment of the PAID Bonds is
guaranteed by Holt and the other Non-combined Affiliates, and such guarantees
are secured by a mortgage granted by Holt Hauling and one of the Non-combined
Affiliates on their respective interests in the Gloucester Facility. The
guarantors are subject to financial covenants including a minimum net worth
test, a debt to tangible net worth test and an interest coverage ratio test. The
Guaranty also contains restrictions on certain mergers, acquisitions and sales
of assets, incurrence of additional indebtedness and the making of guarantees,
the payment of dividends, the repurchase of stock, the making of loans to
shareholders and the granting of liens. The documents contain customary events
of default consistent with those contained in the NJEDA and CCIA Bond documents.
89
<PAGE>
NJEDA BONDS
The NJEDA issued $6.1 million in Economic Development Refunding Bonds (777
Pattison Avenue Inc. 1988 and 1989 Projects), 1992 Refunding Series, which bear
interest at 8.95% and mature on December 15, 2018 (8.65% following an "Exemption
Event" (as defined therein)). The proceeds from the sale of these Bonds were
loaned to one of the Non-combined Affiliates in order to make certain capital
improvements at the Gloucester Facility. Repayment of the bond indebtedness is
guaranteed by Holt and the other Non-combined Affiliates. The Bonds are secured
by a mortgage on the Gloucester Facility.
90
<PAGE>
DESCRIPTION OF NEW NOTES
The form and terms of the New Notes will be identical in all material
respects to the form and terms of the Old Notes, except that (i) the New Notes
have been registered under the Securities Act and, therefore, will not bear
legends restricting the transfer thereof, (ii) holders of the New Notes, except
in limited circumstances, will not be entitled to Liquidated Damages, and (iii)
holders of the New Notes will not be, and upon consummation of the Exchange
Offer, Holders of the Old Notes will no longer be, entitled to certain rights
under the Registration Rights Agreement intended for the holders of unregistered
securities. The Exchange Offer shall be deemed consummated upon the occurrence
of the delivery by the Company to the Registrar under the Indenture of New Notes
in the same aggregate principal amount as the aggregate principal amount of Old
Notes that are validly tendered by holders thereof pursuant to the Exchange
Offer. See "The Exchange Offer -- Termination of Certain Rights" and "--
Procedures for Tendering Old Notes".
Set forth below is a summary of certain provisions of the New Notes. The
New Notes will be issued pursuant to an indenture (the "Indenture") dated as of
January 21, 1998, by and among The Holt Group, Inc. (the "Company"), the
Guarantors and The Bank of New York, as trustee (the "Trustee"). The following
summaries of certain provisions of the Indenture are summaries only, do not
purport to be complete and are qualified in their entirety by reference to all
of the provisions of the Indenture. Capitalized terms used herein and not
otherwise defined shall have the meanings assigned to them in the Indenture.
Wherever particular provisions of the Indenture are referred to in this summary,
such provisions are incorporated by reference as a part of the statements made
and such statements are qualified in their entirety by such reference.
GENERAL
The New Notes will be senior unsecured, general obligations of the Company,
limited in aggregate principal amount to $200.0 million, of which $140.0
aggregate principal amount is being issued on the Issue Date. The New Notes will
be, jointly and severally, irrevocably and unconditionally guaranteed on a
senior basis by each of the Company's present and future Subsidiaries except for
any Non-Recourse Subsidiaries (the "Guarantors"). The obligations of each
Guarantor under its guarantee, however, will be limited in a manner intended to
avoid it being deemed a fraudulent conveyance under applicable law. See
"Guarantees; Certain Bankruptcy Limitations" below. The term "Subsidiaries" as
used herein, however, does not include Unrestricted Subsidiaries. The New Notes
will be issued only in fully registered form, without coupons, in denominations
of $1,000 and integral multiples thereof.
The Indenture provides, in addition to the New Notes being issued on the
Issue Date, for the issuance of up to $60.0 million aggregate principal amount
of additional New Notes having identical terms and conditions to the New Notes
offered hereby (the "Additional New Notes"), subject to compliance with the
covenants contained in the Indenture. Any Additional New Notes will be part of
the same issue as the New Notes offered hereby and will vote on all matters with
the New Notes offered hereby. For purposes of this section, reference to the New
Notes does not include the Additional New Notes.
PRINCIPAL, MATURITY AND INTEREST
The New Notes will mature on January 15, 2006. The New Notes will bear
interest at the rate per annum stated on the cover page hereof from the date of
issuance or from the most recent Interest Payment Date to which interest has
been paid or provided for, payable semi-annually on January 15 and July 15 of
each year, commencing July 15, 1998, to the persons in whose names such New
Notes are registered at the close of business on January 1 and July 1
immediately preceding such Interest Payment Date. Interest will be calculated on
the basis of a 360-day year consisting of twelve 30-day months.
Principal of, premium, if any, and interest and Liquidated Damages, if any,
on the New Notes will be payable, and the New Notes may be presented for
registration of transfer or exchange, at the office
91
<PAGE>
or agency of the Company maintained for such purpose, which office or agency
shall be maintained in the Borough of Manhattan, The City of New York, except as
set forth below. At the option of the Company, payment of interest may be made
by check mailed to the holders of the New Notes ("Holders") at the addresses set
forth upon the registry books of the Company. No service charge will be made for
any registration of transfer or exchange of New Notes, but the Company may
require payment of a sum sufficient to cover any tax or other governmental
charge payable in connection therewith. Until otherwise designated by the
Company, the Company's office or agency will be the corporate trust office of
the Trustee presently located at the office of the Trustee in the Borough of
Manhattan, The City of New York.
GUARANTEES; CERTAIN BANKRUPTCY LIMITATIONS
The Company is a holding company, conducting all of its business through
Subsidiaries, which have guaranteed or will guarantee the Company's Obligations
with respect to the New Notes, and Unrestricted Subsidiaries. See "Risk
Factors." Holders of the New Notes will be direct creditors of each Guarantor by
virtue of its guarantee.
Nonetheless, in the event of the bankruptcy or financial difficulty of a
Guarantor, such Guarantor's obligations under its guarantee may be subject to
review and avoidance under state and federal fraudulent transfer laws. Among
other things, such obligations may be avoided if a court concludes that such
obligations were incurred for less than reasonably equivalent value or fair
consideration at a time when the Guarantor was insolvent, was rendered
insolvent, or was left with inadequate capital to conduct its business. A court
would likely conclude that a Guarantor did not receive reasonably equivalent
value or fair consideration to the extent that the aggregate amount of its
liability on its guarantee exceeds the economic benefits it receives in the
Offering. The obligations of each Guarantor under its guarantee will be limited
in a manner intended to cause it not to be a fraudulent conveyance under
applicable law, although no assurance can be given that a court would give the
holder the benefit of such provision. See "Risk Factors -- Fraudulent Transfer
Considerations."
If the obligations of a Guarantor under its guarantee were avoided, Holders
of New Notes would have to look to the assets of any remaining Guarantors for
payment. There can be no assurance in that event that such assets would suffice
to pay the outstanding principal and interest on the New Notes.
OPTIONAL REDEMPTION
Except as described in the following paragraph, the Company will not have
the right to redeem any New Notes prior to January 15, 2002. The New Notes will
be redeemable for cash at the option of the Company, in whole or in part, at any
time on or after January 15, 2002, upon not less than 30 days nor more than 60
days notice to each holder of New Notes, at the following redemption prices
(expressed as percentages of the principal amount) if redeemed during the
12-month period commencing January 15 of the years indicated below, in each case
(subject to the right of Holders of record on a Record Date to receive interest
due on an Interest Payment Date that is on or prior to such Redemption Date)
together with accrued and unpaid interest and Liquidated Damages, if any,
thereon to the Redemption Date:
<TABLE>
<CAPTION>
YEAR PERCENTAGE
- ---- ----------
<S> <C>
2002.............................................. 104.8750%
2003.............................................. 102.4375%
2004 and thereafter............................... 100.0000%
</TABLE>
Until January 15, 2001 upon a Public Equity Offering of common stock for
cash of the Company, up to 35% of the sum of (i) the original aggregate
principal amount of the New Notes and (ii) the original aggregate principal
amount of any Additional New Notes may be redeemed at the option of the Company
within 90 days of such Public Equity Offering, on not less than 30 days, but not
more than 60 days, notice to each holder of the New Notes to be redeemed, with
cash from the Net Cash Proceeds of such Public Equity Offering, at a redemption
price equal to 109 3/4% of principal (subject to the right
92
<PAGE>
of Holders of record on a Record Date to receive interest due on an Interest
Payment Date that is on or prior to such Redemption Date), together with accrued
and unpaid interest and Liquidated Damages, if any, to the date of redemption;
provided, however, that immediately following such redemption not less than 65%
of the sum of (i) the original aggregate principal amount of the New Notes and
(ii) the original aggregate principal amount of any Additional New Notes remains
outstanding. In the case of a partial redemption, the Trustee shall select the
New Notes or portions thereof for redemption on a pro rata basis, by lot or in
such other manner it deems appropriate and fair. The New Notes may be redeemed
in part in multiples of $1,000 only.
The New Notes will not have the benefit of any sinking fund.
Notice of any redemption will be sent, by first class mail, at least 30
days and not more than 60 days prior to the date fixed for redemption to the
Holder of each Note to be redeemed to such Holder's last address as then shown
upon the registry books of the Registrar. Any notice which relates to a Note to
be redeemed in part only must state the portion of the principal amount equal to
the unredeemed portion thereof and must state that on and after the date of
redemption, upon surrender of such Note, a new Note or New Notes in a principal
amount equal to the unredeemed portion thereof will be issued. On and after the
date of redemption, interest will cease to accrue on the New Notes or portions
thereof called for redemption, unless the Company defaults in the payment
thereof.
CERTAIN COVENANTS
The Indenture contains covenants including the following:
REPURCHASE OF NEW NOTES AT THE OPTION OF HOLDERS UPON A CHANGE OF CONTROL
The Indenture provides that in the event that a Change of Control has
occurred, unless all New Notes have been called for redemption pursuant to the
provisions described under the caption "Optional Redemption," each holder of New
Notes will have the right, at such holder's option, pursuant to an irrevocable
and unconditional offer by the Company (the "Change of Control Offer"), to
require the Company to repurchase all or any part of such holder's New Notes
(provided that the principal amount of such New Notes must be $1,000 or an
integral multiple thereof) on a date (the "Change of Control Purchase Date")
that is no later than 45 Business Days after the occurrence of such Change of
Control, at a cash price equal to 101% of the principal amount thereof (the
"Change of Control Purchase Price"), together with accrued and unpaid interest
and Liquidated Damages, if any, to the Change of Control Purchase Date. The
Change of Control Offer shall be made within 10 Business Days following a Change
of Control and shall remain open for 20 Business Days following its commencement
(the "Change of Control Offer Period"). Upon expiration of the Change of Control
Offer Period, the Company promptly shall purchase all New Notes properly
tendered in response to the Change of Control Offer.
As used herein, a "Change of Control" means (i) prior to the consummation
of an initial Public Equity Offering an Excluded Person shall cease to own
beneficially, directly or indirectly and of record 51% of the Capital Stock of
the Company; or (ii) following the consummation of an initial Public Equity
Offering (A) any merger or consolidation of the Company with or into any person
or any sale, transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of the Company, on a consolidated basis, in one
transaction or a series of related transactions, if, immediately after giving
effect to such transaction(s), any "person" or "group" (as such terms are used
for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable) (other than an Excluded Person) is or becomes the "beneficial
owner," directly or indirectly, of more than 35% of the total voting power in
the aggregate normally entitled to vote in the election of directors, managers,
or trustees, as applicable, of the transferee(s) or surviving entity or entities
unless an Excluded Person "beneficially owns," directly or indirectly, in the
aggregate a greater percentage of the total voting power in the aggregate
normally entitled to vote in the election of directors, managers, or trustees,
as applicable, of the transferee(s) or surviving entity or entities; or (B) any
"person" or "group" (as such terms are used for purposes of Sections 13(d) and
14(d) of the Exchange Act, whether or not
93
<PAGE>
applicable) (other than an Excluded Person) is or becomes the "beneficial
owner," directly or indirectly, of more than 35% of the total voting power in
the aggregate of all classes of Capital Stock of the Company then outstanding
normally entitled to vote in elections of directors, unless an Excluded Person
"beneficially owns," directly or indirectly, in the aggregate a greater
percentage of the total voting power of all classes of Capital Stock of the
Company then outstanding normally entitled to vote in the election of directors;
or (iii) during any period of 12 consecutive months after the Issue Date,
individuals who at the beginning of any such 12-month period constituted the
Board of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
shareholders of the Company was approved by a vote of a majority of the
directors then still in office who were either directors at the beginning of
such period or whose election or nomination for election was previously so
approved) cease for any reason to constitute a majority of the Board of
Directors of the Company then in office.
On or before the Change of Control Purchase Date, the Company will (i)
accept for payment New Notes or portions thereof properly tendered pursuant to
the Change of Control Offer, (ii) deposit with the Paying Agent cash sufficient
to pay the Change of Control Purchase Price (together with accrued and unpaid
interest and Liquidated Damages, if any) of all New Notes so tendered and (iii)
deliver to the Trustee New Notes so accepted together with an Officers'
Certificate listing the New Notes or portions thereof being purchased by the
Company. The Paying Agent promptly will pay the Holders of New Notes so accepted
an amount equal to the Change of Control Purchase Price (together with accrued
and unpaid interest and Liquidated Damages, if any), and the Trustee promptly
will authenticate and deliver to such Holders a new Note equal in principal
amount to any unpurchased portion of the Note surrendered. Any New Notes not so
accepted will be delivered promptly by the Company to the Holder thereof. The
Company publicly will announce the results of the Change of Control Offer on or
as soon as practicable after the Change of Control Purchase Date.
The Change of Control purchase feature of the New Notes may make more
difficult or discourage a takeover of the Company, and, thus, the removal of
incumbent management.
The phrase "all or substantially all" of the assets of the Company will
likely be interpreted under applicable state law and will be dependent upon
particular facts and circumstances. As a result, there may be a degree of
uncertainty in ascertaining whether a sale or transfer of "all or substantially
all" of the assets of the Company has occurred. In addition, no assurances can
be given that the Company will be able to acquire New Notes tendered upon the
occurrence of a Change of Control.
Any Change of Control Offer will be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws. To the extent that the provisions of any securities laws or
regulations conflict with the provisions of this covenant, compliance by the
Company or any of its subsidiaries with such laws and regulations shall not in
and of itself cause a breach of its obligations under such covenant.
If a Change of Control Offer is made, there can be no assurance that the
Company will have available funds sufficient to pay the purchase price for all
of the New Notes that might be delivered by Holders seeking to accept the Change
of Control Offer. The failure of the Company to make or consummate the Change of
Control Offer or pay the Change of Control Purchase Price when due will give the
Trustee and the Holders the rights described under "Event of Default."
Certain Indebtedness of the Company contains and future Indebtedness of the
Company may contain prohibitions of the occurrence of certain events that would
constitute a Change of Control or require such Existing Indebtedness or future
Indebtedness to be repaid or repurchased upon a Change of Control. Moreover, the
exercise by the Holders of their right to require the Company to repurchase the
New Notes could cause a default under such Existing Indebtedness or future
Indebtedness, even if the Change of Control itself does not, due to the
financial effect of such repurchase on the Company. Finally, the Company's
ability to pay cash to the Holders following the occurrence of a Change of
Control may be limited by the Company's then existing financial resources. There
can be no assurance that sufficient funds will be available when necessary to
make any required repurchases.
94
<PAGE>
If the Change of Control Purchase Date hereunder is on or after an interest
payment Record Date and on or before the associated Interest Payment Date, any
accrued and unpaid interest (and Liquidated Damages, if any) will be paid to the
person in whose name a Note is registered at the close of business on such
Record Date, and such interest (and Liquidated Damages, if applicable) will not
be payable to Holders who tender the New Notes pursuant to the Change of Control
Offer.
LIMITATION ON INCURRENCE OF ADDITIONAL INDEBTEDNESS AND ISSUANCE OF
DISQUALIFIED CAPITAL STOCK
The Indenture provides that, except as set forth in this covenant, the
Company and the Guarantors will not, and will not permit any of their
Subsidiaries to, directly or indirectly, issue, assume, guaranty, incur, become
directly or indirectly liable with respect to (including as a result of an
Acquisition), or otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur" or, as appropriate, an "incurrence"),
any Indebtedness or issue any Disqualified Capital Stock (including Acquired
Indebtedness), other than Permitted Indebtedness. Notwithstanding the foregoing,
if (i) no Default or Event of Default shall have occurred and be continuing at
the time of, or would occur after giving effect on a pro forma basis to, such
incurrence of Indebtedness or issuance of Disqualified Capital Stock and (ii) on
the date of such incurrence or issuance (the "Incurrence Date"), the
Consolidated Coverage Ratio of the Company for the Reference Period immediately
preceding the Incurrence Date, after giving effect on a pro forma basis to such
incurrence of such Indebtedness or issuance of Disqualified Capital Stock and,
to the extent set forth in the definition of Consolidated Coverage Ratio, the
use of proceeds thereof, would be at least 2.0 to l (the "Debt Incurrence
Ratio"), then the Company may incur such Indebtedness or issue Disqualified
Capital Stock and the Guarantors may incur such Indebtedness (other than
Disqualified Capital Stock).
In addition, the foregoing limitations will not apply to:
(a) the incurrence by the Company or any Guarantor of Purchase Money
Indebtedness on or after the Issue Date; provided, that (i) the aggregate
principal amount of such Indebtedness incurred on or after the Issue Date
and outstanding at any time pursuant to this paragraph (a) (including any
Indebtedness incurred to refinance, replace or refund such Indebtedness)
shall not exceed $25.0 million, and (ii) in each case, such Indebtedness
shall not constitute more than 100% of the cost (determined in accordance
with GAAP) to the Company or such Guarantor, as applicable, of the property
so purchased, leased or financed;
(b) if no Event of Default shall have occurred and be continuing, the
incurrence by the Company or any Guarantor of Indebtedness in an aggregate
principal amount outstanding at any time (including Indebtedness incurred
to refinance, replace or refund such Indebtedness) of up to $25.0 million;
(c) the incurrence by the Company or any Guarantor of Indebtedness
pursuant to the Credit Agreement up to an aggregate principal amount
outstanding at any time (including any Indebtedness incurred to refinance,
replace or refund such Indebtedness) of $50.0 million, minus the amount of
any such Indebtedness (i) retired with the Net Cash Proceeds from any Asset
Sale applied to reduce permanently the outstanding amounts or the
commitments with respect to such Indebtedness pursuant to clause (1)(b)(ii)
of the first paragraph of the covenant "Limitation on Sale of Assets and
Subsidiary Stock" or (ii) assumed by a transferee in an Asset Sale;
(d) the incurrence by the Company or any Guarantor of Existing
Indebtedness; and
(e) the incurrence by any Non-Recourse Subsidiary of Permitted
Non-Recourse Vessel Indebtedness.
Indebtedness or Disqualified Capital Stock of any Person which is
outstanding at the time such Person becomes a Subsidiary of the Company
(including upon designation of any subsidiary or other person as a Subsidiary)
or is merged with or into or consolidated with the Company or a Subsidiary of
the Company shall be deemed to have been incurred at the time such Person
becomes such a Subsidiary of the Company or is merged with or into or
consolidated with the Company or a
95
<PAGE>
Subsidiary of the Company, as applicable. The Indenture provides that the
Company and the Guarantors will not, and will not permit any of their
Subsidiaries to, directly or indirectly, incur, or suffer to exist any
Indebtedness that is contractually subordinate in right of payment to any other
Indebtedness of the Company or a Guarantor unless, by its terms, such
Indebtedness is subordinate to the same extent in right of payment to the New
Notes or the Guarantee, as applicable.
LIMITATION ON RESTRICTED PAYMENTS
The Indenture provides that the Company and the Guarantors will not, and
will not permit any of their Subsidiaries to, directly or indirectly, make any
Restricted Payment if, after giving effect to such Restricted Payment on a pro
forma basis, (1) a Default or an Event of Default shall have occurred and be
continuing, (2) the Company is not permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt Incurrence Ratio in the covenant
"Limitation on Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock," or (3) the aggregate amount of all Restricted
Payments made by the Company and its Subsidiaries, including after giving effect
to such proposed Restricted Payment, from and after the Issue Date, would exceed
the sum of (a) 50% of the aggregate Consolidated Net Income of the Company for
the period (taken as one accounting period), commencing on the first day of the
first full fiscal quarter commencing after the Issue Date, to and including the
last day of the fiscal quarter ended immediately prior to the date of each such
calculation (or, in the event Consolidated Net Income for such period is a
deficit, then minus 100% of such deficit), plus (b) the aggregate Net Cash
Proceeds received by the Company from the sale of its Qualified Capital Stock
(other than (i) to a Subsidiary of the Company and (ii) to the extent applied in
connection with a Qualified Exchange), after the Issue Date.
The foregoing clauses (2) and (3) of the immediately preceding paragraph,
however, will not prohibit (t) pro rata dividends and other distributions on
Equity Interests of a Subsidiary by such Subsidiary, (u) Restricted Investments,
provided that, after giving pro forma effect to any such Investment, the
aggregate amount of all such Investments made on or after the Issue Date that
are outstanding (after giving effect to any such Investments that are returned
to the Company or the Subsidiary that made such prior Investment, without
restriction, in cash on or prior to the date of any such calculation) at any
time does not exceed $10.0 million plus (i) any cash proceeds received by the
Company or any Guarantor from the Packer Avenue Proceeding and (ii) the Net Cash
Proceeds received by the Company from the sale (other than to any of its
Affiliates, to the extent used to effect a Qualified Exchange, or to make
Restricted Payments other than pursuant to this clause (u)) of its Qualified
Capital Stock after the Issue Date, (v) (i) payments pursuant to the Employee
Stock Plan and (ii) repurchases of Capital Stock from employees of the Company
or its Subsidiaries upon their death or disability or the termination of their
employment, such payments under (i) and (ii) collectively not to exceed $15.0
million in the aggregate on and after the Issue Date and (w) payments required
to be made under put rights pursuant to the TNX Shareholders Agreement not to
exceed $10.0 million in the aggregate, and the provisions of the immediately
preceding paragraph will not prohibit (x) a Qualified Exchange, (y) the payment
of any dividend on Qualified Capital Stock within 60 days after the date of its
declaration if such dividend could have been made on the date of such
declaration in compliance with the foregoing provisions and (z) so long as the
Company is a Subchapter S Corporation or substantially similar pass-through
entity for federal income tax purposes, cash distributions paid by the Company
to its shareholders from time to time in amounts permitted by and otherwise in
accordance with the definition of Permitted Tax Distribution. The full amount of
any Restricted Payment made pursuant to the foregoing clauses (t), (u), (v) and
(y) (but not pursuant to clauses (w), (x) and (z)) of the immediately preceding
sentence, however, will be deducted in the calculation of the aggregate amount
of Restricted Payments available to be made referred to in clause (3) of the
immediately preceding paragraph.
For purposes of this covenant, the amount of any Restricted Payment, if
other than in cash, shall be the fair market value thereof, as determined in the
good faith reasonable judgment of the Board of Directors of the Company.
Additionally, at the time of each Restricted Payment, the Company shall deliver
an Officers' Certificate to the Trustee describing in reasonable detail the
nature of such
96
<PAGE>
Restricted Payment, stating the amount of such Restricted Payment, stating in
reasonable detail the provisions of the Indenture pursuant to which such
Restricted Payment was made and certifying that such Restricted Payment was made
in compliance with the terms of the Indenture.
LIMITATION ON DIVIDENDS AND OTHER PAYMENT RESTRICTIONS AFFECTING SUBSIDIARIES
The Indenture provides that the Company and the Guarantors will not, and
will not permit any of their Subsidiaries to, directly or indirectly, create,
assume or suffer to exist any consensual restriction on the ability of any
Subsidiary of the Company to pay dividends or make other distributions to or on
behalf of, or to pay any obligation to or on behalf of, or otherwise to transfer
assets or property to or on behalf of, or make or pay loans or advances to or on
behalf of, the Company or any Subsidiary of the Company, except (a) restrictions
imposed by the New Notes or the Indenture or by other indebtedness of the
Company (which may also be guaranteed by the Guarantors) ranking pari passu with
the New Notes (and the guarantees, as applicable), provided such restrictions
are no more restrictive than those imposed by the Indenture and the New Notes,
(b) restrictions imposed by applicable law, (c) restrictions under the Existing
Indebtedness and Permitted Non-Recourse Vessel Indebtedness, (d) restrictions
under any Acquired Indebtedness not incurred in violation of the Indenture or
any agreement relating to any property, asset, or business acquired by the
Company or any of its Subsidiaries, which restrictions in each case existed at
the time of acquisition, were not put in place in connection with or in
anticipation of such acquisition and are not applicable to any person, other
than the person acquired, or to any property, asset or business, other than the
property, assets and business so acquired, (e) any such restriction or
requirement imposed by Indebtedness incurred under paragraph (c) of the covenant
"Limitation on Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock," provided such restriction or requirement is no more
restrictive than that imposed by the Credit Agreement as of the Issue Date, (f)
restrictions with respect solely to a Subsidiary of the Company imposed pursuant
to a binding agreement which has been entered into for the sale or disposition
of all or substantially all of the Equity Interests or assets of such
Subsidiary, provided further such restrictions apply solely to the Equity
Interests or assets of such Subsidiary which are being sold, (g) restrictions on
transfer contained in Purchase Money Indebtedness incurred pursuant to paragraph
(a) of the covenant "Limitation on Incurrence of Additional Indebtedness and
Issuance of Disqualified Capital Stock," provided such restrictions relate only
to the transfer of the property acquired with the proceeds of such Purchase
Money Indebtedness, and (h) in connection with and pursuant to permitted
Refinancings, replacements of restrictions imposed pursuant to clauses (a), (c)
or (d) of this paragraph that are not more restrictive than those being replaced
and do not apply to any other person or assets other than those that would have
been covered by the restrictions in the Indebtedness so refinanced.
Notwithstanding the foregoing, neither (a) customary provisions restricting
subletting or assignment of any lease entered into in the ordinary course of
business, consistent with industry practice, nor (b) Liens permitted under the
terms of the Indenture on assets securing Senior Debt or Purchase Money
Indebtedness incurred in accordance with the covenant "Limitation on Incurrence
of Additional Indebtedness and Issuance of Disqualified Capital Stock" shall in
and of themselves be considered a restriction on the ability of the applicable
Subsidiary to transfer such agreement or assets, as the case may be.
LIMITATION ON LIENS SECURING INDEBTEDNESS
The Company and the Guarantors will not, and will not permit any of their
Subsidiaries to create, incur, assume or suffer to exist any Lien of any kind,
other than Permitted Liens, upon any of their respective assets now owned or
hereafter acquired on or after the Issue Date of the Indenture or upon any
income or profits therefrom securing any Indebtedness of the Company or any
Guarantor, provided that only with respect to other senior Indebtedness of the
Company (which may also be guaranteed by the Guarantors) ranking on a parity
with the New Notes (and the guarantees, as applicable), the Company provides,
and causes its Subsidiaries to provide, concurrently therewith, that the New
Notes are equally and ratably so secured.
97
<PAGE>
LIMITATION ON SALE OF ASSETS AND SUBSIDIARY STOCK
The Indenture provides that the Company and the Guarantors will not, and
will not permit any of their Subsidiaries to, in one or a series of related
transactions, convey, sell, transfer, assign or otherwise dispose of, directly
or indirectly, any of its property, business or assets, including by merger or
consolidation (in the case of a Guarantor or a Subsidiary of the Company), and
including any sale or other transfer or issuance of any Equity Interests of any
Subsidiary of the Company, whether by the Company or a Subsidiary or through the
issuance, sale or transfer of Equity Interests by a Subsidiary of the Company,
and including any sale and leaseback transaction (any of the foregoing, an
"Asset Sale"), unless (1)(a) the Net Cash Proceeds therefrom (the "Asset Sale
Offer Amount") are applied, subject to the next paragraph below, (i) within 330
days after the date of such Asset Sale, to the optional redemption of (a)
Indebtedness secured by the items so subject to such Asset Sale or (b) the New
Notes in accordance with the terms of the Indenture and other Indebtedness of
the Company ranking on a parity with the New Notes from time to time outstanding
with similar provisions requiring the Company to make an offer to purchase or to
redeem such Indebtedness with the proceeds of asset sales, pro rata in
proportion to the respective principal amounts (or accreted values in the case
of Indebtedness issued with an original issue discount) of the New Notes and
such other Indebtedness then outstanding or (ii) to the repurchase of (a)
Indebtedness secured by the items so subject to such Asset Sale or (b) the New
Notes and such other Indebtedness ranking on a parity with the New Notes and
having similar provisions requiring the Company to purchase or redeem such
Indebtedness with the proceeds from asset sales pursuant to a cash offer subject
only to conditions, if any, required by law (pro rata in proportion to the
respective principal amounts (or accreted values in the case of Indebtedness
issued with an original issue discount) of the New Notes and such other
Indebtedness then outstanding) (the "Asset Sale Offer") at a purchase price of
100% of principal amount (or accreted value in the case of Indebtedness issued
with an original issue discount) (the "Asset Sale Offer Price") together with
accrued and unpaid interest and Liquidated Damages, if any, to the date of
payment, made within 330 days of such Asset Sale or (b) within 330 days
following such Asset Sale, the Asset Sale Offer Amount is (i) invested in assets
and property (except in connection with the acquisition of a Wholly-owned
Subsidiary, other than notes, bonds, obligation and securities) which in the
good faith reasonable judgment of the Board of Directors of the Company will
immediately constitute or be a part of a Related Business of the Company or such
Subsidiary (if it continues to be a Subsidiary) immediately following such
transaction or (ii) used to retire permanently Indebtedness permitted to be
incurred pursuant to paragraph (c) of the covenant "Limitation on Incurrence of
Additional Indebtedness and Issuance of Disqualified Capital Stock" (including
that in the case of a revolver or similar arrangement that makes credit
available, such commitment is so permanently reduced by such amount), (2) at
least 75% of the consideration for such Asset Sale or series of related Asset
Sales consists of Cash or Cash Equivalents, (3) no Default or Event of Default
shall have occurred and be continuing at the time of, or would occur after
giving effect, on a pro forma basis, to, such Asset Sale, and (4) the Board of
Directors of the Company determines in good faith that the Company or such
Subsidiary, as applicable, receives fair market value for such Asset Sale.
The Indenture provides that an acquisition of New Notes pursuant to an
Asset Sale Offer may be deferred until the accumulated Net Cash Proceeds from
Asset Sales not applied to the uses set forth in clause (1)(a)(i) or clause
(l)(b) above (the "Excess Proceeds") exceeds $10.0 million and that each Asset
Sale Offer shall remain open for 20 Business Days following its commencement
(the "Asset Sale Offer Period"). Upon expiration of the Asset Sale Offer Period,
the Company shall apply the Asset Sale Offer Amount plus an amount equal to
accrued and unpaid interest and Liquidated Damages, if any, to the purchase of
all Indebtedness properly tendered (on a pro rata basis (in $1,000 increments)
if the Asset Sale Offer Amount is insufficient to purchase all Indebtedness so
tendered) at the Asset Sale Offer Price (together with accrued interest and
Liquidated Damages, if any). To the extent that the aggregate amount of New
Notes tendered pursuant to an Asset Sale Offer is less than the Asset Sale Offer
Amount, the Company may use any remaining Net Cash Proceeds for general
corporate purposes as otherwise permitted by the Indenture and following each
Asset Sale Offer the Excess Proceeds amount shall be reset to zero. For purposes
of clause (2) above, total consideration received means the total consideration
received for such Asset Sales minus the amount of Purchase
98
<PAGE>
Money Indebtedness or Permitted Non-Recourse Vessel Indebtedness secured solely
by and repaid with the proceeds from the assets sold or assumed by a transferee.
Notwithstanding, and without complying with, the provisions of this
covenant:
(i) the Company and its Subsidiaries may, in the ordinary course of
business, (1) convey, sell, transfer, assign or otherwise dispose of
inventory acquired and held for resale in the ordinary course of business
or (2) liquidate Cash Equivalents;
(ii) the Company and its Subsidiaries may convey, sell, transfer,
assign or otherwise dispose of assets pursuant to and in accordance with
the covenant "Limitation on Merger, Sale or Consolidation" and the covenant
"Limitation on Restricted Payments";
(iii) the Company and its Subsidiaries may sell or dispose of damaged,
worn out or other obsolete personal property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of the Company or such Subsidiary, as applicable;
(iv) the Company and the Guarantors may convey, sell, transfer, assign
or otherwise dispose of assets to the Company or any of its Subsidiary
Guarantors; and (v) the Company and each of its Subsidiaries may surrender
or waive contract rights or settle, release or surrender contract, tort or
other claims of any kind or grant Liens not prohibited by the Indenture.
All Net Cash Proceeds from an Event of Loss (other than the proceeds of any
business interruption insurance) shall be invested, or used to repurchase (a)
Indebtedness secured by the items so subject to such Event of Loss or (b) New
Notes and on a pro rata basis with the New Notes other Indebtedness ranking on a
parity with the New Notes, all within the period and as otherwise provided above
in clauses 1(a) or 1(b) of the first paragraph of this covenant.
In addition to the foregoing, the Company will not, and will not permit any
of its Subsidiaries to, directly or indirectly make any Asset Sale of any of the
Equity Interests of any Subsidiary of the Company except (i) pursuant to an
Asset Sale of all the Equity Interests of such Subsidiary or (ii) pursuant to an
Asset Sale of common stock with no preferences or special rights or privileges
and with no redemption or prepayment provisions, provided that after such sale,
the Company or its Subsidiaries own a majority of the voting and economic Equity
Interests of such Subsidiary.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this covenant, compliance by
the Company or any of its subsidiaries with such laws and regulations shall not
in and of itself cause a breach of its obligations under such covenant.
If the payment date in connection with an Asset Sale Offer hereunder is on
or after an interest payment Record Date and on or before the associated
Interest Payment Date, any accrued and unpaid interest (and Liquidated Damages,
if any) will be paid to the person in whose name a Note is registered at the
close of business on such Record Date, and such interest (and Liquidated
Damages, if applicable) will not be payable to Holders who tender New Notes
pursuant to such Asset Sale Offer.
LIMITATION ON TRANSACTIONS WITH AFFILIATES
The Indenture provides that neither the Company nor any of its Subsidiaries
will be permitted on or after the Issue Date to enter into or suffer to exist
any contract, agreement, arrangement or transaction with any Affiliate (an
"Affiliate Transaction"), or any series of related Affiliate Transactions (other
than Exempted Affiliate Transactions), (i) unless it is determined that the
terms of such Affiliate Transaction are fair and reasonable to the Company, and
no less favorable to the Company, than could have been obtained in an arm's
length transaction with a non-Affiliate, (ii) if involving consideration to
either party in excess of $1.0 million unless such Affiliate Transaction(s) is
the subject of an Officers' Certificate addressed and delivered to the Trustee
certifying that such
99
<PAGE>
Affiliate Transaction (or Transactions) has been approved by a majority of the
members of the Board of Directors that are disinterested in such transaction and
(iii) if involving consideration to either party in excess of $10.0 million,
unless, in addition, the Company, prior to the consummation thereof, obtains a
written favorable opinion as to the fairness of such transaction to the Company
from a financial point of view from an independent investment banking firm of
national reputation or, if pertaining to a matter for which such investment
banking firms do not customarily render such opinions, an appraisal or valuation
firm of national reputation; provided, however, that clause (iii) also will be
applicable to any Affiliate Transaction involving consideration to either party
in excess of $5.0 million but equal to or less than $10.0 million unless such
Affiliate Transaction is only with an Affiliate (x) engaged in business
substantially similar and related to the business then conducted by the Company
and its Subsidiaries (as permitted under the Indenture) and (y) such Affiliate
Transaction is entered into in the ordinary course of business for purposes
customary in the Company's industry.
LIMITATION ON MERGER, SALE OR CONSOLIDATION
The Indenture provides that the Company will not consolidate with or merge
with or into another person or, directly or indirectly, sell, lease, convey or
transfer all or substantially all of its assets (computed on a consolidated
basis), whether in a single transaction or a series of related transactions, to
another Person or group of affiliated Persons or adopt a plan of liquidation,
unless (i) either (a) the Company is the continuing entity or (b) the resulting,
surviving or transferee entity or, in the case of a plan of liquidation, the
entity which receives the greatest value from such plan of liquidation is a
corporation organized under the laws of the United States, any state thereof or
the District of Columbia and expressly assumes by supplemental indenture all of
the obligations of the Company in connection with the New Notes and the
Indenture; (ii) no Default or Event of Default shall exist or shall occur
immediately after giving effect on a pro forma basis to such transaction; and
(iii) (unless such transaction is solely the merger of the Company and one of
its previously existing Wholly-owned Subsidiaries which is also a Guarantor and
such transaction is not in connection with any other transaction) immediately
after giving effect to such transaction on a pro forma basis, the consolidated
resulting, surviving or transferee entity or, in the case of a plan of
liquidation, the entity which receives the greatest value from such plan of
liquidation would immediately thereafter be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt Incurrence Ratio set forth in the
covenant "Limitation on Incurrence of Additional Indebtedness and Issuance of
Disqualified Capital Stock."
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Company or consummation of a plan of liquidation in
accordance with the foregoing, the successor corporation formed by such
consolidation or into which the Company is merged or to which such transfer is
made or, in the case of a plan of liquidation, the entity which receives the
greatest value from such plan of liquidation shall succeed to (except in the
case of a lease), and be substituted for, and may exercise every right and power
of, the Company under the Indenture with the same effect as if such successor
corporation had been named therein as the Company, and (except in the case of a
lease) the Company shall be released from the obligations under the New Notes
and the Indenture except with respect to any obligations that arise from, or are
related to, such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, the Company's interest in which constitutes all or
substantially all of the properties and assets of the Company shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company.
LIMITATION ON LINES OF BUSINESS
The Indenture provides that neither the Company nor any of its Subsidiaries
shall directly or indirectly engage to any substantial extent in any line or
lines of business activity other than that which, in the reasonable good faith
judgment of the Board of Directors of the Company, is a Related Business.
100
<PAGE>
FUTURE SUBSIDIARY GUARANTORS
The Indenture provides that all present and future Subsidiaries of the
Company except for Non-Recourse Subsidiaries jointly and severally will guaranty
irrevocably and unconditionally all principal, premium, if any, and interest
(and Liquidated Damages, if any) on the New Notes on a senior basis. The term
Subsidiary does not include Unrestricted Subsidiaries.
RELEASE OF GUARANTORS
The Indenture provides that no Subsidiary Guarantor shall consolidate or
merge with or into (whether or not such Subsidiary Guarantor is the surviving
person) another person unless (i) subject to the provisions of the following
paragraph and certain other provisions of the Indenture, the person formed by or
surviving any such consolidation or merger (if other than such Subsidiary
Guarantor) assumes all the obligations of such Subsidiary Guarantor pursuant to
a supplemental indenture in form reasonably satisfactory to the Trustee,
pursuant to which such person shall unconditionally guarantee, on a senior
basis, all of such Subsidiary Guarantor's obligations under such Subsidiary
Guarantor's guarantee and the Indenture on the terms set forth in the Indenture,
and (ii) immediately before and immediately after giving effect to such
transaction on a pro forma basis, no Default or Event of Default shall have
occurred or be continuing.
Upon the sale or disposition (whether by merger, stock purchase, asset sale
or otherwise) of a Subsidiary Guarantor or all of its assets to an entity which
is not a Subsidiary Guarantor or the designation of a Subsidiary to become an
Unrestricted Subsidiary, which transaction is otherwise in compliance with the
Indenture (including, without limitation, the provisions of the covenant
"Limitations on Sale of Assets and Subsidiary Stock"), such Subsidiary Guarantor
will be deemed released from its obligations under its Guarantee of the New
Notes; provided, however, that any such termination shall occur only to the
extent that all obligations of such Subsidiary Guarantor under all of its
guarantees of, and under all of its pledges of assets or other security
interests which secure, any Indebtedness of the Company or any other Subsidiary
of the Company shall also terminate upon such release, sale or transfer.
LIMITATION ON STATUS AS INVESTMENT COMPANY
The Indenture prohibits the Company and its Subsidiaries from being
required to register as an "investment company" (as that term is defined in the
Investment Company Act of 1940, as amended), or from otherwise becoming subject
to regulation under the Investment Company Act.
REPORTS
The Indenture provides that whether or not the Company is subject to the
reporting requirements of Section 13 or 15(d) of the Exchange Act, the Company
shall deliver to the Trustee and to each Holder and to prospective purchasers of
New Notes identified to the Company by an Initial Purchaser, within 15 days
after it is or would have been (if it were subject to such reporting
obligations) required to file such with the Commission, annual and quarterly
financial statements substantially equivalent to financial statements that would
have been included in reports filed with the Commission, if the Company were
subject to the requirements of Section 13 or 15(d) of the Exchange Act,
including, with respect to annual information only, a report thereon by the
Company's certified independent public accountants as such would be required in
such reports to the Commission, and, in each case, together with a management's
discussion and analysis of financial condition and results of operations which
would be so required and, unless the Commission will not accept such reports,
file with the Commission the annual, quarterly and other reports which it is or
would have been required to file with the Commission.
101
<PAGE>
EVENTS OF DEFAULT AND REMEDIES
The Indenture defines an Event of Default as (i) the failure by the Company
to pay any installment of interest (or Liquidated Damages, if any) on the New
Notes as and when the same becomes due and payable and the continuance of any
such failure for 30 days, (ii) the failure by the Company to pay all or any part
of the principal, or premium, if any, on the New Notes when and as the same
becomes due and payable at maturity, redemption, by acceleration or otherwise,
including, without limitation, payment of the Change of Control Purchase Price
or the Asset Sale Offer Price, or otherwise, (iii) the failure by the Company or
any Subsidiary of the Company to observe or perform any other covenant or
agreement contained in the New Notes or the Indenture and, subject to certain
exceptions, the continuance of such failure for a period of 30 days after
written notice is given to the Company by the Trustee or to the Company and the
Trustee by the Holders of at least 25% in aggregate principal amount of the New
Notes outstanding, (iv) certain events of bankruptcy, insolvency or
reorganization in respect of the Company or any of its Significant Subsidiaries,
(v) a default in any issue of Indebtedness of the Company or any of its
Subsidiaries with an aggregate principal amount in excess of $10.0 million (a)
resulting from the failure to pay principal or interest when due or (b) as a
result of which the maturity of such Indebtedness has been accelerated prior to
its stated maturity, and (vi) final unsatisfied judgments not covered by
insurance aggregating in excess of $10.0 million, at any one time rendered
against the Company or any of its Subsidiaries and not stayed, bonded or
discharged within 60 days. The Indenture provides that if a Default occurs and
is continuing, the Trustee must, within 90 days after the occurrence of such
default, give to the Holders notice of such default.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in clause (iv), above, relating to the Company or any of its
Significant Subsidiaries), then in every such case, unless the principal of all
of the New Notes shall have already become due and payable, either the Trustee
or the Holders of at least 25% in aggregate principal amount of the New Notes
then outstanding, by notice in writing to the Company (and to the Trustee if
given by Holders) (an "Acceleration Notice"), may declare all principal,
determined as set forth below, and accrued interest (and Liquidated Damages, if
any) thereon to be due and payable immediately. If an Event of Default specified
in clause (iv), above, relating to the Company or any of its Significant
Subsidiaries occurs, all principal and accrued interest (and Liquidated Damages,
if any) thereon will be immediately due and payable on all outstanding New Notes
without any declaration or other act on the part of Trustee or the Holders. The
Holders of a majority in aggregate principal amount of New Notes generally are
authorized to rescind such acceleration if all existing Events of Default, other
than the non-payment of the principal of, premium, if any, and interest (and
Liquidated Damages, if any) on the New Notes which have become due solely by
such acceleration and except a default with respect to any provision requiring a
supermajority approval to amend, which default may only be waived by such a
supermajority, and have been cured or waived.
Prior to the declaration of acceleration of the maturity of the New Notes,
the Holders of a majority in aggregate principal amount of the New Notes at the
time outstanding may waive on behalf of all the Holders any default, except a
default with respect to any provision requiring a supermajority approval to
amend, which default may only be waived by such a supermajority, and except a
default in the payment of principal of or interest (or Liquidated Damages, if
any) on any Note not yet cured or a default with respect to any covenant or
provision which cannot be modified or amended without the consent of the Holder
of each outstanding Note affected. Subject to the provisions of the Indenture
relating to the duties of the Trustee, the Trustee will be under no obligation
to exercise any of its rights or powers under the Indenture at the request,
order or direction of any of the Holders, unless such Holders have offered to
the Trustee reasonable security or indemnity. Subject to all provisions of the
Indenture and applicable law, the Holders of a majority in aggregate principal
amount of the New Notes at the time outstanding will have the right to direct
the time, method and place of conducting any proceeding for any remedy available
to the Trustee, or exercising any trust or power conferred on the Trustee.
102
<PAGE>
LEGAL DEFEASANCE AND COVENANT DEFEASANCE
The Indenture provides that the Company may, at its option and at any time
within one year of the Stated Maturity of the New Notes, elect to have its
obligations and the obligations of the Guarantors discharged with respect to the
outstanding New Notes ("Legal Defeasance"). Such Legal Defeasance means that the
Company shall be deemed to have paid and discharged the entire indebtedness
represented, and the Indenture shall cease to be of further effect as to all
outstanding New Notes and Guarantees, except as to (i) rights of Holders to
receive payments in respect of the principal of, premium, if any, and interest
(and Liquidated Damages, if any) on such New Notes when such payments are due
from the trust funds; (ii) the Company's obligations with respect to such New
Notes concerning issuing temporary New Notes, registration of New Notes,
mutilated, destroyed, lost or stolen New Notes, and the maintenance of an office
or agency for payment and money for security payments held in trust; (iii) the
rights, powers, trust, duties, and immunities of the Trustee, and the Company's
obligations in connection therewith; and (iv) the Legal Defeasance provisions of
the Indenture. In addition, the Company may, at its option and at any time,
elect to have the obligations of the Company and the Guarantors released with
respect to certain covenants that are described in the Indenture ("Covenant
Defeasance") and thereafter any omission to comply with such obligations shall
not constitute a Default or Event of Default with respect to the New Notes. In
the event Covenant Defeasance occurs, certain events (not including non-payment,
bankruptcy, receivership, rehabilitation and insolvency events) described under
"Events of Default" will no longer constitute an Event of Default with respect
to the New Notes.
In order to exercise either Legal Defeasance or Covenant Defeasance, (i)
the Company must irrevocably deposit with the Trustee, in trust, for the benefit
of the holders of the New Notes, U.S. legal tender, U.S. Government Obligations
or a combination thereof, in such amounts as will be sufficient, in the opinion
of a nationally recognized firm of independent public accountants, to pay the
principal of, premium, if any, and interest on such New Notes on the stated date
for payment thereof or on the redemption date of such principal or installment
of principal of, premium, if any, or interest on such New Notes, and the holders
of New Notes must have a valid, perfected, exclusive security interest in such
trust; (ii) in the case of Legal Defeasance, the Company shall have delivered to
the Trustee an opinion of counsel in the United States reasonably acceptable to
the Trustee confirming that (A) the Company has received from, or there has been
published by the Internal Revenue Service, a ruling or (B) since the date of the
Indenture, there has been a change in the applicable federal income tax law, in
either case to the effect that, and based thereon such opinion of counsel shall
confirm that, the holders of such New Notes will not recognize income, gain or
loss for federal income tax purposes as a result of such Legal Defeasance and
will be subject to federal income tax on the same amounts, in the same manner
and at the same times as would have been the case if such Legal Defeasance had
not occurred; (iii) in the case of Covenant Defeasance, the Company shall have
delivered to the Trustee an opinion of counsel in the United States reasonably
acceptable to such Trustee confirming that the holders of such New Notes will
not recognize income, gain or loss for federal income tax purposes as a result
of such Covenant Defeasance and will be subject to federal income tax on the
same amounts, in the same manner and at the same times as would have been the
case if such Covenant Defeasance had not occurred; (iv) no Default or Event of
Default shall have occurred and be continuing on the date of such deposit or
insofar as Events of Default from bankruptcy or insolvency events are concerned,
at any time in the period ending on the 91st day after the date of deposit; (v)
such Legal Defeasance or Covenant Defeasance shall not result in a breach or
violation of, or constitute a default under the Indenture or any other material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound; (vi) the
Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit was not made by the Company with the intent of preferring the
holders of such New Notes over any other creditors of the Company or with the
intent of defeating, hindering, delaying or defrauding any other creditors of
the Company or others; and (vii) the Company shall have delivered to the Trustee
an Officers' Certificate and an opinion of counsel, each stating that the
conditions precedent provided for in, in the case of the Officers' Certificate,
(i) through (vi) and, in the case of the opinion of counsel, clauses (i)
103
<PAGE>
(with respect to the validity and perfection of the security interest), (ii),
(iii) and (v) of this paragraph have been complied with.
AMENDMENTS AND SUPPLEMENTS
The Indenture contains provisions permitting the Company, the Guarantors
and the Trustee to enter into a supplemental indenture for certain limited
purposes without the consent of the Holders. With the consent of the Holders of
not less than a majority in aggregate principal amount of the New Notes at the
time outstanding, the Company, the Guarantors and the Trustee are permitted to
amend or supplement the Indenture or any supplemental indenture or modify the
rights of the Holders; provided that no such modification may, without the
consent of holders of at least 66 2/3% in aggregate principal amount of New
Notes at the time outstanding, e.g., modify the provisions (including the
defined terms used therein) of the covenant "Repurchase of New Notes at the
Option of the Holder upon a Change of Control" in a manner adverse to the
holders; and provided, that no such modification may, without the consent of
each Holder affected thereby: (i) change the Stated Maturity on any Note, or
reduce the principal amount thereof or the rate (or extend the time for payment)
of interest thereon or any premium payable upon the redemption at the option of
the Company thereof, or change the place of payment where, or the coin or
currency in which, any Note or any premium or the interest thereon is payable,
or impair the right to institute suit for the enforcement of any such payment on
or after the Stated Maturity thereof (or, in the case of redemption at the
option of the Company, on or after the Redemption Date), or reduce the Change of
Control Purchase Price or the Asset Sale Offer Price or alter the provisions
(including the defined terms used therein) regarding the right of the Company to
redeem the New Notes as a right, or at the option, of the Company in a manner
adverse to the Holders, or (ii) reduce the percentage in principal amount of the
outstanding New Notes, the consent of whose Holders is required for any such
amendment, supplemental indenture or waiver provided for in the Indenture, or
(iii) modify any of the waiver provisions, except to increase any required
percentage or to provide that certain other provisions of the Indenture cannot
be modified or waived without the consent of the Holder of each outstanding Note
affected thereby.
NO PERSONAL LIABILITY OF PARTNERS, STOCKHOLDERS, OFFICERS, DIRECTORS, EMPLOYEES
The Indenture provides that no direct or indirect stockholder, employee,
officer or director, as such, past, present or future of the Company, the
Guarantors or any successor entity shall have any personal liability in respect
of the obligations of the Company or the Guarantors under the Indenture or the
New Notes solely by reason of his or its status as such stockholder, employee,
officer or director, except that this provision shall not limit the obligation
of any Guarantor pursuant to its guarantee of the New Notes.
CERTAIN DEFINITIONS
"Acquired Indebtedness" means Indebtedness or Disqualified Capital Stock of
any person existing at the time such person becomes a Subsidiary of the Company,
including, without limitation, by designation, or is merged or consolidated into
or with the Company or one of its Subsidiaries.
"Acquisition" means the purchase or other acquisition of any person of all
or substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, provided that, with respect to ownership interest in the Company
and its Subsidiaries, a Beneficial Owner of 10% or more of the total voting
power normally entitled to vote in the election of directors, managers or
trustees, as applicable, shall for such purposes be deemed to constitute
control.
104
<PAGE>
"Average Life" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of the
products (a) of the number of years from the date of determination to the date
or dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"Beneficial Owner" or "beneficial owner" for purposes of the definition of
Change of Control and Affiliate has the meaning attributed to it in Rules 13d-3
and 13d-5 under the Exchange Act (as in effect on the Issue Date), whether or
not applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"Board of Directors" means, with respect to any person, the board of
directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the board of directors of such person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness that is not itself otherwise capital stock), warrants, options,
participations or other equivalents of or interests (however designated) in
stock issued by that corporation.
"Capitalized Lease Obligation" means, as to any person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) or (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500.0 million or (iii) commercial paper issued by others rated at
least A-2 or the equivalent thereof by Standard & Poor's Corporation or at least
P-2 or the equivalent thereof by Moody's Investors Service, Inc., and in the
case of each of (i), (ii), and (iii) maturing within one year after the date of
acquisition.
"Consolidated Coverage Ratio" of any person on any date of determination
(the "Transaction Date") means the ratio, on a pro forma basis, of (a) the
aggregate amount of Consolidated EBITDA of such person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such person's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period; provided, that for purposes of
such calculation, (i) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date shall
be assumed to have occurred on the first day of the Reference Period, (ii)
transactions giving rise to the need to calculate the Consolidated Coverage
Ratio shall be assumed to have occurred on the first day of the Reference
Period, (iii) the incurrence of any Indebtedness or issuance of any Disqualified
Capital Stock during the Reference Period or subsequent to the Reference Period
and on or prior to the Transaction Date (and the application of the proceeds
therefrom to the extent used to refinance or retire other Indebtedness) shall be
assumed to have occurred on the first day of the Reference Period, and (iv) the
Consolidated Fixed Charges of such person attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating
interest (or dividend) rate shall be
105
<PAGE>
computed on a pro forma basis as if the average rate in effect from the
beginning of the Reference Period to the Transaction Date had been the
applicable rate for the entire period, unless such Person or any of its
Subsidiaries is a party to an Interest Swap or Hedging Obligation (which shall
remain in effect for the 12-month period immediately following the Transaction
Date) that has the effect of fixing the interest rate on the date of
computation, in which case such rate (whether higher or lower) shall be used.
"Consolidated EBITDA" means, with respect to any person, for any period,
the Consolidated Net Income of such person for such period adjusted to add
thereto (to the extent deducted from net revenues in determining Consolidated
Net Income), without duplication, the sum of (i) Consolidated income tax
expense, (ii) Consolidated depreciation and amortization expense, and (iii)
Consolidated Fixed Charges, provided that consolidated depreciation and
amortization expense of a Subsidiary that is a less than wholly owned Subsidiary
shall only be added to the extent of the equity interest of the Company in such
Subsidiary.
"Consolidated Fixed Charges" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of: (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such person and its
Consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, (b)
one-third ( 1/3) of Consolidated Rental Expense for such period attributable to
operating leases of such person and its Consolidated Subsidiaries, and (c) the
amount of dividends accrued or payable (or guaranteed) by such person or any of
its Consolidated Subsidiaries in respect of Preferred Stock (other than by
Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined in good faith by the Company to be the rate of interest implicit in
such Capitalized Lease Obligation in accordance with GAAP and (y) interest
expense attributable to any Indebtedness represented by the guaranty by such
person or a Subsidiary of such person of an obligation of another person shall
be deemed to be the interest expense attributable to the Indebtedness
guaranteed.
"Consolidated Net Income" means, with respect to any person for any period,
the net income (or loss) of such person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication): (a) all gains (but not losses) which are
either extraordinary (as determined in accordance with GAAP) or are either
unusual or nonrecurring (including any gain from the sale or other disposition
of assets outside the ordinary course of business or from the issuance or sale
of any capital stock), (b) the net income, if positive, of any person, other
than a Consolidated Subsidiary, in which such person or any of its Consolidated
Subsidiaries has an interest, except to the extent of the amount of any
dividends or distributions actually paid in cash to such person or a
Consolidated Subsidiary of such person during such period, but in any case not
in excess of such person's pro rata share of such person's net income for such
period, (c) the net income or loss of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition, and
(d) the net income, if positive, of any of such person's Consolidated
Subsidiaries to the extent that the declaration or payment of dividends or
similar distributions is not at the time permitted by operation of the terms of
its charter or bylaws or any other agreement, instrument, judgment, decree,
order, statute, rule or governmental regulation applicable to such Consolidated
Subsidiary.
"Consolidated Rental Expense" of any Person means the aggregate rental
obligations of such Person and its Consolidated Subsidiaries (not including
taxes, insurance, maintenance and similar expenses that the lessee is obligated
to pay under the terms of the relevant leases), determined on a consolidated
basis in conformity with GAAP, payable in respect of such period under leases of
real or
106
<PAGE>
personal property (net of income from subleases thereof, not including taxes,
insurance, maintenance and similar expenses that the sublessee is obligated to
pay under the terms of such sublease), whether or not such obligations are
reflected as liabilities or commitments on a consolidated balance sheet of such
Person and its Subsidiaries or in the notes thereto, excluding, however, in any
event, that portion of Consolidated Fixed Charges of such Person representing
payments by such Person or any of its Consolidated Subsidiaries in respect of
Capitalized Lease Obligations.
"Consolidated Subsidiary" means, for any person, each Subsidiary of such
person (whether now existing or hereafter created or acquired) the financial
statements of which are consolidated for financial statement reporting purposes
with the financial statements of such person in accordance with GAAP.
"Credit Agreement" means the credit agreement dated as of November 20, 1997
by and among the Company, certain of its subsidiaries and CoreStates Bank, N.A.,
providing for an aggregate $25.0 million revolving credit facility, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, as such credit agreement and/or related
documents may be amended, restated, supplemented, renewed, replaced or otherwise
modified from time to time, whether or not with the same lender, trustee,
representative lenders or holders, and, subject to the proviso to the next
succeeding sentence, irrespective of any changes in the terms and conditions
thereof. Without limiting the generality of the foregoing, the term "Credit
Agreement" shall include agreements in respect of Interest Swap and Hedging
Obligations with lenders party to the Credit Agreement and shall also include
any amendment, amendment and restatement, renewal, extension, restructuring,
supplement or modification to any Credit Agreement and all refundings,
refinancings and replacements of any Credit Agreement, including any agreement
(i) extending the maturity of any Indebtedness incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder, so long as borrowers and issuers include one or more of the Company
and its Subsidiaries and their respective successors and assigns, (iii)
increasing the amount of Indebtedness incurred thereunder or available to be
borrowed thereunder, provided that on the date such Indebtedness is incurred it
would be permitted by paragraph (c) of the covenant "Limitation on Incurrence of
Additional Indebtedness and Issuance of Disqualified Capital Stock" or (iv)
otherwise altering the terms and conditions thereof in a manner not prohibited
by the terms of the Indenture.
"Disqualified Capital Stock" means (a) except as set forth in (b), with
respect to any person, Equity Interests of such person that, by its terms or by
the terms of any security into which it is convertible, exercisable or
exchangeable, is, or upon the happening of an event or the passage of time or
both would be, required to be redeemed or repurchased (including at the option
of the holder thereof) by such person or any of its Subsidiaries, in whole or in
part, on or prior to the date that is 91 days after the date which is following
the Stated Maturity of the New Notes and (b) with respect to any Subsidiary of
such person (including with respect to any Subsidiary of the Company), any
Equity Interests other than any common equity with no preference, privileges, or
redemption or repayment provisions.
"Employee Stock Plan" means the NPR Holding Corporation 1997 Phantom Stock
Plan under which certain members of the management of NPR, Inc. have received
grants of phantom stock units in connection with the acquisition of NPR Holding
Corporation, NPR-Navieras Receivables, Inc., NPR, Inc. and NPR S.A., Inc.
"Equity Interest" of any Person means any shares, interests, participations
or other equivalents (however designated) in such Person's equity, and shall in
any event include any Capital Stock issued by, or partnership or membership
interests in, such Person.
"Event of Loss" means, with respect to any property or asset, any (i) loss,
destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
107
<PAGE>
"Excluded Person" means, individually or collectively, Thomas J. Holt, Sr.,
and any of his estates, spouse, heirs, ancestors, lineal descendants, legatees,
and legal representatives and the trustee of any bona fide trust of which one or
more of the foregoing are the sole beneficiaries.
"Exempted Affiliate Transaction" means (a) customary employee compensation
arrangements approved by a majority of independent (as to such transactions)
members of the Board of Directors of the Company, (b) dividends permitted under
the terms of the covenant "Limitation on Restricted Payments" and payable, in
form and amount, on a pro rata basis to all holders of common stock of the
Company, and (c) transactions solely between the Company and any of its wholly
owned Consolidated Subsidiaries or solely among wholly owned Consolidated
Subsidiaries of the Company.
"Existing Indebtedness" means Indebtedness of the Company and the
Guarantors (other than Indebtedness under the Credit Agreement) in existence on
the Issue Date, until such amounts are repaid or refinanced in accordance with
the Indenture.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession in the United States as in effect on the Issue Date.
"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of any such person, to the
extent such liabilities and obligations would appear as a liability upon the
consolidated balance sheet of such person in accordance with GAAP, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except (other than accounts payable or other obligations to trade creditors
which have remained unpaid for more than 60 days past their original due date)
those incurred in the ordinary course of its business that would constitute
ordinarily a trade payable to trade creditors; (b) all liabilities and
obligations, contingent or otherwise, of such person (i) evidenced by bankers'
acceptances or similar instruments issued or accepted by banks, (ii) relating to
any Capitalized Lease Obligation, or (iii) evidenced by a letter of credit or a
reimbursement obligation of such person with respect to any letter of credit;
(c) all net obligations of such person under Interest Swap and Hedging
Obligations; (d) all liabilities and obligations of others of the kind described
in the preceding clause (a), (b) or (c) that such person has guaranteed or that
is otherwise its legal liability or which are secured by any assets or property
of such person; (e) any and all deferrals, renewals, extensions, refinancing and
refundings (whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a), (b), (c) or (d), or this clause (e), whether or not between or
among the same parties; and (f) all Disqualified Capital Stock of such Person
(measured at the greater of its voluntary or involuntary maximum fixed
repurchase price plus accrued and unpaid dividends). For purposes hereof, the
"maximum fixed repurchase price" of any Disqualified Capital Stock which does
not have a fixed repurchase price shall be calculated in accordance with the
terms of such Disqualified Capital Stock as if such Disqualified Capital Stock
were purchased on any date on which Indebtedness shall be required to be
determined pursuant to the Indenture, and if such price is based upon, or
measured by, the Fair Market Value of such Disqualified Capital Stock, such Fair
Market Value to be determined in good faith by the board of directors of the
issuer (or managing general partner of the issuer) of such Disqualified Capital
Stock.
"Interest Swap and Hedging Obligation" means any obligation of any person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional
108
<PAGE>
amount in exchange for periodic payments made by such person calculated by
applying a fixed or floating rate of interest on the same notional amount.
"Investment" by any person in any other person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities, including any options or warrants, of such other
person or any agreement to make any such acquisition; (b) the making by such
person of any deposit with, or advance, loan or other extension of credit to,
such other person (including the purchase of property from another person
subject to an understanding or agreement, contingent or otherwise, to resell
such property to such other person) or any commitment to make any such advance,
loan or extension (but excluding accounts receivable, endorsements for
collection or deposits arising in the ordinary course of business); (c) other
than guarantees of Indebtedness of the Company or any Guarantor to the extent
permitted by the covenant "Limitation on Incurrence of Additional Indebtedness
and Issuance of Disqualified Capital Stock," the entering into by such person of
any guarantee of, or other credit support or contingent obligation with respect
to, Indebtedness or other liability of such other person; (d) the making of any
capital contribution by such person to such other person; and (e) the
designation by the Board of Directors of the Company of any person to be an
Unrestricted Subsidiary. The Company shall be deemed to make an Investment in an
amount equal to the fair market value of the net assets of any subsidiary (or,
if neither the Company nor any of its Subsidiaries has theretofore made an
Investment in such subsidiary, in an amount equal to the Investments being
made), at the time that such subsidiary is designated an Unrestricted
Subsidiary, and any property transferred to an Unrestricted Subsidiary from the
Company or a Subsidiary of the Company shall be deemed an Investment valued at
its fair market value at the time of such transfer.
"Issue Date" means the date of first issuance of the New Notes under the
Indenture.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
"Net Cash Proceeds" means the aggregate amount of cash or Cash Equivalents
received by the Company in the case of a sale of Qualified Capital Stock and by
the Company and its Subsidiaries in respect of an Asset Sale plus, in the case
of an issuance of Qualified Capital Stock upon any exercise, exchange or
conversion of securities (including options, warrants, rights and convertible or
exchangeable debt) of the Company that were issued for cash on or after the
Issue Date, the amount of cash originally received by the Company upon the
issuance of such securities (including options, warrants, rights and convertible
or exchangeable debt) less, in each case, the sum of all payments, fees,
commissions and reasonable and customary expenses (including, without
limitation, the fees and expenses of legal counsel and investment banking fees
and expenses) incurred in connection with such Asset Sale or sale of Qualified
Capital Stock, and, in the case of an Asset Sale only, less the amount
(estimated reasonably and in good faith by the Company) of income, franchise,
sales and other applicable taxes required to be paid by the Company or any of
its respective Subsidiaries in connection with such Asset Sale.
"Non-Recourse Subsidiary" means a Subsidiary which is a single purpose
company, partnership or other legal person formed for the purpose of incurring
Permitted Non-Recourse Vessel Indebtedness.
"Obligation" means any principal, premium or interest payment, or monetary
penalty, due by the Company or any Guarantor under the terms of the New Notes or
the Indenture, including any liquidated damages due pursuant to the terms of the
Registration Rights Agreement.
"Packer Avenue Proceeding" shall mean that certain outstanding action
commenced by Holt Cargo, Holt Hauling & Warehousing System, Inc. and Astro
Holding, Inc. (the "Plaintiffs") in the United States District Court for the
Eastern District of Pennsylvania against the Delaware River Port Authority (the
"DRPA"), the Philadelphia Regional Port Authority (the "PRPA") and the Ports of
109
<PAGE>
Philadelphia and Camden (together with the DRPA and PPC, the "Defendants"). The
Plaintiffs allege that the Defendants, along with other unnamed co-conspirators,
acting under the color of state law, committed predatory acts under a conspiracy
designed to injure, harass and appropriate the property of the Plaintiffs.
Plaintiffs are seeking damages for Defendants' conduct which constitutes a
violation of Plaintiffs' substantive due process, equal protection and
procedural due process rights under 41 U.S.C. Section 1983.
"Permitted Indebtedness" means any of the following:
a. the Company and the Guarantors may incur up to an aggregate
principal amount of Indebtedness evidenced by the New Notes and represented
by the Indenture;
b. the Company and the Guarantors, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clause (a) of this definition or
incurred under the Debt Incurrence Ratio test of the covenant "Limitation
on Incurrence of Additional Indebtedness and Disqualified Capital Stock,"
or which is outstanding on the Issue Date;
c. the Company and the Guarantors may incur Indebtedness solely in
respect of bankers acceptances, letters of credit and performance bonds (to
the extent that such incurrence does not result in the incurrence of any
obligation to repay any obligation relating to borrowed money of others),
all in the ordinary course of business in accordance with customary
industry practices, in amounts and for the purposes customary in the
Company's industry; provided, that the aggregate principal amount
outstanding of such Indebtedness (including any Indebtedness issued to
refinance, refund or replace such Indebtedness) shall at no time exceed
$20.0 million;
d. the Company may incur Indebtedness to any Subsidiary Guarantor, and
any Subsidiary Guarantor may incur Indebtedness to any other Subsidiary
Guarantor or to the Company; provided, that, in the case of Indebtedness of
the Company, such obligations shall be unsecured and subordinated in all
respects to the Company's obligations pursuant to the New Notes and the
date of any event that causes such Subsidiary Guarantor to no longer be a
Subsidiary Guarantor shall be an Incurrence Date; and
e. any Guarantor may guaranty any Indebtedness of the Company or
another Guarantor that was permitted to be incurred pursuant to the
Indenture, substantially concurrently with such incurrence or at the time
such person becomes a Guarantor.
"Permitted Investment" means (a) Investments in any of the New Notes; (b)
Cash Equivalents; and (c) intercompany notes to the extent permitted under
clause (d) of the definition of Permitted Indebtedness.
"Permitted Lien" means (a) Liens existing on the Issue Date; (b) Liens
securing Indebtedness incurred under the Credit Facility in accordance with
clause (c) of the covenant "Limitation on Incurrence of Additional Indebtedness
and Issuance of Disqualified Capital Stock"; (c) Liens imposed by governmental
authorities for taxes, assessments or other charges not yet subject to penalty
or which are being contested in good faith and by appropriate proceedings, if
adequate reserves with respect thereto are maintained on the books of the
Company in accordance with GAAP; (d) statutory liens of carriers, warehousemen,
mechanics, materialmen, landlords, repairmen, crew's wages, wages of stevedores,
salvage or other like Liens arising by operation of law in the ordinary course
of business (including relating to maritime activities); provided that (i) the
underlying obligations are not overdue for a period of more than 30 days, or
(ii) such Liens are being contested in good faith and by appropriate proceedings
and adequate reserves with respect thereto are maintained on the books of the
Company in accordance with GAAP; (e) Liens securing the performance of bids,
trade contracts (other than borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (f) easements, rights-of-
way, zoning, similar restrictions and other similar encumbrances or title
defects which, singly or in the aggregate, do not in any case materially detract
from the value of the property subject thereto (as such property is used by the
Company or any of its Subsidiaries) or interfere with the ordinary conduct of
110
<PAGE>
the business of the Company or any of its Subsidiaries; (g) Liens arising by
operation of law in connection with judgments, only to the extent, for an amount
and for a period not resulting in an Event of Default with respect thereto; (h)
pledges or deposits made in the ordinary course of business in connection with
workers' compensation, unemployment insurance and other types of social security
legislation; (i) Liens securing the New Notes; (j) Liens securing Indebtedness
of a Person existing at the time such Person becomes a Subsidiary or is merged
with or into the Company or a Subsidiary or Liens securing Indebtedness incurred
in connection with an Acquisition, provided that such Liens were in existence
prior to the date of such acquisition, merger or consolidation, were not
incurred in anticipation thereof, and do not extend to any other assets; (k)
Liens arising from Purchase Money Indebtedness permitted to be incurred under
paragraph (a) of the covenant "Limitation on Incurrence of Additional
Indebtedness and Issuance of Disqualified Capital Stock," provided such Liens
relate solely to the property which is subject to such Purchase Money
Indebtedness; (l) leases or subleases granted to other persons in the ordinary
course of business not materially interfering with the conduct of the business
of the Company or any of its Subsidiaries or materially detracting from the
value of the relative assets of the Company or any such Subsidiary; (m) Liens
arising from precautionary Uniform Commercial Code financing statement filings
regarding operating leases entered into by the Company or any of its
Subsidiaries in the ordinary course of business; (n) Liens incurred in
connection with Permitted Non-Recourse Vessel Indebtedness; and (o) Liens
securing Refinancing Indebtedness, incurred to refinance any Indebtedness that
was previously so secured in a manner no more adverse to the Holders of the New
Notes than the terms of the Liens securing such refinanced Indebtedness provided
that the Indebtedness secured is not increased and the lien is not extended to
any additional assets or property.
"Permitted Non-Recourse Vessel Indebtedness" means the incurrence by any
Non-Recourse Subsidiary of Indebtedness for so long as (a) the liabilities of
such Non-Recourse Subsidiary in respect thereof are not directly or indirectly
the subject of a guarantee, indemnity or any other form of assurance,
undertaking or support from the Company or any Guarantor which would constitute
Indebtedness of the Company or the Guarantor, (b) in respect of which the person
or persons making such Indebtedness available to such Non-Recourse Subsidiary
have no recourse whatsoever to the Company or any Guarantor for the repayment of
or payment of any sum relating to such Indebtedness and (c) which such
Indebtedness is used for the purpose of refinancing seagoing vessels owned on
the Issue Date or financing newly acquired seagoing vessels, any such vessels to
be used solely by the Company, a Guarantor or such Non-Recourse Subsidiary.
"Permitted Tax Distribution" means with respect to each tax year that the
Company or a Guarantor (a "Taxpayer") qualifies as an S Corporation under the
Internal Revenue Code of 1986 (as amended, or any successor statute), or any
similar provision of state or local law, distributions of Tax Amounts (as
defined below), provided that prior to any distribution of Tax Amounts a
knowledgeable and duly authorized officer of the Taxpayer making such
distribution certifies, and counsel reasonably acceptable to the Trustee opines,
that such Taxpayer qualifies as an S Corporation for Federal income tax purposes
and for the states in respect of which such distributions are being made and
that at the time of such distributions, the most recent audited financial
statements of the Company covering such Taxpayer provide that such Taxpayer was
treated as an S Corporation for Federal income tax purposes for the period of
such financial statements.
"Public Equity Offering" means an underwritten offering of common stock of
equity securities of the Company not constituting Disqualified Capital Stock for
cash pursuant to an effective registration statement under the Securities Act.
"Purchase Money Indebtedness" of any person means any Indebtedness of such
person to any seller or other person incurred to finance the acquisition
(including in the case of a Capitalized Lease Obligation, the lease) of any
after acquired real or personal tangible property which, in the reasonable good
faith judgment of the Board of Directors of the Company, is directly related to
a Related Business of the Company and which is incurred within 120 days of such
acquisition and is secured only by the assets so financed.
111
<PAGE>
"Qualified Capital Stock" means any Capital Stock of the Company that is
not Disqualified Capital Stock.
"Qualified Exchange" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Indebtedness of the Company
issued on or after the Issue Date with the Net Cash Proceeds received by the
Company from the substantially concurrent sale of Qualified Capital Stock or any
exchange of Qualified Capital Stock for any Capital Stock or Indebtedness of the
Company issued on or after the Issue Date.
"Reference Period" with regard to any person means the four full fiscal
quarters (or such lesser period during which such person has been in existence)
ended immediately preceding any date upon which any determination is to be made
pursuant to the terms of the New Notes or the Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or (b)
constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified Capital Stock in a principal amount or, in the case
of Disqualified Capital Stock, liquidation preference, not to exceed (after
deduction of reasonable and customary fees and expenses incurred in connection
with the Refinancing) the lesser of (i) the principal amount or, in the case of
Disqualified Capital Stock, liquidation preference, of the Indebtedness or
Disqualified Capital Stock so Refinanced and (ii) if such Indebtedness being
Refinanced was issued with an original issue discount, the accreted value
thereof (as determined in accordance with GAAP) at the time of such Refinancing;
provided, that (A) such Refinancing Indebtedness of any Subsidiary of the
Company shall only be used to Refinance outstanding Indebtedness or Disqualified
Capital Stock of such Subsidiary, (B) such Refinancing Indebtedness shall (x)
not have an Average Life shorter than (i) the Indebtedness or Disqualified
Capital Stock to be so refinanced at the time of such Refinancing or (ii) the
New Notes, but only in the case of Refinancing Indebtedness described by (C)(ii)
below, and (y) in all respects, be no less subordinated or junior, if
applicable, to the rights of Holders of the New Notes than was the Indebtedness
or Disqualified Capital Stock to be refinanced, (C) such Refinancing
Indebtedness shall have a final stated maturity or redemption date, as
applicable, no earlier than (i) the final stated maturity or redemption date, as
applicable, of the Indebtedness or Disqualified Capital Stock to be so
refinanced or (ii) the Stated Maturity, but only if such final stated maturity
or redemption date, as applicable, of the Indebtedness or Disqualified Capital
Stock to be so refinanced falls after the Stated Maturity and (D) such
Refinancing Indebtedness shall be secured (if secured) in a manner no more
adverse to the Holders of the New Notes than the terms of the Liens securing
such refinanced Indebtedness, including, without limitation, the amount of
Indebtedness secured shall not be increased.
"Related Business" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.
"Restricted Investment" means, in one or a series of related transactions,
any Investment, other than investments in Cash Equivalents and other Permitted
Investments; provided, however, that (i) a merger of another person with or into
the Company or a Subsidiary Guarantor in accordance with the terms of the
Indenture shall not be deemed to be a Restricted Investment so long as the
surviving entity is the Company or a Subsidiary Guarantor and (ii) Investments
in any Person, so long as immediately upon such Investment such Person becomes a
Subsidiary Guarantor, shall not be deemed to be a Restricted Investment.
"Restricted Payment" means, with respect to any person, (a) the declaration
or payment of any dividend or other distribution in respect of Equity Interests
of such person or any parent or Subsidiary of such person (including, without
limitation, pursuant to the Employee Stock Plan), (b) any payment on account of
the purchase, redemption or other acquisition or retirement for value of Equity
Interests of such person or any Subsidiary or parent of such person, (c) other
than with the proceeds from the substantially concurrent sale of, or in exchange
for, Refinancing Indebtedness, any purchase, redemption, or other acquisition or
retirement for value of, any payment in respect of any amendment
112
<PAGE>
of the terms of or any defeasance of, any Subordinated Indebtedness, directly or
indirectly, by such person or a parent or Subsidiary of such person prior to the
scheduled maturity, any scheduled repayment of principal, or scheduled sinking
fund payment, as the case may be, of such Indebtedness and (d) any Restricted
Investment by such person; provided, however, that the term "Restricted Payment"
does not include (i) any dividend, distribution or other payment on or with
respect to Equity Interests of an issuer to the extent payable solely in shares
of Qualified Capital Stock of such issuer; or (ii) any dividend, distribution or
other payment to the Company, or to any of its Subsidiary Guarantors, by the
Company or any of its Subsidiaries.
"Senior Debt" of the Company or any Guarantor means Indebtedness of the
Company or such Guarantor arising under the Credit Agreement and without
duplication, certain Existing Indebtedness or Indebtedness that, by the terms of
the instrument creating or evidencing such Indebtedness, is expressly designated
Senior Debt and made senior in right of payment to the New Notes or the
applicable Guarantee; provided, that in no event shall Senior Debt include (a)
Indebtedness to any Subsidiary of the Company or any officer, director or
employee of the Company or any Subsidiary of the Company, (b) Indebtedness
incurred in violation of the terms of the Indenture, (c) Indebtedness to trade
creditors, (d) Disqualified Capital Stock, (e) Capitalized Lease Obligations,
and (f) any liability for taxes owed or owing by the Company or such Guarantor.
"Significant Subsidiary" shall have the meaning provided under Regulation
S-X of the Securities Act, as in effect on the Issue Date.
"Stated Maturity," when used with respect to any Note, means January 15,
2006.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Guarantor that is subordinated in right of payment by its terms or the terms of
any document or instrument or instrument relating thereto to the New Notes or
such Guarantee, as applicable, in any respect or has a stated maturity after the
Stated Maturity.
"Subsidiary," with respect to any person, means (i) a corporation a
majority of whose Equity Interests with voting power, under ordinary
circumstances, to elect directors is at the time, directly or indirectly, owned
by such person, by such person and one or more Subsidiaries of such person or by
one or more Subsidiaries of such person, (ii) any other person (other than a
corporation) in which such person, one or more Subsidiaries of such person, or
such person and one or more Subsidiaries of such person, directly or indirectly,
at the date of determination thereof has at least majority ownership interest,
or (iii) a partnership in which such person or a Subsidiary of such person is,
at the time, a general partner. Notwithstanding the foregoing, an Unrestricted
Subsidiary shall not be a Subsidiary of the Company or of any Subsidiary of the
Company. Unless the context requires otherwise, Subsidiary means each direct and
indirect Subsidiary of the Company.
"Tax Amounts" with respect to any year means (a) an amount equal to the
higher of (i) the product of (A) the taxable income of the relevant Taxpayer for
such year as determined in good faith by its Board of Directors; and (B) the Tax
Percentage (as defined below), and (ii) the product of (A) the alternative
minimum taxable income attributable to such Taxpayer for such year as determined
in good faith by its Board of Directors; and (B) the Tax Percentage, in either
case, reduced by (b) to the extent not previously taken into account, any income
tax benefit attributable to such Taxpayer solely as a result of the
stockholder's investment in such Taxpayer (including without limitation, tax
losses, alternative minimum tax credits, other tax credits and carryforwards and
carrybacks thereof to the extent such benefit is realized in the year for which
the Tax Amount is being determined); provided, however, that in no event shall
such Tax Percentage exceed the greater of (1) the highest aggregate applicable
statutory marginal rate of Federal, state and local income tax (or, when
applicable, alternative minimum tax), to which a corporation doing business in
New York City would be subject in the relevant year of determination (as
certified to the Trustee by a nationally recognized tax accounting firm); and
(2) 50%. Any part of the Tax Amount not distributed in respect of a tax period
for which it is calculated shall be available for distribution in subsequent tax
periods. The term "Tax Percentage" is the highest aggregate applicable statutory
marginal rate of Federal, state and local income tax or, when applicable,
alternative minimum tax, to which an individual shareholder of the Taxpayer
could be subject in the relevant year of determination (calculated in good faith
by the Taxpayer and certified
113
<PAGE>
to the Trustee by a nationally recognized tax accounting firm). Distributions of
Tax Amounts may be made from time to time with respect to a tax year based on
reasonable estimates, with a reconciliation within 40 days of the earlier of (i)
the Taxpayer's filing of the Internal Revenue Service Form 1120S for the
applicable taxable year; and (ii) the last date such form is required to be
filed (without regard to any extensions). The stockholders of each Taxpayer will
enter into a binding agreement with each Taxpayer to reimburse the applicable
Taxpayer for certain positive differences between the distributed amount and the
Tax Amount, which difference must be paid at the time of such reconciliation.
"TNX Shareholders Agreement" means the Shareholders Agreement, dated as of
November 20, 1997, by and among NPR Holding Corporation, certain members of
NPR's senior management and the other entities and individuals signatory
thereto.
"Unrestricted Subsidiary" means any subsidiary of the Company that does not
own any Capital Stock of, or own or hold any Lien on any property of, the
Company or any other Subsidiary of the Company and that, at the time of
determination, shall be an Unrestricted Subsidiary (as designated by the Board
of Directors of the Company); provided, that (i) such subsidiary shall not
engage, to any substantial extent, in any line or lines of business activity
other than a Related Business, (ii) neither immediately prior thereto nor after
giving pro forma effect to such designation would there exist a Default or Event
of Default and (iii) immediately after giving pro forma effect thereto, the
Company could incur at least $1.00 of Indebtedness pursuant to the Debt
Incurrence Ratio of the covenant "Limitation on Incurrence of Additional
Indebtedness and Issuance of Disqualified Capital Stock." The Board of Directors
of the Company may designate any Unrestricted Subsidiary to be a Subsidiary,
provided that (i) no Default or Event of Default is existing or will occur as a
consequence thereof and (ii) immediately after giving effect to such
designation, on a pro forma basis, the Company could incur at least $1.00 of
Indebtedness pursuant to the Debt Incurrence Ratio of the covenant "Limitation
on Incurrence of Additional Indebtedness and Issuance of Disqualified Capital
Stock." Each such designation shall be evidenced by filing with the Trustee a
certified copy of the resolution giving effect to such designation and an
Officers' Certificate certifying that such designation complied with the
foregoing conditions. As of the Issue Date, The Riverfront Development
Corporation shall be an Unrestricted Subsidiary.
"U.S. Government Obligations" means direct noncallable obligations of, or
noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
"Wholly-owned Subsidiary" means a Subsidiary all the Equity Interests of
which are owned by the Company or one or more Wholly-owned Subsidiaries of the
Company.
BOOK-ENTRY; DELIVERY; FORM AND TRANSFERS
The Old Notes were offered and sold to "qualified institutional buyers" in
reliance on Rule 144A. The Old Notes were issued in registered, global form in
minimum denominations of $1,000 and integral multiples of $1,000 in excess
thereof.
The Old Notes are represented by one or more Notes in registered, global
form without interest coupons (the "Restricted Global Note"), and, except as set
forth below, the New Notes will be represented by one or more Notes in
registered, global form without interest coupons (the "Unrestricted Global
Note," and together with the Restricted Global Note, the "Global Note"). The
Restricted Global Note was, and the Unrestricted Global Note will be, deposited
upon issuance with the Trustee as custodian for The Depository Trust Company
("DTC"), in New York, New York and registered in the name of DTC or its nominee,
in each case for credit to an account of a direct or indirect participant in DTC
as described below.
Except as set forth below, the Global Note may be transferred, in whole and
not in part, only to another nominee of DTC or to a successor of DTC or its
nominee. Beneficial interests in the Global Note may not be exchanged for Notes
in certificated form except in the limited circumstances described below. See
"Exchange of Book-Entry Notes for Certificated Notes."
The Trustee will act as paying agent and registrar.
114
<PAGE>
REGISTRATION RIGHTS; LIQUIDATED DAMAGES
The Holders of the New Notes are not entitled to any registration rights
with respect to the New Notes. Pursuant to the Registration Rights Agreement,
the Company agreed to file with the SEC a registration statement (the "Exchange
Offer Registration Statement") on the appropriate form under the Securities Act
with respect to the New Notes. The Registration Statement of which this
Prospectus forms a part constitutes the Exchange Offer Registration Statement.
The Registration Rights Agreement provides that in the event that
applicable interpretations of the staff of the SEC do not permit the Company to
effect the Exchange Offer, or if for any other reason the Exchange Offer is not
consummated within 210 days of the Issue Date, the Company will, at its own
expense, (a) as promptly as practicable, file a shelf registration statement
covering resales of the Notes (a "Shelf Registration Statement"), (b) use its
best efforts to cause such Shelf Registration Statement to be declared effective
under the Securities Act as promptly as practicable after the filing of such
Shelf Registration Statement and (c) use its best efforts to keep effective such
Shelf Registration Statement until the earlier of 24 months following the Issue
Date and such time as all of the Notes have been sold thereunder, or otherwise
cease to be a Transfer Restricted Security (as defined in the Registration
Rights Agreement). The Company will, in the event a Shelf Registration Statement
is required to be filed, provide to each Holder of the Notes copies of the
prospectus which is a part of such Shelf Registration Statement, notify each
such Holder when such Shelf Registration Statement for the Notes has become
effective and take certain other actions that are required to permit
unrestricted resales of the Notes. A Holder of the Notes who sells such Notes
pursuant to the Shelf Registration Statement generally would be required to be
named as a selling security holder in the related prospectus and to deliver a
prospectus to purchasers, will be subject to certain of the civil liability
provisions under the Securities Act in connection with such sales and will be
bound by the provisions of the Registration Rights Agreement which is applicable
to such a Holder (including certain indemnification and contribution rights and
obligations).
If (a) the Company fails to consummate the Exchange Offer within 60 days of
the effectiveness of the Exchange Offer Registration Statement, or (b) the Shelf
Registration Statement is declared effective but thereafter ceases to be
effective or usable in connection with resales of Notes during the period
specified in the Registration Rights Agreement (each such event referred to in
clauses (a) and (b) above a "Registration Default"), then the Company will pay
liquidated damages ("Liquidated Damages") to each holder of Transfer Restricted
Securities, during the first 90-day period immediately following the occurrence
of such Registration Default in an amount equal to $0.05 per week per $1,000
principal amount of Notes constituting Transfer Restricted Securities held by
such holder. The amount of the Liquidated Damages will increase by an additional
$0.05 per week per $1,000 principal amount constituting Transfer Restricted
Securities for each subsequent 90-day period until the Registration Default is
cured, up to a maximum amount of liquidated damages of $0.50 per week per $1,000
principal amount of Notes constituting Transfer Restricted Securities. All
accrued liquidated damages shall be paid to Holders in the same manner as
interest payments on the Notes on semi-annual damages payment dates which
correspond to interest payment dates for the Notes.
Holders of Notes to be included in a Shelf Registration Statement will be
required to deliver information to be used in connection with the Shelf
Registration Statement and to provide comments on the Shelf Registration
Statement within the time periods set forth in the Registration Rights Agreement
in order to have their Notes included in the Shelf Registration Statement and
benefit from the provisions regarding Liquidated Damages set forth above.
The summary herein of certain provisions of the Registration Rights
Agreement does not purport to be complete and is subject to, and is qualified in
its entirety by reference to, all the provisions of the Registration Rights
Agreement, a copy of which is filed as an exhibit to the Registration Statement
of which this Prospectus constitutes a part.
115
<PAGE>
DEPOSITARY PROCEDURES
DTC has advised the Company that DTC is a limited-purpose trust company
created to hold securities for its participating organizations (collectively,
the "Participants") and to facilitate the clearance and settlement of
transactions in those securities between Participants through electronic
book-entry changes in accounts of its Participants. The Participants include
securities brokers and dealers (including the Initial Purchaser), banks, trust
companies, clearing corporations and certain other organizations. Access to
DTC's system is also available to other entities such as banks, brokers, dealers
and trust companies that clear through or maintain a custodial relationship with
a Participant, either directly or indirectly (collectively, the "Indirect
Participants"). Persons who are not Participants may beneficially own securities
held by or on behalf of DTC only through the Participants or the Indirect
Participants. The ownership interests and transfer of ownership interests of
each actual purchaser of each security held by or on behalf of DTC are recorded
on the records of the Participants and Indirect Participants.
DTC has also advised the Company that, pursuant to procedures established
by it, (i) upon deposit of the Global Note, DTC will credit the accounts of
Participants designated by the Initial Purchasers with portions of the principal
amount of the Global Note and (ii) ownership of such interests in the Global
Note will be maintained by DTC (with respect to the Participants) or by the
Participants and the Indirect Participants (with respect to other owners of
beneficial interests in the Global Note).
Investors in the Global Note may hold their interests therein directly
through DTC, if they are Participants in such system, or indirectly through
organizations which are Participants in such system. All interests in the Global
Note may be subject to the procedures and requirements of DTC. The laws of some
states require that certain persons take physical delivery in definitive form of
securities that they own. Consequently, the ability to transfer beneficial
interests in a Global Note to such persons will be limited to that extent.
Because DTC can act only on behalf of Participants, which in turn act on behalf
of Indirect Participants and certain banks, the ability of a person having
beneficial interests in a Global Note to pledge such interests to persons or
entities that do not participate in the DTC system, or otherwise take actions in
respect of such interests, may be affected by the lack of a physical certificate
evidencing such interests. For certain other restrictions on the transferability
of the Notes, see "-- Exchange of Book-Entry Notes for Certificated Notes."
EXCEPT AS DESCRIBED BELOW, OWNERS OF INTERESTS IN THE GLOBAL NOTE WILL NOT
HAVE NOTES REGISTERED IN THEIR NAMES, WILL NOT RECEIVE PHYSICAL DELIVERY OF
NOTES IN CERTIFICATED FORM AND WILL NOT BE CONSIDERED THE REGISTERED OWNERS OR
HOLDERS THEREOF UNDER THE INDENTURE FOR ANY PURPOSE.
Payments in respect of the principal of and premium, if any, and interest
and Liquidated Damages, if any, on a Global Note registered in the name of DTC
or its nominee will be payable by the Trustee to DTC in its capacity as the
registered Holder under the Indenture. Under the terms of the Indenture, the
Company and the Trustee will treat the persons in whose names the Notes,
including the Global Note, are registered as the owners thereof for the purpose
of receiving such payments and for any and all other purposes whatsoever.
Consequently, neither the Company, the Trustee nor any agent of the Company or
the Trustee has or will have any responsibility or liability for (i) any aspect
of DTC's records or any Participant's or Indirect Participant's records relating
to or payments made on account of beneficial ownership interests in the Global
Note, or for maintaining, supervising or reviewing any of DTC's records or any
Participant's or Indirect Participants's records relating to the beneficial
ownership interests in the Global Note or (ii) any other matter relating to the
actions and practices of DTC or any of its Participants or Indirect
Participants. DTC has advised the Company that its current practice, upon
receipt of any payment in respect of securities such as the Notes (including
principal and interest), is to credit the accounts of the relevant Participants
with the payment on the payment date, in amounts proportionate to their
respective holdings in the principal amount of beneficial interests in the
relevant security as shown on the records of DTC unless DTC has reason to
believe it will not receive payment on such payment date. Payments by the
Participants and the Indirect Participants to the
116
<PAGE>
beneficial owners of Notes will be governed by standing instructions and
customary practices and will be the responsibility of the Participants or the
Indirect Participants and will not be the responsibility of DTC, the Trustee or
the Company. Neither the Company nor the Trustee will be liable for any delay by
DTC or any of its Participants in identifying the beneficial owners of the
Notes, and the Company and the Trustee may conclusively rely on and will be
protected in relying on instructions from DTC or its nominee for all purposes.
Interests in the Global Note are expected to be eligible to trade in DTC's
Same-Day Funds Settlement System and secondary market trading activity in such
interests will therefore settle in immediately available funds, subject in all
cases to the rules and procedures of DTC and its participants. Transfers between
Participants in DTC will be effected in accordance with DTC's procedures, and
will be settled in same-day funds.
DTC has advised the Company that it will take any action permitted to be
taken by a holder of Notes only at the direction of one or more Participants to
whose account with DTC interests in the Global Note are credited and only in
respect of such portion of the aggregate principal amount of the Notes as to
which such Participant or Participants has or have given such direction.
However, if there is an Event of Default under the Notes, DTC reserves the right
to exchange the Global Note for Notes in certificated form, and to distribute
such Notes to its Participants.
The information in this section concerning DTC and its book-entry system
has been obtained from sources that the Company believes to be reliable, but the
Company takes no responsibility for the accuracy thereof. Neither the Company
nor the Trustee will have any responsibility for the performance by DTC or its
participants or indirect participants of their obligations under the rules and
procedures governing the DTC's operations.
EXCHANGE OF BOOK-ENTRY NOTES FOR CERTIFICATED NOTES
The Global Note is exchangeable for definitive Notes in registered
certificated form if (i) DTC (x) notifies the Company that it is unwilling or
unable to continue as depositary for the Global Note and the Company thereupon
fails to appoint a successor depositary or (y) has ceased to be a clearing
agency registered under the Exchange Act, (ii) the Company, at its option,
notifies the Trustee in writing that it elects to cause the issuance of the
Notes in certificated form or (iii) there shall have occurred and be continuing
an Event of Default or any event which after notice or lapse of time or both
would be an Event of Default with respect to the Notes. In all cases,
certificated Notes delivered in exchange for the Global Note or beneficial
interests therein will be registered in the names, and issued in any approved
denominations, requested by or on behalf of the depositary (in accordance with
its customary procedures) and will bear a restrictive legend referred, unless
the Company determines otherwise in compliance with applicable law.
117
<PAGE>
CERTAIN UNITED STATES FEDERAL INCOME TAX CONSIDERATIONS
The following is a summary of certain U.S. federal income tax consequences
associated with the acquisition, ownership and disposition of the Notes
applicable to holders of Notes who purchase the Notes upon original issuance.
The summary is based upon current laws, regulations, rulings and judicial
decisions, all of which are subject to change. The discussion below does not
address all aspects of U.S. federal income taxation that may be relevant to
particular holders in the context of their specific investment circumstances or
certain types of holders subject to special treatment under such laws (for
example, financial institutions, tax-exempt organizations and insurance
companies). In addition, the discussion does not address any aspect of state,
local or foreign taxation and assumes that purchasers of the Notes will hold
them as "capital assets" (generally, property held for investment) within the
meaning of Section 1221 of the Code.
For purposes of the discussion, a "U.S. holder" is an individual who is a
citizen or resident of the U.S., a corporation, partnership or other entity
created under the laws of the U.S. or any political subdivision thereof, or an
estate that is subject to U.S. federal income taxation without regard to the
source of income or a trust whose administration is subject to the primary
supervision of a United States court and which has one or more U.S. Persons who
have authority to control substantial decisions of the trust and a "Non-U.S.
holder" is any holder who is not a U.S. holder.
Prospective purchasers of the Notes are urged to consult their tax advisors
concerning the U.S. federal income tax consequences of acquiring, owning and
disposing of the Notes as well as the application of state, local and foreign
income and other tax laws.
U.S. HOLDERS
Except as provided below under "-- Exchange Offer," if a Note is redeemed,
sold or otherwise disposed of, a U.S. holder generally will recognize gain or
loss equal to the difference between the amount realized on the sale or other
disposition of such Note (to the extent such amount does not represent accrued
but unpaid interest) and such holder's tax basis in the Note. Such gain or loss
will be capital gain or loss, assuming that the holder has held the Note as a
capital asset, and none of the gain is market discount. Capital gain will be
long-term if the holder has held the Note for more than eighteen months at the
time of disposition.
A "market discount Note" is a Note that is acquired other than at the
original issuance, where the tax basis of the Note to the holder is less than
the stated redemption price of the Note at maturity. The excess of such
redemption price over the tax basis is the "market discount." In general, upon
the disposition of a market discount Note, gain on shall be treated as ordinary
income up to the amount of market discount attributable to the holder of the
Note. Holders who acquire a Note after original issuance at a discount should
consult their tax advisors concerning the recognition of the market discount.
NON-U.S. HOLDERS
PAYMENTS OF INTEREST
No withholding of United States federal income tax will be required with
respect to payments by the Company of interest on a Note to a Non-U.S. Holder of
such Note, provided that (i) the Holder does not actually or constructively own
10% or more of the total combined voting power of all classes of stock of the
Company entitled to vote, is not a controlled foreign corporation that is
related to the Company through stock ownership, a foreign tax-exempt
organization or foreign private foundation for United States federal income tax
purposes, and (ii) the requirements of section 871(h) or 881(c) of the Code, as
set forth below, are satisfied. Notwithstanding the above, a Non-U.S. Holder
that is engaged in the conduct of a United States trade or business will be
subject to (i) United States federal income tax on interest that is effectively
connected with such trade or business and (ii) if the Non-U.S. Holder is a
corporation, a United States branch profits tax equal to 30% of its "effectively
connected earnings
118
<PAGE>
and profits" (as adjusted) for the taxable year, unless it qualifies for an
exemption from such tax or a lower tax rate under an applicable treaty.
GAIN ON SALE OF NOTES
A Non-U.S. Holder generally will not be subject to tax on any capital gains
recognized upon the sale, exchange, redemption or other disposition of a Note
unless (i) such gain is effectively connected with the conduct of a United
States trade or business by the Non-U.S. Holder or (ii) in the case of a
Non-U.S. Holder who is a nonresident alien individual, such holder is present in
the United States for 183 or more days in the taxable year and certain other
requirements are met. In the case of (i) above, the Non-U.S. Holder will be
subject to tax on its net income at graduated rates. In the case of (ii) above,
the Non-U.S. Holder will be subject to tax at a rate of 30% on any such capital
gains to the extent that such capital gains exceed his United States source
capital losses.
FEDERAL ESTATE TAX
A Note held by an individual who at the time of death is not a citizen or
resident of the United States will not be subject to United States federal
estate tax as a result of such individual's death, provided that the individual
does not actually or constructively own 10% or more of the total combined voting
power of all classes of stock of the Company entitled to vote and that the
interest accrued on such Notes was not effectively connected with a United
States trade or business.
OWNER STATEMENT REQUIREMENT
Sections 871(h) and 881(c) of the Code require that either the beneficial
owner of a Note or a securities clearing organization, bank or other financial
institution that holds customers' securities in the ordinary course of its trade
or business (a "Financial Institution") and that holds a Note on behalf of such
owner file a statement with the Company or its agent to the effect that the
beneficial owner is not a U.S. person in order to avoid withholding of United
States federal income tax. Under current regulations, this requirement will be
satisfied if the Company or its agent receives (i) a statement (an "Owner's
Statement") from the beneficial owner of a Note in which such owner certifies,
under penalties of perjury, that such owner is not a U.S. person and provides
such owner's name and address, or (ii) a statement from the Financial
Institution holding the Note on behalf of the beneficial owner in which the
Financial Institution certifies, under penalties of perjury, that it has
received the Owner's Statement together with a copy of the Owner's Statement.
The beneficial owner must inform the Company or its agent (or, in the case of a
statement described in clause (ii) of the immediately preceding sentence, the
Financial Institution) within 30 days of any change in information on the
Owner's Statement.
BACKUP WITHHOLDING AND INFORMATION REPORTING
Under current United States federal income tax law, a 31% "backup"
withholding tax is applied to certain payments made to, and to the proceeds of
sales before maturity by, certain U.S. persons if such persons (i) fail to
furnish their taxpayer identification numbers which, for an individual, would be
his or her Social Security Number or (ii) in certain circumstances, fail to
certify, under penalties of perjury, that they have both furnished a correct
taxpayer identification number and not been notified by the Internal Revenue
Service that they are subject to backup withholding for failure to report
interest payments. Under current regulations, this backup withholding will not
apply to payments made by the Company or a paying agent on a Note if the Owner's
Statement is received; provided in each case that the Company or the paying
agent, as the case may be, does not have actual knowledge that the payee is a
U.S. person.
Under current regulations, payments of the proceeds of the sale of a Note
to or through a foreign office of a "broker" will not be subject to backup
withholding but will be subject to information reporting if the broker is a U.S.
person, a controlled foreign corporation for United States federal income tax
purposes, or a foreign person 50% or more of whose gross income is from a United
States trade or business for a specified three-year period unless the broker has
in its records documentary
119
<PAGE>
evidence that the holder of a Note is not a U.S. person and certain conditions
are met or the holder of a Note otherwise establishes an exemption. Payment of
the proceeds of a sale to or through the United States office of a broker is
subject to backup withholding and information reporting unless the holder
certifies its non-United States status under penalties of perjury or otherwise
establishes an exemption.
On October 7, 1997, the Treasury Department released new Treasury
Regulations governing the backup withholding and information reporting
requirements described above. The new regulations would not generally alter the
treatment of Non-U.S. Holders who furnish an Owner's Statement to the payor. The
new regulations may change certain procedures applicable to the foreign office
of a United States broker or foreign brokers with certain types of relationships
to the United States. The new regulations generally are effective for payments
made after December 31, 1998.
THE EXCHANGE OFFER
The exchange of Old Notes for New Notes pursuant to the Exchange Offer will
not constitute a significant modification of the terms of the Old Notes and,
therefore, such exchange will not constitute an exchange for United States
federal income tax purposes. Accordingly, such exchange will have no United
States federal income tax consequences to U.S. holders of the Old Notes and the
holding period of the New Notes will include the holding period of the Old Notes
and the basis of the New Notes will be the same as the basis of the Old Notes
immediately before the exchange.
ORIGINAL ISSUE DISCOUNT AND STATED INTEREST
The Old Notes were issued and the New Notes will be issued without original
issue discount. Stated interest on the Old and New Notes will be taxable to a
holder as ordinary interest income at the time it is accrued or paid in
accordance with such holder's method of accounting for tax purposes.
BOND PREMIUM ON THE NEW NOTES
If a holder of a New Note purchased the Old Notes for an amount in excess
of the amount payable at the maturity date (or a call date, if appropriate) of
the Old Notes, the holder may deduct such excess as amortizable bond premium
over the aggregate terms of the Old Notes and the New Notes (taking into account
earlier call dates, as appropriate), under a yield-to-maturity formula. The
deduction is available only if an election is made by the purchaser or is in
effect. This election is revocable only with the consent of the Service. The
election applies to all obligations owned or subsequently acquired by the
holder. The holder's adjusted tax basis in the Old Notes and the New Notes will
be reduced to the extent of the deduction of amortizable bond premium. Except as
may otherwise be provided in future regulations, under the Code the amortizable
bond premium is treated as an offset to interest income on the Old Notes and the
New Notes rather than as a separate deduction item.
MARKET DISCOUNT ON THE NEW NOTES
Tax consequences of a disposition of the New Notes may be affected by the
market discount provisions of the Code. These rules generally provide that if a
holder acquired the Old Notes (other than in an original issue) at a market
discount which equals or exceeds 1/4 of 1% of the stated redemption price of the
Old Notes at maturity multiplied by the number of remaining complete years to
maturity and thereafter recognizes gain upon a disposition (or makes a gift) of
the New Notes, the lesser of (i) such gain (or appreciation, in the case of a
gift) or (ii) the portion of the market discount which accrued while the Old or
New Notes were held by such holder will be treated as ordinary income at the
time of the disposition (or gift). For these purposes, market discount means the
excess (if any) of the stated redemption price at maturity over the basis of
such Old or New Notes immediately after their acquisition by the holder. A
holder of the New Notes may elect to include any market discount (whether
accrued under the Old Notes or the New Notes) in income currently rather than
upon disposition of the New Notes. This election once made applies to all market
discount obligations acquired on or after the first taxable year to which the
election applies, and may not be revoked without the consent of the Service.
120
<PAGE>
A holder of any New Note who acquired the Old Note at a market discount
generally will be required to defer the deduction of a portion of the interest
on any indebtedness incurred or maintained to purchase or carry such Old or New
Note until the market discount is recognized upon a subsequent disposition of
such New Note. Such a deferral is not required, however, if the holder elects to
include accrued market discount in income currently.
REDEMPTION OR SALE OF THE NEW NOTES
Generally, any redemption or sale of the New Notes by a holder should
result in taxable gain or loss equal to the difference between the amount of
cash and the fair market value of property received (except to the extent that
such cash or property received is attributable to accrued, but previously
untaxed, interest) and the holder's tax basis in the New Notes. The tax basis of
a holder of the New Notes should generally be equal to the price paid for the
Old Notes exchanged therefor, plus any accrued market discount on the New Notes
(and the Old Notes exchanged therefor) included in the holder's income prior to
sale or redemption of the New Notes, or reduced by any amortizable bond premium
applied against the holder's income prior to sale or redemption of the New
Notes. Such gain or loss generally would be long-term capital gain or loss if
the holding period exceeded one year, except to the extent it constitutes
accrued market discount.
THE FOREGOING DISCUSSION OF CERTAIN FEDERAL INCOME TAX CONSEQUENCES IS FOR
GENERAL INFORMATION ONLY AND IS NOT TAX ADVICE. ACCORDINGLY, EACH HOLDER OF THE
OLD NOTES SHOULD CONSULT HIS OR HER TAX ADVISOR WITH RESPECT TO THE TAX
CONSEQUENCES TO HIM OR HER OF THE ACQUISITION, OWNERSHIP AND DISPOSITION OF THE
NEW NOTES, INCLUDING THE APPLICABILITY AND EFFECT OF STATE, LOCAL, FOREIGN AND
OTHER TAX LAWS.
PLAN OF DISTRIBUTION
Each broker-dealer that holds Old Notes that were acquired for its own
account as a result of market making or other trading activities (other than Old
Notes acquired directly from the Company), may exchange Old Notes for New Notes
in the Exchange Offer. However, any such broker-dealer may be deemed to be an
"underwriter" within the meaning of such term under the Securities Act and must,
therefore, acknowledge that it will deliver a prospectus in connection with any
resale of New Notes received in the Exchange Offer. This prospectus delivery
requirement may be satisfied by the delivery by such broker-dealer of this
Prospectus, as it may be amended or supplemented from time to time. The Company
has agreed that, for a period of 180 days after the effective date of this
Prospectus, it will make this Prospectus, as amended or supplemented, available
to any broker-dealer who receives New Notes in the Exchange Offer for use in
connection with any such sale. The Company will not receive any proceeds from
any sales of New Notes by broker-dealers. New Notes received by broker-dealers
for their own accounts pursuant to the Exchange Offer may be sold from time to
time in one or more transactions in the over-the-counter market, in negotiated
transactions, through the writing of options on the New Notes or a combination
of such methods of resale, at market prices at the time of resale, at prices
related to such prevailing market prices or negotiated prices. Any such resale
of New Notes by broker-dealers may be made directly to a purchaser or to or
through brokers or dealers who may receive compensation in the form of
commissions or concessions from any such broker-dealer and/or the purchasers of
any such New Notes. Any broker-dealer that resells New Notes that were received
by it for its own account pursuant to the Exchange Offer and any broker or
dealer that participates in a distribution of such New Notes may be deemed to be
an "underwriter" within the meaning of the Securities Act and any profit on any
such resale of New Notes and any commissions or concessions received by any such
persons may be deemed to be underwriting compensation under the Securities Act.
The Company has agreed to pay all expenses incident to the Exchange Offer other
than commissions or concessions of any brokers or dealers and will indemnify
Holders (including any broker-dealer) against certain liabilities, including
liabilities under the Securities Act.
By acceptance of the Exchange Offer, each broker-dealer that receives New
Notes pursuant to the Exchange Offer hereby agrees to notify the Company prior
to using the Prospectus in connection with
121
<PAGE>
the sale or transfer of New Notes, and acknowledges and agrees that, upon
receipt of notice from the Company of the happening of any event which makes any
statement in the Prospectus untrue in any material respect or which requires the
making of any changes in the Prospectus in order to make the statements herein
not misleading (which notice the Company agrees to deliver promptly to such
broker-dealer), such broker-dealer will suspend use of the Prospectus until the
Company has amended or supplemented the Prospectus to correct such misstatement
or omission and has furnished copies of the amended or supplemented prospectus
to such broker-dealer.
LEGAL MATTERS
The validity of the New Notes offered hereby is being passed upon for the
Company by Pepper Hamilton LLP.
EXPERTS
The consolidated financial statements of the Company as of December 31,
1996 and 1997 and for each of the three years in the period ended December 31,
1997 included herein have been audited by BDO Seidman LLP, independent certified
public accountants, as set forth in their report appearing herein, and have been
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
The consolidated financial statements of NPR Holding Corporation and
Subsidiaries as of January 5, 1997 and November 20, 1997 and for the periods
ended December 31, 1995, January 5, 1997 and November 20, 1997 included herein
have also been audited by BDO Seidman LLP, independent certified public
accountants, as set forth in their report appearing herein, and have been
included in reliance upon such report given upon the authority of such firm as
experts in accounting and auditing.
CHANGE OF ACCOUNTANTS
On October 21, 1997, the Issuer engaged BDO Seidman LLP ("BDO") as NPR's
independent public accountants. BDO's engagement was approved by the Issuer's
Board of Directors. BDO also serves as independent public accountants to the
Company. Pursuant to such engagement, BDO audited NPR's financial statements for
the period March 3, 1995 through December 31, 1995, the year ended January 5,
1997 and the period January 6, 1997 to November 20, 1997, which financial
statements are included herein. See "Consolidated Financial Statements of NPR
Holding Corporation and Subsidiaries." Prior to such engagement, the Company had
not consulted with BDO on issues relating to NPR's accounting principles or the
type of audit opinion to be issued with respect to NPR's financial statements.
Deloitte & Touche LLP ("Deloitte") were the prior auditors of NPR, and
Deloitte audited the financial statements of NPR for the period from March 3,
1995 through December 31, 1995 and the year ended January 5, 1997. The report of
Deloitte on such financial statements, which is not included herein, did not
contain an adverse opinion nor a disclaimer of opinion and was not qualified or
modified as to uncertainty, audit scope, or accounting principles. In connection
with the audit by Deloitte for the period from March 3, 1995 through December
31, 1995 and the year ended January 5, 1997, there was no disagreement between
NPR and Deloitte on any matter of accounting principles or practices, financial
statement disclosure, or auditing scope or procedures, which, if not resolved to
the satisfaction of Deloitte, would have caused them to make reference to the
matter in their report. Deloitte has not been associated with any financial
statements of NPR subsequent to the year ended January 5, 1997. Deloitte's
appointment as NPR's independent public accountants was not renewed following
the completion of Deloitte's engagement to audit NPR's financial statements
described above.
122
<PAGE>
INDEX TO FINANCIAL STATEMENTS
<TABLE>
<CAPTION>
PAGE
----
<S> <C>
THE HOLT GROUP, INC. AND SUBSIDIARIES
Report of Independent Accountants........................... F-2
Consolidated Balance Sheets as of December 31, 1996 and
1997...................................................... F-3
Consolidated Statements of Income for the years ended
December 31, 1995, 1996 and 1997.......................... F-5
Consolidated Statements of Stockholder's Equity for the
years ended December 31, 1995, December 31, 1996 and
1997...................................................... F-6
Consolidated Statements of Cash Flows for the years ended
December 31, 1995, 1996 and 1997.......................... F-7
Notes to the Consolidated Financial Statements.............. F-8
NPR HOLDING CORPORATION AND SUBSIDIARIES
Report of Independent Accountants........................... F-21
Consolidated Balance Sheets as of January 5, 1997 and
November 20, 1997......................................... F-22
Consolidated Statements of Operations for the period from
March 3, 1995 to December 31, 1995, the fifty-three weeks
ended January 5, 1997 and the period from January 6, 1997
to November 20, 1997...................................... F-23
Consolidated Statements of Stockholders' Equity (Deficiency)
for the period from March 3, 1995 to December 31, 1995,
the fifty-three weeks ended January 5, 1997, and the
period from January 6, 1997 to November 20, 1997.......... F-24
Consolidated Statements of Cash Flows for the period from
March 3, 1995 to December 31, 1995, the fifty-three weeks
ended January 5, 1997 and the period from January 6, 1997
to November 20, 1997...................................... F-25
Notes to the Consolidated Financial Statements.............. F-26
</TABLE>
F-1
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Stockholder and Directors
The Holt Group, Inc.
Gloucester City, New Jersey
We have audited the accompanying consolidated balance sheets of The Holt
Group, Inc. and subsidiaries ("Holt") (see Note 1) as of December 31, 1996 and
1997, and the related consolidated statements of income, stockholder's equity
and cash flows for each of the three years in the period ended December 31,
1997. These consolidated financial statements are the responsibility of Holt's
management. Our responsibility is to express an opinion on these consolidated
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of Holt as of
December 31, 1996 and 1997 and the consolidated results of its operations and
its cash flows for each of the three years in the period ended December 31,
1997 in conformity with generally accepted accounting principles.
BDO SEIDMAN, LLP
Philadelphia, Pennsylvania
April 24, 1998
F-2
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
Assets
Current assets:
Cash...................................................... $ 1,242 $ 8,005
Marketable securities..................................... -- 40,156
Receivables
Trade.................................................. 22,791 32,610
Tenants................................................ 14,267 37,076
Other.................................................. 1,374 17,390
Fuel and supplies......................................... -- 2,201
Prepaid expenses.......................................... 1,060 5,913
Other current assets...................................... 1,373 189
Refundable deposits....................................... 4,175 --
-------- --------
Total current assets................................... 46,282 143,540
-------- --------
Property, plant and equipment, net of accumulated
depreciation and amortization............................. 90,056 194,427
-------- --------
Other assets
Receivables, other........................................ 5,955 11,288
Investment................................................ 3,405 2,925
Unamortized financing costs............................... 2,571 4,192
Other..................................................... 3,096 4,744
Receivables from non-consolidated affiliates.............. 21,114 21,262
-------- --------
Total other assets..................................... 36,141 44,411
-------- --------
$172,479 $382,378
======== ========
</TABLE>
See accompanying summary of significant accounting policies and
notes to consolidated financial statements.
F-3
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS -- (CONTINUED)
<TABLE>
<CAPTION>
DECEMBER 31,
----------------------
1996 1997
-------- --------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
LIABILITIES AND STOCKHOLDER'S EQUITY
Current liabilities:
Current maturities of long-term debt
Notes payable, banks................................... $ 33,178 $ 18,678
Other.................................................. 2,722 3,089
Accounts payable.......................................... 7,408 42,544
Payroll taxes payable..................................... 1,147 4,235
Accrued expenses.......................................... 4,945 17,964
Payments in excess of billings............................ -- 3,355
-------- --------
Total current liabilities.............................. 49,400 89,865
-------- --------
Long-term debt, net of current maturities
Notes payable, banks...................................... 2,875 1,864
Notes payable, other...................................... 60,428 189,802
-------- --------
Total long-term debt, net of current maturities........ 63,303 191,666
-------- --------
Payables to non-consolidated affiliates..................... 10,272 12,190
-------- --------
Other long term liabilities................................. -- 15,928
-------- --------
Commitments and contingencies
Stockholder's equity:
Common stock, par value $.01, authorized 1,000 shares,
issued and outstanding 100 shares...................... -- --
Additional paid-in capital................................ 631 631
Retained earnings......................................... 48,873 55,147
Unrealized appreciation on marketable
securities............................................. -- 16,635
Unrealized foreign exchange gain.......................... -- 316
-------- --------
Total stockholder's equity.................................. 49,504 72,729
-------- --------
$172,479 $382,378
======== ========
</TABLE>
See accompanying summary of significant accounting policies and
notes to consolidated financial statements.
F-4
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF INCOME
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
---------------------------------
1995 1996 1997
------- ------- -------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Operating............................................ $59,541 $57,803 $92,326
Rental income........................................ 8,385 14,995 24,007
Other................................................ 674 269 2,610
Revenue from non-consolidated affiliates............. 750 9 55
------- ------- -------
Total revenues................................. 69,350 73,076 118,998
------- ------- -------
Operating expenses
Terminal............................................. 19,753 24,125 30,431
General and administrative........................... 9,591 8,865 26,112
Equipment maintenance................................ 9,470 10,720 15,796
Insurance and safety................................. 4,291 4,797 2,998
Vessel............................................... -- -- 5,815
Transportation....................................... 2,857 2,917 9,346
Depreciation and amortization........................ 4,375 4,025 8,652
Operating taxes and licenses......................... 665 165 227
Charges from non-consolidated affiliates............. 3,175 1,703 1,207
------- ------- -------
Total operating expenses....................... 54,177 57,317 100,584
------- ------- -------
Income from operations................................. 15,173 15,759 18,414
Interest expense, net.................................. 7,875 8,154 9,211
Other income
Gain on sale of property and equipment............... 19 694 7
Dividends received................................... -- -- 1,595
Realized foreign exchange loss....................... -- -- (50)
------- ------- -------
Total other income............................. 19 694 1,552
------- ------- -------
Net income............................................. $ 7,317 $ 8,299 $10,755
======= ======= =======
</TABLE>
See accompanying summary of significant accounting policies and
notes to consolidated financial statements.
F-5
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
FOR THE YEARS ENDED DECEMBER 31, 1995, 1996 AND 1997
CONSOLIDATED STATEMENTS OF STOCKHOLDER'S EQUITY
<TABLE>
<CAPTION>
UNREALIZED
COMMON ADDITIOAL UNREALIZED FOREIGN TOTAL
STOCK PAID-IN RETAINED HOLDINGS EXCHANGE STOCKHOLDER'S
AMOUNT CAPITAL EARNINGS GAINS GAINS EQUITY
------ ---------- -------- ----------- ----------- -------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C> <C> <C> <C>
Balance, January 1, 1995..... $ -- $631 $37,825 $ -- $ -- $38,456
Net income................... -- -- 7,317 -- -- 7,317
Dividends paid............... -- -- (1,600) -- -- (1,600)
---- ---- ------- ------- ------- -------
Balance, December 31, 1995... -- 631 43,542 -- -- 44,173
Net income................... -- -- 8,299 -- -- 8,299
Dividends paid............... -- -- (2,968) -- -- (2,968)
---- ---- ------- ------- ------- -------
Balance, December 31, 1996... -- 631 48,873 -- -- 49,504
Net income................... -- -- 10,755 -- -- 10,755
Dividends paid............... -- -- (4,481) -- -- (4,481)
Unrealized foreign exchange
gains...................... -- -- -- -- 316 316
Unrealized appreciation on
marketable securities...... -- -- -- 16,635 -- 16,635
---- ---- ------- ------- ------- -------
Balance, December 31, 1997... $ -- $631 $55,147 $16,635 $ 316 $72,729
==== ==== ======= ======= ======= =======
</TABLE>
See accompanying summary of significant accounting policies and
notes to consolidated financial statements.
F-6
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31,
-------------------------------
1995 1996 1997
------- ------- -----------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Cash flows from operating activities
Net income................................................ $ 7,317 $ 8,299 $ 10,755
Adjustments to reconcile net income to net cash provided
by (used in) operating activities
Depreciation and amortization........................... 4,375 4,025 8,652
(Gain) on sale of property and equipment................ (19) (694) (7)
Changes in assets and liabilities
(Increase) decrease in assets
Trade receivables....................................... (5,019) 3,858 20,705
Tenants receivables..................................... (4,975) (5,173) (22,809)
Fuel and Supplies....................................... -- -- (68)
Prepaid expenses........................................ 829 367 (2,779)
Other current assets.................................... (10,268) 4,932 5,461
Other assets............................................ 79 285 1,939
Increase (decrease) in liabilities
Accounts payable........................................ 2,777 816 374
Payroll taxes payable................................... 253 (98) 765
Accrued expenses........................................ 1,841 588 2,034
Payments in excess of billings.......................... -- -- (426)
Other non-current liabilities........................... -- -- (63)
------- ------- -----------
Net cash (used in) provided by operating activities......... (2,810) 17,205 24,533
------- ------- -----------
Cash flows from investing activities
Payment for NPR acquisition net of cash acquired.......... -- -- (67,105)
Proceeds from sale of property and equipment.............. 102 675 7
Purchases of marketable securities........................ -- -- (23,521)
Purchases and construction of property, plant and
equipment............................................... (6,034) (6,936) (9,674)
(Increase) decrease in refundable deposits................ 8,000 -- --
Decrease (increase) in other receivables.................. (2,332) (1,397) 10,911
Decrease (increase) in receivables from non-consolidated
affiliates.............................................. (3,428) (7,751) (149)
Decrease (increase) in payables to non-consolidated
affiliates.............................................. 443 (956) 1,917
------- ------- -----------
Net cash provided by (used in) investing activities......... (3,249) (16,365) (87,614)
------- ------- -----------
Cash flows from financing activities
Redemption of preferred stock............................. -- -- (740)
Financing cost incurred................................... (140) (495) (3,994)
Net payments on term notes................................ (19,241) -- (33,940)
Proceeds of long-term debt................................ 36,003 10,986 166,387
Payments on long-term debt................................ (8,596) (8,941) (55,314)
Dividends paid............................................ (1,600) (2,969) (4,481)
------- ------- -----------
Net cash (used in) provided by financing activities......... 6,426 (1,419) 67,918
------- ------- -----------
Net increase (decrease) in cash............................. 367 (579) 4,837
Cash, at beginning of year.................................. 1,454 1,821 3,168
------- ------- -----------
Cash, at end of year........................................ $ 1,821 $ 1,242 $ 8,005
======= ======= ===========
Supplemental disclosure of cash flow information
Cash paid during the year for interest, net of amounts
capitalized............................................. $ 7,794 $ 8,247 $ 8,128
======= ======= ===========
Non-cash investing and financing activities
Unrealized appreciation from marketable securities........ -- -- $ 16,635
Unrealized foreign exchange gain.......................... -- -- 316
------- ------- -----------
-- -- $ 16,951
======= ======= ===========
Acquisition of NPR Holding Corporation (1997) and
Wilmington Stevedores, Inc. (1995)
Fair market value of assets acquired...................... $ 1,424 $ -- $ 179,709
Liabilities assumed....................................... 1,273 -- 110,679
------- ------- -----------
Cash paid................................................. $ 151 $ -- $ 69,030
======= ======= ===========
</TABLE>
See accompanying summary of significant accounting policies and
notes to consolidated financial statements.
F-7
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
BUSINESS
The Holt Group, Inc. and its subsidiaries, collectively ("Holt") is engaged
in stevedoring, trucking, warehousing and distribution services; rental of real
estate and equipment in the Delaware Valley area. Holt also operates vessels and
provides containerized cargo transportation and related services between the
United States, Puerto Rico, the Caribbean and, through a joint venture, provides
similar services in South America.
BASIS OF PRESENTATION
During October 1997, Holt Hauling and Warehousing System, Inc., Holt Cargo
Systems, Inc., The Riverfront Development Corporation, Murphy Marine Services,
Inc. and subsidiary (Wilmington Stevedores, Inc.), collectively, the Holt
Subsidiaries, reorganized their operations. In order to effectuate the
reorganization, on October 31, 1997, the Holt Subsidiaries sole stockholder
contributed 100% of the common stock of the Holt Subsidiaries to The Holt Group,
Inc., which is 100% owned by the same stockholder. Holt's wholly-owned
subsidiaries are included in the accompanying consolidated financial statements.
This reorganization has been reflected retroactively for all periods presented.
PRINCIPLES OF CONSOLIDATION
The consolidated financial statements include Holt's wholly owned
subsidiaries, Holt Hauling and Warehousing System, Inc. ("HHW"), Holt Cargo
Systems, Inc. ("HCS"), Murphy Marine Services, Inc. and its wholly owned
subsidiary ("MMS"), The Riverfront Development Corporation ("RFD") and
commencing November 21, 1997, NPR Holding Corporation and its wholly owned
subsidiaries ("NPR").
CASH AND CASH EQUIVALENTS
Holt considers highly liquid investments with a maturity of three months or
less at the time of purchase to be cash equivalents.
MARKETABLE SECURITIES
Holt classifies its marketable equity securities as available-for-sale.
Available-for-sale securities are carried at fair market value, with unrealized
gains and losses reported as a component of stockholder's equity.
PROPERTY, PLANT AND EQUIPMENT AND DEPRECIATION AND AMORTIZATION
Property, plant and equipment are stated at cost. Depreciation is provided
using the straight-line method over the estimated useful lives of the assets
ranging from five to fifty years. Costs of construction in progress are
segregated from other property accounts until construction is completed, at
which time depreciation charges commence. Maintenance and repair costs are
charged to operations as incurred and major renewals and betterments are
capitalized. Leasehold improvements are amortized over the life of the related
assets.
OVERHAUL COSTS
Costs to be incurred while a vessel is in drydock to satisfy the
requirements of various periodic regulatory inspections will be capitalized and
amortized over the expected benefit period of approximately 2 to 3 years.
F-8
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
VALUATION OF LONG-LIVED ASSETS
When events and circumstances warrant, the carrying value of long-lived
assets to be held and used are evaluated. The carrying value of a long-lived
asset is considered impaired when the anticipated undiscounted cash flow from
such asset is less than its carrying value. In that event, a loss is recognized
based on the amount by which the carrying value exceeds the fair market value of
the long-lived asset. This position is consistent with SFAS 121 "Accounting for
Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of"
which was adopted on January 1, 1995 and upon adoption, did not have a material
effect on Holt. Holt believes that no material impairment existed at December
31, 1997.
INTEREST ON CONSTRUCTION
Interest attributable to construction is capitalized into the cost of each
project on a pro rata basis. Interest capitalized in 1995, 1996 and 1997 was
$151, $394 and $650 respectively.
REVENUE RECOGNITION
Stevedoring, trucking and distribution services revenue is recognized when
services are provided to customers. Rental revenue is recognized over the term
of each lease. Ocean revenue is recognized based on relative transit time
(amount of days at sea) in each reporting period and related vessel operating
expenses are recognized as incurred.
AMORTIZATION OF FINANCING COSTS
Financing costs are amortized using the straight-line method over the terms
of the respective bond issues.
INCOME TAXES
Separate federal and state income tax returns are filed by the corporations
comprising Holt, some of which are subchapter S corporations. As provided by the
Internal Revenue Code, income of subchapter S corporations is reportable by the
stockholders on their individual tax returns. Accordingly, no provision for
federal or state income taxes has been reflected in the accompanying financial
statements for the subchapter S corporations, which earned substantially all of
the consolidated income for each year.
Deferred income taxes which would apply only to non-subchapter S
corporations are insignificant.
Effective January 1, 1998, all of Holt's wholly owned subsidiaries will be
treated for federal, and for certain state income tax purposes as a subchapter S
corporation as provided by the Internal Revenue Code.
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Actual results could differ from those estimates.
F-9
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
RECENT ACCOUNTING PRONOUNCEMENTS
Set forth below are recent accounting pronouncements which may have a
future effect on the Company's reporting requirements.
Statement of Financial Accounting Standards No. 130, "Reporting
Comprehensive Income" (SFAS No. 130) is effective for financial statements with
fiscal years beginning after December 15, 1997. Earlier application is
permitted. SFAS No. 130 establishes standards for reporting and display of
comprehensive income and its components in a full set of general-purpose
financial statements. The Company will present comprehensive income, which
includes unrealized appreciation on marketable securities, which is material,
and unrealized foreign exchange gains, which are immaterial.
Statement of Financial Accounting Standards No. 131, "Disclosure about
Segments of an Enterprise and Related Information" (SFAS No. 131) is effective
for financial statements beginning after December 15, 1997. The new standard
requires that public business enterprises report certain information about
operating segments in complete sets of financial statements of the enterprise
and in condensed financial statements of interim periods issued to stockholders.
It also requires that public business enterprises report certain information
about their products and services, the geographic areas in which they operate
and their major customers. The Company does not expect the impact of SFAS No.
131 to have a material effect on its financial reporting.
Statement of Financial Accounting Standards No. 132, "Employers'
Disclosures about Pensions and Other Postretirement Benefits" (SFAS No. 132) is
effective for financial statements with fiscal years beginning after December
15, 1997. Earlier application is permitted. SFAS No. 132 amends the disclosure
requirements on SFAS No. 87, "Employees Accounting for Pension," No. 88,
"Employees Accounting for Settlements and Curtailments of Denied Benefit Pension
Plan and Termination Benefits," and No. 106, "Employers Accounting for
Postretirement Benefits other than Pensions." This statement revises employers'
disclosures about pension and other postretirement benefit plans. The impact of
SFAS No. 132 will be to clarify the existing disclosures on the Company's
pension and other postretirement benefit plans.
2. ACQUISITION OF NPR HOLDING CORPORATION
On November 20, 1997, Holt acquired 100% of the outstanding common stock of
NPR Holding Corporation ("NPR") in exchange for $44.0 million cash and $25.0
million in notes to the selling stockholders. The operating plans for the
combined business will have a material impact on Holt and its operations and
financial condition and will require the integration of administrative finance,
sales and marketing functions and the implementation of operating, finance and
management systems and controls between Holt and NPR. This transaction was
accounted for as a purchase and NPR's net assets were recorded at fair values,
and the consolidated statement of income includes NPR's operations from November
21, 1997.
In connection with the acquisition, Holt repaid $39.7 million of existing
debt obligations of NPR. Also, Holt entered into five-year employment agreements
with certain members of NPR management and granted these employees "Phantom
Stock Units" representing the right to receive the value of up to 10% of the
common stock of NPR outstanding on November 20, 1997 (computed on a fully
diluted basis as if the Phantom Stock Units were outstanding shares of NPR
common stock), based on the achievement of specified performance goals, none of
which were earned as of December 31, 1997.
In connection with this acquisition, Holt also entered into a $35 million
equipment sale/leaseback agreement with a related party. The agreement provides
for monthly rental payments of $738 for 60 months and are included in related
party leases (see Note 7). Holt has the option to terminate the lease at the end
of 48 months by returning the equipment and payment of a termination fee of $2.8
million.
Holt relocated NPR's U.S. northeastern port of call from Elizabeth, New
Jersey to Philadelphia, Pennsylvania, a move designed to consolidate operations.
Holt does not believe that the relocation will trigger a multiemployer plan
withdrawal liability, which is estimated to be $17.1 million, plus interest
(which, if triggered, would be payable over an eight-year period). However,
there can be no assurance that the liability, or a portion thereof, will not
become payable in the future.
F-10
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
3. PROPERTY, PLANT AND EQUIPMENT
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------------------------------------------
1996 1997
--------------------------- ---------------------------
ACCUMULATED ACCUMULATED
DEPRECIATION AND DEPRECIATION AND
COST AMORTIZATION COST AMORTIZATION
-------- ---------------- -------- ----------------
<S> <C> <C> <C> <C>
Land.......................... $ 15,644 $ -- $ 15,905 $ --
Buildings..................... 29,411 8,455 29,692 9,206
Improvements.................. 6,959 4,055 10,046 4,394
Equipment..................... 34,791 19,689 43,695 23,109
Vessels....................... -- -- 94,104 805
Piers......................... 34,851 9,195 34,851 10,054
Construction in progress...... 9,794 -- 13,702 --
-------- ------- -------- -------
$131,450 $41,394 $241,995 $47,568
======== ======= ======== =======
</TABLE>
4. MARKETABLE SECURITIES AND INVESTMENTS
MARKETABLE SECURITIES
In April 1997, Holt purchased shares of common stock, representing 16.9% of
the outstanding shares of a publicly-traded foreign corporation at a cost of
$23,539. In connection with this purchase, Holt borrowed $8,539 from a foreign
bank with the balance being funded through working capital. The loan is payable
in December 1998 and bears interest at the Norwegian Inter-bank rate plus 2%. At
December 31, 1997, the fair market value of equity securities exceeded their
cost, resulting in an adjustment to stockholder's equity of $16,635.
INVESTMENTS
The investment in a technology company related to the shipbuilding industry
is reflected in the accompanying financial statements at cost.
Holt also has a 40% interest in a joint venture. The investment, the
balance of which is immaterial at December 31, 1997, is accounted for under the
equity method.
Holt has advanced the joint venture $1.5 million to use for working
capital.
The joint venture required a capital contribution of $500,000, which
approximated the operating loss as of and for the period ended November 20,
1997, the date of Holt's acquisition of NPR (see Note 2).
For the period ended December 31, 1997, Holt's share of the joint venture's
loss was immaterial.
F-11
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
5. LONG-TERM DEBT
<TABLE>
<CAPTION>
DECEMBER 31,
---------------------
1996 1997
------- --------
<S> <C> <C>
Notes payable, banks.................................... $36,053 $ 20,542
Subordinated unsecured sellers notes.................... -- 25,000
Senior unsecured increasing rate notes.................. -- 100,000
Bonds payable
1997 Fixed Rate Series K.............................. 27,250 27,250
1992 Fixed Rate Series G.............................. 10,000 10,000
1992 Fixed Rate Series H.............................. 9,000 9,000
1992 Fixed Rate Series J.............................. 5,000 5,000
Construction mortgage payable........................... 4,918 4,989
Equipment financing..................................... 6,502 11,652
Other term note payable................................. 480 --
------- --------
99,203 213,433
Less current maturities
Notes payable, banks.................................. 33,178 18,678
Other................................................. 2,722 3,089
------- --------
$63,303 $191,666
======= ========
</TABLE>
As of December 31, 1997, maturities of long-term debt over the next five
years are due as follows:
YEAR ENDING DECEMBER 31,
------------------------
1998....................................... $21,767
1999....................................... 4,093
2000....................................... 1,899
2001....................................... 1,454
2002....................................... 1,384
-------
$30,597
=======
Substantially all property, plant and equipment are pledged as collateral
for long-term debt.
The bond indentures and loan agreements provide for certain covenants
regarding working capital, net worth, dividend distributions and other financial
matters. At December 31, 1997, Holt is in compliance with the terms of the loan
covenants.
F-12
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
5. LONG-TERM DEBT -- (CONTINUED)
NOTES PAYABLE, BANKS
At December 31, 1997, notes payable, banks, consist of the following term
notes:
Revolving credit facility due in November 1998 with
interest payable monthly at prime, secured by the
vessels......................................... $ 8,500
Term loan due December 1998 with interest payable
monthly at NIBOR plus 2.25%, secured by
investments in marketable securities............ 9,166
Payable in monthly installments of $19 plus
interest at 1.25% over prime. The final payment
of $1,186 is due in December 1999............... 1,653
Payable in monthly installments of $28 plus
interest at 1% over prime....................... 528
Payable in monthly installments of $33 plus
interest at 1% over prime....................... 195
Payable in monthly installments of $21 plus
interest at 1% over prime....................... 500
-------
$20,542
=======
The prime rate noted in these loan agreements at December 31, 1997 was
8.5%.
SUBORDINATED UNSECURED SELLERS NOTES
The Subordinated Unsecured Sellers Notes of $25,000 plus accrued interest
were due December 1998. The notes bear interest at 12.5%. The Subordinated
Unsecured Sellers Notes were refinanced in connection with the issuance of the
Senior Notes (see Note 13) and, accordingly, have been classified as long-term
debt in the accompanying balance sheet.
SENIOR UNSECURED INCREASING RATE NOTES
The Senior Unsecured Increasing Rate Notes of $100,000 plus accrued
interest were due December 1998. The Senior Unsecured Increasing Rate Notes bear
interest at prime plus 2%. The Senior Unsecured Increasing Rate Notes were
refinanced in connection with the issuance of the Senior Notes (see Note 13)
and, accordingly, have been classified as long-term debt in the accompanying
balance sheet.
BONDS PAYABLE
1997 Fixed Rate Series K
The bonds mature March 1, 2027 and bear interest at an effective rate of
7.8%, payable semi-annually. These bonds redeemed and replaced the 1986 fixed
rate series D and E bonds.
1992 Fixed Rate Series G
The bonds mature at various dates through December 15, 2015, and bear
interest at 8.4%, payable semi-annually. The bond indenture requires annual
principal payments into a sinking fund beginning December 15, 2006 through 2015.
F-13
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
5. LONG-TERM DEBT -- (CONTINUED)
1992 Fixed Rate Series H
The bonds mature at various dates through December 15, 2017, and bear
interest at 8.6%, payable semi-annually. The bond indenture requires annual
principal payments into a sinking fund beginning December 15, 2008 through 2017.
1992 Fixed Rate Series J
The bonds mature at various dates through November 1, 2023, and bear
interest at 8.5%, payable semi-annually. The bond indenture requires annual
principal payments into a sinking fund beginning November 1, 2004 through 2023.
CONSTRUCTION MORTGAGE PAYABLE
The mortgage is payable in monthly installments of $33 including interest
at 6% beginning April 1997; final payment of $2,952 including interest, is due
in March, 2012.
EQUIPMENT FINANCING
The equipment obligations are payable in monthly installments aggregating
$217 plus interest. Interest rates at December 31, 1997 ranged from 7.55% to
11.55%.
6. EMPLOYEE BENEFIT PLANS
In connection with the acquisition described in Note 2, Holt assumed and
continued all the NPR employee benefit plans.
PENSION PLAN
Substantially all nonunion employees of NPR are covered under a
noncontributory defined benefit retirement plan. The net pension cost for this
plan included the following components:
DECEMBER 31,
1997
------------
Service cost-benefits earned during the period........... $ 118
-----
Interest cost on projected benefit obligation............ 294
-----
Actual return on plan assets
Actual................................................. ($655)
Asset gain deferred.................................... 387
-----
(268)
Net amortization of unrecognized gain.................... (13)
-----
NET PERIODIC PENSION COST................................ $ 131
=====
Holt amended the plan effective January 31, 1998 freezing the accrued
benefit as of that date. This amendment eliminated for all employees the accrual
of benefits for future service.
F-14
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
6. EMPLOYEE BENEFIT PLANS -- (CONTINUED)
A reconciliation of the prepaid pension asset of the plan as of December
31, 1997 is as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
<S> <C>
Projected benefit obligation............................. $45,293
Plan assets at fair value (primarily common stocks and
U.S. obligations)...................................... 48,246
-------
PREPAID PENSION ASSET (INCLUDED IN OTHER NON-CURRENT
ASSETS)................................................ $ 2,953
=======
</TABLE>
The discount rate used in determining the projected benefit obligation was
7.25% at December 31, 1997. The expected long-term rate of return on plan assets
was 5% at December 31, 1997. The assumed rate of salary increase was 5% at
December 31, 1997.
This Plan was revalued in connection with the NPR Acquisition resulting in
the subsequent freezing of the plan benefits.
NPR also provides a defined contribution 401(k) plan for its management
employees. The plan is 100% contributory by the employees.
The remaining employees of NPR are covered by multiemployer retirement
plans. The employer is required to pay contributions to the multiemployer plans
as required by the applicable collective bargaining agreements. Under the
provisions of the Employee Retirement Income Security Act (ERISA), NPR, as well
as the other employers participating in such multiemployer plans may be
contingently liable for its proportional share of the plan's unfunded vested
benefits in the event of plan termination or NPR's withdrawal from such plans
(see Note 7). NPR contributed and charged to expense $349 for the period ended
December 31, 1997.
It is the policy of NPR to fund pension costs in accordance with
actuarially computed funding requirements and the various bargaining agreements.
Certain Holt employees are covered under union-sponsored collectively
bargained defined benefit plans. Expenses for these plans were $2,719 in 1995,
$3,365 in 1996 and $5,373 in 1997, as determined in accordance with negotiated
labor contracts.
POSTRETIREMENT BENEFITS OTHER THAN PENSION
Holt has an unfunded plan to provide postretirement health care and life
insurance benefits to certain NPR employees who retire with a minimum of 10
years of service. These benefits are accrued over the period the employee
provides services to Holt.
Postretirement benefit expense was $52 for the period ended December 31,
1997. The components of the expense are as follows:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
<S> <C>
Service cost............................................. $12
Interest cost............................................ 45
Amortization of losses................................... (5)
---
POSTRETIREMENT BENEFIT COST.............................. $52
===
</TABLE>
F-15
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
6. EMPLOYEE BENEFIT PLANS -- (CONTINUED)
In general, retiree health benefits are paid as covered expenses are
incurred. The following table sets forth the unfunded status of the Plan at
December 31, 1997:
<TABLE>
<CAPTION>
DECEMBER 31,
1997
------------
<S> <C>
Accumulated postretirement benefit
Retirees............................................... $5,075
Fully eligible active employees........................ 1,344
Other active employees................................. 1,205
------
Total accumulated postretirement benefit obligation...... 7,423
Add unrecognized net gain................................ 1,604
------
ACCRUED POSTRETIREMENT BENEFIT LIABILITY (INCLUDED IN
OTHER LONG-TERM LIABILITIES)........................... $9,228
======
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.25% at December 31, 1997. The assumed rate of inrease
in administrative charges was 4% at December 31, 1997. The rate of increase in
the per capita cost of covered health care benefits is assumed to be 10.2%,
decreasing gradually to 5.25% by calendar year 2005.
7. COMMITMENTS AND CONTINGENCIES AND OTHER MATTERS
COMMITMENTS
Contributions to certain labor-related benefit plans are subject to various
assessments under certain collective bargaining agreements. Certain of these
assessments are subject to audit and final determination, and in the opinion of
Holt, the accompanying financial statements include adequate recognition of the
estimated liability for these assessments.
At December 31, 1997, Holt was contingently liable for outstanding standby
letters of credit in the amount of $6,290.
CONTINGENCIES
Holt is the defendant in a lawsuit filed in November 1996 in United States
District Court. Plaintiff seeks damages arising out of an agreement between
plaintiff and Holt whereby Holt offered a discounted freight rate in exchange
for shipment of a guaranteed volume of containers between the mainland United
States and Puerto Rico. Plaintiff claims that Holt unilaterally terminated the
agreement approximately two and one-half months before its termination date,
allegedly causing damages. Plaintiff seeks $28.0 million for such damages. Holt
has filed a motion to dismiss the complaint, which remains pending. Holt intends
to vigorously defend against the lawsuit. Holt believes that any liability in
connection with the lawsuit will not have a material adverse effect on Holt's
financial condition or results of operations.
Holt is a party to various other legal proceedings, claims and assessments
arising in the course of its business activities. Based upon information
presently available, and in light of legal and other defenses and insurance
coverage and other potential sources of payment available to Holt, management
does not expect these legal proceedings, claims and assessments, individually or
in the aggregate, to have a material impact on Holt's combined financial
position or results of operations.
F-16
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
7. COMMITMENTS AND CONTINGENCIES AND OTHER MATTERS -- (CONTINUED)
GUARANTEES
A governmental authority owns a building located on Holt's Gloucester
Marine Terminal. The building has been leased out by the owner to a relative of
the sole stockholder of Holt. Holt has guaranteed the tenant's lease payments
aggregating $18,500 through April 2024. The guarantee is secured by a mortgage
lien on the Gloucester Marine Terminal which is subordinate to the senior
mortgage debt and on a parity with the remaining mortgage debt. In the normal
course of business, Holt performs services for this tenant. In connection with
services and other transactions, at December 31, 1996 and 1997 Receivables
Tenants include $9,055 and $18,046, respectively which are due from this
relative.
A governmental authority has issued $7.0 million of its Revenue Bonds for
the benefit of one of the non-consolidated affiliates, all of which is
outstanding at December 31, 1997. The bonds are secured by a mortgage on the
non-consolidated affiliate's interest on the property financed by the bonds. The
bonds bear an interest rate of 9.05% and mature on December 1, 2019. Repayment
of bond indebtedness is guaranteed by Holt and the non-consolidated affiliates.
The guarantee is secured by a mortgage granted by Holt and one of the
non-consolidated affiliates on their respective interests in the Gloucester
Facility. The guarantee provides for certain financial covenants, with which
Holt was in compliance for all years presented.
A governmental authority has issued $6.1 million of its Refunding Bonds for
the benefit of one of the non-consolidated affiliates all of which is
outstanding at December 31, 1997. The bonds bear an interest rate of 8.95% and
mature on December 15, 2018. Repayment of bond indebtedness is guaranteed by
Holt and the non-consolidated affiliates. The bonds and the guarantee are
secured by a mortgage granted by Holt and the non-consolidated affiliate on
their respective interests in the Gloucester Facility.
LEASE COMMITMENTS
As of December 31, 1997, Holt leases property and equipment under
noncancelable operating leases requiring minimum annual rentals as follows:
<TABLE>
<CAPTION>
RELATED
PARTY OTHER
YEAR ENDING DECEMBER 31, LEASES LEASES TOTAL
- ------------------------ ------- -------- --------
<S> <C> <C> <C>
1998................................... $10,226 $ 15,777 $ 26,003
1999................................... 10,281 14,418 24,699
2000................................... 10,301 13,784 24,085
2001................................... 8,856 12,592 21,448
2002................................... 7,380 12,462 19,842
Thereafter............................. -- 113,826 113,826
------- -------- --------
$47,044 $182,859 $229,903
======= ======== ========
</TABLE>
Rental payments under the Related Party Lease (referenced above) consist of
several components, including base rent, a container pick fee, a break bulk
cargo fee and certain other fees.
Holt has a 25-year noncancelable lease and a 30-year noncancelable lease
for certain buildings located on the Gloucester Marine Terminal and a marine
terminal facility located in Camden, New Jersey (collectively the "Facilities")
all of which are owned by the same governmental authority referred to in the
first paragraph under "Guarantees" above. Minimum annual rentals are reflected
in the above schedule. Holt has the right to purchase the Facilities throughout
the term of the lease. The
F-17
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
7. COMMITMENTS AND CONTINGENCIES AND OTHER MATTERS -- (CONTINUED)
purchase price is the greater of the fair market value of the Facilities or the
amount required to optionally redeem or defease the bonds under the landlord's
indenture.
Rent expense under noncancelable lease obligations charged to operations
was $3,955 in 1995, $4,748 in 1996 and $8,364 in 1997.
8. LEASES
Holt is the lessor of substantially all of the Gloucester Marine Terminal
utilizing operating leases for periods generally greater than one year.
Minimum rentals receivable under noncancelable lease arrangements as of
December 31, 1997 were as follows:
<TABLE>
<CAPTION>
RELATED
YEAR ENDING DECEMBER 31, PARTY OTHER TOTAL
- ------------------------ ------- -------- --------
<S> <C> <C> <C>
1998.................................... $ 483 $ 10,656 $ 11,139
1999.................................... 483 7,493 7,976
2000.................................... 128 7,440 7,568
2001.................................... -- 7,440 7,440
2002.................................... -- 6,240 6,240
Thereafter.............................. -- 91,710 91,710
------ -------- --------
$1,094 $130,979 $132,073
====== ======== ========
</TABLE>
Net book value of property being leased was approximately $49 million at
December 31, 1997.
9. NON-CONSOLIDATED AFFILIATE TRANSACTIONS
Holt transacts business with companies under the control of Holt's
principal stockholder. These transactions include providing advances to and from
those companies. These advances do not bear interest.
Holt also provided services and goods to these companies which include
stevedoring services, rental of warehouse space and building and equipment
repairs. At December 31, 1996 and 1997, $21,114 and $21,262 was due to Holt in
connection with net advances made and services performed on behalf of certain
non-consolidated affiliates. At December 31, 1996 and 1997, $10,272 and $12,190
was due to certain non-consolidated affiliates in connection with net advances
and services received. Revenue for these services totaled $750, $9 and $55 in
1995, 1996 and 1997. These companies provided services to Holt which included
rental of warehouse space, building and equipment repairs, management services
and sale of ice. Payments for these services totaled $3,175, $1,703 and $1,207
in 1995, 1996 and 1997.
The cost of the goods and services provided by and charged to
non-consolidated affiliates are at prices which management believes are
comparable to those provided to non-related customers.
10. OTHER RELATED PARTY TRANSACTIONS
In 1995, 1996, and 1997, Holt leased property and equipment from a company
owned by family members of Holt's principal sole stockholder under a
non-cancelable lease which expires December 30, 2000 and which is renewable
through 2040 pursuant to four 10-year renewal options. Rental payments under
this lease totaled $2,397 in 1995, $2,481 in 1996 and $2,981 in 1997 and are
included in the minimum annual rentals disclosed in Note 7 above.
F-18
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
10. OTHER RELATED PARTY TRANSACTIONS -- (CONTINUED)
Holt has an agreement to purchase general and administrative support
services from another company owned by these same family members. The cost of
the services provided to Holt are negotiated on an arms length basis which are
comparable to those provided to non-related customers during the normal course
of business. Payments for these services totaled $2,755 in 1995, $3,748 in 1996
and $4,492 in 1997.
In the normal course of business, Holt performs services for these
companies. At December 31, 1996 and 1997, Receivables Tenants include $526 and
$1,238, respectively.
Also at December 31, 1996 and 1997, receivables other includes $391 and
$3,500, respectively, due from the company that provides support services to
Holt and other companies owned by the same family members.
11. CONCENTRATIONS OF CREDIT RISK
Concentrations of credit risk with respect to trade receivables are limited
due to the large number of customers comprising Holt's customer base. Holt does
not require collateral from its customers. During 1995, 1996 and 1997, sales to
one customer accounted for 11.8%, 10.5% and 10.5%, respectively, of revenues.
12. FAIR VALUE OF FINANCIAL INSTRUMENTS
As of December 31, 1997, the estimated fair values of Holt's financial
instruments and significant assumptions made in determining fair values are as
follows:
-- Cash, accounts receivable, accounts payable, payroll taxes payable and
accrued expenses: The amounts reported in the balance sheet approximate
fair value due to the short-term maturities of these instruments.
-- Receivables, other and long-term debt: The amounts reported in the
balance sheet are at market rates of interest and approximate fair
value.
-- Receivable from/payables to non-combined affiliates: Due to uncertain
repayment terms, it is not practicable to estimate fair market value.
13. SUBSEQUENT EVENT
On January 21, 1998, Holt issued $140 million of Senior Notes. The Notes
are due January 2006 and bear interest at 9.75% payable semiannually.
Proceeds received from the issuance of the Senior Notes were used to repay
the $100 million senior unsecured increasing rate notes and the $25 million
subordinated unsecured sellers notes (see Note 5). In addition, Holt charged to
expense in 1998 the remaining unamortized financing costs of approximately
$1.1 million.
Holt's wholly owned subsidiary, RFD, is not a guarantor on the Senior
Notes. The guarantor subsidiaries provide full, complete, unconditional, joint
and several guarantees on the Senior Notes. The Company has not presented
separate financial statements and other disclosures concerning the subsidiary
guarantors as management has determined that such information is not material to
investors.
F-19
<PAGE>
THE HOLT GROUP, INC. AND SUBSIDIARIES
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
13. SUBSEQUENT EVENT -- (CONTINUED)
Summarized financial information is as follows:
<TABLE>
<CAPTION>
DECEMBER 31, 1997
-------------------------------------------------------------------------
SUBSIDIARY
HGI GUARANTORS RFD ELIMINATIONS CONSOLIDATED
-------- ---------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Current assets........... $ 500 $102,896 $40,144 $ -- $143,540
Non-current assets....... 208,048 43,117 3,925 (210,679) 44,411
Current liabilities...... 11,134 69,497 9,234 -- 89,865
Non-current
liabilities............ 125,000 128,260 14,817 (64,221) 203,856
</TABLE>
<TABLE>
<CAPTION>
YEAR ENDED DECEMBER 31, 1997
-------------------------------------------------------------------------
SUBSIDIARY
HGI GUARANTORS RFD ELIMINATIONS CONSOLIDATED
-------- ---------- ------- ------------ ------------
<S> <C> <C> <C> <C> <C>
Revenue.................. $ -- $132,746 $ -- $(13,748) $118,998
Operating income
(loss)................. (2,344) 20,790 (149) 117 18,414
Net income (loss)........ (3,883) 13,513 1,008 117 10,755
</TABLE>
RFD's current assets consist primarily of marketable securities. RFD's
liabilities consist of bank debt and advances from two of the subsidiary
guarantors. RFD's income is a result of dividends received.
RFD's net assets and results of operations as of and for the years ended
December 31, 1995 and 1996 are immaterial.
F-20
<PAGE>
REPORT OF INDEPENDENT ACCOUNTANTS
Stockholders and Directors
NPR Holding Corporation and Subsidiaries
Edison, New Jersey
We have audited the accompanying consolidated balance sheets of NPR Holding
Corporation and Subsidiaries (NPR) as of January 5, 1997 and November 20, 1997,
and the related consolidated statements of operations, stockholders' equity
(deficiency), and cash flows for the periods ended December 31, 1995, January 5,
1997 and November 20, 1997. These consolidated financial statements are the
responsibility of NPR's management. Our responsibility is to express an opinion
on these consolidated financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audits to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly,
in all material respects, the consolidated financial position of NPR as of
January 5, 1997 and November 20, 1997, and the consolidated results of its
operations and its consolidated cash flows for the periods ended December 31,
1995, January 5, 1997 and November 20, 1997, in conformity with generally
accepted accounting principles.
BDO SEIDMAN, LLP
Philadelphia, Pennsylvania
April 24, 1998
F-21
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
JANUARY 5, NOVEMBER 20,
1997 1997
---------- ------------
(DOLLARS IN THOUSANDS)
<S> <C> <C>
ASSETS
Current assets
Cash and cash equivalents................................. $ 1,850 $ 1,926
Trade and other receivables, net of allowance of $23,838
at January 5, 1997 and $26,454 at November 20, 1997.... 40,342 34,459
Fuel and operating supplies, net of reserves of $638 at
January 5, 1997 and $-0- at November 20, 1997.......... 2,427 2,533
Prepaid expenses and other current assets................. 1,854 2,176
-------- --------
Total current assets........................................ 46,473 41,094
-------- --------
Vessels, property and equipment, net........................ 94,249 83,446
Capitalized overhaul costs and other noncurrent assets,
net of accumulated amortization of $2,604 at January 5,
1997 and $3,464 at November 20, 1997...................... 2,716 3,546
Goodwill, net of accumulated amortization of $372 at January
5, 1997 and $551 at November 20, 1997..................... 2,697 2,517
-------- --------
$146,135 $130,603
======== ========
LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIENCY)
Current liabilities
Note payable.............................................. $ 17,104 $ 5,649
Current maturities of long-term debt...................... 8,074 8,719
Accounts payable and accrued liabilities.................. 48,575 57,587
Payments in excess of billings............................ 7,300 6,587
-------- --------
Total current liabilities.............................. 81,053 78,542
-------- --------
Other accrued liabilities................................... 42,843 35,623
Long-term debt, net of current maturities................... 33,539 26,245
Redeemable preferred stock.................................. 689 739
Commitments and Contingencies
Stockholders' equity (deficiency)
Common stock
Class A-1; par value $.001; authorized 16,000 shares;
issued and outstanding 15,177 shares at January 5,
1997 and November 20, 1997........................... -- --
Class A-2; par value $.001; authorized 16,000 shares;
no shares issued or outstanding...................... -- --
Class B; par value $.001; authorized, issued and
outstanding 450 shares............................... -- --
Class C; par value $.001; authorized 2,057 shares,
issued and outstanding 2,023 shares at January 5,
1997 and 2,057 at November 20, 1997.................. -- --
Additional paid-in capital............................. 15,116 15,116
Accumulated deficit.................................... (27,105) (25,662)
-------- --------
Total stockholders' equity (deficiency)..................... (11,989) (10,546)
-------- --------
$146,135 $130,603
======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-22
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
<TABLE>
<CAPTION>
MARCH 3, 1995 JANUARY 1, 1996 JANUARY 6, 1997
TO TO TO
DECEMBER 31, 1995 JANUARY 5, 1997 NOVEMBER 20, 1997
----------------- --------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Revenues
Ocean revenue........................... $228,228 $265,110 $238,670
Other revenue........................... 5,539 3,987 6,671
-------- -------- --------
Total revenues.................... 233,767 269,097 245,341
-------- -------- --------
Expenses
Vessel (including vessel fuel of $12,154
at December 31, 1995, $14,365 at
January 5, 1997 and $12,484 at
November 20, 1997.................... 48,012 48,941 43,915
Cargo handling.......................... 49,006 57,662 50,287
Terminal................................ 55,010 56,145 52,793
Transportation.......................... 34,512 49,535 42,144
Selling, general and administrative..... 42,922 48,644 40,108
Depreciation and amortization........... 10,699 14,524 10,618
-------- -------- --------
Total operating expenses.......... 240,161 275,451 239,865
-------- -------- --------
Income (loss) from operations............. (6,394) (6,354) 5,476
-------- -------- --------
Other (income) expense
Interest expense........................ 5,812 7,171 5,973
Investment loss......................... -- -- 500
Miscellaneous expense (income), net..... (33) 1,407 (2,490)
-------- -------- --------
Other expenses, net............... 5,779 8,578 3,983
-------- -------- --------
Net income (loss)......................... $(12,173) $(14,932) $ 1,493
======== ======== ========
</TABLE>
See accompanying notes to consolidated financial statements.
F-23
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY (DEFICIENCY)
(DOLLARS IN THOUSANDS, SHARES IN WHOLE UNITS)
<TABLE>
<CAPTION>
ADDITIONAL TOTAL
COMMON STOCK PAID-IN ACCUMULATED STOCKHOLDER'S
SHARES AMOUNT CAPITAL DEFICIT (DEFICIENCY)
<S> <C> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------------------
Issuance of shares, March 1995....... 17,781 $ -- $15,213 $ -- $15,213
Shares acquired and cancelled........ (438) -- (150) -- (150)
Net loss for the period ended
December 31, 1995.................. -- -- -- (12,173) (12,173)
- --------------------------------------------------------------------------------------------------
Stockholders' equity,
December 31, 1995.................. 17,343 -- 15,063 (12,173) 2,890
Issuance of shares................... 307 -- 53 -- 53
Net loss for the period ended
January 5, 1996.................... -- -- -- (14,932) (14,932)
- --------------------------------------------------------------------------------------------------
Stockholders'
(deficiency),
January 5, 1997.................... 17,650 -- 15,116 (27,105) (11,989)
Issuance of shares................... 34 -- -- -- --
Preferred stock dividends accrued.... -- -- -- (50) (50)
Net income for period ended
November 20, 1997.................. -- -- -- 1,493 1,493
- --------------------------------------------------------------------------------------------------
Stockholders' (deficiency),
November 20, 1997.................. 17,684 -- 15,116 (25,662) (10,546)
====== ======= ======= ======= =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-24
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
<TABLE>
<CAPTION>
MARCH 3, 1995 JANUARY 1, 1996 JANUARY 6, 1997
TO TO TO
DECEMBER 31, 1995 JANUARY 5, 1997 NOVEMBER 20, 1997
----------------- --------------- -----------------
(DOLLARS IN THOUSANDS)
<S> <C> <C> <C>
Increase (decrease) in cash
Cash flows from operating activities:
Net income (loss)................................... $(12,173) $(14,932) $ 1,493
Adjustments to reconcile net income (loss) to net
cash provided by (used in) operating activities:
Depreciation and amortization..................... 10,699 14,524 10,618
Amortization of debt issuance costs............... 1,166 1,385 1,349
Allowance for bad debts........................... 572 2,536 2,616
(Gain) loss on sale of property and equipment..... (21) 582 (2,502)
Share of TNX operating loss....................... -- -- 500
Changes in assets and liabilities:
(Increase) decrease in assets
Trade and other receivable...................... (4,878) (5,317) 3,267
Fuel and operating supplies..................... (13) 293 (106)
Prepaid expenses and other current assets....... (1,627) 1,206 (321)
Increase (decrease) in liabilities
Accounts payable and accrued expenses........... 1,697 (7,189) 9,719
Payments in excess of billings.................. 2,253 2,200 (714)
Other noncurrent assets and liabilities......... 8,754 (3,024) (10,257)
-------- -------- -------
Net cash provided by (used in) operating
activities........................................ 6,429 (7,736) 15,662
-------- -------- -------
Cash flows from investing activities:
Cash paid to purchase assets of PRMSA............... (52,780) --
Refund from PRMSA for adjustment of purchase
price............................................. 5,654 --
Cash paid to settle Mills litigation................ (250) -- --
Acquisition costs paid.............................. (6,479) -- --
Purchase of property and equipment and capitalized
overhaul costs.................................... (4,063) (3,342) (854)
Proceeds from sale of property and equipment........ 220 756 4,580
Investment in TNX................................... -- -- (500)
-------- -------- -------
Net cash provided by (used in) investing
activities........................................ (63,352) 3,068 3,226
-------- -------- -------
Cash flows from financing activities:
Proceeds from issuance of common stock.............. 15,213 53 --
Proceeds from bank loans............................ 45,000 -- --
Repayments of bank loans............................ (4,056) (9,723) (7,357)
Purchase of treasury stock.......................... (150) -- --
Net borrowings (payments) under line of credit
agreement......................................... 2,939 14,165 (11,455)
-------- -------- -------
Net cash provided by (used in) financing
activities........................................ 58,946 4,495 (18,812)
-------- -------- -------
Net increase (decrease) in cash and cash
equivalents....................................... 2,023 (173) 76
Cash and cash equivalents, at beginning of period... -- 2,023 1,850
-------- -------- -------
Cash and cash equivalents, at end of period......... $ 2,023 $ 1,850 1,926
======== ======== =======
Supplemental disclosures of cash flow information:
Cash paid during the period for interest............ $ 4,212 $ 4,909 3,617
======== ======== =======
Noncash investing and financing transactions
Preferred stock dividends accrued................... -- -- 50
Details of Acquisition in 1995:
Fair value of assets acquired..................... 155,856 --
Liabilities assumed............................... 108,731 --
-------- -------- -------
Cash paid......................................... $ 47,125 $ --
======== ======== =======
</TABLE>
See accompanying notes to consolidated financial statements.
F-25
<PAGE>
1. ORGANIZATION AND OPERATIONS
FORMATION OF COMPANY
NPR Holding Corporation ("NPR") was incorporated December 12, 1994. NPR was
established to purchase the net assets of the Puerto Rico Maritime Shipping
Authority ("PRMSA"). On March 3, 1995, NPR acquired all of the stock of the
Puerto Rico Marine Management Inc. ("PRMMI") and assumed certain liabilities of
PRMSA, for a cash payment of $52,780 and the issuance of a $5,000 Promissory
Note. The transaction was financed with the proceeds of NPR's sale of common
stock and the proceeds of a $45,000 collateralized bank loan (Note 6). All
assets and liabilities have been recorded at fair values as of March 3, 1995. On
February 27, 1995, NPR created two wholly owned subsidiaries, NPR-Navieras
Receivables, Inc. and NPR, Inc. to effectuate the purchase of the PRMSA assets.
NPR, Inc. serves as the operating company. NPR and its subsidiaries, operating
under the trade name Navieras, operate a fleet of five Lancer class container
ships and more than 20,000 containers and chassis.
NPR and PRMSA subsequently adjusted the purchase price as provided for in
the agreement dated March 3, 1995. In summary, PRMSA paid NPR $5,654 in cash for
the working capital shortfall pursuant to the purchase agreement, and NPR agreed
to assume $2,000 of PRMSA's liability for asbestos claims and issue an
additional promissory note to PRMSA in the amount of $1,000. This adjustment has
been included in the initial accounting for the purchase.
RESTRUCTURING OF NPR'S OPERATION
Immediately after the purchase, NPR implemented its restructuring and
revitalization plan. The plan installed a new management team to meet NPR's
current and future operating demands, established a new vessel deployment
schedule to accelerate the frequency of its transportation services, closed
unprofitable port facilities, and refurbished NPR's port cranes.
Associated with the acquisition, management committed to a restructuring
plan which involved closing down certain leased facilities. The facilities
consisted of the New Orleans, Baltimore and Charleston operating terminals and
certain sales offices at other locations. Also included was involuntary
severance for management and other employees covered by collective bargaining
agreements at these and other facilities. As of the acquisition date, $7,066 in
restructuring costs, consisting of approximately $5,607 in remaining lease
payments and other facility costs and $1,459 in severance costs, were recognized
as liabilities in the purchase transaction and included in the acquisition cost
allocation. For periods ended December 31, 1995, January 5, 1997, and November
20, 1997, lease payments and other facility costs paid totaled $395, $1,214, and
$127, respectively. Severance cost paid totaled $406, $933, and $0,
respectively, for the same periods.
As of January 5, 1997, the planned closings were completed. The New Orleans
lease commitment, which originally extended through January 2003 was terminated
effective September 25, 1996. The lease termination agreement stipulated that
NPR pay a lease termination fee of $4,804, payable over the remaining life of
the original lease. The closing costs including the lease termination fee, were
included in the restructuring costs referred to above.
SALE OF COMPANY
On November 20, 1997, NPR's outstanding common stock was acquired by The
Holt Group, Inc. (see Note 15). These financial statements present the results
of operations and financial position prior to the acquisition by Holt.
F-26
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
ACCOUNTING PERIOD
NPR's fiscal year is a 52 or 53 week period ending the Sunday following
December 31, except if December 31, is a Sunday. Since NPR started its
operations on March 3, 1995, after the acquisition of the PRMSA assets, NPR's
first fiscal period which ended December 31, 1995, was a 43 week period (see
Note 1). All costs incurred by NPR during the period between the date of
formation and the acquisition date have been included as either acquisition or
financing costs. Fiscal year 1996 which ended January 5, 1997, consisted of 53
weeks. Fiscal year 1997, which ended November 20, 1997 (see Note 15), consisted
of 45 weeks.
PRINCIPLES OF CONSOLIDATION
The accompanying consolidated financial statements include the accounts of
NPR Holding Corporation and its wholly owned subsidiaries, NPR-Navieras
Receivables, Inc. and NPR, Inc. after eliminating intercompany accounts and
transactions.
OCEAN REVENUE AND VESSEL OPERATING EXPENSES
Ocean revenue is recognized based on relative transit time in each
reporting period and related vessel operating expenses are recognized as
incurred.
FUEL AND OPERATING SUPPLIES
Bunker fuel and garage inventories are valued at the lower of first-in,
first-out cost or market.
CASH AND CASH EQUIVALENTS
NPR considers highly liquid investments with a maturity of three months or
less at the time of purchase to be cash equivalents.
VESSELS, PROPERTY AND EQUIPMENT
Vessels, property and equipment are stated at cost. Depreciation and
amortization is provided on the straight-line basis over estimated useful lives
as follows:
<TABLE>
<S> <C>
Vessels 12 years
Vessel betterments Over the remaining lives of the vessels
Containers and trailers 12 years (new) and 11 years (used)
Chassis 12 years (new) and 11 years (used)
Terminal property and equipment 3 - 10 years
Leasehold rights and improvements Over the term of the lease
</TABLE>
Expenditures for renewals and betterments which improve or extend the life
of the assets are capitalized. Cost and accumulated depreciation of assets sold,
retired or otherwise disposed of are removed from the accounts and any resulting
gain or loss is included in operations.
F-27
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
LONG-LIVED ASSETS
NPR adopted the provisions of Statement of Financial Accounting Standards
("SFAS") No. 121 "Accounting for the Impairment of Long-Lived Assets and for
Long-Lived Assets to Be Disposed Of" (SFAS 121) during the period ended December
31, 1995. SFAS 121 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. The adoption of this standard did not have a
material impact on NPR's results of operations.
When events and circumstances warrant, the carrying value of long-lived
assets to be held and used are evaluated. The carrying value of a long-lived
asset is considered impaired when the anticipated undiscounted cash flows from
such asset is less than its carrying value. In that event, a loss is recognized
based on the amount by which the carrying value exceeds the fair market value of
the long-lived asset. NPR believes that no material impairment existed at
November 20, 1997.
MAINTENANCE, REPAIR AND OVERHAUL COSTS
Maintenance and repair costs incurred while the asset is in service are
charged to operations in the current period.
Costs incurred while a vessel is in drydock (e.g., overhaul) to satisfy the
requirements of various periodic regulatory inspections are capitalized and
amortized over the expected benefit period.
Maintenance and repairs to the vessel fleet while in periodic drydock which
do not materially prolong the useful life of an asset are estimated and accrued
over the period of time between drydockings, and such accruals are charged to
operations currently.
The costs to be incurred to restore certain leased equipment to the
condition mandated by the lease agreements are estimated and accrued over the
average in-service life.
EQUIPMENT OFF-HIRE LEASE TERMINATION LIABILITY
NPR operates various equipment under operating leases. NPR is liable for
any damages incurred on the equipment upon lease termination that do not have
damage protection rates included in the lease payments. The liability is based
upon NPR's estimate of expected lease termination charges and the liability is
adjusted by periodic charges to operating expenses as necessary.
CLAIMS NOT COVERED BY INSURANCE
Accrual for claims not covered by NPR's insurance, principally cargo
claims, injuries, property and vessel damages, include an estimate based on
individual claims outstanding and an estimated amount for losses incurred but
not reported on the basis of past experience.
GOODWILL
The excess of the cost of the net assets acquired over their fair value at
the date of acquisition is being amortized on the straight-line method over 15
years. Amortization expense charged to operations for the period March 3, 1995
to December 31, 1995, the period January 1, 1996 to January 5, 1997 and January
6, 1997 to November 20, 1997 was $167, $205 and $179, respectively.
F-28
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES -- (CONTINUED)
USE OF ESTIMATES
The preparation of financial statements in conformity with generally
accepted accounting principles requires management to make estimates and
assumptions that affect the reported amounts of assets and liabilities and
disclosure of contingent assets and liabilities at the date of the financial
statements and revenues and expenses during the period reported. Actual results
could differ from those estimates.
FAIR VALUE OF FINANCIAL INSTRUMENTS
Fair value estimates are based on pertinent information available to
management as of November 20, 1997. The estimated fair value, which approximates
cost of cash equivalents, trade and other receivables, accounts payable and
accrued expenses are reflected in the consolidated balance sheets. The estimated
fair value of long-term debt approximates face amount since substantially all
borrowings are at variable rates. There are no significant instruments with
off-balance sheet risk such as hedging contracts or derivatives.
INCOME TAXES
NPR files its U.S. federal income tax return on a consolidated basis.
Income tax expense is determined pursuant to Statement of Financial Accounting
Standards No. 109, "Accounting for Income Taxes." Under this method, deferred
tax assets and deferred tax liabilities are determined based upon differences
between the financial and tax basis of assets and liabilities, using enacted tax
rates in effect for the year in which the differences are expected to reverse.
3. LOAN AND SECURITY AGREEMENT
The Loan and Security Agreement ("Agreement") as amended January 28, 1997
and referred to in Notes 5 and 6 requires that NPR maintain certain financial
ratios, amounts, and other covenants as defined in that Agreement. NPR, from
time to time, did not meet covenants regarding the delivery of audited annual
financial statements, the delivery or application of the proceeds of NPR's sale
of individual items of collateral, the cash flow coverage ratio and tangible net
worth as of or for certain periods, as specified in that Agreement. On October
20, 1997, the Lenders collectively agreed to amend the Agreement and to waive
any default or event of default for NPR's failure to comply with the covenants
referred to above during periods prior to such amendment. In addition, covenants
regarding tangible net worth were amended for certain future periods up to and
including January 4, 1998.
NPR was in compliance with all terms of the Agreement, as amended. On
November 20, 1997, in conjunction with the sale of NPR (see Note 15), all
amounts outstanding under this agreement were paid in full.
F-29
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
4. VESSELS, PROPERTY AND EQUIPMENT
Vessels, property and equipment at January 5, 1997 and November 20, 1997
consist of the following (in thousands):
<TABLE>
<CAPTION>
JANUARY 5, NOVEMBER 20,
1997 1997
---------- ------------
<S> <C> <C>
Vessels and vessel betterments.............................. $ 54,324 $ 54,324
Containers, chassis and trailers............................ 54,296 52,558
Terminal property and equipment............................. 6,315 6,118
Leasehold rights and improvements........................... 572 598
Construction-in-progress.................................... 319 97
-------- --------
115,826 113,695
Less accumulated depreciation and amortization.............. 21,577 30,247
-------- --------
Vessels, property and equipment, net........................ $ 94,249 $ 83,446
======== ========
</TABLE>
Substantially all of the assets of NPR are pledged as collateral for the
Tranche 2 and Tranche 3 loans (see Note 6).
On December 4, 1996, NPR sold the S.S. Ponce. The proceeds were distributed
in accordance with the Ponce Disposition Agreement with PRMSA, whereas, NPR
received approximately $800 as reimbursement of the vessel's lay-up costs. NPR
recorded a loss on the sale of the S.S. Ponce during 1996 of approximately $800.
On April 28, 1997, the Kennedy Building located in San Juan, Puerto Rico was
sold, resulting in a gain of $2,807, which is included in other income on the
accompanying statement of operations.
5. NOTE PAYABLE
On March 3, 1995, NPR as borrower, entered into a Loan and Security
Agreement with LaSalle National Bank as Agent and as Trustee, and with LaSalle
National Bank and Transamerican Business Credit Corporation as Lenders.
Subsequently, on September 20, 1995, this Agreement was modified to include BOT
Financial Corp. as an additional Lender. This Agreement provides for a
three-year term with two additional one-year options at NPR's discretion to
extend, and pledges all accounts receivable as collateral. The Loan and Security
Agreement provides for a line of credit up to 85% of the face amount of eligible
accounts receivable, less the face amount of all issued and outstanding Letters
of Credit, or $20 million, whichever is less. The interest rate on this segment
of the Loan and Security Agreement known as the Tranche 1 Loan, is established
at 1% per annum in excess of the prime rate. During the period January 6, 1997
through November 20, 1997, the Tranche 1 borrowings ranged from a low of $2,818
to a high of $17,104. During the period January 1, 1996 through January 5, 1997,
the Tranche 1 borrowings ranged from a low of $2,067 to a high of $17,109. The
unused line of credit as of November 20, 1997 was $13,778. At November 20, 1997
and January 5, 1997, the effective interest rate was 9.5%, and the
collateralized accounts receivable were $33,636 and $36,030, respectively.
Upon the sale of NPR, Inc. on November 20, 1997, the Tranche 1 Loan was
paid in full. On January 28, 1997, LaSalle National Bank, as sole lender, in
accordance with the March 3, 1995 Credit Agreement and with the consent of the
other Lenders, provided an additional $3 million LaSalle Loan. This Tranche 4
Loan was guaranteed by a Participation Agreement where Berkshire Fund III
Investment Co. provided a $1 million Standby Letter of Credit and Pyramid
Ventures, Inc. contributed $2 million. LaSalle National Bank issued a single $3
million advance to NPR, as a nonrevolving loan. Tranche 4 remained fully
extended, with an 8.5% effective interest rate, until it was paid in full upon
the sale of NPR, Inc. on November 20, 1997.
F-30
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
6. LONG-TERM DEBT
The Loan and Security Agreement with LaSalle National Bank (see Note 5)
provides for a maximum $30 Million Tranche 2 Loan and a maximum $15 Million
Tranche 3 Loan. NPR also has a $5 Million and a $1 Million borrowing from Puerto
Rico Maritime Shipping Authority known as the Seller's Notes (see Note 1).
In July 1996, NPR entered into a seven-year lease/purchase agreement with
Interpool, Inc. The principal amount of $3,238 represented the lease/purchase of
594 units of 45-feet high cube steel containers. The total lease obligation of
$4,555 includes $1,317 in total interest payments over the term. Monthly payment
on this lease varies and is calculated on a $3.00 (Three dollar) per diem, per
unit basis. Ownership effectively reverts to NPR at the expiration of the lease
in September 2003.
Following is a summary of long-term debt at January 5, 1997 and November
20, 1997:
<TABLE>
<CAPTION>
JANUARY 5, NOVEMBER 20,
1997 1997
---------- ------------
<S> <C> <C>
Tranche 2
Payable in various monthly amounts through March 2000,
plus interest at 1.25% above the prime rate, commenced
April 1, 1995, secured by equipment, furniture and
other assets........................................... $22,833 $18,118
Tranche 3
Payable in various monthly amounts through March 1999,
plus interest at 2.25% above the prime rate, secured by
the vessels............................................ 8,885 6,579
PRMSA Notes
10% unsecured Seller's Notes due March 5, 2005,
interest calculated semi-annually (NPR has the option
either to pay the interest semi-annually or to include
the semi-annual interest as additional principal. For
the period January 6, 1997 to November 20, 1997 and the
period January 1, 1996 to January 5, 1997, NPR added to
principal $707 and $552, respectively)................. $ 6,806 $ 7,513
Interpool
Payable monthly on a per diem basis, commenced July
1996 with a seven year term, expiring September 2003... 3,089 2,754
------- -------
41,613 34,964
Less current maturities ............................... 8,074 8,719
------- -------
Long-term debt, net of current maturities ............. $33,539 $26,245
======= =======
</TABLE>
The Tranche 2, Tranche 3 and the PRMSA Notes were paid in full upon the
sale of NPR (see Note 15).
F-31
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
7. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES
<TABLE>
<CAPTION>
JANUARY 5, NOVEMBER 20,
1997 1997
---------- ------------
<S> <C> <C>
CURRENT
Accounts payable......................................... $32,709 $40,724
Accrued liabilities...................................... 8,762 10,219
Other liabilities........................................ 2,064 1,587
Accrued dry docking costs................................ 5,040 5,057
------- -------
$48,575 $57,587
======= =======
LONG-TERM
Reserve for insurance deductible......................... $ 904 $ 840
Accrued closing cost -- noncurrent maturities............ 3,140 3,112
Reserve for equipment off-hire termination............... 6,180 5,903
Reserve for asbestos claims.............................. 1,933 1,883
Reserve for employee benefit plans (see Note 8).......... 24,712 23,555
Other.................................................... 5,974 330
------- -------
$42,843 $35,623
======= =======
</TABLE>
8. EMPLOYEE BENEFIT PLANS
In connection with the acquisition described (in Note 1), NPR assumed and
continued all the employee benefit plans as defined by PRMSA.
PENSION PLAN
Substantially all nonunion employees of NPR are covered under a
noncontributory defined benefit retirement plan. The net pension cost for this
plan included the following components:
<TABLE>
<CAPTION>
JANUARY 5, NOVEMBER 20,
1997 1997
---------- ------------
<S> <C> <C>
Service cost-benefits earned during the period........... $ 1,550 $ 1,301
Interest cost on projected benefit obligation............ 3,457 3,232
Actual return on plan assets............................. (2,879) (3,088)
------- -------
Net periodic pension cost................................ $ 2,128 $ 1,445
======= =======
</TABLE>
F-32
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
8. EMPLOYEE BENEFIT PLANS -- (CONTINUED)
A reconciliation of the funded status of the Plan as of January 5, 1997 and
November 20, 1997 is as follows:
<TABLE>
<CAPTION>
JANUARY 5, NOVEMBER 20,
1997 1997
---------- ------------
<S> <C> <C>
Actuarial present value of benefit obligations
Vested benefits........................................ $ 40,316 $ 40,208
Nonvested benefits..................................... 2,283 4,892
-------- --------
Accumulated benefit obligation.............................. 42,599 45,100
Effect on projected future compensation..................... 6,846 6,761
-------- --------
Projected benefit obligation................................ 49,445 51,861
Plan assets at fair value (primarily common stocks and U.S.
obligations).............................................. 40,377 47,846
-------- --------
Projected benefit obligation in excess of plan assets....... (9,068) (4,015)
Unrecognized net (gain)..................................... (5,889) (9,762)
-------- --------
(Accrued) pension cost...................................... $(14,957) $(13,777)
======== ========
</TABLE>
The discount rate used in determining the projected benefit obligation was
7.5% at January 5, 1997 and 7.25% at November 20, 1997. The expected long-term
rate of return on plan assets was 8% at January 5, 1997 and November 20, 1997.
The assumed rate of salary increase was 4.5% at January 5, 1997 and 5% November
20, 1997.
In connection with the sale of NPR (Note 15), NPR's pension plan was frozen
as of January 15, 1998.
NPR also provides a defined contribution 401(k) Plan for its management
employees. The plan is 100% contributory by the employees.
The remaining employees of NPR are covered by multiemployer retirement
plans. The employer is required to pay contributions to the multiemployer plans
as required by the applicable collective bargaining agreements. Under the
provisions of the Employee Retirement Income Security Act (ERISA), NPR, as well
as the other employers participating in such multiemployer plans may be
contingently liable for its proportional share of the plan's unfunded vested
benefits in the event of plan termination or NPR's withdrawal from such plans
(see Note 13). NPR contributed and charged to expense $2,679, $2,670, and
$2,475, respectively for the periods ended December 31, 1995, January 5, 1997
and November 20, 1997.
It is the policy of NPR to fund pension costs in accordance with
actuarially computed funding requirements and the various bargaining agreements.
POSTRETIREMENT BENEFITS OTHER THAN PENSION
NPR has an unfunded plan to provide postretirement health care and life
insurance benefits to certain employees who retire with a minimum of 10 years of
service. These benefits are accrued over the period the employee provides
services to NPR.
F-33
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
8. EMPLOYEE BENEFIT PLANS -- (CONTINUED)
Postretirement benefit expense was $672, $769 and $582 for the periods
ended December 31, 1995, January 5, 1997 and November 20, 1997, respectively, as
follows:
<TABLE>
<CAPTION>
JANUARY 6,
MARCH 3, JANUARY 1, 1997 TO
1995 TO 1996 TO NOVEMBER
DECEMBER 31, JANUARY 5, 20,
1995 1997 1997
------------ ---------- ----------
<S> <C> <C> <C>
Service cost.................................... $144 $192 $132
Interest cost................................... 528 577 503
Amortization of gain............................ -- -- (53)
---- ---- ----
Postretirement benefit cost..................... $672 $769 $582
==== ==== ====
</TABLE>
In general, retiree health benefits are paid as covered expenses are
incurred. The following table sets forth the unfunded status of the Plan at
January 5, 1997 and November 20, 1997:
<TABLE>
<CAPTION>
JANUARY 5, NOVEMBER 20,
1997 1997
---------- ------------
<S> <C> <C>
Accumulated postretirement benefit
Retirees................................................... $5,329 $5,100
Fully eligible active employees............................ 1,541 1,337
Other active employees..................................... 1,527 1,186
------ ------
Total APBO................................................. 8,397 7,623
Add unrecognized net gain.................................. 717 1,559
------ ------
Accrued postretirement benefit liability................... $9,114 $9,182
====== ======
</TABLE>
The discount rate used in determining the accumulated postretirement
benefit obligation was 7.5% at January 5, 1997 and 7.25% at November 20, 1997.
The assumed rate of increase in administrative charges are 6% at January 5, 1997
and 4% at November 20, 1997. The rate of increase in the per capita cost of
covered health care benefits is assumed to be 10.2%, decreasing gradually to
5.25% by calendar year 2005.
9. MILLS SETTLEMENT AGREEMENT AND ISSUANCE OF REDEEMABLE PREFERRED STOCK
On June 1, 1995, NPR entered into an agreement with Mills Capital Advisor,
Inc. ("Mills") and Russel T. Stern, Jr. ("RTS") to settle: (a) certain claims
made by Mills in an action filed in the Circuit Court of Cook County, Illinois,
Chancery Division, captioned Mills Capital Advisors, Inc. V. BT Investment
Partners, Inc., Case No. 95 CH 1725 (the "Litigation"), and (b) all obligations
of the Mills and BT Investment Partners, Inc. ("BTIP") agreement dated March 23,
1995 (the "Settlement Agreement").
NPR authorized 689 shares of preferred stock with a liquidation value of
$.1 per share, no voting rights, a 3% cumulative dividend provision based on the
stock's liquidation value, and a redemption schedule stipulating that the
redeemed preferred shares stock are canceled and not reissued. The first
redemption date was set at June 1, 2002 at which time NPR would be required to
redeem issued and outstanding shares of preferred stock having an aggregate
liquidation value of $258, at a price per share equal to the liquidation value.
The second redemption date was set at June 1, 2003 at which time, NPR would be
required to redeem issued and outstanding shares of preferred stock having an
aggregate liquidation value of $258, at a price per share equal to the
liquidation value plus cumulative
F-34
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
9. MILLS SETTLEMENT AGREEMENT AND ISSUANCE OF REDEEMABLE PREFERRED
STOCK -- (CONTINUED)
and unpaid dividends. The final redemption date was set at June 1, 2004 at which
time all outstanding shares of preferred stock would be required to be redeemed
at liquidation value plus cumulative and unpaid dividends.
On November 20, 1997, in conjunction with the sale of NPR (see Note 15),
the Settlement Agreement was satisfied through redemption of all outstanding
preferred stock in consideration of a payment by NPR of $740, including accrued
dividends of approximately $50.
10. COMMON STOCK
All shares of NPR's Common Stock are identical in all respects and entitle
the holders to the same rights and privileges, subject to the same
qualifications, limitations and restrictions except for the voting rights,
dividends and distributions as specified below.
Holders of Class A-1 Common, Class B Common and Class C Common are entitled
to one vote per share on all matters to be voted on by the stockholders of NPR.
Holders of Class A-2 Common have the same voting rights except that they shall
have no voting rights when all Common Stock holders vote as one class on matters
involving: 1) merger or consolidations, 2) sales of substantially all of NPR's
assets, and 3) any amendment of NPR's Certificate of Incorporation.
Dividends or distributions of earnings shall be paid ratably to all of the
holders of the Common Stocks.
At January 5, 1997 and November 20, 1997, there were 2,023 and 2,057 shares
of Class C Common Stock outstanding, respectively, held by NPR's management.
Pursuant to the stockholders' agreement establishing certain limitation
features, contingent upon NPR achieving targeted earning levels, or in defined
circumstances upon the sale of stock or results of operations, said stock would
become vested and be entitled to participate fully in the proceeds of such
exchanges and earnings distributions.
Dividends or distributions in connection with the distributions from
sources other than earnings shall be paid ratably to each holder in the class
and in the order set forth below until the sum of all nonearnings distributions
are paid:
Class A (A-1 and A-2) Common up to the first $1,000 per share
Class B Common for the next $1,010 per share
Class C Common for the next $10 per share
Any remaining distributions shall be distributed to all of the holders of
Common Stock ratably.
The Class A-1 Common holders can convert any or all of their shares of
Class A-1 into the same number of shares of Class A-2 Common, and vice versa. On
November 20, 1997, all of the outstanding shares of all classes of common stock
were purchased by The Holt Group, Inc. (See Note 15).
11. INCOME TAXES
No provision for income taxes was provided in any period presented due to
the significant losses that NPR incurred.
F-35
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
11. INCOME TAXES -- (CONTINUED)
The significant components of the Net Deferred Tax Asset (Liability)
consist of the following at January 5, 1997 and November 20, 1997:
<TABLE>
<CAPTION>
JANUARY 5, NOVEMBER 20,
1997 1997
---------- ------------
<S> <C> <C>
Depreciation and amortization.............................. $(13,005) $(10,295)
Net operating loss......................................... 21,450 42,915
Foreign tax credit......................................... 714 1,059
Pension and retiree benefits............................... 11,508 9,431
Inventories................................................ 111 --
Compensation and benefits.................................. 300 505
Receivables................................................ 10,914 10,544
Equipment off-hire......................................... 2,830 2,355
Contract dry dock.......................................... 4,508 3,571
Intangibles................................................ 2,557 822
Other...................................................... 1,329 1,140
Deferred tax asset valuation reserve....................... (43,216) (62,047)
-------- --------
Total...................................................... $ -- $ --
======== ========
</TABLE>
As it is more likely than not that none of the future tax benefits of any
of the components of the deferred tax asset will be realized, a valuation
reserve of $27,213 and $62,047 at January 5, 1997 and November 20, 1997,
respectively has been established.
For income tax reporting, NPR has net operating loss carryforwards
aggregating approximately $9 million available to reduce future U.S. income
taxes and $101 million available to reduce Puerto Rico income taxes. Subsequent
to the acquisition of NPR by The Holt Group, Inc. (See Note 15) the Company
adopted S corporation status, whereby the shareholders' record income and loss
on their personal tax returns and the net operating losses and the deferred tax
asset will be unavailable to reduce future taxable income of NPR.
12. OPERATING LEASES
Future minimum rental payments required under noncancelable operating
leases that have initial or remaining terms in excess of one year, and the
remaining future lease payments and consideration for the early termination of
the leases associated with the facility closings at November 20, 1997 are as
follows:
<TABLE>
<CAPTION>
December 1997-1998. $ 8,388
<S> <C>
1999....................................... 6,531
2000....................................... 5,814
2001....................................... 4,693
2002....................................... 4,574
Thereafter................................. 8,557
-------
$38,557
=======
</TABLE>
Rental expense for the periods ended December 31, 1995, January 5, 1997 and
November 20, 1997 was $4,524, $5,603 and $5,830, respectively.
F-36
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
13. COMMITMENTS, CONTINGENCIES AND OTHER MATTERS
COMMITMENTS
Contributions to certain labor-related benefit plans are subject to various
assessments under certain collective bargaining agreements. Certain of these
assessments are subject to audit and final determination, and in the opinion of
NPR, the accompanying financial statements include adequate recognition of the
estimated liability for these assessments.
CONTINGENCIES
NPR is the defendant in a lawsuit filed in November 1996 in United States
District Court. Plaintiff seeks damages arising out of an agreement between
plaintiff and NPR whereby NPR offered a discounted freight rate in exchange for
shipment of a guaranteed volume of containers between the mainland United States
and Puerto Rico. Plaintiff claims that NPR unilaterally terminated the agreement
approximately two and one-half months before its termination date, allegedly
causing damages. Plaintiff seeks $28.0 million for such damages. NPR has filed a
motion to dismiss the complaint, which remains pending. NPR intends to
vigorously defend against the lawsuit. There can be no assurance that the
resolution of this lawsuit will not have a material adverse effect on NPR's
financial condition or results of operations.
NPR is a party to various other legal proceedings, claims and assessments
arising in the course of its business activities. Based upon information
presently available, and in light of legal and other defenses and insurance
coverage and other potential sources of payment available to NPR, management
does not expect these legal proceedings, claims and assessments, individually or
in the aggregate, to have a material adverse impact on NPR's consolidated
financial position or results of operations.
As of November 20, 1997, NPR has outstanding letters of credit in the
amount of $1,400, expiring on various dates through October 19, 1998, of which
$110 was fully collateralized.
14. START OF NEW SERVICE, TNX (TRANSROLL NAVIERAS EXPRESS, INC.)
NPR announced a new venture with Transroll Navegacao, S.A. of Brazil (TNX)
whereby a weekly express service in the South American trade lanes will
commence. NPR has a 49.99% share of TNX. TNX's inaugural sailing commenced in
October 1997, calling at the South American ports of Fortaleza-Vitoria, Buenos
Aires, Rio Grande, Imbituba/Sao Francisco de Sul, Santos and Rio de Janeiro. In
connection with this service, NPR has agreed to guarantee to TNX up to $1,500
total reimbursement related to the time chartering of three vessels -- MV
Norpol, MV Antares and MV Aldebaran.
The joint venture requires a $500 capital contribution and advances up to
$2.0 million which will be funded from the proceeds of Holt's proposed offering
of Senior Notes due 2006.
For the period ended November 20, 1997, TNX incurred a net loss of $975.
NPR's share of the loss amounted to approximately $500.
F-37
<PAGE>
NPR HOLDING CORPORATION AND SUBSIDIARIES
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS -- (CONTINUED)
(DOLLARS IN THOUSANDS)
15. SALE OF NPR
On November 20, 1997, NPR's outstanding common stock was acquired by The
Holt Group, Inc. in exchange for $44.0 million cash and $25.0 million in notes
to the selling shareholders. The operating plans for the combined business will
have a material impact on NPR and its operations and financial condition and
will require the integration of administrative finance, sales and marketing
functions and the implementation of operating, finance and management systems
and controls between Holt and NPR.
As part of the sale transaction, Holt contributed $39.7 million to NPR
which was used to repay existing debt obligations of NPR. Also, NPR entered into
five-year employment agreements with certain members of NPR management and
granted these employees "Phantom Stock Units" representing the right to receive
the value of up to 10% of the common stock of NPR outstanding on November 20,
1997 based on the achievement of specified performance goals. NPR then
distributed to its shareholders 10% of the outstanding capital stock of TNX (see
above) and caused $670 in cash bonuses to be distributed to certain management
employees of NPR's in 1997.
In connection with the sale, NPR also entered into a $35 million equipment
sale/leaseback agreement with a related party. The agreement provides for
monthly rental payments of $738 for 60 months. NPR has the option to terminate
the lease at the end of 48 months by returning the equipment and payment of a
termination fee of $2.8 million.
The combined company has relocated its U.S. northeastern port of call from
Elizabeth, New Jersey to Philadelphia, Pennsylvania, a move designed to
consolidate operations. Holt does not believe that the relocation will trigger a
multiemployer plan withdrawal liability, which is estimated to be $17.1 million,
plus interest (which, if triggered, would be payable over an eight-year period).
However, there can be no assurance that the liability, or a portion thereof,
will not become payable in the future.
These financial statements are not representative of the postmerger
business of NPR.
F-38
<PAGE>
================================================================================
ALL TENDERED OLD NOTES, EXECUTED LETTERS OF TRANSMITTAL AND OTHER RELATED
DOCUMENTS SHOULD BE DIRECTED TO THE EXCHANGE AGENT. QUESTIONS AND REQUESTS FOR
ASSISTANCE AND REQUESTS FOR ADDITIONAL COPIES OF THE PROSPECTUS, THE LETTER OF
TRANSMITTAL AND OTHER RELATED DOCUMENTS SHOULD BE ADDRESSED TO THE EXCHANGE
AGENT AS FOLLOWS.
BY REGISTERED OR CERTIFIED MAIL:
The Bank of New York
101 Barclay Street
Corporate Trust Services Window
Ground Level
New York, New York 10286
Attn: Reorganization Section
BY HAND/OVERNIGHT EXPRESS:
The Bank of New York
101 Barclay Street, 7E
New York, New York 10286
Attn: Reorganization Section
FACSIMILE TRANSMISSION:
(212) 815-6339
TO CONFIRM RECEIPT:
(212) 815-2742
(ORIGINALS OF ALL DOCUMENTS SUBMITTED BY FACSIMILE SHOULD BE SENT PROMPTLY BY
HAND, OVERNIGHT COURIER OR REGISTERED OR CERTIFIED MAIL)
NO DEALER, SALESPERSON OR OTHER PERSON IS AUTHORIZED IN CONNECTION WITH ANY
OFFERING MADE HEREBY TO GIVE ANY INFORMATION OR TO MAKE ANY REPRESENTATION NOT
CONTAINED IN THIS PROSPECTUS, AND, IF GIVEN OR MADE, SUCH INFORMATION OR
REPRESENTATIONS MUST NOT BE RELIED UPON AS HAVING BEEN AUTHORIZED BY THE
COMPANY. THIS PROSPECTUS DOES NOT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION
OF AN OFFER TO BUY ANY SECURITY OTHER THAN THE SECURITIES OFFERED HEREBY, NOR
DOES IT CONSTITUTE AN OFFER TO SELL OR A SOLICITATION OF AN OFFER TO BUY ANY OF
THE SECURITIES OFFERED HEREBY TO ANY PERSON IN ANY JURISDICTION IN WHICH IT IS
UNLAWFUL TO MAKE SUCH AN OFFER OR SOLICITATION TO SUCH PERSON. NEITHER THE
DELIVERY OF THIS PROSPECTUS NOR ANY SALE MADE HEREUNDER SHALL UNDER ANY
CIRCUMSTANCE CREATE ANY IMPLICATION THAT THE INFORMATION CONTAINED HEREIN IS
CORRECT AS OF ANY DATE SUBSEQUENT TO THE DATE HEREOF.
OFFER TO EXCHANGE ALL
OUTSTANDING
9 3/4% SENIOR NOTES DUE 2006
($100,000,000 PRINCIPAL AMOUNT)
FOR 9 3/4% SENIOR NOTES DUE 2006
[LOGO]
THE HOLT GROUP, INC.
-----------------------
PROSPECTUS
-----------------------
, 1998
================================================================================
<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 20. INDEMNIFICATION OF DIRECTORS AND OFFICERS
The Holt Group, Inc. (the "Company"), Holt Cargo Systems, Inc. ("Holt
Cargo"), Murphy Marine Services, Inc. ("Murphy Marine"), Wilmington Stevedores,
Inc. ("Wilmington Stevedores"), NPR, Inc. ("NPR"), NPR-Navieras Receivables,
Inc. ("Navieras"), NPR Holding Corporation ("NPR Holding") and NPR S.A., Inc.
("NPR S.A.") (collectively, the "Delaware Registrants") are Delaware
corporations. Reference is made to Section 102(b)(7) of the Delaware General
Corporation Law (the "DGCL"), which enables a corporation in its original
certificate of incorporation or an amendment thereto to eliminate or limit the
personal liability of a director to the corporation or its stockholders for
monetary damages for breach of the director's fiduciary duty, except (i) for any
breach of the director's duty of loyalty to the corporation or its stockholders,
(ii) for acts or omissions not in good faith or which involve intentional
misconduct or a knowing violation of law, (iii) pursuant to Section 174 of the
DGCL (providing for liability of directors for unlawful payment of dividends or
unlawful stock purchases or redemptions), or (iv) for any transaction from which
the director derived an improper personal benefit. The certificates of
incorporation of Holt Cargo, NPR, Navieras, NPR Holding and NPR S.A. contain
indemnification provisions permitted by Section 102(b)(7) of the DGCL and the
by-laws of the Company, Murphy Marine, NPR S.A. and Wilmington Stevedores
contain provisions permitting indemnification of directors and officers.
Reference also is made to Section 145 of the DGCL which provides that a
corporation may indemnify any person, including officers and directors, who was
or is, or is threatened to be made, a party to any threatened, pending or
completed legal action, suit or proceeding, whether civil, criminal,
administrative or investigative (other than an action by or in the right of such
corporation), by reason of the fact that such person is or was an officer,
director, employee or agent of such corporation, or is or was serving at the
request of such corporation as a director, officer, employee or agent of another
corporation or enterprise, if such person acted in good faith and in a manner he
reasonably believed to be in or not opposed to the corporation's best interests
and, with respect to any criminal proceeding, had no reasonable cause to believe
that his conduct was unlawful. The indemnity may include expenses (including
attorneys' fees), judgments, fines and amounts paid in settlement actually and
reasonably incurred by such person in connection with such action, suit or
proceeding. A Delaware corporation may indemnify its officers, directors,
employees and agents in an action by or in the right of the corporation under
the same conditions, except that no indemnification is permitted without
judicial approval if the officer, director, employee or agent is adjudged to be
liable to the corporation. Where an officer, director, employee or agent is
successful on the merits or otherwise in the defense of any action referred to
above, the corporation must indemnify him against the expenses which such
officer, director, employee or agent actually and reasonably incurred in
connection therewith.
Holt Hauling and Warehousing System, Inc. ("Holt Hauling") is a
Pennsylvania corporation. Sections 513 and 518 of the Pennsylvania Corporations
and Unincorporated Associations statute (the "Associations Code") and Sections
1741-1750 of the Pennsylvania Business Corporation Law of 1988 (the "BCL")
provide for indemnification of the directors and officers of Holt Hauling. Under
Sections 1741-1750 of the BCL, directors and officers of Holt Hauling may be
indemnified by the Holt Hauling against all expenses actually and reasonably
incurred in connection with actions (including, under certain circumstances,
derivative actions) brought against such director or officer by reason of his or
her status as a representative of Holt Hauling or by reason of the fact that
such director or officer serves or served as a representative of another entity
at the request of Holt Hauling, so long as the director or officer acted in good
faith and in a manner he or she reasonably believed to be in, or not opposed to,
the best interests of Holt Hauling; and, provided further that with respect to
any criminal proceedings, such officer or director had no reasonable cause to
believe that his or her conduct was unlawful. Section 1745 of the BCL permit
Holt Hauling to pay expenses incurred in connection with any such action, suit
or proceeding in advance of the final disposition of such action, suit or
proceeding upon Holt Hauling's receipt of an undertaking by or on behalf of the
representative to repay the
II-1
<PAGE>
amount so advanced if said person is ultimately determined not to be entitled to
indemnification under the BCL. Section 1713 expressly does not permit the
limitation of directors' responsibility or liability arising from any criminal
statute or liability for the payment of taxes pursuant to federal, state or
local law. Under the BCL, the personal liability of the officers and directors
of Holt Hauling shall not be limited if the responsibility or liability arises
under or any criminal statute or the liability concerns for the payment of tax
pursuant to federal, state or local law.
Section 1743 of the BCL mandates indemnification by Holt Hauling of its
officers, directors and representatives when such individuals are ultimately
successful on the merits or otherwise in defense of any third-party action or
proceedings, of any or derivative or corporate actions.
Subject to certain limitations and exceptions, the Company and its
subsidiaries have insurance coverage for losses by any person who is or
hereafter may be a director or officer of the Company arising from claims
against that person for any wrongful act in his capacity as a director or
officer of the Company or any of its subsidiaries.
The foregoing discussion is qualified in its entirety by reference to the
DGCL, the Associations Code, the BCL and the by-laws of the Delaware Registrants
and Holt Hauling.
ITEM 21. EXHIBITS AND FINANCIAL STATEMENT SCHEDULES
(a) The following is a complete list of Exhibits filed as part of this
Registration Statement.
3.1 Certificate of Incorporation of the Company.
3.2 By-laws of the Company.
3.3 Certificate of Incorporation of Holt Cargo Systems, Inc.
3.4 By-laws of Holt Cargo Systems, Inc.
3.5 Articles of Incorporation of Holt Hauling and Warehousing Systems, Inc.
3.6 By-laws of Holt Hauling and Warehousing Systems, Inc.
3.7 Certificate of Incorporation of Murphy Marine Services, Inc.
3.8 By-laws of Murphy Marine Services, Inc.
3.9 Certificate of Incorporation of Wilmington Stevedores, Inc.
3.10 By-laws of Wilmington Stevedores, Inc.
3.11 Certificate of Formation of NPR, Inc.
3.12 By-laws of NPR, Inc.
3.13 Certificate of Incorporation of NPR-Navieras Receivables, Inc.
3.14 By-laws of NPR-Navieras Receivables, Inc.
3.15 Certificate of Incorporation of NPR Holding Corporation.
3.16 By-laws of NPR Holding Corporation.
3.17 Certificate of Incorporation of NPR S.A., Inc.
3.18 By-laws of NPR S.A., Inc.
4 Indenture, dated January 21, 1998, among the Company, the Guarantors and
The Bank of New York.
*5 Opinion of Pepper Hamilton LLP.
10.1 Purchase Agreement, dated January 14, 1998, among the Company, the
Guarantors and Donaldson, Lufkin & Jenrette.
10.2 Exchange Registration Rights Agreement, dated January 21, 1998, among
the Company, its subsidiaries and Donaldson, Lufkin & Jenrette
Securities Corporation.
10.3 Stock Purchase Agreement, dated September 25, 1997, among the Company
and the selling shareholders of NPR Holding Corporation signatory
thereto.
*10.4 Securities Purchase Agreement, dated November 20, 1997, between the
Company and HS Funding, Inc.
II-2
<PAGE>
10.5 Securities Purchase Agreement, dated November 18, 1997, among the
Company and the persons listed and the signature pages attached thereto.
10.6 Shareholders Agreement, dated November 20, 1997, among the Shareholders
signatory thereto.
10.7 Agreement, dated August 6, 1997, between Transroll Navagacao S.A. and
NPR Holding Corporation.
10.8 First Amendment to Joint Venture Agreement dated November 20, 1997.
10.9 NPR 1997 Phantom Stock Plan.
*10.10 Settlement Agreement, dated April __, 1997, among The New York Shipping
Association -- International Longshoreman's Association Pension Trust
Fund, Puerto Rico Maritime Shipping Authority, Government Development
Bank for Puerto Rico and NPR, Inc.
*10.11 Payment Agreement, dated April __, 1997, among Government Development
Bank for Puerto Rico, Puerto Rico Maritime Shipping Authority, NPR,
Inc., and NPR Holding Corporation.
*10.12 United States Pension Services, Inc. 401(k) Plan and Trust.
10.13 Loan Agreement, dated January 3, 1984, between the City of Gloucester
City, New Jersey and Holt Hauling and Warehousing System, Inc.
10.14 First Amendment to Loan Agreement, dated January 3, 1984, dated March
31, 1991, between the City of Gloucester City, New Jersey and Holt
Hauling and Warehousing System, Inc.
10.15 Loan Agreement, dated August 3, 1984, between the City of Gloucester
City, New Jersey and Holt Hauling and Warehousing System, Inc.
10.16 First Amendment to Loan Agreement, dated August 3, 1984, dated March 31,
1991, between Holt Hauling and Warehousing System, Inc. and the City of
Gloucester City, New Jersey.
10.17 Second Amendment to Loan Agreements, dated January 3, 1984, and August
3, 1984, dated August 1, 1996.
10.18 Multi Currency Secured Revolving Credit Facility dated April 16, 1997,
between The Riverfront Development Corporation and Finansbanken ASA.
10.19 Amendment No. 1 to Multi Currency Secured Revolving Credit Facility
dated April 16, 1997, dated April 23, 1997, between The Riverfront
Development Corporation and Finansbanken ASA.
10.20 Equipment Lease Agreement, dated November 18, 1997, between Emerald
Equipment Leasing, Inc., NPR, Inc. and Holt Cargo Systems, Inc.
10.21 Lease Guaranty Agreement, dated November 20, 1997, by the Company, Holt
Hauling and Warehousing System, Inc., Wilmington Stevedores, Inc.,
Murphy Marine Services, Inc., The Riverfront Development Corporation,
NPR-Navieras Receivables, Inc., and NPR S.A., Ind., for the benefit of
Emerald Equipment Leasing, Inc. with respect to various duties and
obligations of NPR, Inc. and Holt Cargo Systems, Inc.
10.22 Amended and Restated Lease and Operating Agreement, dated December 30,
1990, between Philadelphia Regional Port Authority and Holt Cargo
Systems, Inc. for Packer Avenue Marine Terminal.
10.23 Sublease, dated June 14, 1991, between Astro Holdings, Inc. and Holt
Cargo Systems, Inc.
10.24 Assignment of Lease, dated June 14, 1991, between Holt Cargo Systems,
Inc. and Astro Holdings, Inc.
*10.25 Loan and Security Agreement, dated August 8, 1989, between Holt Cargo
Systems, Inc. and Bank Leumi Le-Israel B.M.
*10.26 Modification of Loan and Security Agreement, dated November 13, 1992,
between Holt Cargo Systems, Inc. and Bank Leumi Le-Israel B.M. and
Second Modification of Loan and Security Agreement, dated December 31,
1992.
II-3
<PAGE>
10.27 Third Modification of Loan and Security Agreement, dated July 1, 1995,
between Holt Cargo Systems, Inc. and PNC Bank, National Association
(successor in interest to Bank Leumi Le- Israel B.M.).
10.28 Loan Agreement, dated July 20, 1995, among Holt Cargo Systems, Inc.,
Holt Hauling and Warehousing Systems, Inc., Broadway Equipment Leasing
Corp., Refrigerated Distribution Center, Inc., Triple Seven Ice, Inc.,
Holt Cargo Systems of California, Inc., The Riverfront Development
Corporation, 777 Pattison Avenue, Inc., Holt Warehousing Company, Marine
Information Technology, Inc., B.H. Sobelman & Co., Inc., T. and L.
Leasing Corp., CRT, Inc., Refrigerated Enterprises, Inc., Oregon Avenue
Enterprises, Incorporated, Pattison Avenue Warehousing Corp., Murphy
Marine Services, Inc., Rockside International Fish Co., Inc., Wilmington
Stevedores, Inc. and Meridian Bank.
10.29 Container Lease Purchase Agreement, dated June 5, 1996, between NPR,
Inc. and Interpool Limited, and Membership and Equipment Lease Agreement
dated April 1, 1996 between Interpool Limited and NPR, Inc.
*10.30 Credit Agreement, dated November 20, 1997, between the Company and
CoreStates Bank, N.A.
10.31 Business Loan Agreement, dated March 13, 1997, between Holt Hauling and
Warehousing System, Inc. and Wilmington Savings Fund Society, FSB.
*10.32 Series G Loan Agreement, dated January 2, 1992, between Holt Hauling and
Warehousing System, Inc. and the New Jersey Economic Development
Authority.
*10.33 Series H Loan Agreement, dated January 2, 1992, between Holt Hauling and
Warehousing System, Inc. and the New Jersey Economic Development
Authority.
*10.34 Series G Mortgage and Security Agreement, dated as of January 2, 1992,
between Holt Hauling and Warehousing System, Inc. and Mellon Bank, N.A.
*10.35 Series H Mortgage and Security Agreement, dated January 2, 1992, between
Holt Hauling and Warehousing System, Inc. and Mellon Bank, N.A.
*10.36 Series J Loan Agreement, dated June 1, 1995, between Holt Hauling and
Warehousing System, Inc. and the New Jersey Economic Development
Authority.
10.37 Series J Mortgage and Security Agreement, dated June 1, 1995, between
Holt Hauling and Warehousing System, Inc. and The Bank of New York (NJ).
*10.38 Lease Agreement, dated January 15, 1996, between Holt Hauling and
Warehousing System, Inc. and Camden County Improvement Authority.
10.39 Mortgage and Security Agreement, dated January 15, 1996, between Holt
Hauling and Warehousing System, Inc., 777 Pattison Ave., Inc. and The
Bank of New York (NJ).
10.40 Mortgage and Security Agreement, dated May 15, 1992, between Holt
Hauling and Warehousing System, Inc., 777 Pattison Ave., Inc. and
Fidelity Bank, National Association.
10.41 Memorandum of Installment Sale Agreement, dated May 15, 1992, among
Philadelphia Authority for Industrial Development, Refrigerated
Enterprises, Inc., Holt Hauling and Warehousing System, Inc., B.H.
Sobelman & Co., Inc., Refrigerated Distribution Center, Inc., Oregon
Avenue Enterprises, Incorporated, Holt Cargo System, Inc., The
Riverfront Development Corp., CRT, Inc., Triple Seven Ice, Inc. and 777
Pattison Ave., Inc.
10.42 Installment Sale Agreement, dated May 15, 1992, among Philadelphia
Authority for Industrial Development, Refrigerated Enterprises, Inc.,
Holt Hauling and Warehousing System, Inc., B.H. Sobelman & Co., Inc.,
Refrigerated Distribution Center, Inc., Oregon Avenue Enterprises,
Incorporated, Holt Cargo Systems, Inc., The Riverfront Development
Corp., CRT, Inc., Triple Seven Ice, Inc., Pattison Avenue Warehousing
Corp., and 777 Pattison Ave., Inc.
*10.43 Series K Loan Agreement, dated February 1, 1997, between New Jersey
Economic Development Authority and Holt Hauling and Warehousing System,
Inc.
10.44 Series K Mortgage and Security Agreement, dated February 1, 1997, among
Holt Hauling and Warehousing, 777 Pattison Ave., Inc. and New Jersey
Economic Development Authority.
II-4
<PAGE>
*10.45 Mortgage and Security Agreement, dated March 15, 1994, among Holt
Hauling and Warehousing System, Inc., 777 Pattison Ave., Inc. and The
Bank of New York N.A.
10.46 Contract of Sale, dated April __, 1994, between Holt Hauling and
Warehousing System, Inc. and Camden County Improvement Authority.
10.47 First Leasehold Mortgage and Security Agreement, dated June 1, 1997,
between Holt Hauling and Warehousing System, Inc.
*10.48 Loan Agreement, dated March 2, 1992, among 777 Pattison Ave., Inc., Holt
Hauling and Warehousing System, Inc., B.H. Sobelman & Co., Inc.,
Refrigerated Distribution Center, Inc., Oregon Avenue Enterprises,
Incorporated, Holt Cargo Systems, Inc., CRT, Inc., The Riverfront
Development Corp., Triple Seven Ice, Inc., Pattison Avenue Warehousing
Corp. and Refrigerated Enterprises, Inc.
10.49 Security Agreement, dated January 24, 1997, by Holt Cargo System, Inc.
in favor of Transamerica Business Credit Corporation.
10.50 Client Services Agreement, dated July 10, 1995, between SLS Services,
Inc. and Wilmington Stevedores, Inc.
10.51 Client Services Agreement, dated April 1, 1994, between SLS Services,
Inc. and Holt Cargo Systems, Inc.
10.52 Client Services Agreement, dated April 1, 1994, between SLS Services,
Inc. and Holt Hauling & Warehousing System, Inc.
10.53 Client Services Agreement, dated July 1, 1994, between SLS Services,
Inc. and Murphy Marine Services, Inc.
10.54 Client Services Agreement, dated April 1, 1994, between SLS Services,
Inc. and The Riverfront Development Corporation.
10.55 Amendment No. 1 to Client Services Agreement, dated January __, 1998, by
and among SLS Services, Inc., Holt Cargo Systems, Inc., Holt Hauling &
Warehousing System, Inc., Murphy Marine Services, Inc., The Riverfront
Development Corporation and Wilmington Stevedores, Inc.
21 Subsidiaries of Registrant.
23.1 Consent of BDO Seidman, LLP.
*23.2 Consent of Pepper Hamilton LLP (to be included in Exhibit 5).
25 Form T-1
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
*99.3 Exchange Agent Agreement, dated __________, 1998, between The Bank of
New York and the Company.
- ------------------
* To be filed by amendment.
(b) Financial Statement Schedules.
All schedules have been omitted because they are not applicable, not
required, or the required information is included in the Financial Statements or
the notes thereto.
ITEM 22. UNDERTAKINGS
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
Delaware Registrants and Holt Hauling pursuant to the foregoing provisions, or
otherwise, the Delaware Registrants and Holt Hauling have been advised that in
the opinion of the Securities and Exchange Commission such indemnification is
against public policy as expressed in the Act and is, therefore, unenforceable.
In the event that a claim for indemnification against such liabilities (other
than the payment by a Delaware Registrant or Holt Hauling, of expenses incurred
or paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or
II-5
<PAGE>
controlling person in connection with the securities being registered, a
Delaware Registrant or Holt Hauling will, unless in the opinion of counsel the
matter has been settled by controlling precedent, submit to a court of
appropriate jurisdiction the question whether such indemnification by it is
against public policy as expressed in the Securities Act and will be governed by
the final adjudication of such issue.
The undersigned registrants hereby undertake: (1) to file, during any
period in which offers or sales are being made, a post-effective amendment to
this registration statement: (i) to include any prospectus required by Section
10(a)(3) of the Securities Act of 1933; (ii) to reflect in the prospectus any
facts or events arising after the effective date of the registration statement
(or the most recent post-effective amendment thereof) which, individually or in
the aggregate, represent a fundamental change in the information set forth in
the registration statement. Notwithstanding the foregoing, any increase or
decrease in volume of securities offered (if the total dollar value of
securities offered would not exceed that which was registered) and any deviation
from the low or high and of the estimated maximum offering range may be
reflected in the form of prospectus filed with the Commission pursuant to Rule
424(b) if, in the aggregate, the changes in volume and price represent no more
than 20 percent change in the maximum aggregate offering price set forth in the
"Calculation of Registration Fee" table in the effective registration statement;
and (iii) to include any material information with respect to the plan of
distribution not previously disclosed in the registration statement or any
material change to such information in the registration statement; (2) that, for
the purpose of determining any liability under the Securities Act of 1933, each
such post-effective amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof; and
(3) to remove from registration by means of a post-effective amendment any of
the securities being registered which remain unsold at the termination of the
offering.
II-6
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
THE HOLT GROUP, INC., has duly caused this Registration Statement to be signed
on its behalf by the undersigned, thereunto duly authorized in Gloucester City,
New Jersey on the 12th day of May, 1998.
THE HOLT GROUP, INC.
By: /s/ THOMAS J. HOLT, SR.
------------------------------------
Thomas J. Holt, Sr.
President, Chairman of the Board and
Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ THOMAS J. HOLT, SR. President, Chairman of the Board and May 12, 1998
- ---------------------------- Director (The Principal Executive Officer)
Thomas J. Holt, Sr.
/s/ BERNARD GELMAN Vice President, Chief Financial Officer and May 12, 1998
- ---------------------------- Director (The Principal Financial Officer
Bernard Gelman and Principal Accounting Officer)
/s/ JOHN A. EVANS Director May 12, 1998
- ----------------------------
John A. Evans
/s/ LEO A. HOLT Director May 12, 1998
- ----------------------------
Leo A. Holt
/s/ THOMAS J. HOLT, JR. Director May 12, 1998
- ----------------------------
Thomas J. Holt, Jr.
/s/ MICHAEL J. HOLT Director May 12, 1998
- ----------------------------
Michael J. Holt
/s/ LORRAINE ROBINS Director May 12, 1998
- ----------------------------
Lorraine Robins
</TABLE>
II-7
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
HOLT CARGO SYSTEMS, INC., has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized in Gloucester
City, New Jersey on the 12th day of May, 1998.
HOLT CARGO SYSTEMS, INC.
By: /s/ THOMAS J. HOLT, SR.
------------------------------------
Thomas J. Holt, Sr.
President, Chairman of the Board and
Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ THOMAS J. HOLT, SR. President, Chairman of the Board and May 12, 1998
- ---------------------------- Director (The Principal Executive Officer)
Thomas J. Holt, Sr.
/s/ BERNARD GELMAN Vice President, Chief Financial Officer and May 12, 1998
- ---------------------------- Director (The Principal Financial Officer
Bernard Gelman and Principal Accounting Officer)
/s/ LORRAINE ROBINS Director May 12, 1998
- ----------------------------
Lorraine Robins
</TABLE>
II-8
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
HOLT HAULING AND WAREHOUSING SYSTEM, INC., has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in Gloucester City, New Jersey on the 12th day of May, 1998.
HOLT HAULING AND WAREHOUSING SYSTEM,
INC.
By: /s/ THOMAS J. HOLT, SR.
------------------------------------
Thomas J. Holt, Sr.
President, Chairman of the Board and
Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ THOMAS J. HOLT, SR. President, Chairman of the Board and May 12, 1998
- ---------------------------- Director (The Principal Executive Officer)
Thomas J. Holt, Sr.
/s/ BERNARD GELMAN Vice President, Chief Financial Officer and May 12, 1998
- ---------------------------- Director (The Principal Financial Officer
Bernard Gelman and Principal Accounting Officer)
/s/ LORRAINE ROBINS Director May 12, 1998
- ----------------------------
Lorraine Robins
</TABLE>
II-9
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
THE RIVERFRONT DEVELOPMENT CORPORATION, has duly caused this Registration
Statement to be signed on its behalf by the undersigned, thereunto duly
authorized in Gloucester City, New Jersey on the 12th day of May, 1998.
THE RIVERFRONT DEVELOPMENT CORPORATION
By: /s/ THOMAS J. HOLT, SR.
------------------------------------
Thomas J. Holt, Sr.
President and Chairman of the Board
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ THOMAS J. HOLT, SR. President and Chairman of the Board (The May 12, 1998
- ---------------------------- Principal Executive Officer)
Thomas J. Holt, Sr.
/s/ BERNARD GELMAN Vice President, Chief Financial Officer and May 12, 1998
- ---------------------------- Director (The Principal Financial Officer
Bernard Gelman and Principal Accounting Officer)
/s/ LORRAINE ROBINS Director May 12, 1998
- ----------------------------
Lorraine Robins
</TABLE>
II-10
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
MURPHY MARINE SERVICES, INC., has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized in Gloucester
City, New Jersey on the 12th day of May, 1998.
MURPHY MARINE SERVICES, INC.
By: /s/ MARK MURPHY
----------------------------------
Mark Murphy
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s/ MARK MURPHY President (The Principal Executive Officer) May 12, 1998
- ----------------------------
Mark Murphy
/s/ BERNARD GELMAN Vice President -- Finance and Director (The May 12, 1998
- ---------------------------- Principal Financial Officer and Principal
Bernard Gelman Accounting Officer)
/s/ THOMAS J. HOLT, SR. Director May 12, 1998
- ----------------------------
Thomas J. Holt, Sr.
/s/ LORRAINE ROBINS Director May 12, 1998
- ----------------------------
Lorraine Robins
</TABLE>
II-11
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
WILMINGTON STEVEDORES, INC., has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized in Gloucester
City, New Jersey on the 12th day of May, 1998.
WILMINGTON STEVEDORES, INC.
By: /s / MARK MURPHY
------------------------------------
Mark Murphy
President
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s / MARK MURPHY President (The Principal Executive Officer) May 12, 1998
- ----------------------------
Mark Murphy
/s / BERNARD GELMAN Vice President -- Finance and Director (The May 12, 1998
- ---------------------------- Principal Financial Officer and Principal
Bernard Gelman Accounting Officer)
/s / THOMAS J. HOLT, SR. Director May 12, 1998
- ----------------------------
Thomas J. Holt, Sr.
/s / LORRAINE ROBINS Director May 12, 1998
- ----------------------------
Lorraine Robins
</TABLE>
II-12
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
NPR HOLDING CORPORATION, has duly caused this Registration Statement to be
signed on its behalf by the undersigned, thereunto duly authorized in Edison,
New Jersey on the 12th day of May, 1998.
NPR HOLDING CORPORATION
By: /s/ RONALD M. KATIMS
-------------------------------------
Ronald M. Katims
President, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s / RONALD M. KATIMS President, Chief Executive Officer and May 12, 1998
- ---------------------------- Director (The Principal Executive Officer)
Ronald M. Katims
/s / PAUL J. WITTIG Executive Vice President -- Administration, May 12, 1998
- ---------------------------- Chief Financial Officer and Director
Paul J. Wittig (The Principal Financial Officer and
Principal Accounting Officer)
/s / THOMAS J. HOLT, SR. Director May 12, 1998
- ----------------------------
Thomas J. Holt, Sr.
/s / LORRAINE ROBINS Director May 12, 1998
- ----------------------------
Lorraine Robins
/s / BERNARD GELMAN Director May 12, 1998
- ----------------------------
Bernard Gelman
/s / THOMAS J. HOLT, JR. Director May 12, 1998
- ----------------------------
Thomas J. Holt, Jr.
/s / LEO A. HOLT Director May 12, 1998
- ----------------------------
Leo A. Holt
/s / MICHAEL J. HOLT Director May 12, 1998
- ----------------------------
Michael J. Holt
/s / EDWARD W. O'DONNELL Director May 12, 1998
- ----------------------------
Edward W. O'Donnell
</TABLE>
II-13
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
NPR-NAVIERAS RECEIVABLES, INC., has duly caused this Registration Statement to
be signed on its behalf by the undersigned, thereunto duly authorized in Edison,
New Jersey on the 12th day of May, 1998.
NPR-NAVIERAS RECEIVABLES, INC.
By: /s/ RONALD M. KATIMS
-------------------------------------
Ronald M. Katims
President, Chairman of the Board and
Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s / RONALD M. KATIMS President, Chairman of the Board and May 12, 1998
- ---------------------------- Director (The Principal Executive Officer)
Ronald M. Katims
/s / PAUL J. WITTIG Executive Vice President -- Administration, May 12, 1998
- ---------------------------- Chief Financial Officer and Director
Paul J. Wittig (The Principal Financial Officer and
Principal Accounting Officer)
/s / THOMAS J. HOLT, SR. Director May 12, 1998
- ----------------------------
Thomas J. Holt, Sr.
/s / LORRAINE ROBINS Director May 12, 1998
- ----------------------------
Lorraine Robins
/s / BERNARD GELMAN Director May 12, 1998
- ----------------------------
Bernard Gelman
/s / THOMAS J. HOLT, JR. Director May 12, 1998
- ----------------------------
Thomas J. Holt, Jr.
/s / LEO A. HOLT Director May 12, 1998
- ----------------------------
Leo A. Holt
/s / MICHAEL J. HOLT Director May 12, 1998
- ----------------------------
Michael J. Holt
/s / EDWARD W. O'DONNELL Director May 12, 1998
- ----------------------------
Edward W. O'Donnell
</TABLE>
II-14
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
NPR, INC., has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in Edison, New Jersey on
the 12th day of May, 1998.
NPR, INC.
By: /s/ RONALD M. KATIMS
-------------------------------------
Ronald M. Katims
President, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s / RONALD M. KATIMS President, Chief Executive Officer and May 12, 1998
- ---------------------------- Director (The Principal Executive Officer)
Ronald M. Katims
/s / PAUL J. WITTIG Executive Vice President -- Administration, May 12, 1998
- ---------------------------- Chief Financial Officer and Director
Paul J. Wittig (The Principal Financial Officer and
Principal Accounting Officer)
/s / THOMAS J. HOLT, SR. Director May 12, 1998
- ----------------------------
Thomas J. Holt, Sr.
/s / LORRAINE ROBINS Director May 12, 1998
- ----------------------------
Lorraine Robins
/s / BERNARD GELMAN Director May 12, 1998
- ----------------------------
Bernard Gelman
/s / THOMAS J. HOLT, JR. Director May 12, 1998
- ----------------------------
Thomas J. Holt, Jr.
/s / LEO A. HOLT Director May 12, 1998
- ----------------------------
Leo A. Holt
/s / MICHAEL J. HOLT Director May 12, 1998
- ----------------------------
Michael J. Holt
/s / EDWARD W. O'DONNELL Director May 12, 1998
- ----------------------------
Edward W. O'Donnell
</TABLE>
II-15
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933, the Registrant,
NPR S.A., INC., has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereunto duly authorized in Edison, New Jersey on
the 12th day of May, 1998.
NPR S.A., INC.
By: /s/ RONALD M. KATIMS
-------------------------------------
Ronald M. Katims
President, Chief Executive Officer
and Director
Pursuant to the requirements of the Securities Act of 1933, this
Registration Statement has been signed by the following persons in the
capacities and on the dates indicated.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
--------- ----- ----
<S> <C> <C>
/s / RONALD M. KATIMS President, Chief Executive Officer and May 12, 1998
- ---------------------------- Director (The Principal Executive Officer)
Ronald M. Katims
/s / PAUL J. WITTIG Executive Vice President -- Administration, May 12, 1998
- ---------------------------- Chief Financial Officer and Director
Paul J. Wittig (The Principal Financial Officer and
Principal Accounting Officer)
/s / THOMAS J. HOLT, SR. Director May 12, 1998
- ----------------------------
Thomas J. Holt, Sr.
/s / LORRAINE ROBINS Director May 12, 1998
- ----------------------------
Lorraine Robins
/s / BERNARD GELMAN Director May 12, 1998
- ----------------------------
Bernard Gelman
/s / THOMAS J. HOLT, JR. Director May 12, 1998
- ----------------------------
Thomas J. Holt, Jr.
/s / LEO A. HOLT Director May 12, 1998
- ----------------------------
Leo A. Holt
/s / MICHAEL J. HOLT Director May 12, 1998
- ----------------------------
Michael J. Holt
/s / EDWARD W. O'DONNELL Director May 12, 1998
- ----------------------------
Edward W. O'Donnell
</TABLE>
II-16
<PAGE>
EXHIBIT INDEX
3.1 Certificate of Incorporation of the Company.
3.2 By-laws of the Company.
3.3 Certificate of Incorporation of Holt Cargo Systems, Inc.
3.4 By-laws of Holt Cargo Systems, Inc.
3.5 Articles of Incorporation of Holt Hauling and Warehousing Systems, Inc.
3.6 By-laws of Holt Hauling and Warehousing Systems, Inc.
3.7 Certificate of Incorporation of Murphy Marine Services, Inc.
3.8 By-laws of Murphy Marine Services, Inc.
3.9 Certificate of Incorporation of Wilmington Stevedores, Inc.
3.10 By-laws of Wilmington Stevedores, Inc.
3.11 Certificate of Formation of NPR, Inc.
3.12 By-laws of NPR, Inc.
3.13 Certificate of Incorporation of NPR-Navieras Receivables, Inc.
3.14 By-laws of NPR-Navieras Receivables, Inc.
3.15 Certificate of Incorporation of NPR Holding Corporation.
3.16 By-laws of NPR Holding Corporation.
3.17 Certificate of Incorporation of NPR S.A., Inc.
3.18 By-laws of NPR S.A., Inc.
4.1 Indenture, dated January 21, 1998, among the Company, the Guarantors and
the Bank of New York.
10.1 Purchase Agreement, dated January 14, 1998, among the Company, the
Guarantors and Donaldson, Lufkin & Jenrette.
10.2 Exchange Registration Rights Agreement, dated January 21, 1998, among
the Company, its subsidiaries and Donaldson, Lufkin & Jenrette
Securities Corporation.
10.3 Stock Purchase Agreement, dated September 25, 1997, among the Company
and the selling shareholders of NPR Holding Corporation signatory
thereto.
10.5 Securities Purchase Agreement, dated November 18, 1997, among the
Company and the persons listed and the signature pages attached thereto.
10.6 Shareholders Agreement, dated November 20, 1997, among the Shareholders
signatory thereto.
10.7 Agreement, dated August 6, 1997, between Transroll Navagacao S.A. and
NPR Holding Corporation.
10.8 First Amendment to Joint Venture Agreement dated November 20, 1997.
10.9 NPR 1997 Phantom Stock Plan.
10.13 Loan Agreement, dated January 3, 1984, between the City of Gloucester
City, New Jersey and Holt Hauling and Warehousing System, Inc.
10.14 First Amendment to Loan Agreement, dated January 3, 1984, dated March
31, 1991, between the City of Gloucester City, New Jersey and Holt
Hauling and Warehousing System, Inc.
10.15 Loan Agreement, dated August 3, 1984, between the City of Gloucester
City, New Jersey and Holt Hauling and Warehousing System, Inc.
10.16 First Amendment to Loan Agreement, dated August 3, 1984, dated March
31, 1991, between Holt Hauling and Warehousing System, Inc. and the
City of Gloucester City, New Jersey.
10.17 Second Amendment to Loan Agreements, dated January 3, 1984, and August
3, 1984, dated August 1, 1996.
10.18 Multi Currency Secured Revolving Credit Facility dated April 16, 1997,
between The Riverfront Development Corporation and Finansbanken ASA.
<PAGE>
10.19 Amendment No. 1 to Multi Currency Secured Revolving Credit Facility
dated April 16, 1997, dated April 23, 1997, between The Riverfront
Development Corporation and Finansbanken ASA.
10.20 Equipment Lease Agreement, dated November 18, 1997, between Emerald
Equipment Leasing, Inc., NPR, Inc. and Holt Cargo Systems, Inc.
10.21 Lease Guaranty Agreement, dated November 20, 1997, by the Company, Holt
Hauling and Warehousing System, Inc., Wilmington Stevedores, Inc.,
Murphy Marine Services, Inc., The Riverfront Development Corporation,
NPR-Navieras Receivables, Inc., and NPR S.A., Ind., for the benefit of
Emerald Equipment Leasing, Inc. with respect to various duties and
obligations of NPR, Inc. and Holt Cargo Systems, Inc.
10.22 Amended and Restated Lease and Operating Agreement, dated December 30,
1990, between Philadelphia Regional Port Authority and Holt Cargo
Systems, Inc. for Packer Avenue Marine Terminal.
10.23 Sublease, dated June 14, 1991, between Astro Holdings, Inc. and Holt
Cargo Systems, Inc.
10.24 Assignment of Lease, dated June 14, 1991, between Holt Cargo Systems,
Inc. and Astro Holdings, Inc.
10.27 Third Modification of Loan and Security Agreement, dated July 1, 1995,
between Holt Cargo Systems, Inc. and PNC Bank, National Association
(successor in interest to Bank Leumi Le-Israel B.M.).
10.28 Loan Agreement, dated July 20, 1995, among Holt Cargo Systems, Inc.,
Holt Hauling and Warehousing Systems, Inc., Broadway Equipment Leasing
Corp., Refrigerated Distribution Center, Inc., Triple Seven Ice, Inc.,
Holt Cargo Systems of California, Inc., The Riverfront Development
Corporation, 777 Pattison Avenue, Inc., Holt Warehousing Company, Marine
Information Technology, Inc., B.H. Sobelman & Co., Inc., T. and L.
Leasing Corp., CRT, Inc., Refrigerated Enterprises, Inc., Oregon Avenue
Enterprises, Incorporated, Pattison Avenue Warehousing Corp., Murphy
Marine Services, Inc., Rockside International Fish Co., Inc., Wilmington
Stevedores, Inc. and Meridian Bank.
10.29 Container Lease Purchase Agreement, dated June 5, 1996, between NPR,
Inc. and Interpool Limited, and Membership and Equipment Lease Agreement
dated April 1, 1996 between Interpool Limited and NPR, Inc.
10.31 Business Loan Agreement, dated March 13, 1997, between Holt Hauling and
Warehousing System, Inc. and Wilmington Savings Fund Society, FSB.
10.37 Series J Mortgage and Security Agreement, dated June 1, 1995, between
Holt Hauling and Warehousing System, Inc. and The Bank of New York (NJ).
10.39 Mortgage and Security Agreement, dated January 15, 1996, between Holt
Hauling and Warehousing System, Inc., 777 Pattison Ave., Inc. and The
Bank of New York (NJ).
10.40 Mortgage and Security Agreement, dated May 15, 1992, between Holt
Hauling and Warehousing System, Inc., 777 Pattison Ave., Inc. and
Fidelity Bank, National Association.
10.41 Memorandum of Installment Sale Agreement, dated May 15, 1992, among
Philadelphia Authority for Industrial Development, Refrigerated
Enterprises, Inc., Holt Hauling and Warehousing System, Inc., B.H.
Sobelman & Co., Inc., Refrigerated Distribution Center, Inc., Oregon
Avenue Enterprises, Incorporated, Holt Cargo System, Inc., The
Riverfront Development Corp., CRT, Inc., Triple Seven Ice, Inc. and 777
Pattison Ave., Inc.
10.42 Installment Sale Agreement, dated May 15, 1992, among Philadelphia
Authority for Industrial Development, Refrigerated Enterprises, Inc.,
Holt Hauling and Warehousing System, Inc., B.H. Sobelman & Co., Inc.,
Refrigerated Distribution Center, Inc., Oregon Avenue Enterprises,
Incorporated, Holt Cargo Systems, Inc., The Riverfront Development
Corp., CRT, Inc., Triple Seven Ice, Inc., Pattison Avenue Warehousing
Corp., and 777 Pattison Ave., Inc.
10.44 Series K Mortgage and Security Agreement, dated February 1, 1997, among
Holt Hauling and Warehousing, 777 Pattison Ave., Inc. and New Jersey
Economic Development Authority.
10.46 Contract of Sale, dated April __, 1994, between Holt Hauling and
Warehousing System, Inc. and Camden County Improvement Authority.
<PAGE>
10.47 First Leasehold Mortgage and Security Agreement, dated June 1, 1997,
between Holt Hauling and Warehousing System, Inc.
10.49 Security Agreement, dated January 24, 1997, by Holt Cargo System, Inc.
in favor of Transamerica Business Credit Corporation.
10.50 Client Services Agreement, dated July 10, 1995, between SLS Services,
Inc. and Wilmington Stevedores, Inc.
10.51 Client Services Agreement, dated April 1, 1994, between SLS Services,
Inc. and Holt Cargo Systems, Inc.
10.52 Client Services Agreement, dated April 1, 1994, between SLS Services,
Inc. and Holt Hauling & Warehousing System, Inc.
10.53 Client Services Agreement, dated July 1, 1994, between SLS Services,
Inc. and Murphy Marine Services, Inc.
10.54 Client Services Agreement, dated April 1, 1994, between SLS Services,
Inc. and The Riverfront Development Corporation.
10.55 Amendment No. 1 to Client Services Agreement, dated January __, 1998,
by and among SLS Services, Inc., Holt Cargo Systems, Inc., Holt Hauling
& Warehousing System, Inc., Murphy Marine Services, Inc., The
Riverfront Development Corporation and Wilmington Stevedores, Inc.
21 Subsidiaries of Registrant.
23.1 Consent of BDO Seidman.
25. Form T-1
99.1 Form of Letter of Transmittal.
99.2 Form of Notice of Guaranteed Delivery.
CERTIFICATE OF INCORPORATION
OF
THE HOLT GROUP, INC.
-----------------
FIRST. The name of this corporation shall be:
THE HOLT GROUP, INC.
SECOND. Its registered office in the State of Delaware is to be
located at 1013 Centre Road, in the City of Wilmington, County of New Castle,
Delaware 19805, and its registered agent at such address is Corporation Service
Company.
THIRD. The purpose or purposes of the corporation shall be to engage
in any lawful act or activity for which corporations may be organized under the
General Corporation Law of Delaware.
FOURTH. The total number of shares of Stock which the Corporation
shall have the authority to issue is One Thousand (1,000) shares of common stock
and the par value of each of such shares is One Cent ($.01).
FIFTH. The name and address of the incorporator is as follows:
Jacqueline Y. Eastridge
c/o Pepper, Hamilton & Scheetz
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, PA 19103-2799
SIXTH. In furtherance of and not in limitation of the powers conferred
by statute, the board of directors is expressly authorized to make, alter or
repeal the By-laws of the corporation.
SEVENTH. Election of directors need not be by ballot, unless the
By-laws of the corporation shall so provide.
EIGHTH. This section has been deleted.
<PAGE>
NINTH: No director of the corporation shall be personally liable to
the corporation or to any stockholder of the corporation for monetary damages
for breach of fiduciary duty as a director, provided that this provision shall
not limit the liability of a director (i) for any breach of the director's duty
of loyalty to the corporation or its stockholders, (ii) for acts or omissions
not in good faith or which involve intentional misconduct or a knowing violation
of law, (iii) under Section 174 of the General Corporation Law of the State of
Delaware, or (iv) for any transaction from which the director derived an
improper personal benefit.
Any repeal or modification of the foregoing paragraph by the
stockholders of the corporation shall not adversely affect any right or
protection of a Director of the corporation existing at the time of such repeal
or modification.
-2-
THE HOLT GROUP, INC.
B Y L A W S
ARTICLE I
OFFICES
Section 1.1. The registered office of the corporation shall be in the City
of Wilmington, County of New Castle, State of Delaware.
Section 1.2. The corporation may also have offices at such other places
both within and without the State of Delaware as the board of directors may from
time to time determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 2.1. All meetings of the stockholders shall be held at such time
and place, within or without the State of Delaware, as shall be stated in the
notice of the meeting or in a duly executed waiver of notice thereof.
Section 2.2. A meeting of stockholders shall be held in each year for the
election of directors at such time and place as the board of directors shall
determine. Any other proper business may be transacted at the annual meeting.
Elections of directors shall be by written ballot, unless otherwise provided in
the certificate of incorporation.
<PAGE>
Section 2.3. Unless otherwise provided by law, written notice
of the annual meeting, stating the place, date and hour of the meeting, shall be
given to each stockholder entitled to vote thereat not less than ten nor more
than sixty days before the date of the meeting.
Section 2.4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at said
election, arranged in alphabetical order, showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder during ordinary
business hours, for any purpose germane to the meeting, for a period of at least
ten days prior to the meeting, either at a place within the city, town or
village where the meeting is to be held and which place shall be specified in
the notice of the meeting, or, if not specified, at the place where said meeting
is to be held, and the list shall be produced and kept at the time and place of
the meeting during the whole time thereof, and subject to the inspection of any
stockholder who may be present.
Section 2.5. Special meetings of the stockholders, for any purpose or
purposes, may be called by the board of directors or president and shall be
called by the president or secretary at the request in writing of stockholders
owning a majority in amount of the entire capital stock of the corporation
issued and outstanding and entitled to vote. Such request shall state the place,
date and hour and the purpose or purposes of the proposed meeting.
Section 2.6. Unless otherwise provided by law, written notice of a special
meeting of stockholders, stating the place, date and hour and purpose or
purposes thereof, shall
-2-
<PAGE>
be given to each stockholder entitled to vote thereat, not less than ten
nor more than sixty days before the date fixed for the meeting.
Section 2.7. Business transacted at any special meeting of stockholders
shall be limited to the purposes stated in the notice.
Section 2.8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 2.9. Unless otherwise provided in the Certificate of Incorporation
or by an express provision of the Delaware General Corporation Law (the
"Statute"), in all matters other than the election of directors, when a quorum
is present at any meeting, the vote of the holders of a majority of the stock
having voting power present in person or represented by proxy shall decide any
question brought before such meeting. Unless otherwise provided in the
-3-
<PAGE>
Certificate of Incorporation or by the Statute, directors shall be elected
by a plurality of the votes of the shares present in person or represented by
proxy at the meeting and entitled to vote on the election of directors.
Section 2.10. Unless otherwise provided in the certificate of incorporation
and subject to other provisions of the Statute, each stockholder shall at every
meeting of the stockholders be entitled to one vote in person or by proxy for
each share of the capital stock having voting power held by such stockholder,
but no proxy shall be voted or acted on after three years from its date, unless
the proxy provides for a longer period.
Section 2.11. Any action required to be taken at any annual or special
meeting of stockholders, or any action which may be taken at any annual or
special meeting of such stockholders, may be taken without a meeting, without
prior notice and without a vote, if a consent or consents in writing, setting
forth the action so taken, shall be signed by the holders of outstanding stock
having not less than the minimum number of votes that would be necessary to
authorize or take such action at a meeting at which all shares entitled to vote
thereon were present and voted and shall be delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business or an officer or agent of the corporation having custody of the
books in which proceedings of meetings of stockholders are recorded. Prompt
notice of the taking of the corporate action without a meeting by less than
unanimous written consent shall be given to those stockholders who have not
consented in writing.
-4-
<PAGE>
ARTICLE III
DIRECTORS
Section 3.1. The business of the corporation shall be managed by or under
the discretion of its board of directors. The number of directors which shall
constitute the whole board shall be such number as the board of directors may
determine. Except as hereinafter provided in Section 3.2 of this Article, the
directors, other than those constituting the first board of directors, shall be
elected by the stockholders. Each director shall hold office until his successor
is elected and qualified or until his earlier resignation or removal. Directors
need not be stockholders.
Section 3.2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, although less than a quorum, or by a sole
remaining director.
MEETINGS OF THE BOARD OF DIRECTORS
Section 3.3. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 3.4. The first meeting of each newly elected board of directors may
be held immediately after and at the same place as the meeting of the
stockholders at which it was elected and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present.
Section 3.5. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
-5-
<PAGE>
Section 3.6. Special meetings of the board of directors may be called by
the President on two days notice to each director, either personally or by mail
or by telegram; special meetings shall be called by the president or secretary
in like manner and on like notice on the written request of two directors.
Section 3.7. At all meetings of the board of directors a majority of
directors shall constitute a quorum for the transaction of business and the act
of a majority of the directors present at any meeting at which there is a quorum
shall be the act of the board of directors, except as may be otherwise
specifically provided by the Statute or by the certificate of incorporation.
Section 3.8. Unless otherwise restricted by the certificate of
incorporation, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or of such committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 3.9. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. In the absence or
disqualification of a member of a committee, the member or members thereof
present at any meeting and not disqualified from voting, whether or not he or
they constitute a quorum, may unanimously appoint another member of the board of
directors to act at the meeting in the place of any such absent or disqualified
member. Any such
-6-
<PAGE>
committee, to the extent provided in the resolution of the board of
directors, shall have and may exercise all the powers and authority of the board
of directors in the management of the business and affairs of the corporation,
and may authorize the seal of the corporation to be affixed to all papers which
may require it; but no such committee shall have the power or authority in
reference to amending the certificate of incorporation (except that a committee
may, to the extent authorized in the resolution or resolutions providing for the
issuance of shares of stock adopted by the board of directors, fix the
designations and any of the preferences or rights of such shares relating to
dividends, redemption, dissolution, any distribution of assets of the
corporation or the conversion into, or the exchange of such shares for, shares
of any other class or classes or any other series of the same or any other class
or classes of stock of the corporation or fix the number of shares of any series
of stock or authorize the increase or decrease of the shares of any series),
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution or amending the
by-laws of the corporation; and, unless the resolution expressly so provides, no
such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
Section 3.10. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
-7-
<PAGE>
COMPENSATION OF DIRECTORS
Section 3.11. The board of directors shall have the authority to fix the
compensation of directors.
PARTICIPATION IN MEETING BY TELEPHONE
Section 3.12. Members of the board of directors or any committee designated
by such board may participate in a meeting of the board or of a committee of the
board by means of conference telephone or similar communications equipment by
means of which all persons participating in the meeting can hear each other, and
participation in a meeting pursuant to this subsection shall constitute presence
in person at such meeting.
ARTICLE IV
NOTICES
Section 4.1. Notices to directors and stockholders shall be in writing and
delivered personally, by first class or express mail, postage prepaid, telex,
TWX (with answer back received), courier service (with charges prepaid) or
facsimile transmission, to the directors or stockholders at their addresses
appearing on the books of the corporation or, in the case of directors, supplied
by the director to the Corporation for the purpose of notice. If the notice is
sent by mail, telegraph or courier service, it shall be deemed to have been
given to the person entitled thereto when deposited in the United States mail or
with a telegraph office or courier service for delivery to that person. A notice
given by telex, TWX or facsimile transmission shall be deemed to have been given
when dispatched.
-8-
<PAGE>
Section 4.2. Whenever any notice is required to be given under the
provisions of the Statute or of the certificate of incorporation or by these
by-laws, a waiver thereof in writing, signed by the person or persons entitled
to said notice, whether before or after the time stated therein, shall be deemed
equivalent to notice. Attendance of a person at a meeting shall constitute a
waiver of notice of such meeting, except when the person attends a meeting for
the express purpose of objecting, at the beginning of the meeting, to the
transaction of any business because the meeting is not lawfully called or
convened. Neither the business to be transacted at, nor the purpose of, any
regular or special meeting of the stockholders, directors, or members of a
committee of directors need be specified in any written waiver of notice.
ARTICLE V
OFFICERS
Section 5.1. The officers of the corporation shall be chosen by the board
of directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of directors may also choose additional vice-presidents,
and one or more assistant secretaries and assistant treasurers. Any number of
offices may be held by the same person, unless the certificate of incorporation
otherwise provides.
Section 5.2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
Section 5.3. The board of directors may appoint such other officers as it
shall deem necessary who shall hold their offices for such terms and shall
exercise such powers and perform such duties as shall be determined from time to
time by the board.
-9-
<PAGE>
Section 5.4. The salaries of all officers of the corporation shall be fixed
by the board of directors.
Section 5.5. Each officer of the corporation shall hold office until his
successor is elected or appointed and qualified or until his earlier resignation
or removal. Any officer elected or appointed by the board of directors may be
removed at any time by the affirmative vote of a majority of the board of
directors. Any vacancy occurring in any office of the corporation shall be
filled by the board of directors
THE PRESIDENT
Section 5.6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 5.7. The president shall execute bonds, mortgages and other
contracts requiring a seal, under the seal of the corporation, except where
required or permitted by law to be otherwise signed and executed and except
where the signing and execution thereof shall be expressly delegated by the
board of directors to some other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 5.8. The vice-president, or if there shall be more than one, the
vice-presidents in the order determined by the board of directors, shall, in the
absence or disability of the president, perform the duties and exercise the
powers of the president and shall perform such
-10-
<PAGE>
other duties and have such other powers as the board of directors may from time
to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 5.9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. The secretary shall give, or cause to be given, notice of all
meetings of the stockholders and special meetings of the board of directors, and
shall perform such other duties as may be prescribed by the board of directors
or president, under whose supervision the secretary shall be. The secretary
shall have custody of the corporate seal of the corporation and he, or an
assistant secretary, shall have authority to affix the same to any instrument
requiring it and when so affixed, it may be attested by his signature or by the
signature of such assistant secretary. The board of directors may give general
authority to any other officer to affix the seal of the corporation and to
attest the affixing by his signature.
Section 5.10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors may from time to time prescribe.
-11-
<PAGE>
THE TREASURER AND ASSISTANT TREASURERS
Section 5.11. The treasurer shall have the custody of the corporate funds
and securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 5.12. The treasurer shall disburse the funds of the corporation as
may be ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors at
its regular meetings or when the board of directors so requires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 5.13. If required by the board of directors, the treasurer shall
give the corporation a bond (which shall be renewed every six years) in such sum
and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of his office and for the
restoration to the corporation, in case of his death, resignation, retirement or
removal from office, of all books, papers, vouchers, money and other property of
whatever kind in his possession or under his control belonging to the
corporation.
Section 5.14. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors,
shall, in the absence or disability of the treasurer, perform the duties and
exercise the powers of the treasurer and shall
-12-
<PAGE>
perform such other duties and have such other powers as the board of
directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 6.1. Every holder of stock in the corporation shall be entitled to
have a certificate signed by, or in the name of the corporation by, the chairman
or vice-chairman, if any, of the board of directors, or president or a
vice-president and the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the corporation, certifying the number of shares
registered in certificate form.
Section 6.2. Any or all of the signatures on the certificate may be
facsimile. In case any officer, transfer agent or registrar who has signed, or
whose facsimile signature or signatures has been placed upon a certificate,
shall have ceased to be such officer, transfer agent or registrar, before such
certificate is issued, such certificate may be issued by the corporation with
the same effect as if he were such officer, transfer agent or registrar at the
date of issue.
LOST CERTIFICATES
Section 6.3. The board of directors may direct a new certificate of stock
or uncertificated shares to be issued in place of any certificate theretofore
issued by the corporation alleged to have been lost, stolen or destroyed, upon
the making of an affidavit of that fact by the person claiming the certificate
of stock to be lost, stolen or destroyed. When authorizing such issue of a new
certificate or uncertificated shares, the board of directors may, in its
discretion and
-13-
<PAGE>
as a condition precedent to the issuance thereof, require the owner of such
lost, stolen or destroyed certificate or certificates, or his legal
representative, to give the corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen or destroyed upon
the issuance of such new certificate or uncertificated shares.
TRANSFERS OF STOCK
Section 6.4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transactions upon its books,
unless the corporation has a duty to inquire as to adverse claims with respect
to such transfer which has not been discharged. The corporation shall have no
duty to inquire into adverse claims with respect to such transfer unless (a) the
corporation has received a written notification of an adverse claim at a time
and in a manner which affords the corporation a reasonable opportunity to act on
it prior to the issuance of a new, reissued or re-registered share certificate
and the notification identifies the claimant, the registered owner and the issue
of which the share or shares is a part and provides an address for
communications directed to the claimant; or (b) the corporation has required and
obtained, with respect to a fiduciary, a copy of a will, trust, indenture,
articles of co-partnership, by-laws or other controlling instruments, for a
purpose other than to obtain appropriate evidence of the appointment or
incumbency of the fiduciary, and such documents indicate, upon reasonable
inspection, the existence of an adverse claim.
-14-
<PAGE>
Section 6.5. The corporation may discharge any duty of inquiry by any
reasonable means, including notifying an adverse claimant by registered or
certified mail at the address furnished by him or, if there be no such address,
at his residence or regular place of business that the security has been
presented for registration of transfer by a named person, and that the transfer
will be registered unless within thirty days from the date of mailing the
notification, either (a) an appropriate restraining order, injunction or other
process issues from a court of competent jurisdiction; or (b) an indemnity bond,
sufficient in the corporation's judgment to protect the corporation and any
transfer agent, registrar or other agent of the corporation involved from any
loss which it or they may suffer by complying with the adverse claim, is filed
with the corporation.
FIXING RECORD DATE
Section 6.6. (a) In order that the corporation may determine the
stockholders entitled to notice of or to vote at any meeting of stockholders or
any adjournment thereof, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted by the board of directors, and which record date shall
not be more than 60 nor less than 10 days before the date of such meeting. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
(b) In order that the corporation may determine the
stockholders entitled to consent to corporate action in writing without a
meeting, the board of directors may fix a
-15-
<PAGE>
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than 10 days after the date upon which the
resolution fixing the record date is adopted by the board of directors.
(c) In order that the corporation may determine the
stockholders entitled to receive payment of any dividend or other distribution
or allotment of any rights or the stockholders entitled to exercise any rights
in respect of any change, conversion or exchange of stock, or for the purpose of
any other lawful action, the board of directors may fix a record date, which
record date shall not precede the date upon which the resolution fixing the
record date is adopted, and which record date shall not be more than 60 days
prior to such action.
(d) If no record date is fixed:
(1) The record date for determining stockholders entitled
to notice of or to vote at a meeting of stockholders shall be at the close of
business on the day next preceding the day on which notice is given, or, if
notice is waived, at the close of business on the day next preceding the day on
which the meeting is held. A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting.
(2) The record date for determining stockholders entitled
to express consent to corporate action in writing without a meeting, when no
prior action by the board of directors is necessary, shall be the first date on
which a signed written consent setting
-16-
<PAGE>
forth the action taken or proposed to be taken is delivered to the corporation
by delivery to its registered office in the State of Delaware, its principal
place of business or an officer or agent of the corporation having custody of
the books in which proceedings of meetings of stockholders are recorded.
(3) The record date for determining stockholders for any
other purpose shall be at the close of business on the day on which the board of
directors adopts the resolution relating thereto.
(e) A determination of stockholders of record entitled to
notice of or to vote at a meeting of stockholders shall apply to any adjournment
of the meeting; provided, however, that the board of directors may fix a new
record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6.7. Prior to due presentment for transfer of any share or shares,
the corporation shall treat the registered owner thereof as the person
exclusively entitled to vote, to receive notifications and to all other benefits
of ownership with respect to such share or shares, and shall not be bound to
recognize any equitable or other claim to or interest in such share or shares on
the part of any other person, whether or not it shall have express or other
notice thereof, except as otherwise provided by the laws of Delaware.
-17-
<PAGE>
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 7.1. Dividends upon the capital stock of the corporation, subject
to the provisions of the certificate of incorporation, if any, may be declared
by the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock of
the corporation, subject to the provisions of the certificate of incorporation.
Section 7.2. There may be set aside out of any funds of the corporation
available for dividends such sum or sums as the directors from time to time, in
their absolute discretion, deem proper as a reserve or reserves to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or for such other purpose as the directors shall
deem conducive to the interest of the corporation, and the directors may modify
or abolish any such reserve.
ANNUAL STATEMENT
Section 7.3. The board of directors shall present at each annual meeting,
and at any special meeting of the stockholders when requested, a full and clear
statement of the business and condition of the corporation.
-18-
<PAGE>
CHECKS
Section 7.4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other persons as the board
of directors may from time to time designate.
FISCAL YEAR
Section 7.5. The fiscal year of the corporation shall be as determined by
the board of directors.
SEAL
Section 7.6. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or in any manner reproduced.
FORM OF RECORDS
Section 7.7. Any records maintained by the corporation in the regular
course of its business, including its stock ledger, books of account and minute
books, may be kept on, or be in the form of, punch cards, magnetic tape,
photographs, microphotographs, or any other information storage device,
provided, that the records so kept can be converted into clear legible form
within a reasonable time. The corporation shall convert any records so kept upon
the request of any person entitled to inspect the same.
-19-
<PAGE>
ARTICLE VIII
AMENDMENTS
Section 8.1. These by-laws may be altered, amended or repealed at any
regular or special meeting of the stockholders or if such power is conferred
upon the board of directors by the certificate of incorporation, at any regular
or special meeting of the board of directors, if notice of such alteration,
amendment or repeal be contained in the notice of such special meeting. If the
power to adopt, amend or repeal bylaws is conferred upon the board of directors
by the certificate of incorporation, it shall not divest or limit the power of
the stockholders to adopt, amend or repeal bylaws.
ARTICLE IX
INDEMNIFICATION
Section 9.1. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director or officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director or officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or
-20-
<PAGE>
proceeding, had no reasonable cause to believe his conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had reasonable cause to believe that his conduct was unlawful.
Section 9.2. The corporation shall indemnify any person who was or is a
party or is threatened to be made a party to any threatened, pending or
completed action or suit by or in the right of the corporation to procure a
judgment in its favor by reason of the fact that he is or was a director,
officer, employee or agent of the corporation, or is or was serving at the
request of the corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against
expenses (including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation and except that no indemnification shall be
made in respect of any claim, issue or matter as to which such person shall have
been adjudged to be liable to the corporation unless and only to the extent that
the Court of Chancery or the court in which such action or suit was brought
shall determine upon application that, despite the adjudication of liability but
in view of all the circumstances of the case, such person is fairly and
reasonably entitled to indemnity for such expenses which the Court of Chancery
or such other court shall deem proper.
-21-
<PAGE>
Section 9.3. Any indemnification under sections 9.1 or 9.2 of this Article
(unless ordered by a court) shall be made by the corporation only as authorized
in the specific case upon a determination that indemnification of the director,
officer, employee or agent is proper in the circumstances because he has met the
applicable standard of conduct set forth in such section. Such determination
shall be made:
1. By the board of directors by a majority vote of a quorum consisting
of directors who were not parties to such action, suit or proceeding, or
2. If such a quorum is not obtainable, or, even if obtainable a quorum
of disinterested directors so directs, by independent legal counsel in a written
opinion, or
3. By the stockholders.
Section 9.4. Expenses (including attorney's fees) incurred by an officer or
director in defending a civil, criminal, administrative or investigative action,
suit or proceeding may be paid by the corporation in advance of the final
disposition of such action, suit or proceeding upon receipt of an undertaking by
or on behalf of the director or officer to repay such amount if it shall
ultimately be determined that he is not entitled to be indemnified by the
corporation as authorized in this Article. Such expenses (including attorney's
fees) incurred by employees and agents may be so paid upon such terms and
conditions, if any, as the board of directors deems appropriate.
Section 9.5. The indemnification and advancement of expenses provided by,
or granted pursuant to, this Article shall not be deemed exclusive of any other
rights to which those seeking indemnification or advancement of expenses may be
entitled under any bylaw,
-22-
<PAGE>
agreement, vote of stockholders or disinterested directors or otherwise, both as
to action in his official capacity and as to action in another capacity while
holding such office.
Section 9.6. The corporation shall have power to purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the corporation, or is or was serving at the request of the corporation
as a director, officer, employee or agent of another corporation, partnership,
joint venture, trust or other enterprise against any liability asserted against
him and incurred by him in any such capacity, or arising out of his status as
such, whether or not the corporation would have the power to indemnify him
against such liability under the provisions of this Article.
Section 9.7. The indemnification and advancement of expenses provided by or
granted pursuant to, this Article shall, unless otherwise provided when
authorized or ratified, continue as to a person who has ceased to be a director,
officer, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 9.8. For purposes of this Article, references to "the corporation"
shall include, in addition to the resulting corporation, any constituent
corporation (including any constituent of a constituent) absorbed in a
consolidation or merger which, if its separate existence had continued, would
have had power and authority to indemnify its directors, officers, employees or
agents so that any person who is or was a director, officer, employee or agent
of such constituent corporation, or is or was serving at the request of such
constituent corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise, shall stand
in the same position under this Article with respect to the resulting or
-23-
<PAGE>
surviving corporation as he would have with respect to such constituent
corporation if its separate existence had continued.
Section 9.9. For purposes of this Article, references to "other
enterprises" shall include employee benefit plans; references to "fines" shall
include any excise taxes assessed on a person with respect to any employee
benefit plan; and references to "serving at the request of the corporation"
shall include any service as a director, officer, employee or agent of the
corporation which imposes duties on, or involves services by, such director,
officer, employee or agent with respect to an employee benefit plan, its
participants or beneficiaries; and a person who acted in good faith and in a
manner he reasonably believed to be in the interest of the participants and
beneficiaries of an employee benefit plan shall be deemed to have acted in a
manner "not opposed to the best interests of the corporation" as referred to in
this Article.
Section 9.10. No director of the corporation or such other person or
persons, if any, who, pursuant to a provision of the Certificate of
Incorporation or in accordance with ss.141(a) of the Delaware General
Corporation Laws, exercise or perform any of the powers or duties otherwise
conferred or imposed upon the board of directors, shall be personally liable to
the corporation or to any stockholder of the corporation for monetary damages
for breach of fiduciary duty as a director or officer, provided that this
provision shall not limit the liability of a director or officer (i) for any
breach of the director's or the officer's duty of loyalty to the corporation or
its stockholders, (ii) for acts or omissions not in good faith or which involve
intentional misconduct or a knowing violation of law, (iii) under Section 174 of
the General
-24-
<PAGE>
Corporation Law of Delaware, or (iv) for any transaction from which the
director or officer derived an improper personal benefit.
-25-
CERTIFICATE OF INCORPORATION
OF
HOLT CARGO SYSTEMS, INC.
We, the undersigned, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, do hereby certify as follows:
FIRST: The name of the corporation is
HOLT CARGO SYSTEMS, INC.
SECOND: The principal office of the corporation is to be located in the
City of Wilmington, in the County of New Castle, in the State of Delaware. The
name of its resident agent is The Corporation Trust Company, whose address is
Corporation Trust Center, 1209 Orange Street in said city.
THIRD: The purpose of the corporation is to engage in any lawful act or
activity for which a corporation may be organized under the General Corporation
Law of Delaware.
Without limiting in any manner the scope and generality of the foregoing,
it is hereby provided that the corporation shall have the following purposes:
To transport property in intrastate, interstate and foreign movements
as a common and contrast carrier by motor vehicle and to have and
exercise all of the powers and means appropriate to effect such
purpose and, in the conduct of such business, to carry on a general
warehousing business in all its phases and to render service to other
common and contrast carriers in the receiving, consolidating, storing,
loading, distributing, handling, forwarding, transferring and
transshipping of property of all kinds in intrastate, interstate and
foreign commerce and to act as agent or broker for or in connection
with any thereof, provided, however, the corporation does not propose
to carry out such purposes or exercise such powers except upon being
granted the necessary authority by any Federal, State, or other
regulatory body having jurisdiction.
To buy, sell, use, lease as lessee or lessor, and generally trade and
deal in and with any and all kinds of new and used automobiles,
trucks, tank trucks, trailers, tractors
-1-
<PAGE>
and automotive parts, supplies and equipment of all kinds, and to
lease, own, maintain and operate any terminals, platforms, garages,
service stations, equipment and facilities deemed necessary.
To purchase or otherwise acquire, lease as lessee or lessor, own,
maintain and operate any piers, docks, wharves, lighters, landing
stages and terminals and to carry on any or all of the businesses of
wharfingers, stevedores, lightermen, forwarding agents, warehousemen
and general agents and brokers, and to use, maintain and operate any
machines, machinery and equipment necessary or incidental thereto.
FOURTH: The total number of shares of stock which the corporation is
authorized to issue is one hundred and fifty thousand ($150,000), and the par
value of each of such shares is One Dollar ($1.00).
FIFTH: The minimum amount of capital with which the corporation will
commence business is One Thousand Dollars ($1,000.00).
SIXTH: The name and place of residence of each of the incorporators is as
follows:
NAME RESIDENCE
---- ---------
DONALD L. HURLEY 225 South 15th Street,
Philadelphia, Pennsylvania
WILLARD S. RANDALL 225 South 15th Street,
Philadelphia, Pennsylvania
S. GOLDMAN 225 South 15th Street,
Philadelphia, Pennsylvania
SEVENTH: The corporation is to have perpetual existence.
EIGHTH: The private property of the stockholders shall not be subject to
the payment of corporate debts to any extent whatever.
NINTH: The following provisions are inserted for the management of the
business and for the conduct of the affairs of this corporation, and for further
definition, limitation and regulation of the powers of this corporation and of
its directors and stockholders:
-2-
<PAGE>
1. The number of directors of the corporation as such as from time to time
shall be fixed by, or in the manner provided in the by-laws. Election of
directors need not be by ballot unless the by-laws so provide.
2. The Board of Directors shall have power
a. Without the assent or vote of the stockholders, to make, alter,
amend, change, add to, or repeal the by-laws of this corporation; to fix
and vary the amount to be reserved for any proper purpose; to authorize and
cause to be executed mortgages and liens upon any part of the property of the
corporation provided it be less than substantially all; to determine the use and
disposition of any surplus or net profits and to fix the times for the
declaration and payment of dividends.
b. To determine from time to time whether and to what extent and at what
times and places and under what conditions and regulations the accounts and
books of the corporation (other than the stock ledger) or any of them, shall be
open to the inspection of the stockholders.
3. The directors in their discretion may submit any contract or act for
approval and ratification at any annual meeting of the stockholders or at any
meeting of the stockholders called for the purpose of considering any such act
or contract, and any contract or act that shall be approved or be ratified by
the vote of the holders of a majority of the stock of the corporation which is
represented in person or by proxy at such meeting and entitled to vote thereat
(provided that a lawful quorum of stockholders be there represented in person or
by proxy) shall be as valid and as binding upon the corporation and upon all the
stockholders as though it had been approved or ratified by every stockholder of
the corporation, whether or not the contract or act would otherwise be open to
legal attack because of directors' interest or for any other reason.
4. In addition to the powers and authorities hereinbefore or by statute
expressly conferred upon them, the directors are hereby empowered to exercise
all such powers and do all such acts and things as may be exercised or done by
the corporation; subject, nevertheless, to the provisions of the statutes of
Delaware, of this certificate, and to any by-laws from time to time made by the
stockholders; provided, however, that no by-laws so made shall invalidate any
_____ act of the directors which would have been valid if such by-law had not
been made.
TENTH: No contract or other transaction between the corporation and any
other corporation shall be affected or invalidated by the fact that any one or
more of the directors of this corporation is or are interested in, or is a
director or officer, or are directors or officers of such other corporation, and
any director or directors, individually or jointly may be a party or parties to
or may be interested in any contract or transaction of this corporation or in
which this corporation is interested; and no contract, act or transaction of
this corporation with any person or persons, firm or association, shall be
affected or invalidated by the fact that any director or directors of this
corporation is a party or are parties to, or interested in such contract, act or
-3-
<PAGE>
transaction, or in any way connected with such person or persons, firm or
association, and each and every person who may become a director of this
corporation is hereby relieved from any liability that might otherwise exist
from contracting with the corporation for the benefit of himself or any firm or
corporation in which he may be in any wise interested.
ELEVENTH: Any person made a party to any action, suit or proceeding by
reason of the fact that he, his testator or intestate is or was a director,
officer or employee of this corporation or of any corporation which he served as
such at the request of this corporation, shall be indemnified by the corporation
against the reasonable expenses, including attorneys' fees, actually and
necessarily incurred by him in connection with the defense of such action, suit
or proceeding, or in connection with any appeal therein, except in relation to
matters as to which it shall be adjudged in such action, suit or proceeding that
such officer, director or employee is liable for negligence or misconduct in the
performance of his duties. Such right of indemnification shall not be deemed
exclusive of any other rights to which such director, officer or employee may be
entitled by law.
TWELFTH: The corporation reserves the right to amend, alter, change or
repeal any provision contained in this certificate of incorporation in the
manner now or hereafter prescribed by law, and all rights and powers conferred
herein on stockholders, directors and officers are subject to this reserved
power.
IN WITNESS WHEREOF, we have hereunto set our hands and seals, the 31st day
of December, 1964.
In the presence of:
/s/ Ruth M. Wotiz /s/ Donald L. Hurley (L.S.)
- --------------------------- ----------------------------
Donald L. Hurley
/s/ Willard S. Randall (L.S.)
----------------------------
/s/ S. Goldman (L.S.)
----------------------------
-4-
<PAGE>
COMMONWEALTH OF PENNSYLVANIA )
)
COUNTY OF PHILADELPHIA )
BE IT REMEMBERED that on this 31st day of December, A.D. 1964, personally
came before me, RUTH M. WOTIZ, a Notary Public in and for the County and
Commonwealth aforesaid, DONALD L. HURLEY, WILLARD S. RANDALL AND S. GOLDMAN,
parties to the foregoing Certificate of Incorporation, known to me personally to
be such, and severally acknowledged the said Certificate to be the act and deed
of the signers respectively, and that the facts therein stated are truly set
forth.
GIVEN under my hand and seal of office the day and year aforesaid.
/s/ Ruth M. Wotiz
--------------------------------
RUTH M. WOTIZ
BY-LAWS
OF
HOLT CARGO SYSTEMS, INC.
- - - - - - - -
ARTICLE I
OFFICES
SECTION 1. PRINCIPAL OFFICE. -- The principal office shall be established
and maintained at the office of the United States Corporation Company, in the
City of Dover, in the County of Kent, in the State of Delaware, and said
corporation shall be the resident agent of this corporation in charge thereof.
SECTION 2. OTHER OFFICES. -- The corporation may have other offices, either
within or outside of the State of Delaware, at such place or places as the Board
of Directors may from time to time appoint or the business of the corporation
may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
SECTION 1. PLACE OF MEETINGS. -- The annual meeting of stockholders shall
be held in the City of Philadelphia, Pa. at the place therein determined by the
directors and set forth in the notice thereof, but other meetings of the
stockholders may be held at such place or places as shall be fixed by the
directors and stated in the notice of the meeting.
SECTION 2. ANNUAL ELECTION OF DIRECTORS. -- The annual meeting of
stockholders for the election of directors and the transaction of other business
shall be held, in each year, commencing in 1966, on the 3rd Monday in March.
If this date shall fall upon a legal holiday, the meeting shall be held on
the next succeeding business day. At each annual meeting the stockholders
entitled to vote shall elect a Board of Directors and they may transact such
other corporate business as shall be stated in the notice of the meeting.
No change of the time or place of a meeting for the election of directors,
as fixed by the By-Laws, shall be made within sixty days next before the day on
which such election is to be held. In case of any change in such time or place
for such election of directors, notice thereof shall be given to each
stockholder entitled to vote, in person, or by letter mailed to his last known
post office address, twenty days before the election is held.
-1-
<PAGE>
SECTION 3. VOTING. -- Each stockholder entitled to vote in accordance with
the terms of the Certificate of Incorporation and in accordance with the
provisions of these By-Laws shall be entitled to one vote, in person or by
proxy, for each share of stock entitled to vote held by such stockholder, but no
proxy shall be voted after three years from its date unless such proxy provides
for a longer period. After the first election of directors, except where the
transfer books of the corporation shall have been closed or a date shall have
been fixed as the record date for the determination of its stockholders entitled
to vote, no share of stock shall be voted on at any election for directors which
shall have been transferred on the books of the corporation within twenty days
next preceding such election. Upon the demand of any stockholder, the vote for
directors and the vote upon any question before the meeting, shall be by ballot.
All elections for directors shall be decided by plurality vote; all other
questions shall be decided by majority vote except as otherwise provided by the
Certificate of Incorporation or the laws of the State of Delaware.
A complete list of the stockholders entitled to vote at the ensuing
election, arranged in alphabetical order, with the residence of each, and the
number of voting shares held by each, shall be prepared by the Secretary and
filed in the office where the election is to be held, at least ten days before
every election, and shall at all times during the usual hours for business, and
during the whole time of said election, be open to examination of any
stockholder.
SECTION 4. QUORUM. -- Except as otherwise required by law, by the
Certificate of Incorporation or by these By-Laws, the presence, in person or by
proxy, of stockholders holding a majority of the stock of the corporation
entitled to vote shall constitute a quorum at all meetings of the stockholders.
In case a quorum shall not be present at any meeting, a majority in interest of
the stockholders entitled to vote thereat, present in person or by proxy, shall
have power to adjourn the meeting from time to time, without notice other than
announcement at the meeting, until the requisite amount of stock entitled to
vote shall be present. At any such adjourned meeting at which the requisite
amount of stock entitled to vote shall be represented, any business may be
transacted which might have been transacted at the meeting as originally
noticed; but only those stockholders entitled to vote at the meeting as
originally noticed shall be entitled to vote at any adjournment or adjournments
thereof.
SECTION 5. SPECIAL MEETINGS. -- Special meetings of the stockholders for
any purpose or purposes may be called by the President or Secretary, and shall
be called upon a requisition in writing therefor, stating the purpose or
purposes thereof, delivered to the President or Secretary, signed by a majority
of the directors or by twenty-five per cent in interest of the stockholders
entitled to vote, or by resolution of the directors.
SECTION 6. NOTICE OF MEETINGS. -- Written or printed notice, stating the
place and time of the meeting, and the general nature of the business to be
considered, shall be given by the Secretary to each stockholder entitled to vote
thereat at his last known post-office address, at least ten days before the
meeting in the case of an annual meeting and five days before the meeting in the
case of a special meeting.
-2-
<PAGE>
No business other than that stated in the notice shall be transacted at any
meeting without the unanimous consent of all the stockholders entitled to vote
thereat.
SECTION 7. ACTION WITHOUT MEETING. -- Whenever the vote of stockholders at
a meeting thereof is required or permitted to be taken in connection with any
corporate action by any provisions of the statutes or of the Certificate of
Incorporation or of these By-Laws, the meeting and vote of stockholders may be
dispensed with, if all the stockholders who would have been entitled to vote
upon the action if such meeting were held, shall consent in writing to such
corporate action being taken.
ARTICLE III
DIRECTORS
SECTION 1. NUMBER AND TERM. -- The number of directors shall be three (3).
The directors shall be elected at the annual meeting of the stockholders and
each director shall be elected to serve until his successor shall be elected and
shall qualify. The number of directors may be less than three but not less than
the number of stockholders. Directors need not be stockholders.
SECTION 2. RESIGNATIONS. -- Any director, member of a committee or other
officer may resign at any time. Such resignation shall be made in writing, and
shall take effect at the time specified therein, and if no time be specified, at
the time of its receipt by the President or Secretary. The acceptance of a
resignation shall not be necessary to make it effective.
SECTION 3. VACANCIES. -- If the office of any director, member of a
committee or other officer becomes vacant, the remaining directors in office,
though less than a quorum, by a majority vote, may appoint any qualified person
to fill such vacancy, who shall hold office for the unexpired term and until his
successor shall be duly chosen.
SECTION 4. REMOVAL. -- Any director or directors may be removed either for
or without cause at any time by the affirmative vote of the holders of a
majority of all the shares of stock outstanding and entitled to vote, at a
special meeting of the stockholders called for the purpose and the vacancies
thus created may be filled, at the meeting held for the purpose of removal, by
the affirmative vote of a majority in interest of the stockholders entitled to
vote.
SECTION 5. INCREASE OF NUMBER. -- The number of directors may be increased
by amendment of these By-Laws by the affirmative vote of a majority of the
directors, though less than a quorum, or, by the affirmative vote of a majority
in interest of the stockholders, at the annual meeting or at a special meeting
called for that purpose, and by like vote the additional directors may be chosen
at such meeting to hold office until the next annual election and until their
successors are elected and qualify.
-3-
<PAGE>
SECTION 6. POWERS. -- The Board of Directors shall exercise all of the
powers of the corporation except such as are by law, or by the Certificate of
Incorporation of the corporation, or by these By-Laws conferred upon or reserved
to the stockholders.
SECTION 7. COMMITTEES. -- The Board of Directors may, by resolution or
resolutions, passed by a majority of the whole board, designate one or more
committees, each committee to consist of two or more of the directors of the
corporation, which, to the extent provided in said resolution or resolutions or
in these By-Laws, shall have and may exercise the powers of the Board of
Directors in the management of the business and affairs of the corporation, and
may have power to authorize the seal of the corporation to be affixed to all
papers which may require it. Such committee or committees shall have such name
or names as may be stated in these By-Laws or as may be determined from time to
time by resolution adopted by the Board of Directors. The committees shall keep
regular minutes of their proceedings and report the same to the board when
required.
SECTION 8. MEETINGS. -- The newly elected directors may hold their first
meeting for the purpose of organization and the transaction of business, if a
quorum be present, immediately after the annual meeting of the stockholders; or
the time and place of such meeting may be fixed by consent in writing of all the
directors.
Regular meetings of the directors may be held without notice at such places
and times as shall be determined from time to time by resolution of the
directors.
Special meetings of the board may be called by the President or by the
Secretary on the written request of any two directors on at least two days'
notice to each director and shall be held at such place or places as may be
determined by the directors, or as shall be stated in the call of the meeting.
SECTION 9. QUORUM. -- A majority of the directors shall constitute a quorum
for the transaction of business. If at any meeting of the board there shall be
less than a quorum present, a majority of those present may adjourn the meeting
from time to time until a quorum is obtained, and no further notice thereof need
be given other than by announcement at the meeting which shall be so adjourned.
SECTION 10. COMPENSATION. -- Directors shall not receive any stated salary
for their services as directors or as members of committees, but by resolution
of the board a fixed fee and expenses of attendance may be allowed for
attendance at each meeting. Nothing herein contained shall be construed to
preclude any director from serving the corporation in any other capacity as an
officer, agent or otherwise, and receiving compensation therefor.
SECTION 11. ACTION WITHOUT MEETING. -- Any action required or permitted to
be taken at any meeting of the Board of Directors, or of any committee thereof,
may be taken without a meeting, if prior to such action a written consent
thereto is signed by all members of the board, or of such committee as the case
may be, and such written consent is filed with the minutes of proceedings of the
board or committee.
-4-
<PAGE>
ARTICLE IV
OFFICERS
SECTION 1. OFFICERS. -- The officers of the corporation shall be a
President, one or more Vice-Presidents, a Treasurer, and a Secretary, and such
Assistant Treasurers and Assistant Secretaries as the Board of Directors may
deem proper. In addition, the Board of Directors may elect a Chairman of the
Board of Directors. All of such officers shall be elected by the Board of
Directors. None of the officers, except the Chairman of the Board of Directors
and the President, need be directors. The officers shall be elected at the first
meeting of the Board of Directors after each annual meeting. Any two offices,
other than those of President and Vice-President, may be held by the same
person. More than two offices, other than those of President and Secretary, may
be held by the same person.
SECTION 2. OTHER OFFICERS AND AGENTS. -- The Board of Directors may appoint
such other officers and agents as it may deem advisable, who shall hold their
officers for such terms and shall exercise such powers and perform such duties
as shall be determined from time to time by the Board of Directors.
SECTION 3. CHAIRMAN. -- The Chairman of the Board of Directors, if one be
elected, shall preside at all meetings of the Board of Directors and he shall
have and perform such other duties as from time to time may be assigned to him
by the Board of Directors or the Executive Committee.
SECTION 4. PRESIDENT. -- The President shall be the chief executive officer
of the corporation and shall have the general powers and duties of supervision
and management usually vested in the office of President of a corporation. He
shall preside at all meetings of the stockholders if present thereat, and in the
absence or non-election of the Chairman of the Board of Directors, at all
meetings of the Board of Directors, and shall have general supervision,
direction and control of the business of the corporation. Except as the Board of
Directors shall authorize the execution thereof in some other manner, he shall
execute bonds, mortgages and other contracts in behalf of the corporation, and
shall cause the seal to be affixed to any instrument requiring it and when so
affixed, the seal shall be attested by the signature of the Secretary or the
Treasurer or an Assistant Secretary or an Assistant Treasurer.
SECTION 5. VICE-PRESIDENT. -- Each Vice-President shall have such powers
and shall perform such duties as shall be assigned to him by the Directors.
SECTION 6. TREASURER. -- The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate account of
receipts and disbursements in books belonging to the corporation. He shall
deposit all moneys and other valuables in the name and to the credit of the
corporation in such depositaries as may be designated by the Board of Directors.
-5-
<PAGE>
The Treasurer shall disburse the funds of the corporation as may be ordered
by the Board of Directors, or the President, taking proper vouchers for such
disbursements. He shall render to the President and Board of Directors at the
regular meetings of the Board of Directors, or whenever they may request it, an
account of all his transactions as Treasurer and of the financial condition of
the corporation. If required by the Board of Directors, he shall give the
corporation a bond for the faithful discharge of his duties in such amount and
with such surety as the board shall prescribe.
SECTION 7. SECRETARY. -- The Secretary shall give, or cause to be given,
notice of all meetings of stockholders and directors, and all other notices
required by law or by these By-Laws, and in case of his absence or refusal or
neglect so to do, any such notice may be given by any person thereunto directed
by the President, or by the directors, or stockholders, upon whose requisition
the meeting is called as provided in these By-Laws. He shall record all the
proceedings of the meetings of the corporation and of the directors in a book to
be kept for that purpose, and shall perform such, other duties as may be
assigned to him by the directors or the President. He shall have the custody of
the seal of the corporation and shall affix the same to all instruments
requiring it, when authorized by the directors or the President, and attest the
same.
SECTION 8. ASSISTANT TREASURERS AND ASSISTANT SECRETARIES. -- Assistant
Treasurers and Assistant Secretaries, if any, shall be elected and shall have
such powers and shall perform such duties as shall be assigned to them,
respectively, by the directors.
ARTICLE V
MISCELLANEOUS
SECTION 1. CERTIFICATES OF STOCK. -- Certificates of stock, numbered and
with the seal of the corporation affixed, signed by the President or
Vice-President, and the Treasurer or an Assistant Treasurer, or Secretary or an
Assistant Secretary, shall be issued to each stockholder certifying the number
of shares owned by him in the corporation. When such certificates are signed by
a transfer agent or an assistant transfer agent or by a transfer clerk acting on
behalf of the corporation and a registrar, the signatures of such officers may
be facsimiles.
SECTION 2. LOST CERTIFICATES. -- A new certificate of stock may be issued
in the place of any certificate theretofore issued by the corporation, alleged
to have been lost or destroyed, and the directors may, in their discretion,
require the owner of the lost or destroyed certificate, or his legal
representatives, to give the corporation a bond, in such sum as they may direct,
not exceeding double the value of the stock, to indemnify the corporation
against any claim that may be made against it on account of the alleged loss of
any such certificate, or the issuance of any such new certificate.
SECTION 3. TRANSFER OF SHARES. -- The shares of stock of the corporation
shall be transferable only upon its books by the holders thereof in person or by
their
-6-
<PAGE>
duly authorized attorneys or legal representatives, and upon such transfer
the old certificates shall be surrendered to the corporation by the delivery
thereof to the person in charge of the stock and transfer books and ledgers, or
to such other person as the directors may designate, by whom they shall be
cancelled, and new certificates shall thereupon be issued. A record shall be
made of each transfer, and a duplicate thereof mailed to the Delaware office,
and whenever a transfer shall be made for collateral security, and not
absolutely, it shall be so expressed in the entry of the transfer.
SECTION 4. CLOSING OF TRANSFER BOOKS. -- The Board of Directors shall have
the power to close the stock transfer books of the corporation for a period not
exceeding fifty days preceding the date of any meeting of stockholders or the
date for payment of any dividend or the date for the allotment of rights or the
date when any change or conversion or exchange of capital stock shall go into
effect; provided, however, that in lieu of closing the stock transfer books as
aforesaid, the Board of Directors may fix in advance a date, not exceeding fifty
days preceding the date of any meeting of stockholders or the date for the
payment of any dividend or the date for the allotment of rights or the date when
any change or conversion or exchange of capital stock shall go into effect, as a
record date for the determination of the stockholders entitled to notice of, and
to vote at, any such meeting, or entitled to receive payment of any such
dividends or to any such allotment of rights or to exercise the rights in
respect of any such change, conversion or exchange of capital stock, and in such
case such stockholders only as shall be stockholders of record on the date so
fixed shall be entitled to such notice of, and to vote at, such meeting, or to
receive payment of such dividend or to receive such allotment of rights or to
exercise such rights, as the case may be, notwithstanding any transfer of any
stock on the books of the corporation after any such record date fixed as
aforesaid.
SECTION 5. DIVIDENDS. -- Subject to the provisions of the Certificate of
Incorporation, the Board of Directors may, out of funds legally available
therefor at any regular or special meeting, declare dividends upon the capital
stock of the corporation as and when they deem expedient. Before declaring any
dividend there may be set apart out of any funds of the corporation available
for dividends, such sum or sums as the directors from time to time in their
discretion deem proper for working capital or as a reserve fund to meet
contingencies or for equalizing dividends or for such other purposes as the
directors shall deem conducive to the interests of the corporation.
SECTION 6. SEAL. -- The corporate seal shall be circular in form and shall
contain the name of the corporation, the year of its creation and the words
"CORPORATE SEAL DELAWARE". Said seal may be used by causing it or a facsimile
thereof to be impressed or affixed or reproduced or otherwise.
SECTION 7. FISCAL YEAR. -- The fiscal year of the corporation shall be the
calendar year.
SECTION 8. CHECKS. -- All checks, drafts or other orders for the payment of
money, notes or other evidences of indebtedness issued in the name of the
corporation shall be
-7-
<PAGE>
signed by such officer or officers, agent or agents of the corporation, and in
such manner as shall be determined from time to time by the resolution of the
Board of Directors.
SECTION 9. NOTICE AND WAIVER OF NOTICE. -- Whenever any notice is required
by these By-Laws to be given, personal notice is not meant unless expressly so
stated, and any notice so required shall be deemed to be sufficient if given by
depositing the same in a post office box in a sealed post-paid wrapper,
addressed to the person entitled thereto at his last known post-office address,
and such notice shall be deemed to have been given on the day of such mailing.
Stockholders not entitled to vote shall not be entitled to receive notice of any
meetings except as otherwise provided by Statute.
Whenever any notice whatever is required to be given under the provisions
of any law, or under the provisions of the Certificate of Incorporation of the
corporation or these ByLaws, a waiver thereof in writing, signed by the person
or persons entitled to said notice, whether before or after the time stated
therein, shall be deemed equivalent thereto.
ARTICLE VI
AMENDMENTS
These By-Laws may be altered or repealed and By-Laws may be deemed at any
annual meeting of the stockholders or at any special meeting thereof if notice
of the proposed alteration or repeal or By-Law or By-Laws to be made be
contained in the notice of such special meeting, by the affirmative vote of a
majority of the stock issued and outstanding and entitled to vote thereat, or by
the affirmative vote of a majority of the Board of Directors, at any regular
meeting of the Board of Directors, or at any special meeting of the Board of
Directors, if notice of the proposed alteration or repeal, or By-Law or By-Laws
to be made, be contained in the Notice of such Special Meeting.
-8-
Description: Articles of Holt Hauling and Warehousing System, Inc.
Articles COMMONWEALTH OF PENNSYLVANIA
of DEPARTMENT OF STATE
Incorporation CORPORATION BUREAU
- --------------------------------------------------------------------------------
In compliance with the requirements of the Business Corporation Law,
approved the 5th day of May, A.D. 1933, P. L. 364, as amended, the undersigned,
all of whom are of full age and at least two-thirds of whom are citizens of the
United States or its territories or possessions, desiring that they may be
incorporated as a business corporation, do hereby certify:
1. The name of the corporation is:
Holt Hauling and Warehousing System, Inc.
- --------------------------------------------------------------------------------
2. The location and post office address of its initial registered office in
this Commonwealth is:
c/o CT Corporation System, 1635 Market Street, Philadelphia, Pennsylvania 19103
- --------------------------------------------------------------------------------
Number Street City
Philadelpia County
- --------------------------------------------------------------------------------
County
3. The purpose or purposes of the corporation are:*
To engage in the business of hauling and storing general commodities
of all kinds and character for the public as a public warehousing and
transportation system; to purchase, lease and otherwise acquire real
property, including land and buildings; to construct, purchase, lease
and acquire buildings for the storage of general commodities belonging
to others; to sell, lease, mortgage and encumber the same; to buy,
sell, acquire and lease, where permitted by law, Certificates of
Convenience of the several states of the United States and of the
Interstate Commerce Commission, a branch of the U.S. Government; and
to operate motor vehicles as a common carrier pursuant to said
Certificates of Convenience; and to conduct a general public warehouse
business with all rights, duties and powers pertinent thereto, all of
the above in accordance with the rules and regulations of the Public
Utility Commission as may be pertinent thereto.
4. The term of its existence is: perpetual.
5. The aggregate number of shares which the corporation shall have
authority to issue is:**
1500 shares of Common Capital Stock, having a par value
of One Hundred ($100.00) Dollars each.
* Do not recite Powers set forth in Section 302 of the Act.
** There should be set forth the number and par value of all shares
having par value, the number of shares without par value, and the
stated capital applicable thereto. If the shares are to be divided
into classes, a description of each class and a statement of the
preferences, qualifications, limitations, restrictions, and the
special or relative rights granted to, or imposed upon, the shares of
each class.
FILING FEE - $40.00
NOTE - Excise Tax at the rate of 1/5 of 1% ($2.00 per $1000.00) will be due
and payable at the time of filing of the Articles, computed by multiplying the
number of authorized shares having par value by their par value or if shares of
no par stock are authorized, then on the stated capital applicable thereto as
well.
<PAGE>
6. The names and addresses of each of the first directors, who shall serve
until the first annual meeting, are:
NAME ADDRESS
(Including street and number, if any)
Leo Holt, Sr. 6810 Roosevelt Boulevard, Philadelphia, Pa.
Leo Holt, Jr. 404 Jamaica Drive, Cherry Hill, New Jersey
Thomas J. Holt 2025 Murray Street, Philadelphia, Pa.
7. The names and addresses of each of the incorporators and the number and
class of shares subscribed by each are:
<TABLE>
<CAPTION>
NAME ADDRESS NUMBER AND CLASS OF SHARES
(Including street and number, if any)
<S> <C> <C>
Leo Holt, Sr. 6810 Roosevelt Blvd., Phila., Pa. 330 shs. Common Cap.
Leo Holt, Jr. 404 Jamaica Drive, Cherry Hill, N.J. 330 shs. Common Cap.
Thomas J. Holt 2025 Murray Street, Phila., Pa. 330 shs. Common Cap
</TABLE>
IN TESTIMONY WHEREOF, the incorporators have signed and sealed these
Articles of Incorporation this 15th day of February, 1964.
(SEAL) /s/ Leo Holt, Sr. (SEAL)
- ----------------------------- ----------------------------
LEO HOLT, SR.
(SEAL) /s/ Leo Holt, Jr. (SEAL)
- ----------------------------- ----------------------------
LEO HOLT, JR.
(SEAL) /s/ Thomas J. Holt (SEAL)
- ----------------------------- ----------------------------
THOMAS J. HOLT
Approved and filed in the Department of State on the 25th day of March,
A.D. 1964.
/s/ George I. Bloom
---------------------------------
Secretary of the Commonwealth
BY-LAWS
ARTICLE I - OFFICES
1. The registered office of the corporation shall be at 4325
Bath Street, Philadelphia, Pennsylvania.
2. The corporation may also have offices at such other places
as the Board of Directors may from time to time appoint or the business of the
corporation may require.
ARTICLE II - SEAL
1. The corporate seal shall have inscribed thereon the name of
the corporation, the year of its organization and the words "Corporate Seal,
Pennsylvania".
ARTICLE III - SHAREHOLDERS' MEETING
1. Meetings of the shareholders shall be held at the office of
the corporation at 4325 Bath Street, Philadelphia, PA or at such other place or
places, either within or without the Commonwealth of Pennsylvania, as may from
time to time be selected.
2. The annual meeting of the shareholders, shall be held on
the third Tuesday of October in each year if not a legal holiday, and if a legal
holiday, then on the next secular day following at 2:00 o'clock p.m. when they
shall elect a Board of Directors, and transact such other business as may
properly be brought before the meeting. If the annual meeting shall not be
called and held during any calendar year, any shareholder may call such meeting
at anytime thereafter.
3. The presence, in person or by proxy, of shareholders
entitled to cast at least a majority of the votes which all shareholders are
entitled to cast on the particular matter shall constitute a quorum for the
purpose of considering such matter, and, unless otherwise provided by statute
the acts, at a duly organized meeting, of the shareholders present, in person or
-1-
<PAGE>
by proxy, entitled to cast at least a majority of the votes which all
shareholders present are entitled to cast shall be the acts of the shareholders.
The shareholders present at a duly organized meeting can continue to do business
until adjournment, notwithstanding the withdrawal of enough shareholders, to
leave less than a quorum. Adjournment or adjournments of any annual or special
meeting may be taken, but any meeting at which directors are to be elected shall
be adjourned only from day to day, or for such longer periods not exceeding
fifteen days each, as may be directed by shareholders who are present in person
or by proxy and who are entitled to cast at least a majority of the votes which
all such shareholders would be entitled to cast at an election of directors
until such directors have been elected. If a meeting cannot be organized because
a quorum has not attended, those present may, except as otherwise provided by
statute, adjourn the meeting to such time and place as they may determine, but
in the case of any meeting called for the election of directors, those who
attend the second of such adjourned meetings, although less than a quorum, shall
nevertheless constitute a quorum for the purpose of electing directors.
4. At each meeting of the shareholders, every shareholder
having the right to vote shall be entitled to vote either in person or by proxy.
Every proxy shall be executed in writing by the shareholder, or by his duly
authorized attorney in fact, and filed with the Secretary of the corporation. A
proxy, unless coupled with an interest, shall be revocable at will, notwith
standing any other agreement or any provision in the proxy to the contrary, but
the revocation of a proxy shall not be effective until notice thereof has been
given to the Secretary of the corporation. No unrevoked proxy shall be valid
after eleven months from the date of its execution, unless a longer time is
expressly provided therein, but in no event shall a proxy, unless coupled with
an interest, be voted on after three years from the date of its execution. In
all
-2-
<PAGE>
elections for directors cumulative voting shall be allowed. Upon demand made by
a shareholder at any election for directors before the voting begins, the
election shall be by ballot. No share shall be voted at any meeting upon which
any installment is due and unpaid.
5. Written notice of the annual meeting shall be given to each
shareholder entitled to vote thereat, at least five days prior to the meeting.
6. In advance of any meeting of shareholders, the Board of
Directors may appoint judges of election, who need not be shareholders, to act
at such meeting or any adjournment thereof. If judges of election be not so
appointed, the chairman of any such meeting may, and on the request of any
shareholder or his proxy, shall make such appointment at the meeting. The number
of judges shall be one or three. If appointed at a meeting on the request of one
or more shareholders or proxies, the majority of shares present and entitled to
vote shall determine whether one or three judges are to be appointed. On request
of the chairman of the meeting, or of any shareholder or his proxy, the judges
shall make a report in writing of any challenge or question or matter determined
by them, and execute a certificate of any fact found by them. No person who is a
candidate for office shall act as a judge.
7. Special meetings of the shareholders may be called at any
time by the President, or the Board of Directors, or shareholders entitled to
cast at least one-fifth of the votes which all shareholders are entitled to cast
at the particular meeting. At any time, upon written request of any person or
persons who have duly called a special meeting, it shall be the duty of the
Secretary to fix the date of the meeting, to be held not more than sixty days
after the receipt of the request, and to give due notice thereof. If the
Secretary shall neglect or refuse to fix the date of the meeting and give notice
thereof, the person or persons calling the meeting may do so.
-3-
<PAGE>
8. Business transacted at all special meetings shall be
confined to the objects stated in the call and matters germane thereto, unless
all shareholders entitled to vote are present and consent.
9. Written notice of a special meeting of shareholders stating
the time and place and object thereof, shall be given to each shareholder
entitled to vote thereat at least days before such meeting, unless a greater
period of notice is required by statute in a particular case.
10. The officer or agent having charge of the transfer books
shall make at least five days before each meeting of shareholders, a complete
list of the shareholders entitled to vote at the meeting, arrange in
alphabetical order, with the address of and the number of shares held by each,
which list shall be subject to inspection by any shareholder at any time during
usual business hours. Such list shall also be produced and kept open at the time
and place of the meeting, and shall be subject to the inspection of any
shareholder during the whole time of the meeting. The original share ledger or
transfer book, or a duplicate thereof kept in this Commonwealth, shall be prima
facie evidence as to who are the shareholders entitled to examine such list or
share ledger or transfer book, or to vote in person or by proxy, at any meeting
of shareholders.
ARTICLE IV - DIRECTORS
1. The business of this corporation shall be managed by its
Board of Directors, three in number, who need not be residents of this
Commonwealth or shareholders in the corporation. They shall be elected by the
shareholders, at the annual meeting of shareholders of the corporation, and each
director shall be elected for the term of one year, and until his successor
shall be elected and shall qualify.
-4-
<PAGE>
2. In addition to the powers and authorities by these By-Laws
expressly conferred upon them, the Board may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the Articles or by these By-Laws directed or required to be exercised or done by
the shareholders.
3. The meetings of the Board of Directors may be held at such
place within this Commonwealth, or elsewhere, as a majority of the directors may
from time to time appoint, or as may be designated in the notice calling the
meeting.
4. Each newly elected Board may meet at such place and time as
shall be fixed by the shareholders at the meeting at which such directors are
elected and no notice shall be necessary to the newly elected directors in order
legally to constitute the meeting, or they may meet at such place and time as
may be fixed by the consent in writing of all the directors.
5. Regular meetings of the Board shall be held without notice
semi-annually at the registered office of the company, or at such other time and
place as shall be determined by the Board.
6. Special meetings of the Board may be called by the
President on five days notice to each director, either personally or by mail or
by telegram; special meetings shall be called by the President or Secretary in
like manner and on like notice on the written request of two directors.
7. A majority of the directors in office shall be necessary to
constitute a quorum for the transaction of business, and the acts of a majority
of the directors present at a meeting at which a quorum is present shall be the
acts of the Board of Directors. Any action which may be taken at a meeting of
the directors may be taken without a meeting if a consent or
-5-
<PAGE>
consents in writing, setting forth the action so taken, shall be signed by all
of the directors and shall be filed with the secretary of the corporation.
8. Directors as such, shall not receive any stated salary for
their services, but by resolution of the Board, a fixed sum and expenses of
attendance, if any, may be allowed for attendance at each regular or special
meeting of the Board PROVIDED, that nothing herein contained shall be construed
to include any director from serving the corporation in any other capacity and
receiving compensation therefor.
ARTICLE V - OFFICERS
1. The executive officers of the corporation shall be chosen
by the directors and shall be a President, Secretary, and Treasurer. The Board
of Directors may also choose a Vice-President and such other officers and agents
as it shall deem necessary, who shall hold their offices for such terms and
shall have such authority and shall perform such duties as from time to time
shall be prescribed by the Board. Any two or more offices may be held by the
same person, except the offices of President and Secretary. It shall not be
necessary for the officers to be directors.
2. The salaries of all officers and agents of the corporation
shall be fixed by the Board of Directors.
3. The officers of the corporation shall hold office for one
year and until their successors are chosen and have qualified. Any officer or
agent elected or appointed by the Board of Directors may be removed by the Board
of Directors whenever in its judgment the best interests of the corporation will
be served thereby.
4. The President shall be the chief executive officer of the
corporation; he shall preside at all meetings of the shareholders and directors;
he shall have general and active
-6-
<PAGE>
management of the business of the corporation, shall see that all orders and
resolutions of the Board are carried into effect, subject, however, to the right
of the directors to delegate any specific powers, except such as may be by
statute exclusively conferred on the President, to any other officer or officers
of the corporation. He shall execute bonds, mortgages and other contracts
requiring a seal, under the seal of the corporation. He shall be EX-OFFICIO a
member of all committees, and shall have the general powers and duties of
supervision and management usually vested in the office of President of a
corporation.
5. The Secretary shall attend all sessions of the Board and
all meetings of the shareholders and act as clerk thereof, and record all the
votes of the corporation and the minutes of all its transactions in a book to be
kept for that purpose; and shall perform like duties for all committees of the
Board of Directors when required. He shall give, or cause to be given, notice of
all meetings of the shareholders and of the Board of Directors, and shall
perform such other duties as may be prescribed by the Board of Directors or
President, and under whose supervision he shall be. He shall keep in safe
custody the corporate seal of the corporation, and when authorized by the Board,
affix the same to any instrument requiring it.
6. The Treasurer shall have custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation, and shall keep the moneys
of the corporation in a separate account to the credit of the corporation. He
shall disburse the funds of the corporation as may be ordered by the Board,
taking proper vouchers for such disbursements, and shall render to the President
and Directors, at the regular meetings of the Board, or whenever they may
require it, an account of all his trans actions as Treasurer and of the
financial condition of the corporation
-7-
<PAGE>
ARTICLE VI - VACANCIES
1. If the office of any officer or agent, one or more, becomes
vacant for any reason, the Board of Directors may choose a successor or
successors, who shall hold office for the unexpired term in respect of which
such vacancy occurred.
2. Vacancies in the Board of Directors, including vacancies
resulting from an increase in the number of directors, shall be filled by a
majority of the remaining members of the Board though less than a quorum, and
each person so elected shall be a director until his successor is elected by the
shareholders, who may make such election at the next annual meeting of the
shareholders or at any special meeting duly called for that purpose and held
prior thereto.
ARTICLE VII - CORPORATE RECORDS
1. There shall be kept at the registered office of the
corporation an original or duplicate record of the proceedings of the
shareholders and of the directors, and the original or a copy of its By-Laws,
including all amendments or alterations thereto to date, certified by the
Secretary of the corporation. An original or duplicate share register shall also
be kept at the registered office, or at the office of a transfer agent or
registrar within this Commonwealth, giving the names of the shareholders in
alphabetical order, and showing their respective addresses, the number and
classes of shares held by each, the number and date of certificates issued for
the shares, and the number and date of cancellation of every certificate
surrendered for cancellation.
2. Every shareholder shall have a right to examine, in person
or by agent or attorney, at any reasonable time or times, for any reasonable
purpose, the share register, books or records of account, and records of the
proceedings of the shareholders and directors, and make extracts therefrom.
-8-
<PAGE>
ARTICLE VIII - SHARE CERTIFICATES, DIVIDENDS, ETC.
1. The share certificates of the corporation shall be numbered
and registered in the share ledger and transfer books of the corporation, as
they are issued. They shall be signed by the President and Treasurer and shall
bear the corporate seal.
2. Transfers of shares shall be made on the books of the
corporation upon surrender of the certificates therefor, endorsed by the person
named in the certificate or by attorney, lawfully constituted in writing. No
transfer shall be made inconsistent with the provisions of Article 8 of the
Uniform Commercial Code, approved the sixth day of April, one thousand nine
hundred fifty-three (Act No. 1), and its amendments and supplements.
3. The Board of Directors may fix a time, no more than fifty
days, prior to the date of any meeting of shareholders, or the date fixed for
the payment of any dividend or distribution, or the date for the allotment of
rights, or the date when any change or conversion or exchange of shares will be
made or go into effect, as a record date for the determination of the
shareholders entitled to notice of, or to vote at, any such meeting, or entitled
to receive payment of any such dividend or distribution, or to receive any such
allotment of rights, or to exercise the rights in respect to any such change,
conversion, or exchange of shares. In such case, only such shareholders as shall
be shareholders of record on the date so fixed shall be entitled to notice of,
or to vote at such meeting or to receive payment of such dividend, or to receive
such allotment of rights, or to exercise such rights, as the case may be,
notwithstanding any transfer of any shares on the books of the corporation after
any record date fixed as aforesaid. The Board of Directors may close the books
of the corporation against transfers of shares during the whole or any part of
such period, and in such case, written or printed notice thereof shall be mailed
at least ten days before the closing thereof to each shareholder of record at
the address appearing on the records of
-9-
<PAGE>
the corporation or supplied by him to the corporation for the purpose of notice.
While the stock transfer books of the corporation are closed, no transfer of
shares shall be made thereon. If no record date is fixed for the determination
of shareholders entitled to receive notice of, or vote at, a shareholders'
meeting, transferees of shares which are transferred on the books of the
corporation within ten days next preceding the date of such meeting shall not be
entitled to notice of or to vote at such meeting.
4. In the event that a share certificate shall be lost,
destroyed or mutilated, a new certificate may be issued therefor upon such terms
and indemnity to the corporation as the Board of Directors may prescribe.
5. The Board of Directors may declare and pay dividends upon
the outstanding shares of the corporation, from time to time and to such extent
as they deem advisable, in the manner and upon the terms and conditions provided
by statute and the Articles of Incorporation.
6. Before payment of any dividend there may be set aside out
of the net profits of the corporation such sum or sums as the directors, from
time to time, in their absolute discretion, think proper as a reserve fund to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or for such other purpose as the directors
shall think conducive to the interests of the corporation, and the director may
abolish any such reserve in the manner in which it was created.
ARTICLE IX - MISCELLANEOUS PROVISIONS
1. All checks or demands for money and notes of the
corporation shall be signed by such officer or officers as the Board of
Directors may from time to time designate
2. The fiscal year shall begin the 1st day of October each
year.
-10-
<PAGE>
3. Whenever written notice is required to be given to any
person, it may be given to such person, either personally or by sending a copy
thereof through the mail, or by telegram, charges prepaid, to his address
appearing on the books of the corporation, or supplied by him to the corporation
for the purpose of notice. If the notice is sent by mail or by telegraph, it
shall be deemed to have been given to the person entitled thereto when deposited
in the United States mail or with a telegraph office for transmission to such
person. Such notice shall specify the place, day and hour of the meeting and, in
the case of a special meeting of shareholders, the general nature of the
business to be transacted.
4. Whenever any written notice is required by statute, or by
the Articles or By-Laws of this corporation, a waiver thereof in writing, signed
by the person or persons entitled to, such notice, whether before or after the
time stated therein, shall be deemed equivalent to the giving of such notice.
Except in the case of a special meeting of shareholders, neither the business to
be transacted at nor the purpose of the meeting need be specified in the waiver
of notice of such meeting. Attendance of a person, either in person or by proxy,
at any meeting shall constitute a waiver of notice of such meeting, except where
a person attends a meeting for the express purpose of objecting to the
transaction of any business because the meeting was not lawfully called or
convened.
5. Except as otherwise provided in the Articles or By-Laws of
this corporation, any action which may be taken at a meeting of the shareholders
may be taken without a meeting, if a consent or consents in writing, setting
forth the action so taken, shall be signed by all of the shareholders who would
be entitled to vote at a meeting for such purpose and shall be filed with the
secretary of the corporation.
-11-
<PAGE>
ARTICLE X - ANNUAL STATEMENT
1. The President and Board of Directors shall present at each
annual meeting a full and complete statement of the business and affairs of the
corporation for the preceding year. Such statement shall be prepared and
presented in whatever manner the Board of Directors shall deem advisable and
need not be verified by a certified public accountant.
ARTICLE XI - AMENDMENTS
1. These By-Laws may be altered, amended or repealed by the
affirmative vote of a majority of the shares issued and outstanding and entitled
to vote thereat at any regular or special meeting of the shareholders, if notice
of the proposed alteration, amendment or repeal be contained in the notice of
the meeting.
-12-
CERTIFICATE OF INCORPORATION
OF
MURPHY MARINE SERVICES, INC.
A CLOSE CORPORATION
* * * * *
1. The name of the corporation is:
MURPHY MARINE SERVICES, INC.
2. The address of its registered office in the State of Delaware is
Corporation Trust Center, 1209 Orange Street, in the City of Wilmington, County
of New Castle. The name of its registered agent at such address is The
Corporation Trust Company.
3. The nature of the business or purposes to be conducted or promoted is:
to engage in any lawful act or activity for which corporations may be organized
under the General Corporation Law of Delaware. To manufacture, purchase or
otherwise acquire, invest in, own, mortgage, pledge, sell, assign and transfer
or otherwise dispose of, trade, deal in and deal with goods, wares and
merchandise and personal property of every class and description.
To acquire, and pay for in cash, stock or bonds of this corporation or
otherwise, the good will, rights, assets and property, and to undertake or
assume the whole or any part of the obligations or liabilities of any person,
firm, association or corporation.
To acquire, hold, use, sell, assign, lease, grant licenses in respect of,
mortgage or otherwise dispose of letters patent of the United States or any
foreign country, patent rights, licenses and privileges, inventions,
improvements and processes, copyrights, trademarks and trade names, relating to
or useful in connection with any business of this corporation.
-1-
<PAGE>
To acquire by purchase, subscription or otherwise, and to receive, hold,
own, guarantee, sell, assign, exchange, transfer, mortgage, pledge or otherwise
dispose of or deal in and with any of the capital stock, or any voting trust
certificates in respect of the shares of capital stock, scrip, warrants, rights,
bonds, debentures, notes, trust receipts, and other securities, obligations,
chose in action and evidences of indebtedness or interest issued or created by
any corporations, joint stock companies, syndicates, associations, firms, trusts
or persons, public or private, or by the government of the United States of
America, or by any foreign government, or by any state, territory, province,
municipality or other political subdivision or by any governmental agency, and
as owner thereof to possess and exercise all the rights, powers and privileges
of ownership, including the right to execute consents and vote thereon, and to
do any and all acts and things necessary or advisable for the preservation,
protection, improvement and enhancement in value thereof.
To borrow or raise money for any of the purposes of the corporation and,
from time to time without limit as to amount, to draw, make, accept, endorse,
execute and issue promissory notes, drafts, bills of exchange, warrants, bonds,
debentures and other negotiable or non-negotiable instruments and evidences of
indebtedness, and to secure the payment of any thereof and of the interest
thereon by mortgage upon or pledge, conveyance or assignment in trust of the
whole or any part of the property of the corporation, whether at the time owned
or thereafter acquired, and to sell, pledge or otherwise dispose of such bonds
or other obligations of the corporation for its corporate purposes.
To purchase, receive, take by grant, gift, devise, bequest or otherwise,
lease, or otherwise acquire, own, hold, improve, employ, use and otherwise deal
in and with real or
-2-
<PAGE>
personal property, or any interest therein, wherever situated, and to sell,
convey, lease, exchange, transfer or otherwise dispose of, or mortgage or
pledge, all or any of the corporation's property and assets, or any interest
therein, wherever situated.
In general, to possess and exercise all the powers and privileges granted
by the General Corporation Law of Delaware or by any other law of Delaware or by
this Certificate of Incorporation together with any powers incidental thereto,
so far as such powers and privileges are necessary or convenient to the conduct,
promotion or attainment of the business or purposes of the corporation.
The business and purposes specified in the foregoing clauses shall, except
where otherwise expressed, be in nowise limited or restricted by reference to,
or inference from, the terms of any other clause in this Certificate of
Incorporation, but the business and purposes specified in each of the foregoing
clauses of this article shall be regarded as independent business and purposes.
4. The total number of shares of stock which the corporation shall have
authority to issue is One Hundred-Thousand (100,000); and the par value of each
such share is One Dollar ($1.00) amounting in the aggregate to One Hundred
Thousand Dollars ($100,000.00).
Shares of stock of this corporation are to be issued and held by each and
every stockholder of this corporation upon and subject to the following terms
and conditions:
All of the issued and outstanding stock of all classes shall be represented
by certificates and shall be held of record by not more than four (10) ??
persons, as defined in section 342 of the General Corporation Law; and the
corporation shall make no offering of any of its stock of any class which would
constitute a "public offering" within the meaning of the
-3-
<PAGE>
United States Securities Act of 1933, as it may be amended from time to
time; and the consent of the directors of the corporation shall be required to
approve the issuance or transfer of any shares as being in compliance with the
foregoing restrictions.
No holder of shares shall sell, assign or otherwise dispose of any share or
shares of stock of this corporation to any person, firm, corporation or
association, nor shall the executor, administrator, trustee, assignee or other
legal representative of a deceased stockholder sell, assign, transfer or
otherwise dispose of any share or shares of the stock of this corporation or any
person, firm, corporation or association nor to any next of kin or legatee or
legatees of a deceased stockholder, without first offering said share or shares
of stock for sale to the corporation at a price representing the true book value
thereof at the time of said offer and the corporation shall have the right to
purchase the same by the payment of such purchase price at any time within
thirty (30) days after receipt of written notice of said offer. In the event
that the corporation does not accept the offer to sell such share or shares
within thirty (30) days after receipt of the written notice of said offer, the
share or shares shall next be offered for sale to the other stockholder or
stockholders of said corporation at a price representing the true book value
thereof at the time of said offer and such other stockholder or stockholders
shall have the right to purchase the same by the payment of such purchase price
at any time within thirty (30) days after receipt of written notice of said
offer.
Compliance with the foregoing terms and conditions in regard to the sale,
assignment, transfer or other disposition of the shares of stock of this
corporation shall be a condition precedent to the transfer of such shares of
stock on the books of this corporation.
-4-
<PAGE>
The holders of Common Stock shall, upon the issuance or sale of shares of
stock of any class (whether now or hereafter authorized) or any securities
convertible into such stock, have the right, during such period of time and on
such conditions as the board of directors shall prescribe, to subscribe to and
purchase such shares or securities in proportion to their respective holdings of
common stock, at such price or prices as the board of directors may from time to
time fix and as may be permitted by law.
5. The name and mailing address of each incorporator is as follows:
NAME MAILING ADDRESS
---- ---------------
M. A. Brzoska Corporation Trust Center
1209 Orange Street
Wilmington, DE 19801
K. A. Widdoes Corporation Trust Center
1209 Orange Street
Wilmington, DE 19801
L. J. Vitalo Corporation Trust Center
1209 Orange Street
Wilmington, DE 19801
5A. The name and mailing address of each person, who is to serve as a
director until the first annual meeting of the stockholders or until a successor
is elected and qualified, is as follows:
NAME MAILING ADDRESS
---- ---------------
Thomas J. Holt, Sr. P.O. Box 41534
Philadelphia, PA 19101
Mark Murphy P.O. Box 41534
Philadelphia, PA 19101
6. The corporation is to have perpetual existence.
-5-
<PAGE>
7. In furtherance and not in limitation of the powers conferred by statute,
the board of directors is expressly authorized. To authorize and cause to be
executed mortgages and liens upon the real and personal property of the
corporation.
To set apart out of any of the funds of the corporation available for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees, each
committee to consist of one or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any meeting of the
committee. The by-laws may provide that in the absence or disqualification of a
member of a committee, the member or members thereof present at any meeting and
not disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Any such
committee, to the extent provided in the resolution of the board of directors,
or in the by-laws of the corporation, shall have and may exercise all the powers
and authority of the board of directors in the management of the business and
affairs of the corporation, and may authorize the seal of the corporation to be
affixed to all papers which may require it; but no such committee shall have the
power or authority in reference to amending the Certificate of Incorporation,
adopting an agreement of merger or consolidation, recommending to the
stockholders the sale, lease or exchange of all or substantially all of the
corporation's property and assets, recommending to the stockholders a
dissolution of the corporation or a revocation of a dissolution, or amending the
by-laws of the
-6-
<PAGE>
corporation; and, unless the resolution or by-laws, expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock.
When and as authorized by the stockholders in accordance with law, to sell,
lease or exchange all or substantially all of the property and assets of the
corporation, including its good will and its corporate franchises, upon such
terms and conditions and for such consideration, which may consist in whole or
in part of money or property including shares of stock in, and/or other
securities of, any other corporation or corporations, as its board of directors
shall deem expedient and for the best interests of the corporation.
8. Elections of directors need not be by written ballot unless the by-laws
of the corporation shall so provide.
Meetings of stockholders may be held within or without the State of
Delaware, as the by-laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the by-laws of the corporation.
9. The corporation reserves the right to alter, amend, change or repeal any
provision contained in this Certificate of Incorporation, in the manner now or
hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this reservation.
10. A director of the corporation shall not be personally liable to the
corporation or its stockholders for monetary damages for breach of fiduciary
duty as a director except for liability (i) for any breach of the director's
duty of loyalty to the corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct
-7-
<PAGE>
or a knowing violation of law, (iii) under Section 174 of the Delaware
Corporation Law, or (iv) for any transaction from which the director derived any
improper personal benefit.
WE, THE UNDERSIGNED, being each of the incorporators hereinbefore named,
for the purpose of forming a corporation pursuant to the General Corporation Law
of the State of Delaware, do make this Certificate, hereby declaring and
certifying that this is our act and deed and the facts herein stated are true,
and accordingly have hereunto set our hands this 23rd day of June, 1994.
/s/ M. A. Brzoska
-----------------------------------
/s/ K. A. Widdoes
-----------------------------------
/s/ L. J. Vitalo
-----------------------------------
-8-
MURPHY MARINE SERVICES, INC.
A CLOSE CORPORATION
* * * * *
BY-LAWS
* * * * *
ARTICLE I
OFFICES
Section 1. The registered office shall be in the City of Wilmington, County
of New Castle, State of Delaware.
Section 2. The corporation may also have offices at such other places both
within and without the State of Delaware as the board of directors may from time
to time determine or the business of the corporation may require.
ARTICLE 2
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in the City of Wilmington, State of Delaware, at such place as may
be fixed from time to time by the board of directors, or at such other place
either within or without the State of Delaware as shall be designated from time
to time by the board of directors and stated in the notice of the meeting.
Meetings of stockholders for any other purpose may be held at such time and
place, within or without the State of Delaware, as shall be stated in the notice
of the meeting or in a duly executed waiver of notice thereof.
Section 2. Annual meetings of stockholders, commencing with the year 1995,
shall be held on the first day of July if not a legal holiday, and if a legal
holiday, then on the next secular day following, at 10 A.M., or at such other
date and time as shall be designated from time
-1-
<PAGE>
to time by, the board of directors and stated in the notice of the meeting,
at which they shall elect by a plurality vote a board of directors, and transact
such other business as may properly be brought before the meeting.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a period of at least
ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
The list shall also be produced and kept at the time and place of the meeting
during the whole time thereof, and may be inspected by any stockholder who is
present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
-2-
<PAGE>
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person or represented by proxy, shall
constitute a quorum at all meetings of the stockholders for the transaction of
business except as otherwise provided by statute or by the certificate of
incorporation. If, however, such quorum shall not be present or represented at
any meeting of the stockholders, the stockholders entitled to vote thereat,
present in person or represented by proxy, shall have power to adjourn the
meeting from time to time, without notice other than announcement at the
meeting, until a quorum shall be present or represented. At such adjourned
meeting at which a quorum shall be present or represented any business may be
transacted which might have been transacted at the meeting as originally
notified. If the adjournment is for more than thirty days, or if after the
adjournment a new record date is fixed for the adjourned meeting, a notice of
the adjourned meeting shall be given to each stockholder of record entitled to
vote at the meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person or represented
by proxy shall decide any question brought before such meeting, unless the
question is one upon which by express provision of the statutes or of the
certificate of incorporation, a different vote is required in which case such
express provision shall govern and control the decision of such question.
-3-
<PAGE>
Section 10. Unless otherwise provided in the certificate of incorporation
each stockholder shall at every meeting of the stockholders be entitled to one
vote in person or by proxy for each share of the capital stock having voting
power held by such stockholder, but no proxy shall be voted on after three years
from its date, unless the proxy provides for a longer period.
Section 11. Unless otherwise provided in the certificate of incorporation,
any action required to be taken at any annual or special meeting of stockholders
of the corporation, or any action which may be taken at any annual or special
meeting of such stockholders, may be taken without a meeting, without prior
notice and without a vote, if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of' votes that would be necessary to authorize or take such
action at a meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting
by less than unanimous written consent shall be given to those stockholders who
have not consented in writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be not less than two nor more than eight. The first board shall consist of
two directors. Thereafter, within the limits above specified, the number of
directors shall be determined by resolution of the board of directors or by the
stockholders at the annual meeting. The directors shall be elected at the annual
meeting of the stockholders, except as provided in Section 2 of this Article,
and each director elected shall hold office until his successor is elected and
qualified. Directors need not be stockholders.
-4-
<PAGE>
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall quality, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships, or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by or under the
direction of its board of directors which may exercise all such powers of the
corporation and do all such lawful acts and things as are not by statute or by
the certificate of incorporation or by these by-laws directed or required to be
exercised or done by the stockholders.
MEETINGS OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without the State of Delaware.
Section 5. The first meeting of each newly elected board of directors shall
be held at such time and place as shall be fixed by the vote of the stockholders
at the annual meeting and no notice of such meeting shall be necessary to the
newly elected directors in order legally to constitute the meeting, provided a
quorum shall be present. In the event of the failure of the
-5-
<PAGE>
stockholders to fix the time or place of such first meeting of the newly elected
board of directors, or in the event such meeting is not held at the time and
place so fixed by the stockholders, the meeting may be held at such time and
place as shall be specified in a notice given as hereinafter provided for
special meetings of the board of directors, or as shall be specified in a
written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the president on
one day's notice to each director, either personally or by mail or by telegram;
special meetings shall be called by the president or secretary in like manner
and on like notice on the written request of two directors unless the board
consists of only one director; in which case special meetings shall be called by
the president or secretary in like manner and on like notice on the written
request of the sole director.
Section 8. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the
-6-
<PAGE>
board or committee, as the case may be, consent thereto in writing, and the
writing or writings are filed with the minuses of proceedings of the board or
committee.
Section 10. Unless otherwise restricted by the certificate of incorporation
or these by-laws, members of the board of directors, or any committee designated
by the board of directors, may participate in a meeting of the board of
directors, or any committee, by means of conference telephone or similar
communications equipment by means of which all persons participating in the
meeting can hear each other, and such participation in a meeting shall
constitute presence in person at the meeting.
COMMITTEES OF DIRECTORS
Section 11. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees, each committee to consist
of one or more of the directors of the corporation. The board may designate one
or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
In the absence or disqualification of a member of a committee, the member
or members thereof present at any meeting and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member.
Any such committee, to the extent provided in the resolution of the board
of directors, shall have and may exercise all the powers and authority of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; but no such committee shall have the power or
authority in reference to amending the certificate of incorporation, (except
that a
-7-
<PAGE>
committee may, to the extent authorized in the resolution or resolutions
providing for the issuance of shares of stock adopted by the board of directors
as provided in Section 151(a) fix any of the preferences or rights of such
shares relating to dividends, redemption, dissolution, any distribution of
assets of the corporation or the conversion into, or the exchange of such shares
for, shares of any other class or classes or any other series of the same or any
other class or classes of stock of the corporation) adopting an agreement of
merger or consolidation, recommending to the stockholders the sale, lease or
exchange of all or substantially all of the corporation's property and assets,
recommending to the stockholders a dissolution of the corporation or a
revocation of a dissolution, or amending the by-laws of the corporation; and,
unless the resolution or the certificate of incorporation expressly so provide,
no such committee shall have the power or authority to declare a dividend or to
authorize the issuance of stock or to adopt a certificate of ownership and
merger. Such committee or committees shall have such name or names as may be
determined from time to time by resolution adopted by the board of directors.
Section 12. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 13. Unless otherwise restricted by the certificate of incorporation
or these by-laws, the board of directors shall have the authority to f ix the
compensation of directors. The directors may be paid their expenses, if any, of
attendance at each meeting of the board of directors and may be paid a fixed sum
for attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving
-8-
<PAGE>
the corporation in any other capacity and receiving compensation therefor.
Members of special or standing committees may be allowed like compensation for
attending committee meetings.
REMOVAL OF DIRECTORS
Section 14. Unless otherwise restricted by the certificate of incorporation
or by law, any director or the entire board of directors may be removed, with or
without cause, by the holders of a majority of shares entitled to vote at an
election of directors.
ARTICLE IV
NOTICES
Section 1. Whenever, under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by telegram.
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these by-laws, a
waiver thereof in, writing, signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a vice-president, a secretary and a
treasurer. The board of
-9-
<PAGE>
directors may also choose additional vice-presidents, and one or more
assistant secretaries and assistant treasurers. Any number of offices may be
held by the same person, unless the certificate of incorporation or these
by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, one or more vice-presidents, a
secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties and shall be determined
from time to time by the board.
Section 4. The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board oil
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
-10-
<PAGE>
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his inability
or refusal to act, the vice-president (or in the event there be more than one
vice-president, the vice-presidents in the order designated by the directors, or
in the absence of any designation, then in the order of their election) shall
perform the duties of the president, and when so acting, shall have all the
powers of and be subject to all the restrictions upon the president. The
vice-presidents shall perform such other duties and have such other powers as
the board of directors may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARY
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his
-11-
<PAGE>
inability or refusal to act, perform the duties and exercise the powers of the
secretary and shall perform such other duties and have such other powers as the
board of directors may from time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so re quires, an account of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession or under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than one,
the assistant treasurers in the order determined by the board of directors (or
if there be no such determination, then in the order of their election) shall,
in the absence of the treasurer or in the
-12-
<PAGE>
event of his inability or refusal to act, perform the duties and exercise the
powers of the treasurer and shall perform such other duties and have such other
powers as the board of directors may from time to time prescribe.
ARTICLE VI
CERTIFICATES FOR SHARES
Section 1. The shares of the corporation shall be represented by a
certificate or shall be uncertificated. Certificates shall be signed by, or in
the name of the corporation by, the chairman or vice-chairman of the board of
directors, or the president or a vice-president, and by the treasurer or an
assistant treasurer, or the secretary or an assistant secretary of the
corporation.
Within a reasonable time after the issuance or transfer of uncertificated
stock, the corporation shall send to the registered owner thereof a written
notice containing the information required to be set forth or stated on
certificates pursuant to Sections 151, 156, 202(a) or 218(a) or a statement that
the corporation will furnish without charge to each stockholder who so requests
the powers, designations, preferences and relative participating, optional or
other special rights of each class of stock or series thereof and the
qualifications, limitations or restrictions of such preferences and/or rights.
Section 2. Any of or all the signatures on a certificate may be facsimile.
In case any officer, transfer agent or registrar who has signed or whose
facsimile signature has been placed upon a certificate shall have ceased to be
such officer, transfer agent or registrar before such certificate is issued, it
may be issued by the corporation with the same effect as if he were such
officer, transfer agent or registrar at the date of issue.
-13-
<PAGE>
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates or uncertificated shares to be issued in place of any certificate
or certificates theretofore issued by the corporation alleged to have been lost,
stolen or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen or destroyed. When
authorizing such issue of a new certificate or certificates or uncertificated
shares, the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen or
destroyed certificate or certificates, or his legal representative, to advertise
the same in such manner as it shall require and/or to give the corporation a
bond in such sum as it may direct as indemnity against any claim that may be
made against the corporation with respect to the certificate alleged to have
been lost, stolen or destroyed.
TRANSFER OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignation or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
Upon receipt of proper transfer instructions from the registered owner of
uncertificated shares such uncertificated shares shall be cancelled and issuance
of new equivalent uncertificated shares or certificated shares shall be made to
the person entitled thereto and the transaction shall be recorded upon the books
of the corporation.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to
-14-
<PAGE>
express consent to corporate action in writing without a meeting, or
entitled to receive payment of any dividend or other distribution or allotment
of any rights, or entitled to exercise any rights in respect of any change,
conversion or exchange of stock or for the purpose of any other lawful action,
the board of directors may fix, in advance, a record date, which shall not be
more than sixty nor less than ten days before the date of such meeting, nor more
than sixty days prior to any other action. A determination of stockholders of
record entitled to notice of or to vote at a meeting of stockholders shall apply
to any adjournment of the meeting, provided, however, that the board of
directors may fix a new record date for the adjourned meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered on its books as the owner of shares to receive
dividends, and to vote as such owner, and to hold liable for calls and
assessments a person registered on its books as the owner of shares, and shall
not be bound to recognize any equitable or other claim to or interest in such
share or shares on the part of any other person, whether or not it shall have
express or other notice thereof, except as otherwise provided by the laws of
Delaware.
ARTICLE VII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
-15-
<PAGE>
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
ANNUAL STATEMENT
Section 3. The board of directors shall present at each annual meeting, and
at any special meeting of the stockholders when called for by vote of the
stockholders, a full and clear statement of the business and condition of the
corporation.
CHECKS
Section 4. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
this board of directors may from time to time designate.
FISCAL YEAR
Section 5. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
SEAL
Section 6. The corporate seal shall have inscribed thereon the name of the
corporation, the year of its organization and the words "Corporate Seal,
Delaware". The seal may be used by causing it or a facsimile thereof to be
impressed or affixed or reproduced or otherwise.
INDEMNIFICATION
-16-
<PAGE>
Section 7. The corporation shall indemnify its officers, directors,
employees and agents to the extent permitted by the General Corporation Law of
Delaware.
ARTICLE VIII
AMENDMENTS
Section 1. These by-laws may be altered, amended or repealed or new by-laws
may be adopted by the stockholders or by the board of directors, when such power
is conferred upon the board of directors by the certificate of incorporation at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new by-laws be contained in
the notice of such special meeting. If the power to adopt, amend or repeal
by-laws is conferred upon the board of directors by the certificate of
incorporation shall not divest or limit the power of the stockholders to adopt,
amend or repeal by-laws.
-17-
CERTIFICATE OF INCORPORATION
WILMINGTON STEVEDORES, INC.
FIRST: The name of the corporation is WILMINGTON STEVEDORES, INC.
SECOND: The address of its registered office in the State of Delaware is
13th Floor, Delaware Trust Building, 902 Market Street, P.O. Box 25130, New
Castle County, Wilmington, Delaware 19899. The name of its registered agent at
such address is Robert Meyer.
THIRD: The nature of the business or purposes to be conducted or promoted
is to engage in any lawful act or activity for which corporations my be
organized under the General Corporation Law of Delaware.
FOURTH: The total number of shares of stock which the corporation shall
have authority to issue is 250 shares of common stock without par value.
FIFTH: The name and mailing address of the incorporator is as follows:
Name Address
---- -------
John G. Mulford 1118 Wilmington Trust Building
Wilmington, Delaware 19801
SIXTH: The corporation is to have perpetual existence.
SEVENTH: In furtherance and not in limitation of the powers conferred by
statute, the bond of directors is expressly authorized:
To make, alter or repeal the By-Laws of the corporation.
To authorize and cause to be executed mortgages and lions upon the real and
personal property of the corporation.
-1-
<PAGE>
To set apart out of any of the funds of the corporation mailable for
dividends a reserve or reserves for any proper purpose and to abolish any such
reserve in the manner in which it was created.
By a majority of the whole board, to designate one or more committees, each
committee to consist of two or more of the directors of the corporation. The
board may designate one or more directors as alternate members of any committee,
who may replace any absent or disqualified member at any mating of the
committee. Any such committee, to the extent provided in the resolution or in
the By-Laws of the corporation, shall have and may exercise the powers of the
board of directors in the management of the business and affairs of the
corporation, and may authorize the seal of the corporation to be affixed to all
papers which may require it; provided, however, the By-Laws may provide that in
the absence or disqualification of any member of such committee or committees,
the or members thereof present at any meet and not disqualified from voting,
whether or not he or they constitute a quorum, may unanimously appoint another
member of the board of directors to act at the meeting in the place of any such
absent or disqualified member.
When and as authorized by the affirmative vote of the holders of a majority
of the stock issued and outstanding having voting power given at a stockholders
meeting duly called upon such notice as is required by statute, or when
authorized by the written consent of the holders of a majority of the voting
stock issued and outstanding to sell, lease or exchange all or substantially all
of the property and assets of the corporation, including its good will and its
corporate franchises, upon such terms and conditions and for such consideration,
which may con sist in whole or in part of money or property including shares of
stock, and/or other securities of,
-2-
<PAGE>
any other corporation or corporations, as its board of directors shall deem
expedient and for the best interests of the corporation.
EIGHTH: This section has been deleted.
NINTH: Meetings of stockholders may be held within or without the State of
Delaware as the By-Laws may provide. The books of the corporation may be kept
(subject to any provision contained in the statutes) outside the State of
Delaware at such place or places as may be designated from time to time by the
board of directors or in the By-Laws of the corporation. Elections of directors
need not be by written ballot unless the By-Law of the corporation shall so
provide.
TENTH: The corporation reserves the right to amend, alter, change or repeal
any provision contained in this certificate of incorporation, in the manner now
or hereafter prescribed by statute, and all rights conferred upon stockholders
herein are granted subject to this
I, THE UNDERSIGNED, being the incorporator hereinbefore named, for the
purpose of forming a corporation pursuant to the General Corporation Law of the
State of Delaware, do make this certificate, hereby declaring and certifying
that this my act and dead and the facts herein stated are true, and accordingly
have hereunto set my hand this 27th day of January, A.D., 1975.
/s/ John G. Mulford
--------------------------------
John G. Mulford
-3-
<PAGE>
STATE OF DELAWARE :
: SS
NEW CASTLE COUNTY :
BE IT REMEMBERED that on this 27th day of January, A.D., 1975,
personally came before for the State of Delaware, John G. Mulford, the party to
the foregoing certificate of incorporation, known to me personally to be such,
acknowledged the said certificate to be the act and dead of the signet and that
the facts stated therein are true.
GIVE under my hand and seal of office the day and year aforesaid.
/s/ illegible
--------------------------------
Notary Public
-4-
BY-LAWS
OF
WILMINGTON STEVEDORES, INC.
--------------------------
ARTICLE I
OFFICES
Section 1. The registered office shall be in Wilmington, Delaware.
Section 2. The corporation may also have offices at such other places both
within and without Delaware as the board of directors may from time to time
determine or the business of the corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. All meetings of the stockholders for the election of directors
shall be held in Wilmington, Delaware, at such place as may be fixed from time
to time by the board of directors, or at such other place either within or
without Delaware as shall be designated from time to time by the board of
directors and stated in the notice of the meeting. Meetings of stockholders for
any other purpose may be held at such time and place, within or without
Delaware, as shall be stated in the notice of the meeting or in a duly executed
waiver of notice thereof.
Section 2. Annual meetings of stockholders shall be held on a business day
falling within the six week period immediately following the close of the fiscal
year as shall be designated from time to time by the board of directors and
stated in the notice of the meeting. At the meeting, in addition to such other
business as may properly be brought before the stockholders, the stockholders
shall elect by a plurality vote a board of directors.
Section 3. Written notice of the annual meeting stating the place, date and
hour of the meeting shall be given to each stockholder entitled to vote at such
meeting not less than ten nor more than sixty days before the date of the
meeting.
Section 4. The officer who has charge of the stock ledger of the
corporation shall prepare and make, at least ten days before every meeting of
stockholders, a complete list of the stockholders entitled to vote at the
meeting, arranged in alphabetical order, and showing the address of each
stockholder and the number of shares registered in the name of each stockholder.
Such list shall be open to the examination of any stockholder, for any purpose
germane to the meeting, during ordinary business hours, for a. period of at
least ten days prior to the meeting, either at a place within the city where the
meeting is to be held, which place shall be specified in the notice of the
meeting, or, if not so specified, at the place where the meeting is to be held.
-1-
<PAGE>
The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 5. Special meetings of the stockholders, for any purpose or
purposes, unless otherwise prescribed by statute or by the certificate of
incorporation, may be called by the president and shall be called by the
president or secretary at the request in writing of a majority of the board of
directors, or at the request in writing of stockholders owning a majority in
amount of the entire capital stock of the corporation issued and outstanding and
entitled to vote. Such request shall state the purpose or purposes of the
proposed meeting.
Section 6. Written notice of a special meeting stating the place, date and
hour of the meeting and the purpose or purposes for which the meeting is called,
shall be given not less than ten nor more than sixty days before the date of the
meeting, to each stockholder entitled to vote at such meeting.
Section 7. Business transacted at any special meeting of stockholders shall
be limited to the purposes stated in the notice.
Section 8. The holders of a majority of the stock issued and outstanding
and entitled to vote thereat, present in person, shall constitute a quorum at
all meetings of the stockholders for the transaction of business except as
otherwise provided by statute or by the certificate of incorporation. If,
however, such quorum shall not be present at any meeting of the stockholders,
the stockholders entitled to vote thereat, present in person, shall have the
power to adjourn the meeting from time to time, without notice other than the
announcement at the meeting, until a quorum shall be present. At such adjourned
meeting, at which a quorum shall be present, any business may be transacted
which might have been transacted at the meeting as originally notified. If the
adjournment is for more than thirty days, or if after the adjournment a new
record date is fixed for the adjourned meeting, a notice of the adjourned
meeting shall be given to each stockholder of record entitled to vote at the
meeting.
Section 9. When a quorum is present at any meeting, the vote of the holders
of a majority of the stock having voting power present in person shall decide
any question brought before such meeting, unless the question is one upon which
by express provision of the statutes or of the certificate of incorporation a
different vote is required, in which case such express provision shall govern
and control the decision of such question.
Section 10. Each stockholder shall, at every meeting of the stockholders,
be entitled to one vote in person for each share of the capital stock having
voting power held by such stockholder.
Section 11. Whenever the vote of stockholders at a meeting thereof is
required or permitted to be taken for or in connection with any corporate
action, by any provision of the statutes, the meeting and vote of stockholders
may be dispensed with if a consent in writing, setting forth the action so
taken, shall be signed by the holders of outstanding stock having not less than
the minimum number of votes that would be necessary to authorize or take such
action
-2-
<PAGE>
at a meeting at which all shares entitled to vote thereon were present and
voted. If pursuant to this provision, corporate action is taken without a
meeting by less than unanimous written consent, prompt notice of the taking of
such action shall be given to those stockholders who have not consented in
writing.
ARTICLE III
DIRECTORS
Section 1. The number of directors which shall constitute the whole board
shall be such number as shall be determined from time to time by resolution of
the board of directors.
The directors shall be elected at the annual meeting of the stockholders,
except as provided in Section 2 of this Article, and each director elected shall
hold office until his successor is elected and qualified. Directors need not be
stockholders.
Section 2. Vacancies and newly created directorships resulting from any
increase in the authorized number of directors may be filled by a majority of
the directors then in office, though less than a quorum, or by a sole remaining
director, and the directors so chosen shall hold office until the next annual
election and until their successors are duly elected and shall qualify, unless
sooner displaced. If there are no directors in office, then an election of
directors may be held in the manner provided by statute. If, at the time of
filling any vacancy or any newly created directorship, the directors then in
office shall constitute less than a majority of the whole board (as constituted
immediately prior to any such increase), the Court of Chancery may, upon
application of any stockholder or stockholders holding at least ten percent of
the total number of the shares at the time outstanding having the right to vote
for such directors, summarily order an election to be held to fill any such
vacancies or newly created directorships or to replace the directors chosen by
the directors then in office.
Section 3. The business of the corporation shall be managed by its board of
directors which may exercise all such powers of the corporation and do all such
lawful acts and things as are not by statute or by the certificate of
incorporation or by these by-laws directed or required to be exercised or done
by the stockholders.
MEETING OF THE BOARD OF DIRECTORS
Section 4. The board of directors of the corporation may hold meetings,
both regular and special, either within or without Delaware.
Section 5. The first meeting of each :newly elected board of directors
shall be held at such time and place as shall be fixed by the vote of the
stockholders at the annual meeting and no notice of such meeting shall be
necessary to the newly elected directors in order legally to constitute the
meeting, provided a quorum shall be present.
-3-
<PAGE>
In the event of the failure of the stockholders to fix the time or place of
such first meeting of the newly elected board of directors, or in the event such
meeting is not held at the time and place so fixed by the stockholders, the
meeting may be held at such time and place as shall be specified in a notice
given as hereinafter provided for special meetings of the board of directors, or
as shall be specified in a written waiver signed by all of the directors.
Section 6. Regular meetings of the board of directors may be held without
notice at such time and at such place as shall from time to time be determined
by the board.
Section 7. Special meetings of the board may be called by the president.
Special meetings shall be called by the president or secretary on the written
request of two directors. Notice of special meetings shall be given to each
director, either personally, by mail, overnight delivery, telegram or facsimile
transmission, and in each case the officer calling the meeting shall endeavor to
give not less than two (2) days' advance notice of same.
Section 8. At all meetings of the board a majority of the directors shall
constitute a quorum for the transaction of business and the act of a majority of
the directors present at any meeting at which there is a quorum shall be the act
of the board of directors, except as may be otherwise specifically provided by
statute or by the certificate of incorporation. If a quorum shall not be present
at any meeting of the board of directors, the directors present thereat may
adjourn the meeting from time to time, without notice other than announcement at
the meeting, until a quorum shall be present.
Section 9. Unless otherwise restricted by the certificate of incorporation
or these by-laws, any action required or permitted to be taken at any meeting of
the board of directors or of any committee thereof may be taken without a
meeting, if all members of the board or committee, as the case may be, consent
thereto in writing and the writing or writings are filed with the minutes of
proceedings of the board or committee.
COMMITTEES OF DIRECTORS
Section 10. The board of directors may, by resolution passed by a majority
of the whole board, designate one or more committees. The board may designate
one or more directors as alternate members of any committee, who may replace any
absent or disqualified member at any meeting of the committee.
Any such committee, to the extent provided in the resolution, shall have
and may exercise the powers of the board of directors in the management of the
business and affairs of the corporation, and may authorize the seal of the
corporation to be affixed to all papers which may require it; provided, however,
that in the absence or disqualification of any member of such committee or
committees, the member or members thereof present at any meeting and not
disqualified from voting, whether or not he or they constitute a quorum, may
unanimously appoint another member of the board of directors to act at the
meeting in the place of any such absent or disqualified member. Such committee
or committees shall have such name or names as may be determined from time to
time by resolution adopted by the board of directors.
-4-
<PAGE>
Section 11. Each committee shall keep regular minutes of its meetings and
report the same to the board of directors when required.
COMPENSATION OF DIRECTORS
Section 12. The directors may be paid their expenses, if any, of attendance
at each meeting of the board of directors and may be paid a fixed sum for
attendance at each meeting of the board of directors or a stated salary as
director. No such payment shall preclude any director from serving the
corporation in any other capacity and receiving compensation therefor. Members
of special or standing committees may be allowed like compensation for attending
committee meetings.
ARTICLE IV
NOTICES
Section 1. Whenever under the provisions of the statutes or of the
certificate of incorporation or of these by-laws, notice is required to be given
to any director or stockholder, it shall not be construed to mean personal
notice, but such notice may be given in writing, by mail, addressed to such
director or stockholder, at his address as it appears on the records of the
corporation, with postage thereon prepaid, and such notice shall be deemed to be
given at the time when the same shall be deposited in the United States mail.
Notice to directors may also be given by facsimile transmission or telegram.
Section 2. Whenever any notice is required to be given under the provisions
of the statutes or of the certificate of incorporation or of these by-laws, a
waiver thereof in writing signed by the person or persons entitled to said
notice, whether before or after the time stated therein, shall be deemed
equivalent thereto.
ARTICLE V
OFFICERS
Section 1. The officers of the corporation shall be chosen by the board of
directors and shall be a president, a secretary and a treasurer. The board of
directors may also choose one or more assistant secretaries and assistant
treasurers. Any number of offices may be held by the same person, unless the
certificate of incorporation or these by-laws otherwise provide.
Section 2. The board of directors at its first meeting after each annual
meeting of stockholders shall choose a president, a secretary and a treasurer.
Section 3. The board of directors may appoint such other officers and
agents as it shall deem necessary who shall hold their offices for such terms
and shall exercise such powers and perform such duties as shall be determined
from time to time by the board.
-5-
<PAGE>
Section 4. The salaries of all officers and agents of the corporation shall
be fixed by the board of directors.
Section 5. The officers of the corporation shall hold office until their
successors are chosen and qualify. Any officer elected or appointed by the board
of directors may be removed at any time by the affirmative vote of a majority of
the board of directors. Any vacancy occurring in any office of the corporation
shall be filled by the board of directors.
THE PRESIDENT
Section 6. The president shall be the chief executive officer of the
corporation, shall preside at all meetings of the stockholders and the board of
directors, shall have general and active management of the business of the
corporation and shall see that all orders and resolutions of the board of
directors are carried into effect.
Section 7. He shall execute bonds, mortgages and other contracts requiring
a seal, under the seal of the corporation, except where required or permitted by
law to be otherwise signed and executed and except where the signing and
execution thereof shall be expressly delegated by the board of directors to some
other officer or agent of the corporation.
THE VICE-PRESIDENTS
Section 8. In the absence of the president or in the event of his inability
or refusal to act, the vice-president (or in the event there be more than one
vice-president, the vice presidents in the order designated, or in the absence
of any designation, then in the order of their election) shall perform the
duties of the president, and when so acting, shall have all the powers of and be
subject to all the restrictions upon the president. The vice-presidents shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
THE SECRETARY AND ASSISTANT SECRETARIES
Section 9. The secretary shall attend all meetings of the board of
directors and all meetings of the stockholders and record all the proceedings of
the meetings of the corporation and of the board of directors in a book to be
kept for that purpose and shall perform like duties for the standing committees
when required. He shall give, or cause to be given, notice of all meetings of
the stockholders and special meetings of the board of directors, and shall
perform such other duties as may be prescribed by the board of directors or
president, under whose supervision he shall be. He shall have custody of the
corporate seal of the corporation and he, or an assistant secretary, shall have
authority to affix the same to any instrument requiring it and when so affixed,
it may be attested by his signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
signature.
-6-
<PAGE>
Section 10. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors (or if
there be no such determination, then in the order of their election) shall, in
the absence of the secretary or in the event of his inability or refusal to act,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other powers as the board of directors may from
time to time prescribe.
THE TREASURER AND ASSISTANT TREASURERS
Section 11. The treasurer shall have the custody of the corporate funds and
securities and shall keep full and accurate accounts of receipts and
disbursements in books belonging to the corporation and shall deposit all moneys
and other valuable effects in the name and to the credit of the corporation in
such depositories as may be designated by the board of directors.
Section 12. He shall disburse the funds of the corporation as may be
ordered by the board of directors, taking proper vouchers for such
disbursements, and shall render to the president and the board of directors, at
its regular meetings, or when the board of directors so requires, an account, of
all his transactions as treasurer and of the financial condition of the
corporation.
Section 13. If required by the board of directors, he shall give the
corporation a bond (which shall be renewed every six years) in such sum and with
such surety or sureties as shall be satisfactory to the board of directors for
the faithful performance of the duties of his office and for the restoration to
the corporation, in case of his death, resignation, retirement or removal from
office, of all books, papers, vouchers, money and other property of whatever
kind in his possession under his control belonging to the corporation.
Section 14. The assistant treasurer, or if there shall be more than one,
the assistant treasurers, in the order determined by the board of directors (or
if there be no such determination, then in the order of their election), shall,
in the absence of the treasurer or in the event of his inability or refusal to
act, perform the duties and exercise the powers of the treasurer and shall
perform such other duties and have such other powers as the board of directors
may from time to time prescribe.
ARTICLE VI
CERTIFICATES OF STOCK
Section 1. Every holder of stock in the corporation shall be entitled to
have a certificate, signed by, or in the name of the corporation by, the
chairman or vice-chairman of the board of directors or the president or a
vice-president and the treasurer or an assistant treasurer, or the secretary or
an assistant secretary of the corporation, certifying the number of shares owned
by him in the corporation.
-7-
<PAGE>
Section 2. Where a certificate is countersigned (1) by a transfer agent
other than the corporation or its employee, or (2) by a registrar other than the
corporation or its employee, any other signature on the certificate may be
facsimile. The corporation may issue any certificate on which the signature of
any officer, transfer agent or registrar appears notwithstanding the resignation
or removal from office of such officer, transfer agent or registrar during the
interval between execution of such certificate and its issuance.
LOST CERTIFICATES
Section 3. The board of directors may direct a new certificate or
certificates to be issued in place of any certificate or certificates
theretofore issued by the corporation alleged to have been lost, stolen or
destroyed, upon the making of an affidavit of that fact by the person claiming
the certificate of stock to be lost, stolen or destroyed. When authorizing such
issue of a new certificate or certificates, the board of directors may, in its
discretion and as a condition precedent to the issuance thereof, require the
owner of such lost, stolen or destroyed certificate or certificates, or his
legal representative to advertise the same in such manner as it shall be
required and/or to give the corporation a bond in such sum as it may direct as
indemnity against any claim that may be made against the corporation with
respect to the certificate alleged to have been lost, stolen or destroyed.
TRANSFERS OF STOCK
Section 4. Upon surrender to the corporation or the transfer agent of the
corporation of a certificate for shares duly endorsed or accompanied by proper
evidence of succession, assignment or authority to transfer, it shall be the
duty of the corporation to issue a new certificate to the person entitled
thereto, cancel the old certificate and record the transaction upon its books.
FIXING RECORD DATE
Section 5. In order that the corporation may determine the stockholders
entitled to notice of or to vote at any meeting of stockholders or any
adjournment thereof, or to express consent to corporate action in writing
without a meeting, or entitled to receive payment of any dividend or other
distribution of allotment of any rights, or entitled to exercise any rights in
respect of any change, conversion or exchange of stock or for the purpose of any
other lawful action, the board of directors may fix, in advance, a record date,
which shall be not more than sixty nor less than ten days before the date of
such meeting, nor more than sixty days prior to any other action. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
REGISTERED STOCKHOLDERS
Section 6. The corporation shall be entitled to recognize the exclusive
right of a person registered in its books as the owner of shares to receive
dividends, and to vote as such
-8-
<PAGE>
owner, and to hold liable for calls and assessments a person registered on
its books as the owner of shares, and shall not be bound to recognize any
equitable or other claim to or interest in such share or shares on the part of
any other person, whether or not it shall have express or other notice thereof,
except as otherwise provided by the laws of Delaware.
ARTICLE VII
INDEMNIFICATION
All directors, officers, employees or agents of the corporation or anyone
serving as a director, officer, employee or agent of another corporation at the
request of the corporation shall be indemnified by the corporation to the full
extent and in the manner permitted by the laws of the State of Delaware.
ARTICLE VIII
GENERAL PROVISIONS
DIVIDENDS
Section 1. Dividends upon the capital stock of the corporation, subject to
the provisions of the certificate of incorporation, if any, may be declared by
the board of directors at any regular or special meeting, pursuant to law.
Dividends may be paid in cash, in property, or in shares of the capital stock,
subject to the provisions of the certificate of incorporation.
Section 2. Before payment of any dividend, there may be set aside out of
any funds of the corporation available for dividends such sum or sums as the
directors from time to time, in their absolute discretion, think proper as a
reserve or reserves to meet contingencies, or for equalizing dividends, or for
repairing or maintaining any property of the corporation, or for such other
purpose as the directors shall think conducive to the interest of the
corporation, and the directors may modify or abolish any such reserve in the
manner in which it was created.
CHECKS
Section 3. All checks or demands for money and notes of the corporation
shall be signed by such officer or officers or such other person or persons as
the board of directors may from time to time designate.
FISCAL YEAR
Section 4. The fiscal year of the corporation shall be fixed by resolution
of the board of directors.
-9-
<PAGE>
SEAL
Section 5. The corporate seal shall have inscribed thereon the words
"Corporate Seal, Delaware" and may include the name of the corporation and the
year of its organization. The corporate seal may be used by causing it or a
facsimile thereof to be impressed or affixed or in any other manner reproduced.
The corporation may adopt for any transaction, without the specific leave of the
directors, a seal which is different from its customary and usual seal; and it
shall be sufficient in any document requiring the seal of the corporation if the
officer executing such document on behalf of the corporation, being authorized
to do so, writes or prints the word "Seal" or makes some similar mark.
ARTICLE IX
AMENDMENTS
Section 1. These by-laws may be altered, amended or resealed or new by-laws
may be adopted by the stockholders or by the board of directors, when such power
is conferred upon the board of directors by the certificate of incorporation, at
any regular meeting of the stockholders or of the board of directors or at any
special meeting of the stockholders or of the board of directors if notice of
such alteration, amendment, repeal or adoption of new by-laws be contained in
the notice of such special meeting.
-10-
CERTIFICATE OF INCORPORATION
OF
NPR, INC.
FIRST: The name of the corporation (hereinafter referred to as the
"Corporation") is NPR, Inc.
-1-
<PAGE>
SECOND: The address of its registered office in the State of Delaware is
1013 Centre Road, City of Wilmington, County of New Castle, Delaware 190805. The
name of its registered agent at such address is Corporation Service Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
FOURTH: The total number of shares which the Corporation shall have the
authority to issue is One Thousand (1,000) shares, all of which shall be shares
of Common Stock, with a par value of $0.01 (One Cent) per share.
FIFTH: The directors shall have the power to adopt, amend or repeal
By-Laws, except as may be otherwise be provided in the By-Laws.
SIXTH: The Corporation expressly elects not to be governed by Section 203
of the General Corporation Law of the State of Delaware.
SEVENTH: Section 1. Nature of Indemnity. Each person who was or is made a
party or is threatened to be made a party to or is involved in any action, suit
or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he (or a person of whom
he is the legal representative), is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee,
fiduciary or agent or in any other capacity while serving as a director,
officer, employee, fiduciary or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent which it is empowered to do so by the
General Corporation Law of the State of Delaware, as the same exists or may be
amended (but, in the case of any such amendment, only to the extent that such
amendment permits the Corporation to provide broader indemnification rights than
said law permitted the Corporation to provide prior to such amendment) against
all expense, liability and loss (including attorneys' fees actually and
reasonably incurred by such person in connection with such proceeding and such
indemnification shall inure to the benefit of his or her heirs, executors and
administrators; provided, however, that except as provided in Section 2 of this
Article Seventh, the Corporation shall indemnify any such person seeking
indemnification in connection with a proceeding initiated by such person only if
such proceeding was authorized by the Board of Directors of the Corporation. The
right to indemnification conferred in this Article Seventh shall be a contract
right and, subject to Sections 2 and 5 of this Article Seventh, shall include
the right to payment by the Corporation of the expenses incurred in defending
any such proceeding in advance of its final disposition. The Corporation may, by
action of the Board of Directors, provide indemnification to employees and
agents of the Corporation with the same scope and effect as the foregoing
indemnification of directors and officers.
-2-
<PAGE>
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the Corporation under Section 1 of
this Article Seventh or advance of expenses under Section 5 of this Article
Seventh shall be made promptly, and in any event within 30 days, upon the
written request of the director or officer. If a determination by the
Corporation that the director or officer is entitled to indemnification pursuant
to this Article Seventh is required, and the Corporation fails to respond within
sixty days to a written request for indemnity, the Corporation shall be deemed
to have approved the request. If the Corporation denies a written request for
indemnification or advancing of expenses, in whole or in part, or if payment in
full pursuant to such request is not made within 30 days, the right to
indemnification or advances as granted by this Article Seventh shall be
enforceable by the director or officer in any court of competent jurisdiction.
Such person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall also be indemnified by the Corporation. It shall be a defense to
any such action (other than an action brought to enforce a claim for expenses
incurred in defending any proceeding in advance of its final disposition where
the required undertaking, if any, has been tendered to the Corporation) that the
claimant has not met the standards of conduct which make it permissible under
the General Corporation Law of the State of Delaware for the Corporation to
indemnify the claimant for the amount claimed, but the burden of such defense
shall be on the Corporation. Neither the failure of the Corporation (including
the Board of Directors, independent legal counsel, or its stockholders) to have
made a determination prior to the commencement of such action that
indemnification of the claimant is proper in the circumstances because he or she
has met the applicable standard of conduct set forth in the General Corporation
Law of the State of Delaware, nor an actual determination by the Corporation
(including its Board of Directors, independent legal counsel, or its
stockholders) that the claimant has not met such applicable standard of conduct,
shall be a defense to the action or create a presumption that the claimant has
not met the applicable standard of conduct.
Section 3. Nonexclusivity of Article Seventh. The rights to indemnification
and the payment of expenses incurred in defending a proceeding in advance of its
final disposition conferred in this Article Seventh shall not be exclusive of
any other right which any person may have or hereafter acquire under any
statute, provision of the certificate of incorporation, by-law, agreement, vote
of stockholders or disinterested directors or otherwise.
Section 4. Insurance. The Corporation may purchase and maintain insurance
on its own behalf and on behalf of any person who is or was a director, officer,
employee, fiduciary, or agent of the Corporation or was serving at the request
of the Corporation as a director, officer, employee or agent of another
corporation, partnership, joint venture, trust or other enterprise against any
liability asserted against him or her and incurred by him or her in any such
capacity, whether or not the Corporation would have the power to indemnify such
person against such liability under this Article Seventh.
Section 5. Expenses. Expenses incurred by any person described in Section 1
of this Article Seventh in defending a proceeding shall be paid by the
Corporation in advance of such proceeding's final disposition unless otherwise
determined by the Board of Directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such
-3-
<PAGE>
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article Seventh and who are or were employees or
agents of the Corporation, or who are or were serving at request of the
Corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the Board of Directors.
Section 7. Contract Rights. The provisions of this Article Seventh shall be
deemed to be a contract right between the Corporation and each director or
officer who serves in any such capacity at any time while this Article Seventh
and the relevant provisions of the General Corporation Law of the State of
Delaware or other applicable law are in effect, and any repeal or modification
of this Article Seventh or any such law shall not affect any rights or
obligations then existing with respect to any state of facts or proceeding then
existing.
Section 8. Merger or Consolidation. For purposes of this Article Seventh,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
Seventh with respect to the resulting or surviving corporation as he or she
would have with respect to such constituent corporation if its separate
existence had continued.
EIGHTH: The Corporation reserves the right to amend or repeal any
provisions contained in this Certificate of Incorporation from time to time and
at any time in the manner now or hereafter prescribed by the laws of the State
of Delaware, and all rights conferred upon stockholders and directors are
granted subject to such reservation.
NINTH: The Merger shall be effective upon the filing with the Secretary of
State of Delaware.
TENTH: The name and address of the Incorporator is as follows:
Marcie W. Friedman
200 Logan Square
Philadelphia, PA 19101
SIXTH: The executed Agreement and Plan of Merger is on file at the
principal place of business of the Surviving Corporation. The address of the
principal place of business of the Surviving Corporation is:
-4-
<PAGE>
212 Fernwood Avenue
Edison, New Jersey 08810
SEVENTH: A copy of the Agreement and Plan of Merger will be furnished by
the Surviving Corporation, on request and without cost to any stockholder of any
constituent corporation.
EIGHTH: Anything herein or elsewhere to the contrary notwithstanding, this
Merger may be amended or terminated and abandoned by the Board of Directors of
the Surviving Corporation at any time prior to the date of filing of the
Certificate of Merger with the Secretary of State of Delaware.
IN WITNESS WHEREOF, the undersigned, for the purposes of effectuating the
Merger of the constituent corporations, pursuant to the General Corporation Law
of the State of Delaware, under penalties of perjury do hereby declare and
certify that this the act and deed of the Corporation and the facts stated
herein are true and accordingly have hereunto signed this Certificate of Merger
as of this 3rd day of March, 1995.
NPR, Inc.
By: /s/ Ronald Katims
------------------------------
Name: Ronald Katims
Title: President
Attest:
By: /s/ Mario F. Escudero
----------------------
Name: Mario F. Escudero
Title: Assistant Secretary
Puerto Rico Marine Management, Inc.
By: /s/ Ronald Katims
-------------------------------
Name: Ronald Katims
Title: President
Attest:
By: /s/ Mario F. Escudero
----------------------
Name: Mario F. Escudero
Title: Assistant Secretary
-5-
Effective February 27, 1995
AMENDED AND RESTATED
BY-LAWS
OF
NPR, INC.
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 1013 Centre Road, Wilmington Delaware
19805, in the County of New Castle. The name of the corporation's registered
agent at such address shall be Corporation Service Company. The registered
office and/or registered agent of the corporation may be changed from time to
time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year for the purpose of electing directors and
conducting such other proper business as may come before the meeting. The date,
time and place of the annual meeting may be determined by resolution of the
board of directors or as set by the president of the corporation.
Section 2. Special Meetings. Special meetings of stockholders may be called
for any purpose (including, without limitation, the filling of board vacancies
and newly created directorships), and may be held at such time and place, within
or without the State of Delaware, as shall be stated in a notice of meeting or
in a duly executed waiver of notice thereof. Such meetings may be called at any
time by five or more members of the board of directors and shall be called by
the president upon the written request of holders of shares entitled to cast not
less than
-1-
<PAGE>
fifty percent (50%) of the outstanding shares of any series or class of the
corporation's Capital Stock.
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special meeting be otherwise
called, the place of meeting shall be the principal executive office of the
corporation.
Section 4. Notice. Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice stating the place, date, time,
and, in the case of special meetings, the purpose or purposes, of such meeting,
shall be given to each stockholder entitled to vote at such meeting not less
than 10 nor more than 60 days before the date of the meeting. All such notices
shall be delivered, either personally or by mail, by or at the direction of the
board of directors, the president or the secretary, and if mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, addressed to the stockholder at his, her or its address as the
same appears on the records of the corporation. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened.
Section 5. Stockholders List. The officer having charge of the stock ledger
of the corporation shall make, at least 10 days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. Except as otherwise provided by applicable law or by the
Certificate of Incorporation, a majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time in accordance with Section
7 of this Article, until a quorum shall be present or represented.
Section 7. Adjourned Meetings. When a meeting is adjourned to another time
and place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is
-2-
<PAGE>
fixed for the adjourned meeting, a notice of the adjourned meeting shall be
given to each stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote of
the majority of shares present in person or represented by proxy at this meeting
and entitled to vote on the subject matter shall be the act of the stockholders,
unless the question is one upon which by express provisions of an applicable
law, the certificate of incorporation, or any contractual arrangement a
different vote is required, in which case such express provision shall govern
and control the decision of such question. Where a separate vote by class is
required, the affirmative vote of the majority of shares of such class present
in person or represented by proxy at the meeting shall be the act of such class.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him, her or
it by proxy. Every proxy must be signed by the stockholder granting the proxy or
by his, her or its attorney-in-fact. No proxy shall be voted or acted upon after
three years from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally.
Section 11. Action by Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than a majority of
the shares entitled to vote, or, if greater, not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in the state
of Delaware, or the corporation's principal place of business, or an officer or
agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested provided, however, that no consent or consents
delivered by certified or registered mail shall be deemed delivered until such
consent or consents are actually received at the registered office. All consents
properly delivered in accordance with this section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take the
corporate action
-3-
<PAGE>
referred to therein unless, within sixty days of the earliest dated consent
delivered to the corporation as required by this section, written consents
signed by the holders of a sufficient number of shares to take such corporate
action are so recorded. Prompt notice of the taking of the corporate action
without a meeting by less than unanimous written consent shall be given to those
stockholders who have not consented in writing. Any action taken pursuant to
such written consent or consents of the stockholders shall have the same force
and effect as if taken by the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the board shall be up to (9) nine members, which number
may be increased or decreased from time to time by resolution of the board;
provided, that such number shall be increased to such number of directors which
are designated pursuant to the Stockholders Agreement entered into by the
corporation and the stockholders of the corporation, (as in effect from time to
time, the "Stockholders Agreement") for so long as (i) such agreement has been
filed with the corporation and (ii) has not been terminated. The following
persons shall be elected to the corporation's board of directors:
(a) up to three (3) representatives designated by Pyramid Ventures, Inc.
("Pyramid");
(b) up to three (3) representatives designated by Berkshire Fund III, a
Limited Partnership ("Berkshire"); and
(c) the Chief Executive Officer of the Corporation; and
(d) up to two representatives designated by the Stockholders owning
shares of Common Stock representing a majority of the voting power to elect
directors determined by the vote or consent of such Stockholders in accordance
with the provisions of the Corporation's Articles of Incorporation.
The directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote in
the election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 4 of this
Article III. Each director elected shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal and Resignation. The removal from the corporation's
board of directors or any such committee, with or without cause, of any
representative designated hereunder
-4-
<PAGE>
by Pyramid, Berkshire or the Stockholders shall be at the written request
of the Stockholders which have the right to designate such representative
hereunder but only upon such written request and under no other circumstances.
Section 4. Vacancies. In the event that any representative designated
hereunder by Pyramid, Berkshire or the Stockholders for any reason ceases to
serve as a member of the Board of Directors or any committee thereof during such
representative's term of office, the resulting vacancy on the Board of Directors
or committee shall be filled by a representative designated by Pyramid,
Berkshire or the Stockholders, respectively, as provided pursuant to Section 2
above.
Section 5. Annual Meetings. The annual meeting of each newly elected board
of directors shall be held without other notice than this by-law immediately
after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the directors may be called by or at the request
of the president or vice president on at least 24 hours notice to each director,
either personally, by telephone, by mail, or by telegraph; in like manner and on
like notice the president must call a special meeting on the written request of
at least a majority of the directors.
Section 7. Quorum, Required Vote and Adjournment. A majority of the total
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, which to the
extent provided in such resolution or these by-laws shall have and may exercise
the powers of the board of directors in the management and affairs of the
corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
-5-
<PAGE>
member's alternate, if alternates are designated by the board of directors
as provided in Section 8 of this Article III, of such committee is or are absent
or disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors or
any committee thereof may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing, and the writing or writings are filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by the
board of directors and shall consist of a chairman, if any is elected, a
president, one or more vice presidents, a secretary, a treasurer, and such other
officers and assistant officers as may be deemed necessary or desirable by the
board of directors. Any number of offices may be held by the same person, except
that no person may simultaneously hold the office of president and secretary. In
its discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall appoint other officers to serve for such terms as he
or she deems desirable. Vacancies may be filled or new
-6-
<PAGE>
offices created and filled at any meeting of the board of directors. Each
officer shall hold office until a successor is duly elected and qualified or
until his or her earlier death, resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of directors
may be removed by the board of directors whenever in its judgment the best
interests of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies. Any vacancy occurring in any office because of
death, resignation, removal, disqualification or otherwise, may be filled by the
board of directors for the unexpired portion of the term by the board of
directors then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by the
board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. The Chairman of the Board. The Chairman of the Board, if one
shall have been elected, shall be a member of the board, an officer of the
Corporation, and, if present, shall preside at each meeting of the board of
directors or shareholders. He shall advise the president, and in the president's
absence, other officer of the Corporation, and shall perform such other duties
as may from time to time be assigned to him by the board of directors.
Section 7. The President. The president shall be the chief executive
officer of the corporation. In the absence of the Chairman of the Board or if a
Chairman of the Board shall have not been elected, the president shall preside
at all meetings of the stockholders and board of directors at which he or she is
present; subject to the powers of the board of directors, shall have general
charge of the business, affairs and property of the corporation, and control
over its officers, agents and employees; and shall see that all orders and
resolutions of the board of directors are carried into effect. The president
shall execute bonds, mortgages and other contracts requiring a seal, under the
seal of the corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some other officer or
agent of the corporation. The president shall have such other powers and perform
such other duties as may be prescribed by the board of directors or as may be
provided in these by-laws.
Section 8. Vice-President. The vice-president, if any, or if there shall be
more than one, the vice-presidents in the order determined by the board of
directors shall, in the absence or disability of the president, act with all of
the powers and be subject to all the restrictions of the president. The
vice-presidents shall also perform such other duties and have such other powers
as the board of directors, the president or these by-laws may, from time to
time, prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that
-7-
<PAGE>
purpose. Under the president's supervision, the secretary shall give, or
cause to be given, all notices required to be given by these by-laws or by law;
shall have such powers and perform such duties as the board of directors, the
president or these by-laws may, from time to time, prescribe; and shall have
custody of the corporate seal of the corporation. The secretary, or an assistant
secretary, shall have authority to affix the corporate seal to any instrument
requiring it and when so affixed, it may be attested by his or her signature or
by the signature of such assistant secretary. The board of directors may give
general authority to any other officer to affix the seal of the corporation and
to attest the affixing by his or her signature. The assistant secretary, or if
there be more than one, the assistant secretaries in the order determined by the
board of directors, shall, in the absence or disability of the secretary,
perform the duties and exercise the powers of the secretary and shall perform
such other duties and have such other power; as the board of directors, the
president, or secretary may, from time to time, prescribe.
Section 10. The Treasurer and Assistant Treasurer. The treasurer shall have
the custody of the corporate funds and securities; shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation;
shall deposit all monies and other valuable effects in the name and to the
credit of the corporation as may be ordered by the board of directors; shall
cause the funds of the corporation to be disbursed when such disbursements have
been duly authorized, taking proper vouchers for such disbursements; and shall
render to the president and the board of directors, at its regular meeting or
when the board of directors so requires, an account of the corporation; shall
have such powers and perform such duties as the board of directors, the
president or these by-laws may, from time to time, prescribe. If required by the
board of directors, the treasurer shall give the corporation a bond (which shall
be rendered every six years) in such sums and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful performance of
the duties of the office of treasurer and for the restoration to the
corporation, in case of death, resignation, retirement, or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the possession or under the control of the treasurer belonging to the
corporation. The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors, shall in
the absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The assistant treasurers shall perform such other
duties and have such other powers as the board of directors, the president or
treasurer may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 12. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
-8-
<PAGE>
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by the
chairman of the board, the president or a vice-president and the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
such holder in the corporation. If such a certificate is countersigned (1) by a
transfer agent or an assistant transfer agent other than the corporation or its
employee or (2) by a registrar, other than the corporation or its employee, the
signature of any such chairman of the board, president, vice-president,
secretary, or assistant secretary may be facsimiles. In case any officer or
officers who have signed, or whose facsimile signature or signatures have been
used on, any such certificate or certificates shall cease to be such officer or
officers of the corporation whether because of death, resignation or otherwise
before such certificate or certificates have been delivered by the corporation,
such certificate or certificates may nevertheless be issued and delivered as
though the person or persons who signed such certificate or certificates or
whose facsimile signature or signatures have been used thereon had not ceased to
be such officer or officers of the corporation. All certificates for shares
shall be consecutively numbered or otherwise identified. The name of the person
to whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of stock
of the corporation shall only be transferred on the books of the corporation by
the holder of record thereof or by such holder's attorney duly authorized in
writing, upon surrender to the corporation of the certificate or certificates
for such shares endorsed by the appropriate person or persons, with such
evidence of the authenticity of such endorsement, transfer, authorization, and
other matters as the corporation may reasonably require, and accompanied by all
necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a new certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that the
corporation may determine the stockholders entitled to notice of or to vote at
any meeting of
-9-
<PAGE>
stockholders or any adjournment thereof, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the board of directors, the
record date for determining stockholders entitled to notice or to vote at a
meeting of stockholders shall be the close of business on the next day preceding
the day on which notice is given, or if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The corporation shall not be bound to recognize any
equitable or other claim to or
-10-
<PAGE>
interest in such share or shares on the part of any other person, whether
or not it shall have express or other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve or reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or any other purpose and the directors may
modify or abolish any such reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer or
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
-11-
<PAGE>
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a corporate
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the corporation and the words "Corporate Seal, Delaware". The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in any
other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware or at its principal place of business.
Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of the
by-laws is or becomes inconsistent with any provision of the certificate of
incorporation, the General Corporation Law of the State of Delaware or any other
applicable law, the provision of these by-laws shall not be given any effect to
the extent of such inconsistency but shall otherwise be given full force and
effect.
ARTICLE VII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the by-laws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
-12-
Description: Certificate of Incorporation of NPR-Navieras Receivables, Inc.
CERTIFICATE OF INCORPORATION
OF
NPR-NAVIERAS RECEIVABLES, INC.
ARTICLE ONE
The name of the corporation is NPR-Navieras Receivables, Inc.
(hereinafter called the "Corporation").
ARTICLE TWO
The address of the Corporation's registered office in the
state of Delaware is 1013 Centre Road, Wilmington, Delaware 19806, in the City
of Wilmington, County of New Castle. The name of its registered agent at such
address is Corporation Service Company.
ARTICLE THREE
The purpose of the Corporation is to engage in any lawful act
or activity for which corporations may be organized under the General
Corporation Law of Delaware.
ARTICLE FOUR
The total number of shares which the Corporation shall have
the authority to issue is One Thousand (1,000) shares, all of which shall be
shares of Common Stock, with a par value of $0.01 (One Cent) per share.
ARTICLE FIVE
The name and mailing address of the incorporator is as
follows:
Name Address
Laura-Jayne Urso c/o Kirkland & Ellis
153 East 43rd Street
39th Floor
New York, NY 10022
ARTICLE SIX
The directors shall have the power to adopt, amend or repeal
By-Laws, except as may be otherwise be provided by the By-Laws.
-1-
<PAGE>
ARTICLE SEVEN
The Corporation expressly elects not to be governed by Section
203 of the General Corporation Law of the State of Delaware.
ARTICLE EIGHT
Section 1. Nature of Indemnity. Each person who was or is made
a party or is threatened to be made a party to or is involved in any action,
suit or proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he (or a person of whom
he is the legal representative), is or was a director or officer of the
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee,
fiduciary or agent or in any other capacity while serving as a director,
officer, employee, fiduciary or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent which it is empowered to do so by the
General Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment) against all expense, liability and loss (including attorneys' fees
actually and reasonably incurred by such person in connection with such
proceeding and such indemnification shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, except as provided
in Section 2 of this Article Eight, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding initiated by such
person only if such proceeding was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this Article Eight shall
be a contract right and, subject to Sections 2 and 5 of this Article Eight,
shall include the right to payment by the Corporation of the expenses incurred
in defending any such proceeding in advance of its final disposition. The
Corporation may, by action of the Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
Section 2. Procedure of Indemnification of Directors and
Officers. Any indemnification of a director or officer of the Corporation under
Section 1 of this Article Eight or advance of expenses under Section 5 of this
Article Eight shall be made promptly, and in any event within 30 days, upon the
written request of the director or officer. If a determination by the
Corporation that the director or officer is entitled to indemnification pursuant
to this Article Eight is required, and the Corporation fails to respond within
sixty days to a written request for indemnity, the Corporation shall be deemed
to have approved the request. If the Corporation denies a written request for
indemnification or advancing or expenses, in whole or in part, or if payment in
full pursuant to such request is not made within 30 days, the right to
indemnification or advances as granted by this Article Eight shall be
enforceable by the director or officer in any court of competent jurisdiction.
Such person's costs and expenses incurred in connection with successfully
establishing his right to indemnification, in whole or in part, in any such
action shall
-2-
<PAGE>
also be indemnified by the Corporation. It shall be a defense to any such action
(other than an action brought to enforce a claim for expenses incurred in
defending any proceeding in advance of its final disposition where the required
undertaking, if any, has been tendered to the Corporation) that the claimant has
not met the standards of conduct which make it permissible under the General
Corporation Law of the State of Delaware for the Corporation to indemnify the
claimant for the amount claimed, but the burden of such defense shall be on the
Corporation. Neither the failure of the Corporation (including the Board of
Directors, independent legal counsel, or its stockholders) to have made a
determination prior to the commencement of such action that indemnification of
the claimant is proper in the circumstances because he or she has met the
applicable standard of conduct set forth in the General Corporation Law of the
State of Delaware, nor an actual determination by the Corporation (including its
Board of Directors, independent legal counsel, or its stockholders) that the
claimant has not met such applicable standard of conduct, shall be a defense to
the action or create a presumption that the claimant has not met the applicable
standard of conduct.
Section 3. Nonexclusivity of Article Eight. The rights to
indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Article Eight shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the certificate of incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 4. Insurance. The Corporation may purchase and
maintain insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the Corporation or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the Corporation would have the power
to indemnify such person against such liability under this Article Eight.
Section 5. Expenses. Expenses incurred by any person described
in Section 1 of this Article Eight in defending a proceeding shall be paid by
the Corporation in advance of such proceeding's final disposition unless
otherwise determined by the Board of Directors in the specific case upon receipt
of an undertaking by or on behalf of the director or officer to repay such
amount if it shall ultimately be determined that he is not entitled to be
indemnified by the Corporation. Such expenses incurred by other employees and
agents may be so paid upon such terms and conditions, if any, as the Board of
Directors deems appropriate.
Section 6. Employees and Agents. Persons who are not covered
by the foregoing provisions of this Article Eight and who are or were employees
or agents of the Corporation, or who are or were serving at the request of the
Corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the Board of Directors.
Section 7. Contract Rights. The provisions of this Article
Eight shall be deemed to be a contract right between the Corporation and each
director or officer who serves in any such
-3-
<PAGE>
capacity at any time while this Article Eight and the relevant provisions of the
General Corporation Law of the State of Delaware or other applicable law are in
effect, and any repeal or modification of this Article Eight or any such law
shall not affect any rights or obligations then existing with respect to any
state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this
Article Eight, references to "the Corporation" shall include, in addition to the
resulting corporation, any constituent corporation (including any constituent of
a constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the request of such constituent corporation as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, shall stand in the same position under this Article
Eight with respect to the resulting or surviving corporation as he or she would
have with respect to such constituent corporation if its separate existence had
continued.
ARTICLE NINE
The Corporation reserves the right to amend or repeal any
provisions contained in this Certificate of Incorporation from time to time and
at any time in the manner now or hereafter prescribed by the laws of the State
of Delaware, and all rights conferred upon stockholders and directors are
granted subject to such reservation.
I, the undersigned, being the sole incorporator hereinbefore
named, for the purpose of forming a corporation in pursuance of the General
Corporation Law of the State of Delaware, do make and file this Certificate,
hereby declaring and certifying that the facts herein stated are true, and
accordingly have hereunto set my hand this 27th day of February 1995.
/s/ Laura-Jayne Urso
-----------------------
Laura-Jayne Urso
Sole Incorporator
-4-
BY-LAWS
OF
NPR-NAVIERAS RECEIVABLES, INC.
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 1013 Centre Road, Wilmington, Delaware
19805, in the County of New Castle. The name of the corporation's registered
agent at such address shall be Corporation Service Company. The registered
office and/or registered agent of the corporation may be changed from time to
time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year for the purpose of electing directors and
conducting such other proper business as may come before the meeting. The date,
time and place of the annual meeting may be determined by resolution of the
board of directors or as set by the president of the corporation.
Section 2. Special Meetings. Special meetings of stockholders may be called
for any purpose (including, without limitation, the filling of board vacancies
and newly created directorships), and may be held at such time and place, within
or without the State of Delaware, as shall be stated in a notice of meeting or
in a duly executed waiver of notice thereof. Such meetings may be called at any
time by five or more members of the board of directors and shall be called by
the president upon the written request of holders of shares entitled to cast not
less than fifty percent (50%) of the outstanding shares of any series or class
of the corporation's Capital Stock.
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special
-1-
<PAGE>
meeting be otherwise called, the place of meeting shall be the principal
executive Office of the corporation.
Section 4. Notice. Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice stating the place, date, time,
and, in the case of special meetings, the purpose or purposes, of such meeting,
shall be given to each stockholder entitled to vote at such meeting not less
than 10 nor more than 60 days before the date of the meeting. All such notices
shall be delivered, either personally or by mail, by or at the direction of the
board of directors, the president or the secretary, and if mailed, such notice
shall be deemed to be delivered when deposited in the United States mail,
postage prepaid, addressed to the stockholder at his, her or its address as the
same appears on the records of the corporation. Attendance of a person at a
meeting shall constitute a waiver of notice of such meeting, except when the
person attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened.
Section 5. Stockholders List. The officer having charge of the stock ledger
of the corporation shall make, at least 10 days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. Except as otherwise provided by applicable law or by the
Certificate of Incorporation, a majority of the outstanding shares of the
corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time in accordance with Section
7 of this Article, until a quorum shall be present or represented.
Section 7. Adjourned Meeting. When a meeting is adjourned to another time
and place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting at which the adjournment is taken. At
the adjourned meeting the corporation may transact any business which might have
been transacted at the original meeting. If the adjournment is for more than
thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote of
the majority of shares present in person or represented by proxy at the meeting
and entitled to vote on the subject matter shall be the act of the stockholders,
unless the question is one upon which by express provisions of an applicable
law, the certificate of incorporation, or any contractual
-2-
<PAGE>
arrangement a different vote is required, in which case such express
provision shall govern and control the decision of such question. Where a
separate vote by class is required, the affirmative vote of the majority of
shares of such class present in person or represented by proxy at the meeting
shall be the act of such class.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto and subject to Section 3 of Article
VI hereof, every stockholder shall at every meeting of the stockholders be
entitled to one vote in person or by proxy for each share of common stock held
by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person or persons to act for him, her or
it by proxy. Every proxy must be signed by the stockholder granting the proxy or
by his, her or its attorney-in-fact. No proxy shall be voted or acted upon after
three years from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the Corporation generally.
Section 11. Action By Written Consent. Unless otherwise provided in the
certificate of incorporation, any action required to be taken at any annual or
special meeting of stockholders of the corporation, or any action which may be
taken at any annual or special meeting of such stockholders, may be taken
without a meeting, without prior notice and without a vote, if a consent or
consents in writing, setting forth the action so taken and bearing the dates of
signature of the stockholders who signed the consent or consents, shall be
signed by the holders of outstanding stock having not less than a majority of
the shares entitled to vote, or, if greater, not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in the state
of Delaware, or the corporation's principal place of business, or an officer or
agent of the corporation having custody of the book or books in which
proceedings of meetings of the stockholders are recorded. Delivery made to the
corporation's registered office shall be by hand or by certified or registered
mail, return receipt requested provided, however, that no consent or consents
delivered by certified or registered mail shall be deemed delivered until such
consent or consents are actually received at the registered office. All consents
properly delivered in accordance with this section shall be deemed to be
recorded when so delivered. No written consent shall be effective to take the
corporate action referred to therein unless, within sixty days of the earliest
dated consent delivered to the corporation as required by this section, written
consents signed by the holders of a sufficient number of shares to take such
corporate action are so recorded. Prompt notice of the taking of the corporate
action without a meeting by less than unanimous written consent shall be given
to those stockholders who have not consented in writing. Any action taken
pursuant to such written consent or consents of the stockholders shall have the
same force and effect as if taken by the stockholders at a meeting thereof.
-3-
<PAGE>
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the board shall be up to (9) nine members, which number
may be increased or decreased from time to time by resolution of the board;
provided, that such number shall be increased to such number of directors which
are designated pursuant to the Stockholders Agreement entered into by the
corporation and the stockholders of the corporation, (as in effect from time to
time, the "Stockholders Agreement") for so long as (i) such agreement has been
filed with the corporation and (ii) has not been terminated. The following
persons shall be elected to the corporation's board of directors:
(a) up to three (3) representatives designated by Pyramid Ventures, Inc.
("Pyramid");
(b) up to three (3) representatives designated by Berkshire Fund III, a
Limited Partnership ("Berkshire"); and
(c) the Chief Executive Officer of the Corporation; and
(d) up to two representatives designated by the Stockholders owning
shares of Common Stock representing a majority of the voting power to elect
directors determined by the vote or consent of such Stockholders in accordance
with the provisions of the Corporation's Articles of Incorporation.
The directors shall be elected by a plurality of the votes of the shares
present in person or represented by proxy at the meeting and entitled to vote in
the election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 4 of this
Article III. Each director elected shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal and Resignation. The removal from the corporation's
board of directors or any such Committee, with or without cause, of any
representative designated hereunder by Pyramid, Berkshire or the Stockholders
shall be at the written request of the Stockholders which have the right to
designate such representative hereunder, but only upon such written request and
under no other circumstances.
Section 4. Vacancies. In the event that any representative designated
hereunder by Pyramid, Berkshire or the Stockholders for any reason ceases to
serve as a member of the
-4-
<PAGE>
Board of Directors or any committee thereof during such representative's
term of office, the resulting vacancy on the Board of Directors or committee
shall be filled by a representative designated by Pyramid, Berkshire or the
Stockholders, respectively, as provided pursuant to Section 2 above.
Section 5. Annual Meetings. The annual meeting of each newly elected board
of directors shall be held without other notice than this by-law immediately
after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the board of directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the board. Special meetings of the directors may be called by or at the request
of the president or vice president on at least 24 hours notice to each director,
either personally, by telephone, by mail, or by telegraph; in like manner and on
like notice the president must call a special meeting on the written request of
at least a majority of the directors.
Section 7. Quorum, Required Vote and Adjournment. A majority of the total
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, which to the
extent provided in such resolution or these by-laws shall have and may exercise
the powers of the board of directors in the management and affairs of the
corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the board of directors. Each committee
shall keep regular minutes of its meetings and report the same to the board of
directors when required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
members alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member or members thereof present at any meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the board of directors to act
at the meeting in place of any such absent or disqualified member.
-5-
<PAGE>
Section 10. Communications Equipment. Members of the board of directors or
any committee thereof may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by the
certificate of incorporation, any action required or permitted to be taken at
any meeting of the board of directors, or of any committee thereof, may be taken
without a meeting if all members of the board or committee, as the case may be,
consent thereto in writing. and the writing or writings are filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by the
board of directors and shall consist of a chairman, if any is elected, a
president, one or more vice presidents, a secretary, a treasurer. and such other
officers and assistant officers as may be deemed necessary or desirable by the
board of directors. Any number of offices may be held by the same person, except
that no person may simultaneously hold the office of president and secretary. In
its discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon thereafter as conveniently
may be. The president shall appoint other officers to serve for such terms as he
or she deems desirable. Vacancies may be filled or new offices created and
filled at any meeting of the board of directors. Each officer shall hold office
until a successor is duly elected and qualified or until his or her earlier
death, resignation or removal as hereinafter provided.
-6-
<PAGE>
Section 3. Removal. Any officer or agent elected by the board of directors
may be removed by the board of directors whenever in its judgment the best
interests of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
Section 4. Vacancies. Any vacancy occurring in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term by the board of directors
then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by the
board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. The Chairman of the Board. The Chairman of the Board, if one
shall have been elected, shall be a member of the board, an officer of the
Corporation, and, if present, shall preside at each meeting of the board of
directors or shareholders. He shall advise the president, and in the presidents
absence, other officer of the Corporation, and shall perform such other duties
as may from time to time be assigned to him by the board of directors.
Section 7. The President. The president shall be the chief executive
officer of the corporation. In the absence of the Chairman of the Board or if a
Chairman of the Board shall have not been elected, the president shall preside
at all meetings of the stockholders and board of directors at which he or she is
present; subject to the powers of the board of directors, shall have general
charge of the business, affairs and property of the corporation, and control
over its officers, agents and employees; and shall see that all orders and
resolutions of the board of directors are carried into effect. The president
shall execute bonds, mortgages and other contracts requiring a seal, under the
seal of the corporation, except where required or permitted by law to be
otherwise signed and executed and except where the signing and execution thereof
shall be expressly delegated by the board of directors to some other officer or
agent of the corporation. The president shall have such other powers and perform
such other duties as may be prescribed by the board of directors or as may be
provided in these by-laws.
Section 8. Vice-Presidents. The vice-president, if any, or if there shall
be more than one, the vice-presidents in the order determined by the board of
directors shall, in the absence or disability of the president, act with all of
the powers and be subject to all the restrictions of the president. The
vice-presidents shall also perform such other duties and have such other powers
as the board of directors, the president or these by-laws may, from time to
time, prescribe.
Section 9. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book or books to be kept for that purpose. Under the
president's supervision, the secretary shall give, or cause to be given, all
notices required to be given by these by-laws or by law; shall have such powers
and perform such duties as the board of directors, the president or these
by-laws may, from time to time, prescribe;
-7-
<PAGE>
and shall have custody of the corporate seal of the corporation. The
secretary, or an assistant secretary, shall have authority to affix the
corporate seal to any instrument requiring it and when so affixed, it may be
attested by his or her signature or by the signature of such assistant
secretary. The board of directors may give general authority to any other
officer to affix the seal of the corporation and to attest the affixing by his
or her signature. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors, the president, or secretary may, from
time to time, prescribe.
Section 10. The Treasurer and Assistant Treasurer. The treasurer shall have
the custody of the corporate funds and securities; shall keep full and accurate
accounts of receipts and disbursements in books belonging to the corporation;
shall deposit all monies and other valuable effects in the name and to the
credit of the corporation as may be ordered by the board of directors; shall
cause the funds of the corporation to be disbursed when such disbursements have
been duly authorized, taking proper vouchers for such disbursements; and shall
render to the president and the board of directors, at its regular meeting or
when the board of directors so requires, an account of the corporation; shall
have such powers and perform such duties as the board of directors, the
president or these by-laws may, from time to time, prescribe. If required by the
board of directors, the treasurer shall give the corporation a bond (which shall
be rendered every six years) in such sums and with such surety or sureties as
shall be satisfactory to the board of directors for the faithful performance of
the duties of the office of treasurer and for the restoration to the
corporation, in case of death, resignation, retirement or removal from office,
of all books, papers, vouchers, money, and other property of whatever kind in
the possession or under the control of the treasurer belonging to the
corporation. The assistant treasurer, or if there shall be more than one, the
assistant treasurers in the order determined by the board of directors, shall in
the absence or disability of the treasurer, perform the duties and exercise the
powers of the treasurer. The assistant treasurers Shall perform such other
duties and have such other powers as the board of directors, the president or
treasurer may, from time to time, prescribe.
Section 11. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 12. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officers absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
-8-
<PAGE>
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by the
chairman of the board, the president or a vice-president and the secretary or an
assistant secretary of the corporation, certifying the number of shares owned by
such holder in the corporation. If such a certificate is countersigned (1) by a
transfer agent or an assistant transfer agent other than the corporation or its
employee or (2) by a registrar, other than the corporation or its employee, the
signature of any such chairman of the board, president, vice-president,
secretary, or assistant secretary may be facsimiles. In case any officer or
officers who have signed, or whose facsimile signature or signatures have been
used on, any such certificate or certificates shall cease to be such officer or
officers of the corporation whether because of death, resignation or otherwise
before such certificate or certificates have been delivered by the corporation,
such certificate or certificates may nevertheless be issued and delivered as
though the person or persons who signed such certificate or certificates or
whose facsimile signature or signatures have been used thereon had not ceased to
be such officer or officers of the corporation. All certificates for shares
shall be consecutively numbered or otherwise identified. The name of the person
to whom the shares represented thereby are issued, with the number of shares and
date of issue, shall be entered on the books of the corporation. Shares of stock
of the corporation shall only be transferred on the books of the corporation by
the holder of record thereof or by such holders attorney (July authorized in
writing, upon surrender to the corporation of the certificate or certificates
for such shares endorsed by the appropriate person or persons, with such
evidence of the authenticity of such endorsement, transfer, authorization, and
other matters as the corporation may reasonably require, and accompanied by all
necessary stock transfer stamps. In that event, it shall be the duty of the
corporation to issue a now certificate to the person entitled thereto, cancel
the old certificate or certificates, and record the transaction on its books.
The board of directors may appoint a bank or trust company organized under the
laws of the United States or any state thereof to act as its transfer agent or
registrar, or both in connection with the transfer of any class or series of
securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate or certificates to be issued in place of any certificate or
certificates previously issued by the corporation alleged to have been lost,
stolen, or destroyed, upon the making of an affidavit of that fact by the person
claiming the certificate of stock to be lost, stolen, or destroyed. When
authorizing such issue of a new certificate or certificates, the board of
directors may, in its discretion and as a condition precedent to the issuance
thereof, require the owner of such lost, stolen, or destroyed certificate or
certificates, or his or her legal representative, to give the corporation a bond
sufficient to indemnify the corporation against any claim that may be made
against the corporation on account of the loss, theft or destruction of any such
certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that the
corporation may determine the stockholders entitled to notice of or to vote at
any meeting of
-9-
<PAGE>
stockholders or any adjournment thereof, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the board of directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be the close of business on the next day preceding
the day on which notice is given, or if notice is waived, at the close of
business on the day next preceding the day on which the meeting is held. A
determination of stockholders of record entitled to notice of or to vote at a
meeting of stockholders shall apply to any adjournment of the meeting; provided,
however, that the board of directors may fix a new record date for the adjourned
meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the corporation may determine the stockholders entitled to consent to
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the board of directors, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting, when no prior action by the board of directors is required by
statute, shall be the first date on which a signed written consent setting forth
the action taken or proposed to be taken is delivered to the corporation by
delivery to its registered office in the State of Delaware, its principal place
of business, or an officer or agent of the corporation having custody of the
book in which proceedings of meetings of stockholders are recorded. Delivery
made to the corporation's registered office shall be by hand or by certified or
registered mail, return receipt requested. If no record date has been fixed by
the board of directors and prior action by the board of directors is required by
statute, the record date for determining stockholders entitled to consent to
corporate action in writing without a meeting shall be at the close of business
on the day on which the board of directors adopts the resolution taking such
prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights or the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate or certificates for a share or shares of stock
with a request to record the transfer of such share or shares, the corporation
may treat the registered owner as the person entitled to receive dividends, to
vote, to receive notifications, and otherwise to exercise all the rights and
powers of an owner. The corporation shall not be bound to recognize any
equitable or other
-10-
<PAGE>
claim to or interest in such share or shares on the part of any other
person, whether or not it shall have express or other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the corporation.
ARTICLE VI
GENERAL PROVISIONS
Section 1. Dividends. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum or sums as the directors from time
to time, in their absolute discretion, think proper as a reserve of reserves to
meet contingencies, or for equalizing dividends, or for repairing or maintaining
any property of the corporation, or any other purpose and the directors may
modify or abolish any such reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by the officer or officers, agent or agents of the corporation, and in such
manner, as shall be determined by resolution of the board of directors or a duly
authorized committee thereof.
Section 3. Contracts. The board of directors may authorize any officer or
officers, or any agent or agents, of the corporation to enter into any contract
or to execute and deliver any instrument in the name of and on behalf of the
corporation, and such authority may be general or confined to specific
instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
-11-
<PAGE>
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a corporate
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the corporation and the words "Corporate Seal, Delaware". The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in any
other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
Section 8. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent, shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock merger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper, purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right inspection, the demand under oath
shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholders
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware or at its principal place of business.
Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the certificate
of incorporation, the General Corporation Law of the State of Delaware or any
other applicable law, the provision of these by-laws shall not be given any
effect to the extent of such inconsistency but shall otherwise be given full
force and effect.
ARTICLE VII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the by-laws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
-12-
Description: Certificate of Incorporation of NPR Holding Corporation
RESTATED
CERTIFICATE OF INCORPORATION
OF
NPR HOLDING CORPORATION
Article One
The name of the corporation is NPR Holding Corporation (hereinafter
referred to as the "Corporation").
Article Two
The address of the Corporation's registered office in the State of
Delaware is 1013 Centre Road, City of Wilmington, County of New Castle, Delaware
19805. The name of the registered agent at such address is Corporation Service
Company.
Article Three
The purpose of the Corporation is to engage in any lawful act or
activity for which corporations may be organized under the General Corporation
Law of the State of Delaware.
Article Four
I. Authorized Shares
The total number of shares of capital stock which the Company has
authority to issue is 35,195.86 shares, consisting of:
(1) 688.86 shares of Series A Preferred Stock, par value $.01 per share
(the "Preferred Stock");
(2) 16,000 shares of Class A-1 Common Stock, par value $.001 per share
(the "Class A-1 Common");
(3) 16,000 shares of Class A-2 Common Stock, par value $.001 per share
(the "Class A-2 Common");
(4) 450 shares of Class B Common Stock, par value $.001 per share (the
"Class B Common");
-1-
<PAGE>
(5) 2,057 shares of Class C Common Stock, par value $.001 per share (the
"Class C Common").
The Class A-1 Common, the Class A-2 Common, Class B Common and Class C
Common are hereafter collectively referred to as the "Common Stock." The Class
A-1 Common and the Class A-2 Common are hereafter collectively referred to as
the "Class A Common."
No amendment or waiver of any provision of this Section I shall be
effective without the prior approval of the holders of a majority of the then
outstanding Common Stock voting as a single class.
II. Preferred Stock
Except as otherwise provided in this Section II or as otherwise required
by applicable law, all shares of Preferred Stock shall be identical in all
respects and shall entitle the holders thereof to the same rights and
privileges, subject to the same qualifications, limitations and restrictions.
SECTION A. Dividends.
1. General Obligation. When and as declared by the board of directors of
the Company and to the extent permitted under the General Corporation Law of
Delaware, the Company will pay preferential dividends to the holders of the
Preferred Stock as provided in this Section A. Except as otherwise provided
herein, dividends on each share of the Preferred Stock (a "Share") will accrue
at a rate of 3% per annum (the "Dividend Rate") of the Liquidation Value thereof
from and including the date of issuance of such Share to and including the date
on which the Liquidation Value of such Share is paid in full; provided, that in
the event that the Company does not comply with its obligation pursuant to
Section C.1(b) below on the First Redemption Date, the Dividend Rate shall
increase to 6% per annum as of the First Redemption Date; and provided, further,
that in the event that the Company does not comply with its obligation pursuant
to Section C.1(c) below on the Second Redemption Date, the Dividend Rate shall
increase to 12% per annum as of the Second Redemption Date. Such dividends will
accrue whether or not they have been declared and whether or not there are
profits, surplus or other funds of the Company legally available for the payment
of dividends. The date on which the Company initially issues any Share will be
deemed to be its "date of issuance" regardless of the number of times transfer
of such Share is made on the stock records maintained by or for the Company and
regardless of the number of certificates which may be issued to evidence such
Share.
2. Dividend Reference Dates. All accrued dividends shall be paid on each
June 1 of each year beginning June 1, 1996 (the "Dividend Reference Dates"). On
each Dividend Reference Date, all dividends which have cumulated on each Share
outstanding during the twelve (12)-month period ending upon such Dividend
Reference Date will be added to the Liquidation Value of such Share (and shall
not be deemed cumulated but unpaid dividends
-2-
<PAGE>
following such Dividend Reference Date); provided, that the Company may,
at its option, pay all or any portion of any such cumulated dividends in cash on
such Dividend Reference Date.
3. Distribution of Partial Dividend Payments. If at any time the Company
elects to pay dividends in cash and pays less than the total amount of dividends
then accrued with respect to the Preferred Stock, such payment will be
distributed ratably among the holders of the Preferred Stock based upon the
aggregate accrued but unpaid dividends on the Shares of such class held by each
such holder.
SECTION B. Liquidation.
Upon any liquidation, dissolution or winding up of the Company, the
holders of Preferred Stock will be entitled to be paid, before any distribution
or payment is made upon any of Common Stock, an amount in cash equal to the
aggregate Liquidation Value of all Shares outstanding (plus cumulated and unpaid
dividends thereon), and the holders of Preferred Stock will not be entitled to
any further payment. The Company will mail written notice of such liquidation,
dissolution or winding up, not less than 60 days prior to the payment date
stated therein, to each record holder of Preferred Stock. Neither the
consolidation or merger of the Company into or with any other corporation or
corporations, nor the sale or transfer by the Company of all or any part of its
assets, nor the reduction of the capital stock of the Company, will be deemed to
be a liquidation, dissolution or winding up of the Company within the meaning of
this Section B.
SECTION C. Redemptions.
1. Scheduled Redemptions.
(a) On June 1, 2004 (the "Scheduled Redemption Date"), the Company
will redeem all issued and outstanding Shares of Preferred Stock, at a price per
Share equal to the Liquidation Value thereof (plus cumulated and unpaid
dividends thereon).
(b) On June 1, 2002 (the "First Redemption Date"), the Company will
redeem issued and outstanding Shares of Preferred Stock with an aggregate
Liquidation Value of $258,333, at a price per Share equal to the Liquidation
Value thereof (plus cumulated and unpaid dividends thereon); provided, that the
Company's obligation pursuant to this Section C.1(b) shall be reduced by the
aggregate Liquidation Value of any Shares redeemed prior to the First Redemption
Date pursuant to Section C.2 below.
(c) On June 1, 2003 (the "Second Redemption Date"), the Company will
redeem issued and outstanding Shares of Preferred Stock with an aggregate
Liquidation Value of $258,333, at a price per Share equal to the Liquidation
Value thereof (plus cumulated and unpaid dividends thereon); provided, that, to
the extent not applied to reduce the Company's obligation pursuant to Section
C.1(b) above (in accordance with the proviso thereto), the Company's obligation
pursuant to this Section C.1(c) shall be reduced by the aggregate
-3-
<PAGE>
Liquidation Value of any Shares redeemed prior to the Second
Redemption Date pursuant to Section C.2 below.
2. Optional Redemptions. The Company may at any time redeem
all or any portion of Preferred Stock then outstanding at a price per share
equal to the Liquidation Value thereof (plus cumulated or unpaid dividends
thereon), provided that all optional redemptions pursuant to this paragraph 2
are made pro rata among the holders of Preferred Stock on the basis of the
number of Shares held by each such holder. Redemptions made pursuant to this
paragraph 2 will not relieve the Company of its obligations to redeem Shares on
the Scheduled Redemption Date.
3. Redemption Payment. For each Share which is to be redeemed the
Company will be obligated on the Redemption Date to pay to the holder thereof
(upon surrender by such holder at the Company's principal office of the
certificate representing such Share) an amount in immediately available funds
equal to the Liquidation Value thereof (plus cumulated and unpaid dividends
thereon). If the Company's funds which are legally available for redemption of
Shares on any Redemption Date are insufficient to redeem the total number of
Shares to be redeemed on such date, those funds which are legally available will
be used to redeem the maximum possible number of Shares ratably among the
Holders of the Shares to be redeemed based upon the aggregate Liquidation Value
of such Shares (plus cumulated and unpaid dividends thereon) held by each such
holder. At any time thereafter when additional funds of the Company are legally
available for the redemption of Shares, such funds will immediately be used to
redeem the balance of the Shares which the Company has become obligated to
redeem on any Redemption Date but which it has not redeemed.
4. Notice of Redemption. The Company will mail written notice of each
redemption of Preferred Stock to each record holder not more than sixty (60)
days prior to the date on which such redemption is to be made. Upon mailing any
notice of redemption which relates to a redemption at the Company's option, the
Company will become obligated to redeem the total number of Shares specified in
such notice at the time of redemption specified therein. In case fewer than the
total number of Shares represented by any certificate are redeemed, a new
certificate representing the number of unredeemed Shares will be issued to the
holder thereof without cost to such holder after surrender of the certificate
representing the redeemed Shares.
5. Determination of the Number of Each Holder's Shares to Be Redeemed.
Except as otherwise provided herein, the number of Shares of Preferred Stock to
be redeemed from each holder thereof in redemptions hereunder will be the number
of Shares determined by multiplying the total number of Shares to be redeemed
times a fraction, the numerator of which will be the total number of Shares then
held by such holder and the denominator of which will be the total number of
Shares of Preferred Stock then outstanding.
6. Dividends After Redemption Date. No Share is entitled to
any dividends accruing after the date on which the Liquidation Value (plus all
cumulated and unpaid dividends thereon) of such Share is paid in full. On such
date all rights of the holder of such Share will cease, and such Share will not
be deemed to be outstanding.
-4-
<PAGE>
7. Redeemed or Otherwise Acquired Shares. Any Shares which are redeemed
or otherwise acquired by the Company will be cancelled and will not be reissued,
sold or transferred.
SECTION D. Voting Rights.
Except as otherwise provided by law, the Preferred Stock will have no
voting rights.
SECTION E. Registration of Transfer.
The Company will keep at its principal office a register for the
registration of Preferred Stock. Upon the surrender of any certificate
representing Preferred Stock at such place, the Company will, at the request of
the record holder of such certificate, execute and deliver (at the Company's
expense) a new certificate or certificates in exchange therefor representing in
the aggregate the number of Shares represented by the surrendered certificate.
Each such new certificate will be registered in such name and will represent
such number of Shares as is requested by the holder of the surrendered
certificate and will be substantially identical in form to the surrendered
certificate, and dividends will accrue on the Preferred Stock represented by
such new certificate from the date to which dividends have been fully paid on
such Preferred Stock represented by the surrendered certificate.
SECTION F. Replacement.
Upon receipt of evidence reasonably satisfactory to the Company (an
affidavit of the registered holder will be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing Shares
of any class of Preferred Stock, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the holder is an institutional investor its own agreement will
be satisfactory), or, in the case of any such mutilation upon surrender of such
certificate, the Company will (at its expense) execute and deliver in lieu of
such certificate a new certificate of like kind representing the number of
Shares of such class represented by such lost, stolen, destroyed or mutilated
certificate and dated the date of such lost, stolen, destroyed or mutilated
certificate, and dividends will accrue on the Preferred Stock represented by
such new certificate from the date to which dividends have been fully paid on
such lost, stolen, destroyed or mutilated certificate.
SECTION G. Definitions.
"Liquidation Value" of any Share as of any particular date will be equal
to $1,000.00, plus any additions thereto pursuant to Section A.2 above.
"Redemption Date" as to any Share means, collectively, (i) the Scheduled
Redemption Date, (ii) the First Redemption Date, (iii) the Second Redemption
Date and (iv) the
-5-
<PAGE>
date specified in the notice of any redemption at the Company's option
or the applicable date specified herein in the case of any other redemption;
provided, that, with respect to clause (iv) no such date will be a Redemption
Date unless the applicable Liquidation Value (plus cumulated and unpaid
dividends thereon) is actually paid in full on such date, and if not so paid in
full, the Redemption Date will be the date on which such Liquidation Value
thereof (plus cumulated and unpaid dividends thereon) is fully paid.
SECTION H. Amendment and Waiver.
No amendment, modification or waiver will be binding or effective with
respect to any provision of this Section II without the prior written consent of
the holders of a majority of the Shares outstanding at the time such action is
taken.
SECTION I. Notices.
Except as otherwise expressly provided, all notices referred to herein
will be in writing and will be delivered by registered or certified mail, return
receipt requested, postage prepaid and will be deemed to have been given when so
mailed (i) to the Company, at its principal executive offices and (ii) to any
stockholder, at such holder's address as it appears in the stock records of the
Company (unless otherwise indicated by any such holder).
III. Common Stock
Except as otherwise provided in this Section III or as otherwise
required by applicable law, all shares of Common Stock shall be identical in all
respects and shall entitle the holders thereof to the same rights and
privileges, subject to the same qualifications, limitations and restrictions.
SECTION A. Voting Rights.
Except as otherwise provided in this Section A or as otherwise required
by applicable law, holders of Class A-1 Common, Class B Common and Class C
Common shall be entitled to one vote per share on all matters to be voted on by
the stockholders of the Company and the holders of Class A-2 Common shall have
no votes per share on all such matters; provided, that the holders of a majority
of the then outstanding shares of all Common Stock shall have the right to
approve, voting together as one class, (i) any merger or consolidation of the
Company with or into another entity or entities, or any recapitalization or
reorganization, (ii) any sale of all or substantially all of the Company's
assets and (iii) any amendment to the Company's Certificate of Incorporation.
SECTION B. Dividends and Distributions.
Subject to the provisions of the Preferred Stock, the holders of Common
Stock shall be entitled to receive dividends and distributions, including
distributions in connection with the liquidation, dissolution or winding up of
the affairs of the Company, when and as declared or
-6-
<PAGE>
made by the Board of Directors of the Company, out of funds of the
Company legally available therefor, payable on such dividend or distribution
payment dates to stockholders of record on such record dates, not exceeding 60
days preceding the dividend or distribution payment dates, as shall be fixed for
the purpose by the Board of Directors of the Company, upon the following terms:
(a) Dividends or distributions in connection with the liquidation,
dissolution or winding up of the affairs of the Company or a Sale of the Company
(as defined below), or not paid out of the current and accumulated earnings and
profits (which as used herein shall mean earnings and profits as referred to in
the Internal Revenue Code of 1988, as amended) of the Company (collectively,
"Non-earnings Distributions"), shall be paid in accordance with, and in the
order set forth in, clauses (i), (ii) and (iii) of this subparagraph (a). A
dividend or distribution shall be deemed as "not paid out of the current and
accumulated earnings and profits of the Company" to the extent the amount of
such dividend or distribution exceeds the amount of current and accumulated
earnings and profits which the Company would have at the end of the fiscal year
in which such dividend or distribution is declared (not taking into account such
dividend or distribution) as estimated in good faith by the Board of Directors
of the Company at the time of declaration. For purposes of this Section B, "Sale
of the Company" means the sale of the Company pursuant to which any independent
Third Party or affiliated group of Independent Third Parties acquires (i)
capital stock of the Company possessing the voting power under normal
circumstances to elect a majority of the Company's board of directors (whether
by merger, consolidation or sale or transfer of the Company's capital stock) or
(ii) all or substantially all of the Company's assets determined on a
consolidated basis, and "Independent Third Party" means any person or entity
who, immediately prior to the contemplated transaction, does not own in excess
of 5% of the Company's Common Stock on a fully diluted basis, who is not
controlling, controlled by or under common control with any such 5% owner of the
Company's capital stock and who is not the spouse or descendent (by birth or
adoption) of any such 5% owner of the Company's Common Stock.
(i) First, Non-earnings Distributions shall be paid exclusively to
the holders of the shares of Class A Common, ratably to each such holder in the
proportion that the number of shares of Class A Common held by such holder bears
to the total outstanding shares of Class A Common, until the sum of all
Non-earnings Distributions paid pursuant to this clause (i) to each holder of
Class A Common in cash or in kind (valued in the manner set forth in paragraph
(c) below) equals One Thousand Dollars ($1,000) for each share of Class A Common
held by such holder.
(ii) After each holder of shares of Class A Common shall have
received Non-earnings Distributions under clause (i) above totaling One Thousand
Dollars ($1,000), then Non-earnings Distributions shall be paid exclusively to
the holders of the shares of Class B Common ratably to each such holder in the
proportion that the number of shares of Class B Common held by such holder bears
to the sum of the total outstanding shares of Class B Common until the sum of
all Non-earnings Distributions under this clause (ii) to each holder of Class B
Common in cash or in kind (valued in the manner set forth in subparagraph (c)
below)
-7-
<PAGE>
equals One Thousand Ten Dollars ($1,010) for each share of Class B
Common held by such holder.
(iii) After each holder of shares of Class B Common shall have
received Non-earnings Distributions under clause (ii) above totaling One
Thousand Ten Dollars ($1,010) for each share of Class B Common held by such
holder, then Non-earnings Distributions shall be paid exclusively to the holders
of shares of Class C Common ratably to each such holder in proportion that the
number of shares of Class C Common held by such holder bears to the sum of the
total outstanding shares of Class C Common until the sum of all Non-earnings
distributions under this clause (iii) to each holder of Class C Common in cash
or kind (valued in the manner set forth in subparagraph (c) below) equals Ten
Dollars ($10) for each share of Class C Common held by such holder.
(iv) After each holder of shares of Class C Common shall have
received Non-earnings Distributions under clause (iii) above totaling Ten
Dollars ($10) for each share of Class C Common held by such holder, then
Non-earnings Distributions shall be paid to all of the holders of shares of
Class A Common, Class B Common and Class C Common, ratably to each such holder
in the proportion that the number of shares of Class A Common Stock, Class B
Common and/or Class C Common held by such holder bears to the total number of
outstanding shares of Common Stock.
(b) Dividends or distributions not constituting Non-earnings
Distributions shall be paid ratably to all of the holders of the Class A Common,
Class B Common and Class C Common in the proportion that the number of shares of
Class A Common, Class B Common and/or Class C Common held by such holder bears
to the total number of outstanding shares of Common Stock.
(c) Any and all dividends or distributions of any property of the
Company shall be made as follows:
(i) The value of such property shall be determined in the manner set
forth in clause (ii) below on the last business day prior to the date of
declaration of such distribution, and such property shall be deemed to have been
sold with the resulting net proceeds being equal to such value and shall be
distributed to the holders of shares of Stock of the Company in accordance with
subparagraph (a) and (b) above.
(ii) For the purpose of determining the value of any property of the
Company, freely marketable securities which are listed on all securities
exchanges shall be valued at the average of the closing prices of the sales of
such securities on each of the last 20 trading days ending on and including the
date of determination. If no sales occurred on any such trading day, such sales
price shall be deemed to be the average between the highest bid and lowest asked
prices on all exchanges at the end of such day. Freely marketable securities
which are not so listed shall be valued at the average of their representative
bid and asked prices on each of the last 20 trading days ending on and including
the date of determination of the basis of quotations furnished by the Nasdaq
National Market, if available. Any security which is held
-8-
<PAGE>
under the representation that it has been acquired for investment and
not with a view to public sale or distribution or which is held subject to any
other restriction affecting marketability shall be valued at such discount from
the value determined under the applicable provisions above as the Board of
Directors of the Company deems necessary to reflect properly the restricted
marketability of such securities. Notwithstanding the foregoing, securities
which are not freely marketable securities and all other property may be
assigned such value as the Board of Directors of the Company determines to be
the fair value. All matters concerning the valuation of the property of the
Company, the determination of earnings and profits and accounting procedures not
specifically and expressly provided for by the terms of this Certificate of
Incorporation shall be determined by the Board of Directors of the Company,
whose determination shall, when made in good faith, be final and conclusive as
to all of the holders of the outstanding shares of the Company.
SECTION C. Conversion.
1. Right to Convert. Subject to paragraph 2 below, (a) any holders of
Class A-1 Common shall be entitled at any time to convert any or all of the
shares of Class A-1 Common held by such holders into the same number of shares
of Class A-2 Common and (b) any holders of Class A-2 Common shall be entitled at
any time to convert any and all of the shares of Class A-2 Common held by such
holders into the same number of shares of Class A-1 Common.
2. Surrender of Certificates. Each conversion of shares of Class A-1
Common or Class A-2 Common shall be effected by the surrender of the certificate
or certificates representing the shares to be converted at the principal office
of the Company at any time during normal business hours, together with a written
notice by the holder of such Class A-1 Common or Class A-2 Common, as the case
may be, stating that such holder desires to convert the shares, or a stated
number of shares of Class A-1 Common or Class A-2 Common, as the case may be,
represented by such certificate or certificates, into shares of Class A-2 Common
or Class A-1 Common, respectively. Each conversion of shares of Class A-1 Common
or Class A-2 Common shall be deemed to have been effected as of the case of
business on the date on which such certificate or certificates have been
surrendered and such notice has been received, and at such time the rights of
the holder of the converted hares of Class A-1 Common or Class A-2 Common, as
the case may be, shall cease and the person or persons in whose name or names
the certificate or certificates for shares of Class A-1 Common or Class A-2
Common, as the case may be, are to be issued upon such conversion shall be
deemed to have become the holder or holders of record of the shares of Common
Stock represented thereby.
3. Issuance of Certificates. Promptly after the surrender of
certificates of Class A-1 Common or Class A-2 Common, as the case may be, and
the receipt of written notice, the Company shall issue and deliver in accordance
with the surrendering holder's instructions (1) the certificate or certificates
for the shares of Class A-2 Common or Class A-1 Common, respectively, issuable
upon such conversion and (ii) a certificate representing any shares of Class A-1
Common or Class A-2 Common, as the case may be, which were represented by the
certificate or certificates delivered to the Company in connection with such
conversion but which were not converted.
-9-
<PAGE>
4. No Charge. The issuance of certificates for Class A-1 Common or Class
A-2 Common, as the case may be, upon conversion of Class A-2 Common or Class A-1
Common, respectively, will be made without charge to the holders of such shares
for any issuance tax in respect thereof or other cost incurred by the Company in
connection with such conversion and the related issuance of Class A-1 Common or
Class A-2 Common, as the case may be.
5. Reserve of Shares. The Company shall at all times reserve and keep
available out of its authorized but unissued shares of Class A-1 Common and
Class A-2 Common solely for the purpose of issuance upon the conversion of the
Class A-2 Common and Class A-1 Common, respectively, such number of shares of
Class A-1 Common and Class A-2 Common as are issuable upon the conversion of all
outstanding shares of Class A-2 Common and Class A-1 Common, respectively. All
shares of Common Stock which are so issuable shall, when issued, be duly and
validly issued, fully paid and nonassessable and free from all taxes, liens and
charges. The Company shall take all such actions as may be necessary to assure
that all such shares of Common Stock may be so issued without violation of any
applicable law or governmental regulation or any requirements of any domestic
securities exchange upon which shares of Common Stock may be listed (except for
official notice of issuance which will be immediately transmitted by the Company
upon issuance).
6. Closing Books. The Company shall not close its books against the
transfer of shares of Common Stock in any manner which wold interfere with the
timely conversion of any shares of Common Stock.
SECTION D. Stock Splits.
If the Company in any manner subdivides or combines the outstanding
shares of one class of Common Stock, the outstanding shares of each other class
of Common Stock shall be proportionately subdivided or combined in a similar
manner.
SECTION E. Amendment and Waiver.
No amendment or waiver of any provision of this Section III shall be
effective without the prior approval of the holders of a majority of the then
outstanding shares of Common Stock, voting together as one class.
SECTION F. Registration of Transfer.
The Company shall keep at its principal office a register for the
registration of the Common Stock. Upon the surrender of any certificate
representing Common Stock at such place, the Company shall, at the request of
the record holder of such certificate, execute and deliver (at the Company's
expense) a new certificate or certificates in exchange therefor representing in
the aggregate the number of shares of Common Stock represented by the
surrendered certificate. Each such new certificate shall be registered in such
name and shall
-10-
<PAGE>
represent such number of shares of Common Stock as is requested by the Holder of
the surrendered certificate and shall be substantially identical in form to the
surrendered certificate.
SECTION G. Replacement.
Upon receipt of evidence reasonably satisfactory to the Company (an
affidavit of the registered holder shall be satisfactory) of the ownership and
the loss, theft, destruction or mutilation of any certificate evidencing shares
of any class of Common Stock, and in the case of any such loss, theft or
destruction, upon receipt of indemnity reasonably satisfactory to the Company
(provided that if the holder is a financial institution or other institutional
investor its own agreement shall be satisfactory), or, in the case of any such
mutilation upon surrender of such certificate, the Company shall (at its
expense) execute and deliver in lieu of such certificate a new certificate of
like kind representing the number of shares of such class represented by such
lost, stolen, destroyed or mutilated certificate and dated the date of such
lost, stolen, destroyed or mutilated certificate.
SECTION H. Notices.
Except as otherwise expressly provided hereunder, all notices referred
to herein shall be in writing and shall be delivered by registered or certified
mail, return receipt requested and postage prepaid, or by reputable overnight
courier service, charges prepaid, and shall be deemed to have been given when so
mailed or sent (i) to the Company, at its principal executive offices and (ii)
to any stockholder, at such holder's address as it appears in the stock records
of the Company (unless otherwise indicated by any such holder).
Article Five
The Corporation is to have perpetual existence.
Article Six
The directors shall have the power to adopt, amend or repeal By-Laws,
except as may be otherwise provided in the By-Laws.
Article Seven
The Corporation expressly elects not to be governed by Section 203 of
the General Corporation Law of the State of Delaware.
Article Eight
Section 1. Nature of Indemnity. Each person who was or is made a party
or is threatened to be made a party to or is involved in any action, suit or
proceeding, whether civil, criminal, administrative or investigative
(hereinafter a "proceeding"), by reason of the fact that he (or a person of whom
he is the legal representative), is or was a director or officer of the
-11-
<PAGE>
Corporation or is or was serving at the request of the Corporation as a
director, officer, employee, fiduciary, or agent of another corporation or of a
partnership, joint venture, trust or other enterprise, including service with
respect to employee benefit plans, whether the basis of such proceeding is
alleged action in an official capacity as a director, officer, employee,
fiduciary or agent or in any other capacity while serving as a director,
officer, employee, fiduciary or agent, shall be indemnified and held harmless by
the Corporation to the fullest extent which it is empowered to do so by the
General Corporation Law of the State of Delaware, as the same exists or may
hereafter be amended (but, in the case of any such amendment, only to the extent
that such amendment permits the Corporation to provide broader indemnification
rights than said law permitted the Corporation to provide prior to such
amendment) against all expense, liability and loss (including attorneys' fees
actually and reasonably incurred by such person in connection with such
proceeding and such indemnification shall inure to the benefit of his or her
heirs, executors and administrators; provided, however, that, except as provided
in Section 2 of this Article Eight, the Corporation shall indemnify any such
person seeking indemnification in connection with a proceeding initiated by such
person only if such proceeding was authorized by the Board of Directors of the
Corporation. The right to indemnification conferred in this Article Eight shall
be a contract right, and subject to Sections 2 and 5 of this Article Eight,
shall include the right to payment by the Corporation of the expenses incurred
in defending any such proceeding in advance of its final disposition. The
Corporation may, by action of the Board of Directors, provide indemnification to
employees and agents of the Corporation with the same scope and effect as the
foregoing indemnification of directors and officers.
Section 2. Procedure for Indemnification of Directors and Officers. Any
indemnification of a director or officer of the Corporation under Section 1 of
this Article Eight or advance of expenses under Section 5 of this Article Eight
shall be made promptly, and in any event within 30 days, upon the written
request of the director or officer. If a determination by the Corporation that
the director or officer is entitled to indemnification pursuant to this Article
Eight is required, and the Corporation fails to respond within sixty days to a
written request for indemnity, the Corporation shall be deemed to have approved
the request. If the Corporation denies a written request for indemnification or
advancing of expenses, in whole or in part, or if payment in full pursuant to
such request is not made within 30 days, the right to indemnification or
advances as granted by this Article Eight shall be enforceable by the director
or officer in any court of competent jurisdiction. Such person's costs and
expenses incurred in connection with successfully establishing his right to
indemnification, in whole or in part, in any such action shall also be
indemnified by the Corporation. It shall be a defense to any such action (other
than an action brought to enforce a claim for expenses incurred in defending any
proceeding in advance of its final disposition where the requested undertaking,
if any, has been tendered to the Corporation) that the claimant has not met the
standards of conduct which make it permissible under the General Corporation Law
of the State of Delaware for the Corporation to indemnify the claimant for the
amount claimed, but the burden of such defense shall be on the Corporation.
Neither the failure of the Corporation (including the Board of Directors,
independent legal counsel, or its stockholders) to have made a determination
prior to the commencement of such action that indemnification of the claimant is
proper in the circumstances because he or she has met the applicable standard of
conduct set forth in the General Corporation Law of the State of Delaware, nor
an actual determination by the Corporation (including its Board of Directors,
-12-
<PAGE>
independent legal counsel, or its stockholders) that the claimant has
not met such applicable standard of conduct, shall be a defense to the action or
create a presumption that the claimant has not met the applicable standard of
conduct.
Section 3. Nonexclusivity of Article Eight. The rights to
indemnification and the payment of expenses incurred in defending a proceeding
in advance of its final disposition conferred in this Article Eight shall not be
exclusive of any other right which any person may have or hereafter acquire
under any statute, provision of the certificate of incorporation, by-law,
agreement, vote of stockholders or disinterested directors or otherwise.
Section 4. Insurance. The Corporation may purchase and maintain
insurance on its own behalf and on behalf of any person who is or was a
director, officer, employee, fiduciary, or agent of the Corporation or was
serving at the request of the Corporation as a director, officer, employee or
agent of another corporation, partnership, joint venture, trust or other
enterprise against any liability asserted against him or her and incurred by him
or her in any such capacity, whether or not the Corporation would have the power
to indemnify such person against such liability under this Article Eight.
Section 5. Expenses. Expenses incurred by any person described in
Section 1 of this Article Eight in defending a proceeding shall be paid by the
Corporation in advance of such proceeding's final disposition unless otherwise
determined by the Board of Directors in the specific case upon receipt of an
undertaking by or on behalf of the director or officer to repay such amount if
it shall ultimately be determined that he is not entitled to be indemnified by
the Corporation. Such expenses incurred by other employees and agents may be so
paid upon such terms and conditions, if any, as the Board of Directors deems
appropriate.
Section 6. Employees and Agents. Persons who are not covered by the
foregoing provisions of this Article Eight and who are or were employees or
agents of the Corporation, or who are or were serving at the request of the
Corporation as employees or agents of another corporation, partnership, joint
venture, trust or other enterprise, may be indemnified to the extent authorized
at any time or from time to time by the Board of Directors.
Section 7. Contract Rights. The provisions of this Article Eight shall
be deemed to be a contract right between the Corporation and each director or
officer who serves in any such capacity at any time while this Article Eight and
the relevant provisions of the General Corporation Law of the State of Delaware
or other applicable law are in effect, and any repeal or modification of this
Article Eight or any such law shall not affect any rights or obligations then
existing with respect to any state of facts or proceeding then existing.
Section 8. Merger or Consolidation. For purposes of this Article Eight,
references to "the Corporation" shall include, in addition to the resulting
corporation, any constituent corporation (including any constituent of a
constituent) absorbed in a consolidation or merger which, if its separate
existence had continued, would have had power and authority to indemnify its
directors, officers, and employees or agents, so that any person who is or was a
director, officer, employee or agent of such constituent corporation, or is or
was serving at the
-13-
<PAGE>
request of such constituent corporation as a director, officer, employee
or agent of another corporation, partnership, joint venture, trust or other
enterprise, shall stand in the same position under this Article Eight with
respect to the resulting or surviving corporation as he or she would have with
respect to such constituent corporation if its separate existence had continued.
Article Nine
The Corporation reserves the right to amend or repeal any provisions
contained in this Certificate of Incorporation from time to time and at any time
in the manner now or hereafter prescribed by the laws of the State of Delaware,
and all rights conferred upon stockholders and directors are granted subject to
such reservation.
In furtherance and not in limitation of the powers conferred by statute,
the Board of Directors is hereby authorized to adopt, amend or repeal the bylaws
of the Corporation.
IN WITNESS WHEREOF, the undersigned, being the President and the
Assistant Secretary of the Corporation, under the penalties of perjury, do
hereby declare and certify that this act and deed of the Corporation and the
facts stated herein are true, and accordingly has hereunto signed this Restated
Certificate of Incorporation as of this 1ST day of June, 1995.
NPR Holding Corporation
By:/s/ Ronald Katims
-------------------------------
Name: Ronald Katims
Title: President
Attest:
By:/s/ Paul Wittig
----------------------------------
Name: Paul Wittig
Title: Assistant Secretary
-14-
BY-LAWS
OF
NPR HOLDING CORPORATION
A Delaware Corporation
ARTICLE I
OFFICES
Section 1. Registered Office. The registered office of the corporation in
the State of Delaware shall be located at 1013 Centre Road, Wilmington, Delaware
19805, in the County of New Castle. The name of the corporation's registered
agent at such address shall be Corporation Service Company. The registered
office and/or registered agent of the corporation may be changed from time to
time by action of the board of directors.
Section 2. Other Offices. The corporation may also have offices at such
other places, both within and without the State of Delaware, as the board of
directors may from time to time determine or the business of the corporation may
require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
Section 1. Place and Time of Meetings. An annual meeting of the
stockholders shall be held each year for the purpose of electing directors and
conducting such other proper business as may come before the meeting. The date,
time and place of the annual meeting may be determined by resolution of the
board of directors or as set by the president of the corporation.
Section 2. Special Meetings. Special meetings of stockholders may be called
for any purpose (including, without limitation, the filling of board vacancies
and newly created directorships), and may be held at such time and place, within
or without the State of Delaware, as shall be stated in a notice of meeting or
in a duly executed waiver of notice thereof. Such meetings may be called at any
time by two or more members of the board of directors, the president or the
holders of shares entitled to cast not less than a majority of the votes at the
meeting or the holders of fifty percent (50%) of the outstanding shares of any
series or class of the corporation's capital stock.
Section 3. Place of Meetings. The board of directors may designate any
place, either within or without the State of Delaware, as the place of meeting
for any annual meeting or for any special meeting called by the board of
directors. If no designation is made, or if a special
-1-
<PAGE>
meeting is otherwise called, the place of meeting shall be the principal
executive office of the corporation.
Section 4. Notice. Whenever stockholders are required or permitted to take
action at a meeting, written or printed notice stating the place, date, time,
and, in the case of special meetings, the purpose(s), of such meeting, shall be
given to each stockholder entitled to vote at such meeting not less than 10 nor
more than 60 days before the date of the meeting. All such notices shall be
delivered, either personally or by mail, by or at the direction of the board of
directors, the president or the secretary, and if mailed, such notice shall be
deemed to be delivered when deposited in the United States mail, postage
prepaid, addressed to the stockholder at his, her or its address as the same
appears on the records of the corporation. Attendance of a person at a meeting
shall constitute a waiver of notice of such meeting, except when the person
attends for the express purpose of objecting at the beginning of the meeting to
the transaction of any business because the meeting is not lawfully called or
convened.
Section 5. Stockholders List. The officer having charge of the stock ledger
of the corporation shall make, at least 10 days before every meeting of the
stockholders, a complete list of the stockholders entitled to vote at such
meeting arranged in alphabetical order, showing the address of each stockholder
and the number of shares registered in the name of each stockholder. Such list
shall be open to the examination of any stockholder, for any purpose germane to
the meeting, during ordinary business hours, for a period of at least 10 days
prior to the meeting, either at a place within the city where the meeting is to
be held, which place shall be specified in the notice of the meeting or, if not
so specified, at the place where the meeting is to be held. The list shall also
be produced and kept at the time and place of the meeting during the whole time
thereof, and may be inspected by any stockholder who is present.
Section 6. Quorum. Except as otherwise provided by applicable law or by the
corporation's certificate of incorporation, a majority of the outstanding shares
of the corporation entitled to vote, represented in person or by proxy, shall
constitute a quorum at a meeting of stockholders. If less than a majority of the
outstanding shares are represented at a meeting, a majority of the shares so
represented may adjourn the meeting from time to time in accordance with Section
7 of this Article, until a quorum shall be present or represented.
Section 7. Adjourned Meetings. When a meeting is adjourned to another time
and place, notice need not be given of the adjourned meeting if the time and
place thereof are announced at the meeting, at which the adjournment is taken.
At the adjourned meeting the corporation may transact any business which might
have been transacted at the original meeting. If the adjournment is for more
than thirty days, or if after the adjournment a new record date is fixed for the
adjourned meeting, a notice of the adjourned meeting shall be given to each
stockholder of record entitled to vote at the meeting.
Section 8. Vote Required. When a quorum is present, the affirmative vote of
the majority of shares present in person or represented by proxy at the meeting
and entitled to vote on the subject matter shall be the act of the stockholders,
unless the question is one upon which by express provisions of an applicable law
or of the corporation's certificate of incorporation a
-2-
<PAGE>
different vote is required, in which case such express provision shall
govern and control the decision of such question. Where a separate vote by class
is required, the affirmative vote of the majority of shares of such class
present in person or represented by proxy at the meeting shall be the act of
such class, unless the question is one upon which by express provisions of an
applicable law or of the corporation's certificate of incorporation a different
vote is required, in which case such express provision shall govern and control
the decision of such question.
Section 9. Voting Rights. Except as otherwise provided by the General
Corporation Law of the State of Delaware or by the certificate of incorporation
of the corporation or any amendments thereto, every stockholder shall at every
meeting of the stockholders be entitled to one vote in person or by proxy for
each share of common stock held by such stockholder.
Section 10. Proxies. Each stockholder entitled to vote at a meeting of
stockholders or to express consent or dissent to corporate action in writing
without a meeting may authorize another person(s) to act for him, her or it by
proxy. Every proxy must be signed by the stockholder granting the proxy or by
his, her or its attorney-in-fact. No proxy shall be voted or acted upon after
three years from its date, unless the proxy provides for a longer period. A duly
executed proxy shall be irrevocable if it states that it is irrevocable and if,
and only as long as, it is coupled with an interest sufficient in law to support
an irrevocable power. A proxy may be made irrevocable regardless of whether the
interest with which it is coupled is an interest in the stock itself or an
interest in the corporation generally.
Section 11. Action by Written Consent. Unless otherwise provided in the
corporation's certificate of incorporation, any action required to be taken at
any annual or special meeting of stockholders of the corporation, or any action
which may be taken at any annual or special meeting of such stockholders, may be
taken without a meeting, without prior notice and without a vote, if a
consent(s) in writing, setting forth the action so taken and bearing the dates
of signature of the stockholders who signed the consent(s), shall be signed by
the holders of outstanding shares of stock having not less than a majority of
the shares entitled to vote, or, if greater, not less than the minimum number of
votes that would be necessary to authorize or take such action at a meeting at
which all shares entitled to vote thereon were present and voted and shall be
delivered to the corporation by delivery to its registered office in the State
of Delaware, or the corporation's principal place of business, or an officer or
agent of the corporation having custody of the book(s) in which proceedings of
meetings of the stockholders are recorded. Delivery made to the corporation's
registered office shall be by hand or by certified or registered mail, return
receipt requested, provided, however, that no consent(s) delivered by certified
or registered mail shall be deemed delivered until such consent(s) are actually
received at the registered office. All consents properly delivered in accordance
with this section shall be deemed to be recorded when so delivered. No written
consent shall be effective to take the corporate action referred to therein
unless, within sixty days of the earliest dated consent delivered to the
corporation as required by this section, written consents signed by the holders
of a sufficient number of shares to take such corporate action are so recorded.
Prompt notice of the taking of the corporate action without a meeting by less
than unanimous written consent shall be given to those stockholders who have not
consented in writing. Any action taken pursuant to
-3-
<PAGE>
such written consent(s) of the stockholders shall have the same force and effect
as if taken by the stockholders at a meeting thereof.
ARTICLE III
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the board of directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the first board shall be one (1), which number may be
increased or decreased from time to time by resolution of the board. The
directors shall be elected by a plurality of the votes of the shares present in
person or represented by proxy at the meeting and entitled to vote in the
election of directors. The directors shall be elected in this manner at the
annual meeting of the stockholders, except as provided in Section 4 of this
Article III. Each director elected shall hold office until a successor is duly
elected and qualified or until his or her earlier death, resignation or removal
as hereinafter provided.
Section 3. Removal and Resignation. Any director or the entire board of
directors may be removed at any time, with or without cause, by the holders of a
majority of the shares then entitled to vote at an election of directors;
provided however, whenever the holders of any class or series are entitled to
elect one or more directors by the provisions of the corporation's certificate
of incorporation, the provisions of this section shall apply, in respect to the
removal without cause or a director or directors so elected, to the vote of the
holders of the outstanding shares of that class or series and not to the vote of
the outstanding shares as a whole; provided further, in the event any of the
stockholders of the corporation have entered into an agreement which provides
for the manner in which the directors of the corporation are to be elected, and
such stockholders have so caused the election of such directors, a director(s)
may be removed from the board of directors only in accordance with such
agreement (as the same may be amended from time to time, the "Stockholders
Agreement"), for so long as (i) such agreement has been filed with the
corporation and (ii) has not been terminated. Any director may resign at any
time upon written notice to the corporation.
Section 4. Vacancies. Except as otherwise provided by the certificate of
incorporation of the corporation or any amendments thereto, vacancies and newly
created directorships resulting from any increase in the number of directors may
be filled by a majority vote of the holders of the corporation's outstanding
stock entitled to vote thereon. Each director so chosen shall hold office until
a successor is duly elected and qualified or until his or her earlier death,
resignation or removal as herein provided.
Section 5. Annual Meetings. The annual meeting of each newly elected board
of directors shall be held without other notice than this by-law immediately
after, and at the same place as, the annual meeting of Stockholders.
-4-
<PAGE>
Section 6. Other Meetings. Regular meetings, other than the annual meeting,
of the board of directors may be held without notice at such time and at such
place as shall from time to time be determined by resolution of the board.
Special meetings of the board of directors may be called by or at the request of
the president or vice president on at least 24 hours notice to each director,
either personally, by telephone, by mail, or by telegraph; in like manner and on
like notice the president must call a special meeting on the written request of
at least a majority of the directors.
Section 7. Quorum, Required Vote and Adjournment. A majority of the total
number of directors shall constitute a quorum for the transaction of business.
The vote of a majority of directors present at a meeting at which a quorum is
present shall be the act of the board of directors. If a quorum shall not be
present at any meeting of the board of directors, the directors present thereat
may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The board of directors may, by resolution passed by
a majority of the whole board, designate one or more committees, each committee
to consist of one or more of the directors of the corporation, which to the
extent provided in such resolution or these by-laws shall have and may exercise
the powers of the board of directors in the management and affairs of the
corporation except as otherwise limited by law. The board of directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee(s) shall have such name(s) as may be determined from time to time by
resolution adopted by the board of directors. Each committee shall keep regular
minutes of its meetings and report the same to the board of directors when
required.
Section 9. Committee Rules. Each committee of the board of directors may
fix its own rules of procedure and shall hold its meetings as provided by such
rules, except as may otherwise be provided by a resolution of the board of
directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
members alternate, if alternates are designated by the board of directors as
provided in Section 8 of this Article III, of such committee is or are absent or
disqualified, the member(s) thereof present at any meeting and not disqualified
from voting, whether or not such member(s) constitute a quorum, may unanimously
appoint another member of the board of directors to act at the meeting in place
of any such absent or disqualified member.
Section 10. Communications Equipment. Members of the board of directors or
any committee thereof may participate in and act at any meeting of such board or
committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
-5-
<PAGE>
Section 11. Waiver of Notice and Presumption of Assent. Any member of the
board of directors or any committee thereof who is present at a meeting shall be
conclusively presumed to have waived notice of such meeting except when such
member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the secretary of the
corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by the
corporation's certificate of incorporation, any action required or permitted to
be taken at any meeting of the board of directors, or of any committee thereof,
may be taken without a meeting if all members of the board or committee, as the
case may be, consent thereto in writing, and the writing(s) are filed with the
minutes of proceedings of the board or committee.
ARTICLE IV
OFFICERS
Section 1. Number. The officers of the corporation shall be elected by the
board of directors and shall consist of a chairman, if any is elected, a
president, one or more vice presidents, a secretary, a treasurer, and such other
officers and assistant officers as may be deemed necessary or desirable by the
board of directors. Any number of offices may be held by the same person, except
that no person may simultaneously hold the office of president and secretary. In
its discretion, the board of directors may choose not to fill any office for any
period as it may deem advisable.
Section 2. Election and Term of Office. The officers of the corporation
shall be elected annually by the board of directors at its first meeting held
after each annual meeting of stockholders or as soon after as conveniently may
be. The president shall appoint other officers to serve for such terms as he or
she deems desirable. Vacancies may be filled or new offices created and filled
at any meeting of the board of directors. Each officer shall hold office until a
successor is duly elected and qualified or until his or her earlier death,
resignation or removal as hereinafter provided.
Section 3. Removal. Any officer or agent elected by the board of directors
may be removed by the board of directors whenever in its judgment the best
interests of the corporation would be served thereby, but such removal shall be
without prejudice to the contract rights, if any, of the person so removed.
-6-
<PAGE>
Section 4. Vacancies. Any vacancy occurring in any office because of death,
resignation, removal, disqualification or otherwise, may be filled by the board
of directors for the unexpired portion of the term by the board of directors
then in office.
Section 5. Compensation. Compensation of all officers shall be fixed by the
board of directors, and no officer shall be prevented from receiving such
compensation by virtue of his or her also being a director of the corporation.
Section 6. The President. The president shall be the chief executive
officer of the corporation. In the absence of the Chairman of the Board or if a
Chairman of the Board shall have not been elected, the president (i) shall
preside at all meetings of the stockholders and board of directors at which he
or she is present; (ii) subject to the powers of the board of directors, shall
have general charge of the business, affairs and property of the corporation,
and control over its officers, agents and employees; and (iii) shall see that
all orders and resolutions of the board of directors are carried into effect.
The president shall have such other powers and perform such other duties as may
be prescribed by the board of directors or as may be provided in these by-laws.
Section 7. Vice-presidents. The vice-president, if any, or if there shall
be more than one, the vice-presidents in the order determined by the board of
directors shall, in the absence or disability of the president, act with all of
the powers and be subject to all the restrictions of the president. The
vice-presidents shall also perform such other duties and have such other powers
as the board of directors, the president or these by-laws may, from time to
time, prescribe.
Section 8. The Secretary and Assistant Secretaries. The secretary shall
attend all meetings of the board of directors, all meetings of the committees
thereof and all meetings of the stockholders and record all the proceedings of
the meetings in a book(s) to be kept for that purpose. Under the president's
supervision, the secretary (i) shall give, or cause to be given, all notices
required to be given by these by-laws or by law; (ii) shall have such powers and
perform such duties as the board of directors, the president or these by-laws
may, from time to time, prescribe; and (iii) shall have custody of the corporate
seal of the corporation. The secretary, or an assistant secretary, shall have
authority to affix the corporate seal to any instrument requiring it and when so
affixed, it may be attested by his or her signature or by the signature of such
assistant secretary. The board of directors may give general authority to any
other officer to affix the seal of the corporation and to attest the affixing by
his or her signature. The assistant secretary, or if there be more than one, the
assistant secretaries in the order determined by the board of directors, shall,
in the absence or disability of the secretary, perform the duties and exercise
the powers of the secretary and shall perform such other duties and have such
other powers as the board of directors, the president, or secretary may, from
time to time, prescribe.
Section 9. The Treasurer and Assistant Treasurers. The treasurer (i) shall
have the custody of the corporate funds and securities; (ii) shall keep full and
accurate accounts of receipts and disbursements in books belonging to the
corporation; (iii) shall deposit all monies and other valuable effects in the
name and to the credit of the corporation as may be ordered by
-7-
<PAGE>
the board of directors; (iv) shall cause the funds of the corporation to be
disbursed when such disbursements have been duly authorized, taking proper
vouchers for such disbursements; (v) shall render to the president and the board
of directors, at its regular meeting or when the board of directors so requires,
an account of the corporation; and (vi) shall have such powers and perform such
duties as the board of directors, the president or these by-laws may, from time
to time, prescribe. If required by the board of directors, the treasurer shall
give the corporation a bond (which shall be rendered every six years) in such
sums and with such surety or sureties as shall be satisfactory to the board of
directors for the faithful performance of the duties of the office of treasurer
and for the restoration to the corporation, in case of death, resignation,
retirement, or removal from office, of all books, papers, vouchers, money, and
other property of whatever kind in the possession or under the control of the
treasurer belonging to the corporation. The assistant treasurer, or if there
shall be more than one, the assistant treasurers in the order determined by the
board of directors, shall in the absence or disability of the treasurer, perform
the duties and exercise the powers of the treasurer. The assistant treasurers
shall perform such other duties and have such other powers as the board of
directors, the president or treasurer may, from time to time, prescribe.
Section 10. Other Officers, Assistant Officers and Agents. Officers,
assistant officers and agents, if any, other than those whose duties are
provided for in these by-laws, shall have such authority and perform such duties
as may from time to time be prescribed by resolution of the board of directors.
Section 11. Absence or Disability of Officers. In the case of the absence
or disability of any officer of the corporation and of any person hereby
authorized to act in such officer's place during such officer's absence or
disability, the board of directors may by resolution delegate the powers and
duties of such officer to any other officer or to any director, or to any other
person whom it may select.
ARTICLE V
CERTIFICATES OF STOCK
Section 1. Form. Every holder of stock in the corporation shall be entitled
to have a certificate, signed by, or in the name of the corporation by (i) the
chairman of the board, the president or a vice-president and (ii) the secretary
or an assistant secretary of the corporation, certifying the number of shares
owned by such holder in the corporation. If such a certificate is countersigned
(1) by a transfer agent or an assistant transfer agent other than the
corporation or its employee or (2) by a registrar, other than the corporation or
its employee, the signature of any such chairman of the board, president,
vice-president, secretary, or assistant secretary may be facsimiles. In case any
officer(s) who have signed, or whose facsimile signature(s) have been used on,
any such certificate(s) shall cease to be such officer(s) of the corporation
whether because of death, resignation or otherwise before such certificate(s)
have been delivered by the corporation, such certificate(s) may nevertheless be
issued and delivered as though the person or persons who signed such
certificate(s) or whose facsimile signature(s) have been used thereon
-8-
<PAGE>
had not ceased to be such officer(s) of the corporation. All certificates
for shares shall be consecutively numbered or otherwise identified. The name of
the person to whom the shares represented thereby are issued, with the number of
shares and date of issue, shall be entered on the books of the corporation.
Shares of stock of the corporation shall only be transferred on the books of the
corporation by the holder of record thereof or by such holder's attorney duly
authorized in writing, upon surrender to the corporation of the certificate(s)
for such shares endorsed by the appropriate person(s), with such evidence of the
authenticity of such endorsement, transfer, authorization, and other matters as
the corporation may reasonably require, and accompanied by all necessary stock
transfer stamps. In that event, it shall be the duty of the corporation to issue
a new certificate to the person entitled thereto, cancel the old certificate(s),
and record the transaction on its books. The board of directors may appoint a
bank or trust company organized under the laws of the United States or any state
thereof to act as its transfer agent or registrar, or both in connection with
the transfer of any class or series of securities of the corporation.
Section 2. Lost Certificates. The board of directors may direct a new
certificate(s) to be issued in place of any certificate(s) previously issued by
the corporation alleged to have been lost, stolen, or destroyed, upon the making
of an affidavit of that fact by the person claiming the certificate of stock to
be lost, stolen, or destroyed. When authorizing such issue of a new
certificate(s), the board of directors may, in its discretion and as a condition
precedent to the issuance thereof, require the owner of such lost, stolen, or
destroyed certificate(s), or his or her legal representative, to give the
corporation a bond sufficient to indemnify the corporation against any claim
that may be made against the corporation on account of the loss, theft or
destruction of any such certificate or the issuance of such new certificate.
Section 3. Fixing a Record Date for Stockholder Meetings. In order that the
corporation may determine the stockholders entitled to notice of or to vote at
any meeting of stockholders or any adjournment thereof, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted by the board of directors, and
which record date shall not be more than sixty nor less than ten days before the
date of such meeting. If no record date is fixed by the board of directors, the
record date for determining stockholders entitled to notice of or to vote at a
meeting of stockholders shall be the close of business on the day immediately
preceding the day on which notice is given, or if notice is waived, at the close
of business on the day immediately preceding the day on which the meeting is
held. A determination of stockholders of record entitled to notice of or to vote
at a meeting of stockholders shall apply to any adjournment of the meeting;
provided, however, that the board of directors may fix a new record date for the
adjourned meeting.
Section 4. Fixing a Record Date for Action by Written Consent. In order
that the corporation may determine the stockholders entitled to consent to a
corporate action in writing without a meeting, the board of directors may fix a
record date, which record date shall not precede the date upon which the
resolution fixing the record date is adopted by the board of directors, and
which date shall not be more than ten days after the date upon which the
resolution fixing the record date is adopted by the board of directors. If no
record date has been fixed by the
-9-
<PAGE>
board of directors, the record date for determining stockholders entitled
to consent to corporate action in writing without a meeting, when no prior
action by the board of directors is required by statute, shall be the first date
on which a signed written consent setting forth the action taken or proposed to
be taken is delivered to the corporation by delivery to its registered office in
the State of Delaware, its principal place of business, or an officer or agent
of the corporation having custody of the book in which proceedings of meetings
of stockholders are recorded. Delivery made to the corporation's registered
office shall be by hand or by certified or registered mail, return receipt
requested. If no record date has been fixed by the board of directors and prior
action by the board of directors is required by statute, the record date for
determining stockholders entitled to consent to corporate action in writing
without a meeting shall be at the close of business on the day on which the
board of directors adopts the resolution taking such prior action.
Section 5. Fixing a Record Date for Other Purposes. In order that the
corporation may determine the stockholders entitled to receive payment of any
dividend or other distribution or allotment or any rights of the stockholders
entitled to exercise any rights in respect of any change, conversion or exchange
of stock, or for the purposes of any other lawful action, the board of directors
may fix a record date, which record date shall not precede the date upon which
the resolution fixing the record date is adopted, and which record date shall be
not more than sixty days prior to such action. If no record date is fixed, the
record date for determining stockholders for any such purpose shall be at the
close of business on the day on which the board of directors adopts the
resolution relating thereto.
Section 6. Registered Stockholders. Prior to the surrender to the
corporation of the certificate(s) for a share(s) of stock with a request to
record the transfer of such share(s), the corporation may treat the registered
owner as the person entitled to receive dividends, to vote, to receive
notifications, and otherwise to exercise all the rights and powers of an owner.
The corporation shall not be bound to recognize any equitable or other claim to
or interest in such share(s) on the part of any other person, whether or not it
shall have express or other notice thereof.
Section 7. Subscriptions for Stock. Unless otherwise provided for in the
subscription agreement, subscriptions for shares shall be paid in full at such
time, or in such installments and at such times, as shall be determined by the
board of directors. Any call made by the board of directors for payment on
subscriptions shall be uniform as to all shares of the same class or as to all
shares of the same series. In case of default in the payment of any installment
or call when such payment is due, the corporation may proceed to collect the
amount due in the same manner as any debt due the Corporation.
ARTICLE VI
GENERAL PROVISIONS
-10-
<PAGE>
Section 1. Dividends. Dividends upon the capital stock of the corporation,
subject to the provisions of the certificate of incorporation, if any, may be
declared by the board of directors at any regular or special meeting, pursuant
to law. Dividends may be paid in cash, in property, or in shares of the capital
stock, subject to the provisions of the certificate of incorporation. Before
payment of any dividend, there may be set aside out of any funds of the
corporation available for dividends such sum(s) as the directors from time to
time, in their absolute discretion, think proper as a reserve(s) to meet
contingencies, or for equalizing dividends, or for repairing or maintaining any
property of the corporation, or any other purpose and the directors may modify
or abolish any such reserve in the manner in which it was created.
Section 2. Checks, Drafts or Orders. All checks, drafts, or other orders
for the payment of money by or to the corporation and all notes and other
evidences of indebtedness issued in the name of the corporation shall be signed
by such officer(s), agent(s) of the corporation, and in such manner, as shall be
determined by resolution of the board of directors or a duly authorized
committee thereof.
Section 3. Contracts. The board of directors may authorize any officer(s),
or any agent(s), of the corporation to enter into any contract or to execute and
deliver any instrument in the name of and on behalf of the corporation, and such
authority may be general or confined to specific instances.
Section 4. Loans. The corporation may lend money to, or guarantee any
obligation of, or otherwise assist any officer or other employee of the
corporation or of its subsidiary, including any officer or employee who is a
director of the corporation or its subsidiary, whenever, in the judgment of the
directors, such loan, guaranty or assistance may reasonably be expected to
benefit the corporation. The loan, guaranty or other assistance may be with or
without interest, and may be unsecured, or secured in such manner as the board
of directors shall approve, including, without limitation, a pledge of shares of
stock of the corporation. Nothing in this section contained shall be deemed to
deny, limit or restrict the powers of guaranty or warranty of the corporation at
common law or under any statute.
Section 5. Fiscal Year. The fiscal year of the corporation shall be fixed
by resolution of the board of directors.
Section 6. Corporate Seal. The board of directors shall provide a corporate
seal which shall be in the form of a circle and shall have inscribed thereon the
name of the corporation and the words "Corporate Seal, Delaware." The seal may
be used by causing it or a facsimile thereof to be impressed or affixed or
reproduced or otherwise.
Section 7. Voting Securities Owned By Corporation. Voting securities in any
other corporation held by the corporation shall be voted by the president,
unless the board of directors specifically confers authority to vote with
respect thereto, which authority may be general or confined to specific
instances, upon some other person or officer. Any person authorized to vote
securities shall have the power to appoint proxies, with general power of
substitution.
-11-
<PAGE>
Section 8. Inspection of Books and Records. Any stockholder of record, in
person or by attorney or other agent shall, upon written demand under oath
stating the purpose thereof, have the right during the usual hours for business
to inspect for any proper purpose the corporation's stock ledger, a list of its
stockholders, and its other books and records, and to make copies or extracts
therefrom. A proper purpose shall mean any purpose reasonably related to such
person's interest as a stockholder. In every instance where an attorney or other
agent shall be the person who seeks the right to inspection, the demand under
oath shall be accompanied by a power of attorney or such other writing which
authorizes the attorney or other agent to so act on behalf of the stockholder.
The demand under oath shall be directed to the corporation at its registered
office in the State of Delaware or at its principal place of business.
Section 9. Section Headings. Section headings in these by-laws are for
convenience of reference only and shall not be given any substantive effect in
limiting or otherwise construing any provision herein.
Section 10. Inconsistent Provisions. In the event that any provision of
these by-laws is or becomes inconsistent with any provision of the corporation's
certificate of incorporation, the General Corporation Law of the State of
Delaware or any other applicable law, such provision of these by-laws shall not
be given any effect to the extent of such inconsistency but shall otherwise be
given full force and effect.
ARTICLE VII
AMENDMENTS
These by-laws may be amended, altered, or repealed and new by-laws adopted
at any meeting of the board of directors by a majority vote. The fact that the
power to adopt, amend, alter, or repeal the by-laws has been conferred upon the
board of directors shall not divest the stockholders of the same powers.
-12-
CERTIFICATE OF INCORPORATION
OF
NPR S.A., INC.
-------------------------------
I, THE UNDERSIGNED, in order to form a corporation for the purposes
hereinafter stated, under and pursuant to the provisions of the General
Corporation Law of the State of Delaware, as from time to time amended, do
hereby certify as follows:
FIRST: The name of the Corporation is
NPR S.A., INC.
SECOND: The registered office of the Corporation in the State of
Delaware is located at 30 Old Rudnick Lane, Suite 100, Dover, in the County of
Kent, Delaware. The name of the registered agent in the State of Delaware at
such address is LEXIS Document Services Inc.
THIRD: The purpose of the Corporation is to engage, directly or
indirectly, in any lawful act or activity for which corporations may be
organized under the General Corporation Law of the State of Delaware as from
time to time in effect.
FOURTH: The total authorized capital stock of the Corporation shall be
one thousand (1,000) shares of Common Stock, all of which are par value $.01 per
share. All to the same rights and privileges, subject to the same
qualifications, limitations and restrictions. Except as otherwise required by
applicable law, the holders of shares of Common Stock shall be entitled to one
vote per share on all matters to be voted on by the stockholders of the
Corporation.
FIFTH: The name and mailing address of the incorporator is as follows:
<PAGE>
Name Mailing Address
---- ---------------
David Wallace White & Case
1155 Avenue of the Americas
New York, New York 10036
SIXTH: The business of the Corporation shall be managed under the
direction of the Board of Directors except as otherwise provided by law. The
number of Directors of the Corporation shall be fixed from time to time by, or
in the manner provided in, the By-Laws. Election of Directors need not be by
written ballot unless the By-Laws of the Corporation shall so provided.
SEVENTH: The Board of Directors may make, alter or repeal the By-Laws
of the Corporation except as otherwise provided in the By-Laws adopted by the
Corporation's stockholders.
EIGHTH: The Directors of the Corporation shall be protected from
personal liability, through indemnification or otherwise, to the fullest extent
permitted under the General Corporation Law of the State of Delaware as from
time to time in effect.
1. A Director of the Corporation shall under no circumstances have any
personal liability to the Corporation or its stockholders for monetary damages
for breach of fiduciary duty as a Director except for those breaches and acts or
omissions with respect to which the General Corporation Law of the State of
Delaware, as from time to time amended, expressly provides that this provision
shall not eliminate or limit such personal liability of Directors. Neither the
modification or repeal of this paragraph 1 of Article EIGHTH nor any amendment
to said General Corporation Law that does not have retroactive application shall
limit the right of Directors hereunder to exculpation from personal liability
for any act or omission occurring prior to such amendment, modification or
repeal.
-2-
<PAGE>
2. The Corporation shall indemnify each Director and Officer of the
Corporation to the fullest extent permitted by applicable law, except as may be
otherwise provided in the Corporation's By-Laws, and in furtherance hereof the
Board of Directors is expressly authorized to amend the Corporation's By-Laws
from time to time to give full effect hereto, notwithstanding possible self
interest of the Directors in the action being taken. Neither the modification or
repeal of this paragraph 2 of Article EIGHTH nor any amendment to the General
Corporation Law of the State of Delaware that does not have retroactive
application shall limit the right of Directors and Officers to indemnification
hereunder with respect to any act or omission occurring prior to such
modification, amendment or repeal.
NINTH: The Corporation reserves the right to amend, alter, change or
repeal any provision contained in this Certificate of Incorporation in the
manner now or hereafter prescribed by statute, and all rights conferred upon
stockholders herein are granted subject to this reservation.
IN WITNESS WHEREOF, I have hereunto set my hand this 12th day of August
1997.
/s/ David Wallace
-----------------
David Wallace
Incorporator
-3-
<PAGE>
STATE OF NEW YORK )
: ss.:
COUNTY OF NEW YORK )
BE IT REMEMBERED, that on the 12th day of August, 1997, personally came
before me, Robyn Y. Choe, a Notary Public in and for the State and County
aforesaid, David Wallace, the party to the foregoing Certificate of
Incorporation, known to me personally to be such, and acknowledged the said
Certificate to be his act and deed, and that the facts therein stated are truly
set forth.
GIVEN under my hand and seal of office the day and year aforesaid.
/s/ Robyn Y. Choe
-----------------
Notary Public
-4-
BY-LAWS
OF
NPR S.A., INC.
ARTICLE I
STOCKHOLDERS
Section 1. Annual Meeting. The annual meeting of the stockholders of
the Corporation shall be held either within or without the State of Delaware, at
such date, time and place as may be determined by the Board of Directors and
designated in the call or in a waiver of notice thereof, for the purpose of
electing directors and for the transaction of such other business as may
properly be brought before the meeting.
Section 2. Special Meetings. Special meetings of the stockholders may
be called by the Board of Directors or by the President, and shall be called by
the President or by the Secretary upon the written request of the holders of
record of at least twenty-five percent (25%) of the shares of stock of the
Corporation, issued and outstanding and entitled to vote, at such times and at
such place either within or without the State of Delaware as may be stated in
the call or in a waiver of notice thereof.
Section 3. Notice of Meetings. Notice of the time, place and purpose of
every meeting of stockholders shall be delivered personally or mailed not less
than ten days nor more than sixty days previous thereto to each stockholder of
record entitled to vote, at such stockholder's post office address appearing
upon the records of the Corporation or at such other address as shall be
furnished in writing by him or her to the Corporation for such purpose. Such
further notice shall be given as may be required by law or by these By-Laws. Any
meeting may be held without notice if all stockholders entitled to vote are
present in person or by proxy, or if notice is waived in writing, either before
or after the meeting, by those not present.
Section 4. Quorum. The holders of record of at least a majority of the
shares of the stock of the Corporation, issued and outstanding and entitled to
vote, present in person or by proxy, shall, except as otherwise provided by law
or by these By-Laws, constitute a quorum at all meetings of the stockholders; if
there be no such quorum, the holders of a majority of such shares so present or
represented may adjourn the meeting from time to time until a quorum shall have
been obtained.
Section 5. Organization of Meetings. Meetings of the stockholders shall
be presided over by the Chairman of the Board, if there be one, or if the
Chairman of the Board is not present by the President, or if the President is
not present, by a chairman to be chosen at the meeting. The Secretary of the
Corporation, or in the Secretary of the Corporation's absence, an Assistant
Secretary, shall act as Secretary of the meeting, if present.
<PAGE>
Section 6. Voting. At each meeting of stockholders, except as otherwise
provided by statute or the Certificate of Incorporation, every holder of record
of stock entitled to vote shall be entitled to one vote in person or by proxy
for each share of such stock standing in his or her name on the records of the
Corporation. Elections of directors shall be determined by a plurality of the
votes cast and, except as otherwise provided by statute, the Certificate of
Incorporation, or these By-Laws, all other action shall be determined by a
majority of the votes cast at such meeting. Each proxy to vote shall be in
writing and signed by the stockholder or by such stockholder's duly authorized
attorney.
At all elections of directors, the voting shall be by ballot or in such
other manner as may be determined by the stockholders present in person or by
proxy entitled to vote at such election. With respect to any other matter
presented to the stockholders for their consideration at a meeting, any
stockholder entitled to vote may, on any question, demand a vote by ballot.
A complete list of the stockholders entitled to vote at each such
meeting, arranged in alphabetical order, with the address of each, and the
number of shares registered in the name of each stockholder, shall be prepared
by the Secretary and shall be open to the examination of any stockholder, for
any purpose germane to the meeting, during ordinary business hours, for a period
of at least ten days prior to the meeting, either at a place within the city
where the meeting is to be held, which place shall be specified in the notice of
the meeting, or, if not so specified, at the place where the meeting is to be
held. The list shall also be produced and kept at the time and place of the
meeting during the whole time thereof, and may be inspected by any stockholder
who is present.
Section 7. Inspectors of Election. The Board of Directors in advance of
any meeting of stockholders may appoint one or more Inspectors of Election to
act at the meeting or any adjournment thereof. If Inspectors of Election are not
so appointed, the chairman of the meeting may, and on the request of any
stockholder entitled to vote shall, appoint one or more Inspectors of Election.
Each Inspector of Election, before entering upon the discharge of his duties,
shall take and sign an oath faithfully to execute the duties of Inspector of
Election at such meeting with strict impartiality and according to the best of
his or her ability. If appointed, Inspectors of Election shall take charge of
the polls and, when the vote is completed, shall make a certificate of the
result of the vote taken and of such other facts as may be required by law.
Section 8. Action by Consent. Any action required or permitted to be
taken at any meeting of stockholders may be taken without a meeting, without
prior notice and without a vote, if, prior to such action, a written consent or
consents thereto, setting forth such action, is signed by the holders of record
of shares of the stock of the Corporation, issued and outstanding and entitled
to vote thereon, having not less than the minimum number of votes that would be
necessary to authorize or take such action at a meeting at which all shares
entitled to vote thereon were present and voted.
-2-
<PAGE>
ARTICLE II
DIRECTORS
Section 1. General Powers. The business and affairs of the corporation
shall be managed by or under the direction of the Board of Directors.
Section 2. Number, Election and Term of Office. The number of directors
which shall constitute the board shall be up to (9) nine members, which number
may be increased or decreased from time to time by resolution of the Board;
provided, that such number shall be increased to such number of directors which
are designated pursuant to the Stockholders Agreement entered into by the
corporation and the stockholders of the corporation, (as in effect from time to
time, the "Stockholders Agreement") for so long as (i) such agreement has been
filed with the Corporation and (ii) has not been terminated. The following
persons shall be elected to the corporation's Board of Directors:
(a) up to three (3) representatives designated by Pyramid Ventures,
Inc. ("Pyramid");
(b) up to three (3) representatives designated by Berkshire Fund
III, a Limited Partnership ("Berkshire"); and
(c) the Chief Executive Officer of the Corporation; and
(d) up to two representatives designated by the Stockholders owning
shares of Common Stock representing a majority of the voting power to elect
directors determined by the vote or consent of such Stockholders in accordance
with the provisions of the Corporation's Articles of Incorporation.
The directors shall be elected by a plurality of the votes of the
shares present in person or represented by proxy at the meeting and entitled to
vote in the election of directors. The directors shall be elected in this manner
at the annual meeting of the stockholders, except as provided in Section 4 of
this Article II. Each director elected shall hold office until a successor is
duly elected and qualified or until his or her earlier death, resignation or
removal as hereinafter provided.
Section 3. Removal and Resignation. The removal from the Corporation's
Board of Directors or any such committee, with or without cause, of any
representative designated hereunder by Pyramid, Berkshire or the Stockholders
shall be at the written request of the Stockholders which have the right to
designate such representative hereunder, but only upon such written request and
under no other circumstances.
Section 4. Vacancies. In the event that any representative designated
hereunder by Pyramid, Berkshire or the Stockholders for any reason ceases to
serve as a member of the Board of Directors or any committee thereof during such
representative's term of office, the
-3-
<PAGE>
resulting vacancy on the Board of Directors or committee shall be filled by a
representative designated by Pyramid, Berkshire or the Stockholders,
respectively, as provided pursuant to Section 2 above.
Section 5. Annual Meetings. The annual meeting of each newly elected
Board of Directors shall be held without other notice than this by-law
immediately after, and at the same place as, the annual meeting of stockholders.
Section 6. Other Meetings and Notice. Regular meetings, other than the
annual meeting, of the Board of Directors may be held without notice at such
time and at such place as shall from time to time be determined by resolution of
the Board. Special meetings of the directors may be called by or at the request
of the president, or vice president on at least 24 hours notice to each
director, either personally, by telephone, by mail, or by telegraph; in like
manner and on like notice the president must call a special meeting on the
written request of at least a majority of the Directors.
Section 7. Quorum, Required Vote and Adjournment. A majority of the
total number of directors shall constitute a quorum for the transaction of
business. The vote of a majority of directors present at a meeting at which a
quorum is present shall be the act of the Board of Directors. If a quorum shall
not be present at any meeting of the Board of Directors, the directors present
thereat may adjourn the meeting from time to time, without notice other than
announcement at the meeting, until a quorum shall be present.
Section 8. Committees. The Board of Directors may, by resolution passed
by a majority of the whole Board, designate one or more committees, each
committee to consist of one or more of the directors of the Corporation, which
to the extent provided in such resolution or these by-laws shall have and may
exercise the powers of the Board of Directors in the management and affairs of
the corporation except as otherwise limited by law. The Board of Directors may
designate one or more directors as alternate members of any committee, who may
replace any absent or disqualified member at any meeting of the committee. Such
committee or committees shall have such name or names as may be determined from
time to time by resolution adopted by the Board of Directors. Each committee
shall keep regular minutes of its meetings and report the same to the Board of
Directors when required.
Section 9. Committee Rules. Each committee of the Board of Directors
may fix its own rules of procedure and shall hold its meetings as provided by
such rules, except as may otherwise be provided by a resolution of the Board of
Directors designating such committee. Unless otherwise provided in such a
resolution, the presence of at least a majority of the members of the committee
shall be necessary to constitute a quorum. In the event that a member and that
member's alternate, if alternates re designated by the Board of Directors as
provided in Section 8 of this Article II, of such committee is or are absent or
disqualified, the member or members thereof present at the meeting and not
disqualified from voting, whether or not such member or members constitute a
quorum, may unanimously appoint another member of the Board of Directors to act
at the meeting in place of any such absent or disqualified member.
-4-
<PAGE>
Section 10. Communications Equipment. Members of the Board of Directors
or any committee thereof may participate in and act at any meeting of such Board
of committee through the use of a conference telephone or other communications
equipment by means of which all persons participating in the meeting can hear
each other, and participation in the meeting pursuant to this section shall
constitute presence in person at the meeting.
Section 11. Waiver of Notice and Presumption of Assent. Any member of
the Board of Directors or any committee thereof who is present at a meeting
shall be conclusively presumed to have waived notice of such meeting except when
such member attends for the express purpose of objecting at the beginning of the
meeting to the transaction of any business because the meeting is not lawfully
called or convened. Such member shall be conclusively presumed to have assented
to any action taken unless his or her dissent shall be entered in the minutes of
the meeting or unless his or her written dissent to such action shall be filed
with the person acting as the Secretary of the meeting before the adjournment
thereof or shall be forwarded by registered mail to the Secretary of the
Corporation immediately after the adjournment of the meeting. Such right to
dissent shall not apply to any member who voted in favor of such action.
Section 12. Action by Written Consent. Unless otherwise restricted by
the Certificate of Incorporation, any action required or permitted to be taken
at any meeting of the Board of Directors, or of any committee thereof, may be
taken without a meeting if all members of the Board of committee, as the case
may be, consent thereto in writing, and the writing or writings are filed with
the minutes of proceedings of the Board of committee.
ARTICLE III
OFFICERS
Section 1. Titles and Election. The officers of the Corporation, who
shall be chosen by the Board of Directors at its first meeting after each annual
meeting of stockholders, shall be a President and a Secretary. The Board of
Directors from time to time may elect a Chairman of the Board, one or more Vice
Presidents, Assistant Secretaries, Assistant Treasurers and such other officers
and agents as it shall deem necessary, and may define their powers and duties.
Any number of offices may be held by the same person.
Section 2. Terms of Office. Officers shall hold office until their
successors are chosen and qualify.
Section 3. Removal. Any officer may be removed, either with or without
cause, at any time, by the affirmative __________ of a majority of the Board of
Directors.
Section 4. Resignations. Any officer may resign at any time by giving
written notice to the Board of Directors or to the Secretary. Such resignation
shall take effect at the time specified therein, and, unless otherwise specified
therein, the acceptance of such resignation shall not be necessary to make it
effective.
-5-
<PAGE>
Section 5. Vacancies. If the office of any officer or agent becomes
vacant by reason of death, resignation, retirement, disqualification, removal
from office or otherwise, the directors may choose a successor, who shall hold
office for the unexpired term in respect of which such vacancy occurred.
Section 6. Chairman of the Board. The Chairman of the Board of
Directors, if one be elected, shall preside at all meetings of the Board of
Directors and of the stockholders, and the Chairman shall have and perform such
other duties as from time to time may be assigned to the Chairman by the Board
of Directors.
Section 7. President. The President shall be the chief executive
officer of the Corporation and, in the absence of the Chairman, shall preside at
all meetings of the Board of Directors, and of the stockholders. The President
shall exercise the powers and perform the duties usual to the chief executive
officer and, subject to the control of the Board of Directors, shall have
general management and control of the affairs and business of the Corporation;
the President shall appoint and discharge employees and agents of the
Corporation (other than officers elected by the Board of Directors) and fix
their compensation; and the President shall see that all orders and resolutions
of the Board of Directors are carried into effect. The President shall have the
power to execute bonds, mortgages and other contracts, agreements and
instruments of the Corporation, and shall do and perform such other duties as
from time to time may be assigned to the President by the Board of Directors.
Section 8. Vice-President. If chosen, the Vice Presidents, in the order
of their seniority, shall, in the absence or disability of the President,
exercise all of the powers and duties of the President. Such Vice Presidents
shall have the power to execute bonds, notes, mortgages and other contracts,
agreements and instruments of the Corporation, and shall do and perform such
other duties incident to the office of the Vice President and as the Board of
Directors, or the President shall direct.
Section 9. Secretary. The Secretary shall attend all sessions of the
Board and all meetings of the stockholders and record all votes and the minutes
of proceedings in a book to be kept for that purpose. The Secretary shall give,
or cause to be given, notice of all meetings of the stockholders and of the
Board of Directors, and shall perform such other duties as may be prescribed by
the Board of Directors. The Secretary shall affix the corporate seal to any
instrument requiring it ______d when so affixed, it shall be attested by the
signature of the Secretary or an Assistant Secretary or the Treasurer or an
Assistant Treasurer who may affix the seal to any such instrument in the event
of the absence or disability of the Secretary. The Secretary shall have and be
the custodian of the stock records and all other books, records and papers of
the Corporation (other than financial) and shall see that all books, reports,
statements, certificates and other documents and records required by law are
properly kept and filed.
Section 10. Treasurer. The Treasurer shall have the custody of the
corporate funds and securities and shall keep full and accurate accounts of
receipts and disbursements in books belonging to the Corporation and shall
deposit all moneys, and other valuable effects in
-6-
<PAGE>
the name and to the credit of the Corporation, in such depositories as may be
designated by the Board of Directors. The Treasurer shall disburse the funds of
the Corporation as may be ordered by the Board, taking proper vouchers for such
disbursements, and shall render to the directors whenever they may require it,
an account of all his or her transactions as Treasurer and of the financial
condition of the Corporation.
Section 11. Duties of Officers may be Delegated. In case of the absence
or disability of any officer of the Corporation, or for any other reason that
the Board may deem sufficient, the Board may delegate, for the time being, the
powers or duties, or any of them, of such officer to any other officer, or to
any director.
ARTICLE IV
INDEMNIFICATION
Section 1. Actions by Others. The Corporation (1) shall indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action, suit or proceeding, whether civil,
criminal, administrative or investigative (other than an action by or in the
right of the Corporation) by reason of the fact that he or she is or was a
director or an officer of the Corporation and (2) except as otherwise required
by Section 3 of this Article, may indemnify any person who was or is a party or
is threatened to be made a party to any threatened, pending or completed action,
suit or proceeding, whether civil, criminal, administrative or investigative
(other than an action by or in the right of the Corporation) by reason of the
fact that he or she is or was an employee or agent of the Corporation, or is or
was serving at the request of the Corporation as a director, officer, employee,
agent of or participant in another corporation, partnership, joint venture,
trust or other enterprise, against expenses (including attorneys' fees),
____ents, fines and amounts actually and reasonably incurred by such person in
connection with such action, suit or proceeding if he or she acted in good faith
and in a manner he or she reasonably believed to be in or not opposed to in the
best interests of the Corporation, and with respect to any criminal action or
proceeding, had no reasonable cause to believe his or her conduct was unlawful.
The termination of any action, suit or proceeding by judgment, order,
settlement, conviction, or upon a plea of nolo contendere or its equivalent,
shall not, of itself, create a presumption that the person did not act in good
faith and in a manner which such person reasonably believed to be in or not
opposed to the best interests of the Corporation, and, with respect to any
criminal action or proceeding, had reasonable cause to believe that his or her
conduct was unlawful.
Section 2. Actions by or in the Right of the Corporation. The
Corporation shall indemnify any person who was or is a party or is threatened to
be made a party to any threatened, pending or completed action or suit by or in
the right of the Corporation to procure a judgment in its favor by reason of the
fact that he or she is or was a director, officer, employee or agent of the
Corporation, or is or was serving at the request of the Corporation as a
director, officer, employee, agent of or participant in another corporation,
partnership, joint venture, trust or other enterprise against expenses
(including attorneys' fees) actually and reasonably incurred by such person in
connection with the defense or settlement of such action or suit if he or she
acted in
-7-
<PAGE>
good faith and in a manner he or she reasonably believed to be in or not opposed
to the best interests of the Corporation and except that no indemnification
shall be made in respect of any claim, issue or matter as to which such person
shall have been adjudged to be liable for negligence or misconduct in the
performance of his or her duty to the Corporation unless and only to the extent
that the Delaware Court of Chancery or the court in which such action or suit
was brought shall determine upon application that, despite the adjudication of
liability but in view of all the circumstances of the case, such person is
fairly and reasonably entitled to indemnity for such expenses which the Delaware
Court of Chancery or such other court shall deem proper.
Section 3. Successful Defense. To the extent that a person who is or
was a director, officer, employee or agent of the Corporation has been
successful on the merits or otherwise in defense of any action, suit or
proceeding referred to in Section 1 or Section 2 or this Article, or in defense
of any claim, issue or matter therein, such person shall be indemnified against
expenses (including attorneys' fees) actually and reasonably incurred by him or
her in connection therewith.
Section 4. Specific Authorization. Any indemnification under Section 1
or Section 2 of this Article (unless ordered by a court) shall be made by the
Corporation only as authorized in the specific case upon a determination that
indemnification of the director, officer, employee or agent is proper in the
circumstances because such person has met the applicable standard of conduct set
forth in said Sections 1 and 2. Such determinations shall be made (1) by the
Board of Directors by a majority vote of a quorum consisting of directors who
were not parties to such action, suit or proceeding, or (2) if such a quorum is
not obtainable, or, even if obtainable a quorum of disinterested directors so
directs, by independent legal counsel in a written opinion, or (3) by the
stockholders.
Section 5. Advance of Expenses. Expenses incurred by any person who may
have a right of indemnification under this Article in defending a civil or
criminal action, suit or proceeding may be paid by the Corporation in advance of
the final disposition of such action, suit or proceeding as authorized by the
Board of Directors in the specific case upon receipt of an undertaking by or on
behalf of the director, officer, employee or agent to repay such amount unless
it shall ultimately be determined that he or she is entitled to be indemnified
by the Corporation pursuant to this Article.
Section 6. Right of Indemnity not Exclusive. The indemnification
provided by this Article shall not be deemed exclusive of any other rights to
which those seeking indemnification may be entitled under any by-law, agreement,
vote or stockholders or disinterested directors or otherwise, both as to action
in his or her official capacity and as to action in another capacity while
holding such office, and shall continue as to a person who has ceased to be a
director, employee or agent and shall inure to the benefit of the heirs,
executors and administrators of such a person.
Section 7. Insurance. The Corporation may purchase and maintain
insurance on behalf of any person who is or was a director, officer, employee or
agent of the Corporation, or is
-8-
<PAGE>
or was serving at the request of the Corporation as a director, officer,
employee or agent of or participant in another corporation, partnership, joint
venture, trust or other enterprise against any liability asserted against him or
her and incurred by him or her in any such capacity, or arising out of such
person's status as such, whether or not the Corporation would have the power to
indemnify him or her against such liability under the provisions of this
Article, Section 145 of the General Corporation Law of the State of Delaware or
otherwise.
Section 8. Invalidity of any Provisions of this Article. The invalidity
or unenforceability of any provision of this Article shall not affect the
validity or enforceability of the remaining provisions of this Article.
ARTICLE V
CAPITAL STOCK
Section 1. Certificates. The interest of each stockholder of the
Corporation shall be evidenced by certificates for shares of stock in such form
as the Board of Directors may from time to time prescribe. The certificates of
stock shall be signed by the President or a Vice President and by the Secretary,
or the Treasurer, or an Assistant Secretary, or an Assistant Treasurer, sealed
with the seal of the Corporation or a facsimile thereof, and countersigned and
registered in such manner, if any, as the Board of Directors may by resolution
prescribe. Where any such certificate is countersigned by a transfer agent other
than the Corporation or its employee, or registered by a registrar other than
the Corporation or its employee, the signature of any such officer may be a
facsimile signature. In case any officer or officers who shall have signed, or
whose facsimile signature or signatures shall have been used on, any such
certificate or certificates shall cease to be such officer or officers of the
Corporation, whether because of death, resignation or otherwise, before such
certificate or certificates shall have been delivered by the Corporation, such
certificate or certificates may nevertheless be adopted by the Corporation and
be issued and delivered as though the person or persons who signed such
certificate or certificates or whose facsimile signature or signatures shall
have been used thereon had not ceased to be such officer or officers of the
Corporation.
Section 2. Transfer. The shares of stock of the Corporation shall be
transferred only upon the books of the Corporation by the holder thereof in
person or by his or her attorney, upon surrender for cancellation of
certificates for the same number of shares, with an assignment and power of
transfer endorsed thereon or attached thereto, duly executed, with such proof of
the authenticity of the signature as the Corporation or its agents may
reasonably require.
Section 3. Record Dates. The Board of Directors may fix in advance a
date, not less than ten nor more than sixty days preceding the date of any
meeting of stockholders, or the date for the payment of any dividend, or the
date for the distribution or allotment of any rights, or the date when any
change, conversion or exchange of capital stock shall go into effect, as a
record date for the determination of the stockholders entitled to notice of, and
to vote at, any such meeting, or entitled to receive payment of any such
dividend, or to receive any distribution or allotment of such rights, or to
exercise the rights in respect of any such change, conversion or
-9-
<PAGE>
exchange of capital stock, and in such case only such stockholders as shall be
stockholders of record on the date so fixed shall be entitled to such notice of,
and to vote at, such meeting, or to receive payment of such dividend, or to
receive such distribution or allotment or rights or to exercise such rights, as
the case may be, notwithstanding any transfer of any stock on the books of the
Corporation after any such record date fixed as aforesaid.
Section 4. Lost Certificates. In the event that any certificate of
stock is lost, stolen, destroyed or mutilated, the Board of Directors may
authorize the issuance of a new certificate of the same tenor and for the same
number of shares in lieu thereof. The Board may in its discretion, before the
issuance of such new certificate, require the owner of the lost, stolen,
destroyed or mutilated certificate, or the legal representative of the owner to
make an affidavit or affirmation setting forth such facts as to the loss,
destruction or mutilation as it deems necessary, and to give the Corporation a
bond in such reasonable sum as it directs to indemnify the Corporation.
ARTICLE VI
CHECKS, NOTES, ETC.
Section 1. Checks, Notes, Etc. All checks and drafts on the
Corporation's bank accounts and all bills of exchange and promissory notes, and
all acceptances, obligations and other instruments for the payment of money, may
be signed by the President, any Vice President or the Treasurer and may also be
signed by such other officer or officers, agent or agents, as shall be thereunto
authorized from time to time by the Board of Directors.
ARTICLE VII
MISCELLANEOUS PROVISIONS
Section 1. Offices. The registered office of the Corporation shall be
located at 1013 Centre Road, in the City of Wilmington, in the State of Delaware
and said corporation shall be the registered agent of this Corporation in charge
thereof. The Corporation may have other offices either within or without the
State of Delaware at such places as shall be determined from time to time by the
Board of Directors or the business of the Corporation may require.
Section 2. Fiscal Year. The fiscal year of the Corporation shall be
determined by the Board of Directors.
Section 3. Corporate Seal. The seal of the Corporation shall be
circular in form and contain the name of the Corporation, and the year and state
of its incorporation. Such seal may be altered from time to time at the
discretion of the Board of Directors.
Section 4. Books. There shall be kept at such office of the Corporation
as the Board of Directors shall determine, within or without the State of
Delaware, correct books and records of account of all its business and
transactions, minutes of the proceedings of its
-10-
<PAGE>
stockholders, Board of Directors and committees, and the stock book, containing
the names and addresses of the stockholders, the number of shares held by them,
respectively, and the dates when they respectively became the owners of record
thereof, and in which the transfer of stock shall be registered, and such other
books and records as the Board of Directors may from time to time determine.
Section 5. Voting of Stock. Unless otherwise specifically authorized by
the Board of Directors, all stock owned by the Corporation, other than stock of
the Corporation, shall be voted in person by proxy, by the President or any Vice
President of the Corporation on behalf of the Corporation.
ARTICLE VIII
AMENDMENTS
Section 1. Amendments. The vote of the holders of at least a majority
of the shares of stock of the Corporation, issued and outstanding and entitled
to vote, shall be necessary at any meeting of stockholders to amend or repeal
these By-Laws or to adopt new by-laws. These By-Laws may also be amended or
repealed, or new by-laws adopted, at any meeting of the Board of Directors by
the vote of at least a majority of the entire Board; provided that any by-law
adopted by the Board may be amended or repealed by the stockholders in the
manner set forth above.
Any proposal to amend or repeal these By-Laws or to adopt new by-laws
shall be stated in the notice of the meeting of the Board of Directors or the
stockholders, or in the waiver of notice thereof, as the case may be, unless all
of the directors or the holders or record of all of the shares of stock of the
Corporation, issued and outstanding and entitled to vote, are present at such
meeting.
-11-
THE HOLT GROUP, INC.,
as Issuer,
THE GUARANTORS NAMED HEREIN,
and
THE BANK OF NEW YORK,
as Trustee
-----------------------
INDENTURE
Dated as of January 21, 1998
-----------------------
9 3/4% Senior Notes due 2006
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.......................................... 1
SECTION 1.2. Incorporation by Reference of TIA.................... 21
SECTION 1.3. Rules of Construction................................ 22
ARTICLE II
THE NOTES
SECTION 2.1. Form and Dating...................................... 22
SECTION 2.2. Execution and Authentication......................... 23
SECTION 2.3. Registrar and Paying Agent........................... 24
SECTION 2.4. Paying Agent to Hold Assets in Trust................. 25
SECTION 2.5. Noteholder Lists..................................... 25
SECTION 2.6. Transfer and Exchange................................ 25
SECTION 2.7. Replacement Notes.................................... 31
SECTION 2.8. Outstanding Notes.................................... 32
SECTION 2.9. Treasury Notes....................................... 32
SECTION 2.10. Temporary Notes...................................... 32
SECTION 2.11. Cancellation......................................... 33
SECTION 2.12. Defaulted Interest................................... 33
SECTION 2.13. CUSIP Numbers........................................ 34
ARTICLE III
REDEMPTION
SECTION 3.1. Right of Redemption.................................. 35
SECTION 3.2. Notices to Trustee................................... 36
SECTION 3.3. Selection of Notes to Be Redeemed.................... 36
SECTION 3.4. Notice of Redemption................................. 36
SECTION 3.5. Effect of Notice of Redemption....................... 37
SECTION 3.6. Deposit of Redemption Price.......................... 38
SECTION 3.7. Notes Redeemed in Part............................... 38
i
<PAGE>
Page
----
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Notes..................................... 38
SECTION 4.2. Maintenance of Office or Agency...................... 39
SECTION 4.3. Limitation on Restricted Payments.................... 39
SECTION 4.4. Corporate and Partnership Existence.................. 41
SECTION 4.5. Payment of Taxes and Other Claims.................... 41
SECTION 4.6. Maintenance of Properties and Insurance.............. 41
SECTION 4.7. Compliance Certificate; Notice of Default............ 42
SECTION 4.8. Reports.............................................. 42
SECTION 4.9. Limitation on Status as Investment Company........... 43
SECTION 4.10. Limitation on Transactions with Affiliates........... 43
SECTION 4.11. Limitation on Incurrence of Additional
Indebtedness and Disqualified Capital Stock.......... 43
SECTION 4.12. Limitations on Dividends and Other Payment
Restrictions Affecting Subsidiaries.................. 45
SECTION 4.13. Reserved............................................. 46
SECTION 4.14. Limitation on Sales of Assets and Subsidiary Stock... 46
SECTION 4.15. Waiver of Stay, Extension or Usury Laws.............. 48
SECTION 4.16. Limitation on Liens Securing Indebtedness............ 49
SECTION 4.17. Rule 144A Information Requirement.................... 49
SECTION 4.18. Limitations on Lines of Business..................... 49
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1. Limitation on Merger, Sale or Consolidation.......... 49
SECTION 5.2. Successor Corporation Substituted.................... 50
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. Events of Default.................................... 51
SECTION 6.2. Acceleration of Maturity Date; Rescission
and Annulment........................................ 52
SECTION 6.3. Collection of Indebtedness and Suits for
Enforcement by Trustee............................... 53
ii
<PAGE>
Page
----
SECTION 6.4. Trustee May File Proofs of Claim..................... 54
SECTION 6.5. Trustee May Enforce Claims Without Possession
of Notes............................................. 55
SECTION 6.6. Priorities........................................... 55
SECTION 6.7. Limitation on Suits.................................. 56
SECTION 6.8. Unconditional Right of Holders to Receive
Principal, Premium and Interest...................... 56
SECTION 6.9. Rights and Remedies Cumulative....................... 57
SECTION 6.10. Delay or Omission Not Waiver......................... 57
SECTION 6.11. Control by Holders................................... 57
SECTION 6.12. Waiver of Existing or Past Default................... 57
SECTION 6.13. Undertaking for Costs................................ 58
SECTION 6.14. Restoration of Rights and Remedies................... 58
ARTICLE VII
TRUSTEE
SECTION 7.1. Duties of Trustee.................................... 59
SECTION 7.2. Rights of Trustee.................................... 60
SECTION 7.3. Individual Rights of Trustee......................... 61
SECTION 7.4. Trustee's Disclaimer................................. 61
SECTION 7.5. Notice of Default.................................... 62
SECTION 7.6. Reports by Trustee to Holders........................ 62
SECTION 7.7. Compensation and Indemnity........................... 62
SECTION 7.8. Replacement of Trustee............................... 63
SECTION 7.9. Successor Trustee by Merger, Etc..................... 64
SECTION 7.10. Eligibility; Disqualification........................ 64
SECTION 7.11. Preferential Collection of Claims Against Company.... 65
ARTICLE VIII
DISCHARGE; LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. Discharge; Option to Effect Legal Defeasance
or Covenant Defeasance............................... 65
SECTION 8.2. Legal Defeasance and Discharge....................... 65
SECTION 8.3. Covenant Defeasance.................................. 66
SECTION 8.4. Conditions to Legal or Covenant Defeasance........... 66
iii
<PAGE>
Page
----
SECTION 8.5. Deposited Cash and U.S. Government Obligations
to be Held in Trust; Other Miscellaneous Provisions.. 67
SECTION 8.6. Repayment to the Company............................. 67
SECTION 8.7. Reinstatement........................................ 68
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Supplemental Indentures Without Consent of Holders... 68
SECTION 9.2. Amendments, Supplemental Indentures and
Waivers with Consent of Holders...................... 70
SECTION 9.3. Compliance with TIA.................................. 71
SECTION 9.4. Revocation and Effect of Consents.................... 71
SECTION 9.5. Notation on or Exchange of Notes..................... 72
SECTION 9.6. Trustee to Sign Amendments, Etc...................... 72
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
SECTION 10.1. Repurchase of Notes at Option of the Holder
Upon a Change of Control............................. 73
ARTICLE XI
GUARANTEE
SECTION 11.1. Guarantee............................................ 75
SECTION 11.2. Execution and Delivery of Guarantee.................. 77
SECTION 11.3. Certain Bankruptcy Events............................ 77
SECTION 11.4. Limitation on Merger of Subsidiary Guaran-
tors and Release of Subsidiary Guarantors............ 78
SECTION 11.5. Future Subsidiary Guarantors......................... 78
ARTICLE XII
RESERVED
iv
<PAGE>
Page
----
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. TIA Controls......................................... 79
SECTION 13.2. Notices.............................................. 79
SECTION 13.3. Communications by Holders with Other Holders......... 80
SECTION 13.4. Certificate and Opinion as to Conditions Precedent... 80
SECTION 13.5. Statements Required in Certificate or Opinion........ 81
SECTION 13.6. Rules by Trustee, Paying Agent, Registrar............ 81
SECTION 13.7. Legal Holidays....................................... 81
SECTION 13.8. Governing Law........................................ 81
SECTION 13.9. No Adverse Interpretation of Other Agreements........ 82
SECTION 13.10. No Personal Liability of Stockholders, Officers
Directors, Employees................................. 82
SECTION 13.11. Successors........................................... 82
SECTION 13.12. Duplicate Originals.................................. 83
SECTION 13.13. Severability......................................... 83
SECTION 13.14. Table of Contents, Headings, Etc..................... 83
SECTION 13.15. Qualification of Indenture........................... 83
SECTION 13.16. Registration Rights.................................. 83
SIGNATURES............................................................. 84
EXHIBIT A -- FORM OF NOTE...................................................A-1
v
<PAGE>
CROSS-REFERENCE TABLE
TIA Indenture
Section Section
- ------- ---------
310(a)(1).................................................... 7.10
(a)(2).................................................... 7.10
(a)(3).................................................... N.A.
(a)(4).................................................... N.A.
(a)(5).................................................... 7.10
(b)....................................................... 7.8; 7.10; 13.2
(c)....................................................... N.A.
311(a)....................................................... 7.11
(b)....................................................... 7.11
(c)....................................................... N.A.
312(a)....................................................... 2.5
(b)....................................................... 13.3
(c)....................................................... 13.3
313(a)....................................................... 7.6
(b)(1).................................................... 7.6
(b)(2).................................................... 7.6
(c)....................................................... 7.6;13.2
(d)....................................................... 7.6
314(a)....................................................... 4.7(a); 4.8;
(b)....................................................... N.A.
(c)(1).................................................... 2.2; 7.2; 13.4
(c)(2).................................................... 7.2; 13.4
(c)(3).................................................... N.A.
(d)....................................................... N.A.
(e)....................................................... 13.5
(f)....................................................... N.A.
315(a)....................................................... 7.1(b)
(b)....................................................... 7.5; 7.6; 13.2
(c)....................................................... 7.1(a)
(d)....................................................... 6.11; 7.1(b), (c)
(e)....................................................... 6.13
316(a)(last sentence)........................................ 2.9
(a)(1)(A)................................................. 6.11
(a)(1)(B)................................................. 6.12
(a)(2).................................................... N.A.
(b)....................................................... 6.12; 6.7; 6.8
317(a)(1).................................................... 6.3
(a)(2).................................................... 6.4
(b)....................................................... 2.4
- --------------
N.A. means Not Applicable
Note: This Cross-Reference Table shall not, for any purpose, be deemed to be a
part of this Indenture.
vi
<PAGE>
INDENTURE, dated as of January 21, 1998, by and among The Holt Group, Inc.,
a Delaware corporation (the "Company"), Holt Cargo Systems, Inc., a Delaware
corporation, Holt Hauling and Warehousing System, Inc., a Pennsylvania
corporation, Wilmington Stevedores, Inc., a Delaware corporation, Murphy Marine
Services, Inc., a Delaware corporation, NPR Holding Corporation, a Delaware
corporation, NPR S.A., Inc., a Delaware corporation, NPR, Inc., a Delaware
corporation, and NPR-Navieras Receivables, Inc., a Delaware corporation, as
guarantors (the "Guarantors" or "Subsidiary Guarantors" and individually, each a
"Guarantor" or "Subsidiary Guarantor") and The Bank of New York, a New York
banking corporation, as trustee (the "Trustee").
Each party hereto agrees as follows for the benefit of each other party and
for the equal and ratable benefit of the Holders of (i) the Company's 9 3/4%
Series A Senior Notes due 2006 issued on the Closing Date, (ii) any Additional
Notes (as defined herein) that may be issued on any other Issue Date and (iii)
the Company's 9 3/4% Series B Senior Notes due 2006 to be exchanged for the
9 3/4% Series A Senior Notes due 2006. Except as otherwise provided herein, the
Notes (as defined herein) will be limited to $200,000,000 in aggregate principal
amount outstanding, of which $140,000,000 in aggregate principal amount will be
initially issued on the Closing Date. Subject to the conditions set forth
herein, the Company may issue up to an additional $60,000,000 aggregate
principal amount of Additional Notes.
ARTICLE I
DEFINITIONS AND INCORPORATION BY REFERENCE
SECTION 1.1. Definitions.
"Acquired Indebtedness" means Indebtedness or Disqualified Capital Stock of
any person existing at the time such person becomes a Subsidiary of the Company,
including by designation, or is merged or consolidated into or with the Company
or one of its Subsidiaries.
"Acquisition" means the purchase or other acquisition of any person or all
or substantially all the assets of any person by any other person, whether by
purchase, merger, consolidation, or other transfer, and whether or not for
consideration.
"Additional Notes" shall mean up to $60.0 million in aggregate principal
amount of the Company's 9 3/4% Series A Senior Notes due 2006 having identical
terms and conditions to the Original Notes; provided, however, that Additional
Notes issued after the Company has issued Exchange Notes shall have identical
terms and conditions to the Exchange Notes and must be issued pursuant to a
registration statement under the Securities Act; and provided, further, that the
issuance of any Additional Notes subsequent to the Closing Date pursuant to
Article II must be in compliance with Section 4.11.
<PAGE>
"Affiliate" means any person directly or indirectly controlling or
controlled by or under direct or indirect common control with the Company. For
purposes of this definition, the term "control" means the power to direct the
management and policies of a person, directly or through one or more
intermediaries, whether through the ownership of voting securities, by contract,
or otherwise, provided that, with respect to ownership interest in the Company
and its Subsidiaries, a Beneficial Owner of 10% or more of the total voting
power normally entitled to vote in the election of directors, managers or
trustees, as applicable, shall for such purposes be deemed to constitute
control.
"Affiliate Transaction" shall have the meaning specified in Section 4.10.
"Agent" means any Registrar, Paying Agent or co-Registrar.
"Asset Sale" shall have the meaning specified in Section 4.14.
"Asset Sale Offer" shall have the meaning specified in Section 4.14.
"Asset Sale Offer Amount" shall have the meaning specified in Section 4.14.
"Asset Sale Offer Period" shall have the meaning specified in Section 4.14.
"Asset Sale Offer Price" shall have the meaning specified in Section 4.14.
"Average Life" means, as of the date of determination, with respect to any
security or instrument, the quotient obtained by dividing (i) the sum of the
products (a) of the number of months from the date of determination to the date
or dates of each successive scheduled principal (or redemption) payment of such
security or instrument and (b) the amount of each such respective principal (or
redemption) payment by (ii) the sum of all such principal (or redemption)
payments.
"Bankruptcy Law" means Title 11, U.S. Code, or any similar Federal, state
or foreign law for the relief of debtors.
"Beneficial Owner" or "beneficial owner" for purposes of the definition of
Change of Control and Affiliate has the meaning attributed to it in Rules 13d-3
and 13d-5 under the Exchange Act (as in effect on the Issue Date), whether or
not applicable, except that a "person" shall be deemed to have "beneficial
ownership" of all shares that any such person has the right to acquire, whether
such right is exercisable immediately or only after the passage of time.
"Board of Directors" means, with respect to any person, the board of
directors of such person or any committee of the Board of Directors of such
person authorized, with respect to any particular matter, to exercise the power
of the board of directors of such person.
2
<PAGE>
"Board Resolution" means, with respect to any Person, a duly adopted
resolution of the Board of Directors of such Person.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York, New York are
authorized or obligated by law or executive order to close.
"Capital Stock" means, with respect to any corporation, any and all shares,
interests, rights to purchase (other than convertible or exchangeable
Indebtedness that is not itself otherwise capital stock), warrants, options,
participations or other equivalents of or interests (however designated) in
stock issued by that corporation.
"Capitalized Lease Obligation" means, as to any person, the obligations of
such Person under a lease that are required to be classified and accounted for
as capital lease obligations under GAAP and, for purposes of this definition,
the amount of such obligations at any date shall be the capitalized amount of
such obligations at such date, determined in accordance with GAAP.
"Cash" or "cash" means such coin or currency of the United States of
America as at the time of payment shall be legal tender for the payment of
public or private debts.
"Cash Equivalent" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) or (ii) time deposits and
certificates of deposit and commercial paper issued by the parent corporation of
any domestic commercial bank of recognized standing having capital and surplus
in excess of $500.0 million or (iii) commercial paper issued by others rated at
least A-2 or the equivalent thereof by Standard & Poor's Corporation or at least
P-2 or the equivalent thereof by Moody's Investors Service, Inc., and in the
case of each of (i), (ii) and (iii) maturing within one year after the date of
acquisition.
"Change of Control" means (i) prior to the consummation of an initial
Public Equity Offering an Excluded Person shall cease to own beneficially,
directly or indirectly and of record 51% of the Capital Stock of the Company; or
(ii) following the consummation of an initial Public Equity Offering (A) any
merger or consolidation of the Company with or into any person or any sale,
transfer or other conveyance, whether direct or indirect, of all or
substantially all of the assets of the Company, on a consolidated basis, in one
transaction or a series of related transactions, if, immediately after giving
effect to such transaction(s), any "person" or "group" (as such terms are used
for purposes of Sections 13(d) and 14(d) of the Exchange Act, whether or not
applicable) (other than an Excluded Person) is or becomes the "beneficial
owner," directly or indirectly, of more than 35% of the total voting power in
the aggregate normally entitled to vote in the election of directors, managers,
or trustees, as applicable, of the transferee(s) or surviving entity or entities
unless an Excluded Person "beneficially owns," directly or indirectly, in the
aggregate a greater percentage of the total voting power in the aggregate
normally entitled to vote in the election of directors, managers, or trustees,
as applicable, of the transferee(s) or surviving entity or entities; or
3
<PAGE>
(B) any "person" or "group" (as such terms are used for purposes of Sections
13(d) and 14(d) of the Exchange Act, whether or not applicable) (other than an
Excluded Person) is or becomes the "beneficial owner," directly or indirectly,
of more than 35% of the total voting power in the aggregate of all classes of
Capital Stock of the Company then outstanding normally entitled to vote in
elections of directors, unless an Excluded Person "beneficially owns," directly
or indirectly, in the aggregate a greater percentage of the total voting power
of all classes of Capital Stock of the Company then outstanding normally
entitled to vote in the election of directors; or (iii) during any period of 12
consecutive months after the Issue Date, individuals who at the beginning of any
such 12-month period constituted the Board of Directors of the Company (together
with any new directors whose election by such Board of Directors or whose
nomination for election by the shareholders of the Company was approved by a
vote of a majority of the directors then still in office who were either
directors at the beginning of such period or whose election or nomination for
election was previously so approved) cease for any reason to constitute a
majority of the Board of Directors of the Company then in office.
"Change of Control Offer" shall have the meaning specified in Section 10.1.
"Change of Control Offer Period" shall have the meaning specified in
Section 10.1.
"Change of Control Purchase Date" shall have the meaning specified in
Section 10.1.
"Change of Control Purchase Price" shall have the meaning specified in
Section 10.1.
"Closing Date" means January 21, 1998.
"Code" means the Internal Revenue Code of 1986, as amended.
"Company" means the party named as such in this Indenture until a successor
replaces it pursuant to this Indenture, and thereafter means such successor.
"Consolidated Coverage Ratio" of any person on any date of determination
(the "Transaction Date") means the ratio, on a pro forma basis, of (a) the
aggregate amount of Consolidated EBITDA of such person attributable to
continuing operations and businesses (exclusive of amounts attributable to
operations and businesses permanently discontinued or disposed of) for the
Reference Period to (b) the aggregate Consolidated Fixed Charges of such person
(exclusive of amounts attributable to operations and businesses permanently
discontinued or disposed of, but only to the extent that the obligations giving
rise to such Consolidated Fixed Charges would no longer be obligations
contributing to such person's Consolidated Fixed Charges subsequent to the
Transaction Date) during the Reference Period; provided, that for purposes of
such calculation, (i) Acquisitions which occurred during the Reference Period or
subsequent to the Reference Period and on or prior to the Transaction Date shall
be assumed to have occurred on the first day of the Reference Period,
(ii) transactions giving rise to the need to calculate the Consolidated Coverage
4
<PAGE>
Ratio shall be assumed to have occurred on the first day of the Reference
Period, (iii) the incurrence of any Indebtedness or issuance of any Disqualified
Capital Stock during the Reference Period or subsequent to the Reference Period
and on or prior to the Transaction Date (and the application of the proceeds
therefrom to the extent used to refinance or retire other Indebtedness) shall be
assumed to have occurred on the first day of the Reference Period, and (iv) the
Consolidated Fixed Charges of such person attributable to interest on any
Indebtedness or dividends on any Disqualified Capital Stock bearing a floating
interest (or dividend) rate shall be computed on a pro forma basis as if the
average rate in effect from the beginning of the Reference Period to the
Transaction Date had been the applicable rate for the entire period, unless such
Person or any of its Subsidiaries is a party to an Interest Swap and Hedging
Obligation (which shall remain in effect for the 12-month period immediately
following the Transaction Date) that has the effect of fixing the interest rate
on the date of computation, in which case such rate (whether higher or lower)
shall be used.
"Consolidated EBITDA" means, with respect to any person, for any period,
the Consolidated Net Income of such person for such period adjusted to add
thereto (to the extent deducted from net revenues in determining Consolidated
Net Income), without duplication, the sum of (i) Consolidated income tax
expense, (ii) Consolidated depreciation and amortization expense (including
amortization of debt discount and deferred financing costs in connection with
any Indebtedness of such person and its Subsidiaries) and (iii) Consolidated
Fixed Charges, provided that consolidated depreciation and amortization expense
of a Subsidiary that is a less than wholly owned Subsidiary shall only be added
to the extent of the equity interest of the Company in such Subsidiary.
"Consolidated Fixed Charges" of any person means, for any period, the
aggregate amount (without duplication and determined in each case in accordance
with GAAP) of (a) interest expensed or capitalized, paid, accrued, or scheduled
to be paid or accrued (including, in accordance with the following sentence,
interest attributable to Capitalized Lease Obligations) of such person and its
Consolidated Subsidiaries during such period, including (i) original issue
discount and non-cash interest payments or accruals on any Indebtedness, (ii)
the interest portion of all deferred payment obligations, and (iii) all
commissions, discounts and other fees and charges owed with respect to bankers'
acceptances and letters of credit financings and currency and Interest Swap and
Hedging Obligations, in each case to the extent attributable to such period, (b)
one-third (1/3) of Consolidated Rental Expense for such period attributable to
operating leases of such person and its Consolidated Subsidiaries, and (c) the
amount of dividends accrued or payable (or guaranteed) by such person or any of
its Consolidated Subsidiaries in respect of Preferred Stock (other than by
Subsidiaries of such person to such person or such person's wholly owned
Subsidiaries). For purposes of this definition, (x) interest on a Capitalized
Lease Obligation shall be deemed to accrue at an interest rate reasonably
determined by the Company to be the rate of interest implicit in such
Capitalized Lease Obligation in accordance with GAAP and (y) interest expense
attributable to any Indebtedness represented by the guaranty by such person or a
Subsidiary of such person of an obligation of another person shall be deemed to
be the interest expense attributable to the Indebtedness guaranteed.
5
<PAGE>
"Consolidated Net Income" means, with respect to any person for any period,
the net income (or loss) of such person and its Consolidated Subsidiaries
(determined on a consolidated basis in accordance with GAAP) for such period,
adjusted to exclude (only to the extent included in computing such net income
(or loss) and without duplication): (a) all gains (but not losses) which are
either extraordinary (as determined in accordance with GAAP) or are either
unusual or nonrecurring (including any gain from the sale or other disposition
of assets outside the ordinary course of business or from the issuance or sale
of any capital stock), (b) the net income, if positive, of any person, other
than a Consolidated Subsidiary, in which such person or any of its Consolidated
Subsidiaries has an interest, except to the extent of the amount of any
dividends or distributions actually paid in cash to such person or a
Consolidated Subsidiary of such person during such period, but in any case not
in excess of such person's pro rata share of such person's net income for such
period, (c) the net income or loss of any person acquired in a pooling of
interests transaction for any period prior to the date of such acquisition, and
(d) the net income, if positive, of any of such person's Consolidated
Subsidiaries in the event and solely to the extent that the declaration or
payment of dividends or similar distributions is not at the time permitted by
operation of the terms of its charter or bylaws or any other agreement,
instrument, judgment, decree, order, statute, rule or governmental regulation
applicable to such Consolidated Subsidiary.
"Consolidated Rental Expense" of any Person means the aggregate rental
obligations of such Person and its Consolidated Subsidiaries (not including
taxes, insurance, maintenance and similar expenses that the lessee is obligated
to pay under the terms of the relevant leases), determined on a consolidated
basis in conformity with GAAP, payable in respect of such period under leases of
real or personal property (net of income from subleases thereof, not including
taxes, insurance, maintenance and similar expenses that the sublessee is
obligated to pay under the terms of such sublease), whether or not such
obligations are reflected as liabilities or commitments on a consolidated
balance sheet of such Person and its Subsidiaries or in the notes thereto,
excluding, however, in any event, that portion of Consolidated Fixed Charges of
such Person representing payments by such Person or any of its Consolidated
Subsidiaries in respect of Capitalized Lease Obligations.
"Consolidated Subsidiary" means, for any person, each Subsidiary of such
person (whether now existing or hereafter created or acquired) the financial
statements of which are consolidated for financial statement reporting purposes
with the financial statements of such person in accordance with GAAP.
"Consolidation" means, with respect to the Company, the consolidation of
the accounts of its Subsidiaries with those of the Company, all in accordance
with GAAP; provided that "consolidation" shall not include consolidation of the
accounts of any Unrestricted Subsidiary with the accounts of the Company. The
term "consolidated" has a correlative meaning to the foregoing.
"Corporate Trust Office" means the principal corporate trust office of the
Trustee in the Borough of Manhattan, The City of New York.
6
<PAGE>
"Covenant Defeasance" shall have the meaning specified in Section 8.3.
"Credit Agreement" means the credit agreement dated as of November 20, 1997
by and among the Company, certain of its subsidiaries and CoreStates Bank, N.A.,
providing for an aggregate $25.0 million revolving credit facility, including
any related notes, guarantees, collateral documents, instruments and agreements
executed in connection therewith, as such credit agreement and/or related
documents may be amended, restated, supplemented, renewed, replaced or otherwise
modified from time to time, whether or not with the same lender, trustee,
representative lenders or holders, and, subject to the proviso to the next
succeeding sentence, irrespective of any changes in the terms and conditions
thereof. Without limiting the generality of the foregoing, the term "Credit
Agreement" shall include agreements in respect of Interest Swap and Hedging
Obligations with lenders party to the Credit Agreement and shall also include
any amendment, amendment and restatement, renewal, extension, restructuring,
supplement or modification to the Credit Agreement and all refundings,
refinancings and replacements of the Credit Agreement, including any agreement
(i) extending the maturity of any Indebtedness incurred thereunder or
contemplated thereby, (ii) adding or deleting borrowers or guarantors
thereunder, so long as borrowers and issuers include one or more of the Company
and its Subsidiaries and their respective successors and assigns,
(iii) increasing the amount of Indebtedness incurred thereunder or available to
be borrowed thereunder, provided that on the date such Indebtedness is incurred
it would not be prohibited by Section 4.11 or (iv) otherwise altering the terms
and conditions thereof in a manner not prohibited by the terms hereof.
"Custodian" means any receiver, trustee, assignee, liquidator, sequestrator
or similar official under any Bankruptcy Law.
"Debt Incurrence Ratio" shall have the meaning specified in Section 4.11.
"Default" means any event or condition the occurrence of which is, or with
the lapse of time or the giving of notice (by the Trustee or the Holders in
accordance with the provisions of this Indenture) or both would be, an Event of
Default.
"Defaulted Interest" shall have the meaning specified in Section 2.12.
"Definitive Notes" means Notes that are in the form of Note attached hereto
as Exhibit A that do not include the information called for by footnotes 3 and 6
thereof.
"Depositary" means, with respect to the Notes issuable or issued in whole
or in part in global form, the person specified in Section 2.3 as the Depositary
with respect to the Notes, until a successor shall have been appointed and
become such pursuant to the applicable provision of this Indenture, and,
thereafter, "Depositary" shall mean or include such successor.
"Disqualified Capital Stock" means (a) except as set forth in (b), with
respect to any person, Equity Interests of such person that, by its terms or by
the terms of any security into which
7
<PAGE>
it is convertible, exercisable or exchangeable, is, or upon the happening of an
event or the passage of time or both would be, required to be redeemed or
repurchased (including at the option of the holder thereof) by such person or
any of its Subsidiaries, in whole or in part, on or prior to the date that is 91
days after the date which is following the Stated Maturity of the Notes and (b)
with respect to any Subsidiary of such person (including with respect to any
Subsidiary of the Company), any Equity Interests other than any common equity
with no preference, privileges, or redemption or repayment provisions.
"Employee Stock Plan" means the NPR Holding Corporation 1997 Phantom Stock
Plan under which certain members of the management of NPR, Inc. have received
grants of phantom stock units in connection with the acquisition of NPR Holding
Corporation, NPR-Navieras Receivables, Inc., NPR, Inc. and NPR S.A., Inc.
"Equity Interest" of any Person means any shares, interests, participations
or other equivalents (however designated) in such Person's equity, and shall in
any event include any Capital Stock issued by, or partnership or membership
interests in, such Person.
"Event of Default" shall have the meaning specified in Section 6.1.
"Event of Loss" means, with respect to any property or asset, any (i) loss,
destruction or damage of such property or asset or (ii) any condemnation,
seizure or taking, by exercise of the power of eminent domain or otherwise, of
such property or asset, or confiscation or requisition of the use of such
property or asset.
"Exchange Act" means the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated by the SEC thereunder.
"Exchange Notes" means the 9 3/4% Series B Senior Notes due 2006, as
supplemented from time to time in accordance with the terms hereof, to be issued
pursuant to this Indenture in connection with the offer to exchange Exchange
Notes for the Initial Notes that may be made by the Company pursuant to the
Registration Rights Agreement that contain the information referred to in
footnotes 1, 2 and 8 to the form of Note attached hereto as Exhibit A.
"Excluded Person" means, individually or collectively, Thomas J. Holt, Sr.,
and any of his estates, spouse, heirs, ancestors, lineal descendants, legatees,
and legal representatives and the trustee of any bona fide trust of which one or
more of the foregoing are the sole beneficiaries.
"Exempted Affiliate Transaction" means (a) customary employee compensation
arrangements approved by a majority of independent (as to such transactions)
members of the Board of Directors of the Company, (b) dividends expressly
permitted under the terms of Section 4.3 and payable, in form and amount, on a
pro rata basis to all holders of common stock of the Company, and
(c) transactions solely between the Company and any of its wholly owned
Consolidated Subsidiaries or solely among wholly owned Consolidated Subsidiaries
of the Company.
8
<PAGE>
"Existing Indebtedness" means Indebtedness of the Company and the
Guarantors (other than Indebtedness under the Credit Agreement) in existence on
the Issue Date, until such amounts are repaid or refinanced in accordance with
this Indenture.
"GAAP" means United States generally accepted accounting principles set
forth in the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements and
pronouncements of the Financial Accounting Standards Board or in such other
statements by such other entity as approved by a significant segment of the
accounting profession in the United States as in effect on the Issue Date.
"Global Note" means a Note that contains the information referred to in
footnotes 3 and 6 to the form of Note attached hereto as Exhibit A.
"Guarantee" shall have the meaning provided in Section 11.1.
"Guarantors" means certain present and future Subsidiary Guarantors of the
Company except for any Non-Recourse Subsidiaries or Unrestricted Subsidiaries.
"Holder" or "Noteholder" means the Person in whose name a Note is
registered on the Registrar's books.
"Incur" or "incur" shall have the meaning specified in Section 4.11.
"Incurrence Date" shall have the meaning specified in Section 4.11.
"Indebtedness" of any person means, without duplication, (a) all
liabilities and obligations, contingent or otherwise, of any such person, to the
extent such liabilities and obligations would appear as a liability upon the
consolidated balance sheet of such person in accordance with GAAP, (i) in
respect of borrowed money (whether or not the recourse of the lender is to the
whole of the assets of such person or only to a portion thereof), (ii) evidenced
by bonds, notes, debentures or similar instruments, or (iii) representing the
balance deferred and unpaid of the purchase price of any property or services,
except (other than accounts payable or other obligations to trade creditors
which have remained unpaid for more than 60 days past their original due date)
those incurred in the ordinary course of its business that would constitute
ordinarily a trade payable to trade creditors; (b) all liabilities and
obligations, contingent or otherwise, of such person (i) evidenced by bankers'
acceptances or similar instruments issued or accepted by banks, (ii) relating to
any Capitalized Lease Obligation, or (iii) evidenced by a letter of credit or a
reimbursement obligation of such person with respect to any letter of credit;
(c) all net obligations of such person under Interest Swap and Hedging
Obligations; (d) all liabilities and obligations of others of the kind described
in the preceding clauses (a), (b) or (c) that such person has guaranteed or that
is otherwise its legal liability or which are secured by any assets or property
of such person; (e) any and all deferrals, renewals, extensions, refinancing and
refundings (whether direct or indirect) of, or amendments, modifications or
supplements to, any liability of the kind described in any of the preceding
clauses (a), (b), (c) or (d),
9
<PAGE>
or this clause (e), whether or not between or among the same parties; and (f)
all Disqualified Capital Stock of such Person (measured at the greater of its
voluntary or involuntary maximum fixed repurchase price plus accrued and unpaid
dividends). For purposes hereof, the "maximum fixed repurchase price" of any
Disqualified Capital Stock which does not have a fixed repurchase price shall be
calculated in accordance with the terms of such Disqualified Capital Stock as if
such Disqualified Capital Stock were purchased on any date on which Indebtedness
shall be required to be determined pursuant to this Indenture, and if such price
is based upon, or measured by, the fair market value of such Disqualified
Capital Stock, such fair market value to be determined in good faith by the
board of directors of the issuer (or managing general partner of the issuer) of
such Disqualified Capital Stock.
"Indenture" means this Indenture, as amended or supplemented from time to
time in accordance with the terms hereof.
"Initial Notes" means the 9 3/4% Series A Senior Notes due 2006 and any
Additional Notes if issued prior to the issuance of the Exchange Notes, as
supplemented from time to time in accordance with the terms hereof, issued under
this Indenture that contain the information referred to in footnotes 4, 5 and 7
to the form of Note attached hereto as Exhibit A.
"Initial Purchaser" means Donaldson, Lufkin & Jenrette Securities
Corporation.
"Interest Payment Date" means the stated due date of an installment of
interest on the Notes.
"Interest Swap and Hedging Obligation" means any obligation of any person
pursuant to any interest rate swap agreement, interest rate cap agreement,
interest rate collar agreement, interest rate exchange agreement, currency
exchange agreement or any other agreement or arrangement designed to protect
against fluctuations in interest rates or currency values, including, without
limitation, any arrangement whereby, directly or indirectly, such person is
entitled to receive from time to time periodic payments calculated by applying
either a fixed or floating rate of interest on a stated notional amount in
exchange for periodic payments made by such person calculated by applying a
fixed or floating rate of interest on the same notional amount.
"Investment" by any person in any other person means (without duplication)
(a) the acquisition (whether by purchase, merger, consolidation or otherwise) by
such person (whether for cash, property, services, securities or otherwise) of
capital stock, bonds, notes, debentures, partnership or other ownership
interests or other securities, including any options or warrants, of such other
person or any agreement to make any such acquisition; (b) the making by such
person of any deposit with, or advance, loan or other extension of credit to,
such other person (including the purchase of property from another person
subject to an understanding or agreement, contingent or otherwise, to resell
such property to such other person) or any commitment to make any such advance,
loan or extension (but excluding accounts receivable, endorsements for
collection or deposits arising in the ordinary course of business); (c) other
than guarantees of Indebtedness of the
10
<PAGE>
Company or any Subsidiary Guarantor to the extent permitted by Section 4.11, the
entering into by such person of any guarantee of, or other credit support or
contingent obligation with respect to, Indebtedness or other liability of such
other person; (d) the making of any capital contribution by such person to such
other person; and (e) the designation by the Board of Directors of the Company
of any person to be an Unrestricted Subsidiary. The Company shall be deemed to
make an Investment in an amount equal to the fair market value of the net assets
of any subsidiary (or, if neither the Company nor any of its Subsidiaries has
theretofore made an Investment in such subsidiary, in an amount equal to the
Investments being made), at the time that such subsidiary is designated an
Unrestricted Subsidiary, and any property transferred to an Unrestricted
Subsidiary from the Company or a Subsidiary of the Company shall be deemed an
Investment valued at its fair market value at the time of such transfer.
"Issue Date" means the date on which any Initial Notes are originally
issued under this Indenture.
"Legal Defeasance" shall have the meaning specified in Section 8.2.
"Legal Holiday" shall have the meaning specified in Section 13.7.
"Lien" means any mortgage, charge, pledge, lien (statutory or otherwise),
privilege, security interest, hypothecation or other encumbrance upon or with
respect to any property of any kind, real or personal, movable or immovable, now
owned or hereafter acquired.
"Liquidated Damages" shall have the meaning specified in the Registration
Rights Agreement.
"Maturity Date" means, when used with respect to any Note, the date
specified on such Note as the fixed date on which the final installment of
principal of such Note is due and payable (in the absence of any acceleration
thereof pursuant to the provisions of this Indenture regarding acceleration of
Indebtedness or any Change of Control Offer or Asset Sale Offer).
"Moody's" means Moody's Investors Services, Inc. and its successors.
"Net Cash Proceeds" means the aggregate amount of cash or Cash Equivalents
received by the Company in the case of a sale of Qualified Capital Stock and by
the Company and its Subsidiaries in respect of an Asset Sale plus, in the case
of an issuance of Qualified Capital Stock upon any exercise, exchange or
conversion of securities (including options, warrants, rights and convertible or
exchangeable debt) of the Company that were issued for cash on or after the
Issue Date, the amount of cash originally received by the Company upon the
issuance of such securities (including options, warrants, rights and convertible
or exchangeable debt) less, in each case, the sum of all payments, fees,
commissions and reasonable and customary expenses (including, without
limitation, the fees and expenses of legal counsel and investment banking fees
and expenses) incurred in connection with such Asset Sale or sale of Qualified
Capital Stock, and, in the case of
11
<PAGE>
an Asset Sale only, less the amount (estimated reasonably and in good faith by
the Company) of income, franchise, sales and other applicable taxes required to
be paid by the Company or any of its respective Subsidiaries in connection with
such Asset Sale.
"Non-Recourse Subsidiary" means a Subsidiary which is a single purpose
company, partnership or other legal person formed for the purpose of incurring
Permitted Non-Recourse Vessel Indebtedness.
"Noteholder" or "Holder" means the Person in whose name a Note is
registered on the Registrar's books.
"Notes" means, collectively, the Initial Notes and, when and if issued as
provided in the Registration Rights Agreement, the Exchange Notes. "Notes" shall
include such Additional Notes for purposes of this Indenture and all Exchange
Notes from time to time issued with respect to any Initial Notes that constitute
such Additional Notes.
"Note Custodian" means the Trustee, as custodian with respect to the Notes
in global form, or any successor entity thereto.
"Obligation" means any principal, premium or interest payment, or monetary
penalty, due by the Company or any Guarantor under the terms of the Notes or
this Indenture, including any Liquidated Damages due pursuant to the terms of
the Registration Rights Agreement.
"Offering Memorandum" means the final Offering Memorandum of the Company
dated January 14, 1998, relating to the offering of the Initial Notes in a
transaction exempt from the requirements of Section 5 of the Securities Act.
"Officer" means, with respect to the Company or any Subsidiary Guarantor,
the Chief Executive Officer, the President, any Vice President, the Chief
Financial Officer, the Treasurer, the Controller, or the Secretary of the
Company.
"Officers' Certificate" means, with respect to the Company or any
Subsidiary Guarantor, a certificate signed by two Officers or by an Officer and
an Assistant Secretary of the Company and otherwise complying with the
requirements of Sections 13.4 and 13.5.
"Opinion of Counsel" means a written opinion from legal counsel who is
reasonably acceptable to the Trustee complying with the requirements of Sections
13.4 and 13.5.
"Original Notes" means the 9 3/4% Series A Senior Notes due 2006 issued on
the Closing Date.
"Packer Avenue Proceeding" shall mean that certain outstanding action
commenced by Holt Cargo, Holt Hauling & Warehousing System, Inc. and Astro
Holding, Inc. (the "Plaintiffs")
12
<PAGE>
in the United States District Court for the Eastern District of Pennsylvania
against the Delaware River Port Authority (the "DRPA"), the Philadelphia
Regional Port Authority (the "PRPA") and the Ports of Philadelphia and Camden
(together with the DRPA and PPC, the "Defendants"). The Plaintiffs allege that
the Defendants, along with other unnamed co-conspirators, acting under the color
of state law, committed predatory acts under a conspiracy designed to injure,
harass and appropriate the property of the Plaintiffs. Plaintiffs are seeking
damages for Defendants' conduct which constitutes a violation of Plaintiffs'
substantive due process, equal protection and procedural due process rights
under 41 U.S.C. Section 1983.
"Paying Agent" shall have the meaning specified in Section 2.3.
"Permitted Indebtedness" means any of the following:
(a) the Company and the Guarantors may incur up to an aggregate
principal amount of Indebtedness evidenced by the Notes and represented by this
Indenture;
(b) the Company and the Guarantors, as applicable, may incur
Refinancing Indebtedness with respect to any Indebtedness or Disqualified
Capital Stock, as applicable, described in clause (a) of this definition or
incurred under the Debt Incurrence Ratio test of Section 4.11 or which is
outstanding on the Issue Date;
(c) the Company and the Guarantors may incur Indebtedness solely in
respect of bankers acceptances, letters of credit and performance bonds (to the
extent that such incurrence does not result in the incurrence of any obligation
to repay any obligation relating to borrowed money of others), all in the
ordinary course of business in accordance with customary industry practices, in
amounts and for the purposes customary in the Company's industry; provided, that
the aggregate principal amount outstanding of such Indebtedness (including any
Indebtedness issued to refinance, refund or replace such Indebtedness) shall at
no time exceed $20.0 million;
(d) the Company may incur Indebtedness to any Subsidiary Guarantor, and
any Subsidiary Guarantor may incur Indebtedness to any other Subsidiary
Guarantor or to the Company; provided, that, in the case of Indebtedness of the
Company, such obligations shall be unsecured and subordinated in all respects to
the Company's obligations pursuant to the Notes and the date of any event that
causes such Subsidiary Guarantor to no longer be a Subsidiary Guarantor shall be
an Incurrence Date; and
(e) any Guarantor may guaranty any Indebtedness of the Company or
another Guarantor that was permitted to be incurred pursuant to this Indenture,
substantially concurrently with such incurrence or at the time such person
becomes a Guarantor.
"Permitted Investment" means Investments in (a) any of the Notes; (b) Cash
Equivalents; and (c) intercompany notes to the extent permitted under clause (d)
of the definition of "Permitted Indebtedness."
13
<PAGE>
"Permitted Lien" means (a) Liens existing on the Issue Date; (b) Liens
securing Indebtedness incurred under the credit facility in accordance with
Section 4.11; (c) Liens imposed by governmental authorities for taxes,
assessments or other charges not yet subject to penalty or which are being
contested in good faith and by appropriate proceedings, if adequate reserves
with respect thereto are maintained on the books of the Company in accordance
with GAAP; (d) statutory liens of carriers, warehousemen, mechanics,
materialmen, landlords, repairmen, crew's wages, wages of stevedores, salvage or
other like Liens arising by operation of law in the ordinary course of business
(including relating to maritime activities); provided that (i) the underlying
obligations are not overdue for a period of more than 30 days, or (ii) such
Liens are being contested in good faith and by appropriate proceedings and
adequate reserves with respect thereto are maintained on the books of the
Company in accordance with GAAP; (e) Liens securing the performance of bids,
trade contracts (other than borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business; (f) easements,
rights-of-way, zoning, similar restrictions and other similar encumbrances or
title defects which, singly or in the aggregate, do not in any case materially
detract from the value of the property subject thereto (as such property is used
by the Company or any of its Subsidiaries) or interfere with the ordinary
conduct of the business of the Company or any of its Subsidiaries; (g) Liens
arising by operation of law in connection with judgments, only to the extent,
for an amount and for a period not resulting in an Event of Default with respect
thereto; (h) pledges or deposits made in the ordinary course of business in
connection with workers' compensation, unemployment insurance and other types of
social security legislation; (i) Liens securing the Notes; (j) Liens securing
Indebtedness of a Person existing at the time such Person becomes a Subsidiary
or is merged with or into the Company or a Subsidiary or Liens securing
Indebtedness incurred in connection with an Acquisition, provided that such
Liens were in existence prior to the date of such acquisition, merger or
consolidation, were not incurred in anticipation thereof, and do not extend to
any other assets; (k) Liens arising from Purchase Money Indebtedness permitted
to be incurred under clause (a) of the second paragraph of Section 4.11,
provided such Liens relate solely to the property which is subject to such
Purchase Money Indebtedness; (l) leases or subleases granted to other persons in
the ordinary course of business not materially interfering with the conduct of
the business of the Company or any of its Subsidiaries or materially detracting
from the value of the relative assets of the Company or any such Subsidiary;
(m) Liens arising from precautionary Uniform Commercial Code financing statement
filings regarding operating leases entered into by the Company or any of its
Subsidiaries in the ordinary course of business; (n) Liens incurred in
connection with Permitted Non-Recourse Vessel Indebtedness; and (o) Liens
securing Refinancing Indebtedness, incurred to refinance any Indebtedness that
was previously so secured in a manner no more adverse to the Holders of the
Notes than the terms of the Liens securing such refinanced Indebtedness provided
that the Indebtedness secured is not increased and the lien is not extended to
any additional assets or property.
"Permitted Non-Recourse Vessel Indebtedness" means the incurrence by any
Non-Recourse Subsidiary of Indebtedness for so long as (a) the liabilities of
such Non-Recourse Subsidiary in respect thereof are not directly or indirectly
the subject of a guarantee, indemnity or any other form of assurance,
undertaking or support from the Company or any Guarantor which
14
<PAGE>
would constitute Indebtedness of the Company or the Guarantor, (b) in respect of
which the person or persons making such Indebtedness available to such
Non-Recourse Subsidiary have no recourse whatsoever to the Company or any
Guarantor for the repayment of or payment of any sum relating to such
Indebtedness and (c) which such Indebtedness is used for the purpose of
refinancing seagoing vessels owned on the Issue Date or financing newly acquired
seagoing vessels, any such vessels to be used solely by the Company, a Guarantor
or such Non-Recourse Subsidiary.
"Permitted Tax Distribution" means with respect to each tax year that the
Company or a Guarantor (a "Taxpayer") qualifies as an S Corporation under the
Internal Revenue Code of 1986 (as amended, or any successor statute), or any
similar provision of state or local law, distributions of Tax Amounts, provided
that prior to any distribution of Tax Amounts a knowledgeable and duly
authorized officer of the Taxpayer making such distribution certifies, and
counsel reasonably acceptable to the Trustee opines, that such Taxpayer
qualifies as an S Corporation for Federal income tax purposes and for the states
in respect of which such distributions are being made and that at the time of
such distributions, the most recent audited financial statements of the Company
covering such Taxpayer provide that such Taxpayer was treated as an
S Corporation for Federal income tax purposes for the period of such financial
statements.
"Person" or "person" means any corporation, individual, limited liability
company, joint stock company, joint venture, partnership, limited liability
company, unincorporated association, governmental regulatory entity, country,
state or political subdivision thereof, trust, municipality or other entity.
"Preferred Stock" means an Equity Interest of any class or classes of a
Person (however designated) which is preferred as to payments of dividends, or
as to distributions upon any liquidation or dissolution, over Equity Interests
of any other class of such Person.
"principal" of any Indebtedness means the principal of such Indebtedness.
"pro forma" means, as used in and with respect to the definition of
"Consolidated Coverage Ratio", pro forma in accordance with Regulation S-X of
the SEC.
"property" means any right or interest in or to property or assets of any
kind whatsoever, whether real, personal or mixed and whether tangible,
intangible, contingent, direct or indirect.
"Public Equity Offering" means an underwritten offering of common stock of
the Company not constituting Disqualified Capital Stock for cash pursuant to an
effective registration statement under the Securities Act.
"Purchase Agreement" means (a) with respect to the Original Notes, the
Purchase Agreement dated January 21, 1998 for the purchase of $140,000,000
principal amount of Original Notes among the Company, the Subsidiary Guarantors
signatory thereto and the Initial Purchaser as
15
<PAGE>
such agreement may be amended, modified or supplemented from time to time in
accordance with the terms thereof and (b) with respect to any Additional Notes,
any purchase or underwriting agreement entered into by the Company, any
Subsidiary Guarantors and the initial purchasers or underwriters with respect
thereto, as such agreement may be amended, modified or supplemented from time to
time in accordance with the terms thereof.
"Purchase Money Indebtedness" of any person means any Indebtedness of such
person to any seller or other person incurred to finance the acquisition
(including in the case of a Capitalized Lease Obligation, the lease) of any
after acquired real or personal tangible property which, in the reasonable good
faith judgment of the Board of Directors of the Company, is directly related to
a Related Business of the Company and which is incurred within 120 days of such
acquisition and is secured only by the assets so financed.
"Qualified Capital Stock" means any Capital Stock of the Company that is
not Disqualified Capital Stock.
"Qualified Exchange" means any legal defeasance, redemption, retirement,
repurchase or other acquisition of Capital Stock or Indebtedness of the Company
issued on or after the Issue Date with the Net Cash Proceeds received by the
Company from the substantially concurrent sale of its Qualified Capital Stock
for any Capital Stock or Indebtedness of the Company issued on or after the
Issue Date.
"Record Date" means a Record Date specified in the Notes whether or not
such Record Date is a Business Day, or, if applicable, as specified in Section
2.12.
"Redemption Date," when used with respect to any Note to be redeemed, means
the date fixed for such redemption pursuant to Article III of this Indenture and
Paragraphs 5 and 6 in the form of Note attached hereto as Exhibit A.
"Redemption Price," when used with respect to any Note to be redeemed,
means the redemption price for such redemption pursuant to Paragraph 5 in the
form of Note attached hereto as Exhibit A, which shall include, without
duplication, in each case, accrued and unpaid interest and Liquidated Damages,
if any, to the Redemption Date.
"Reference Period" with regard to any person means the four full fiscal
quarters (or such lesser period during which such person has been in existence)
ended immediately preceding any date upon which any determination is to be made
pursuant to the terms of the Notes or this Indenture.
"Refinancing Indebtedness" means Indebtedness or Disqualified Capital Stock
(a) issued in exchange for, or the proceeds from the issuance and sale of which
are used substantially concurrently to repay, redeem, defease, refund,
refinance, discharge or otherwise retire for value, in whole or in part, or
(b) constituting an amendment, modification or supplement to, or a deferral or
renewal of ((a) and (b) above are, collectively, a "Refinancing"), any
Indebtedness or Disqualified
16
<PAGE>
Capital Stock in a principal amount or, in the case of Disqualified Capital
Stock, liquidation preference, not to exceed (after deduction of reasonable fees
and expenses incurred in connection with such Refinancing) the lesser of (i) the
principal amount or, in the case of Disqualified Capital Stock, liquidation
preference, of the Indebtedness or Disqualified Capital Stock so Refinanced and
(ii) if such Indebtedness being Refinanced was issued with an original issue
discount, the accreted value thereof (as determined in accordance with GAAP) at
the time of such Refinancing; provided, that (A) such Refinancing Indebtedness
of any Subsidiary of the Company shall only be used to Refinance outstanding
Indebtedness or Disqualified Capital Stock of such Subsidiary, (B) such
Refinancing Indebtedness shall (x) not have an Average Life shorter than (i) the
Indebtedness or Disqualified Capital Stock to be so refinanced at the time of
such Refinancing or (ii) the Notes, but only in the case of Refinancing
Indebtedness described by (C)(ii) below, and (y) in all respects, be no less
subordinated or junior, if applicable, to the rights of Holders of the Notes
than was the Indebtedness or Disqualified Capital Stock to be refinanced,
(C) such Refinancing Indebtedness shall have a final stated maturity or
redemption date, as applicable, no earlier than (i) the final stated maturity or
redemption date, as applicable, of the Indebtedness or Disqualified Capital
Stock to be so refinanced or (ii) the Stated Maturity, but only if such final
stated maturity or redemption date, as applicable, of the Indebtedness or
Disqualified Capital Stock to be so refinanced falls after the Stated Maturity
and (D) such Refinancing Indebtedness shall be secured (if secured) in a manner
no more adverse to the Holders of the Notes than the terms of the Liens securing
such refinanced Indebtedness, including, without limitation, the amount of
Indebtedness secured shall not be increased.
"Registrar" shall have the meaning specified in Section 2.3.
"Registration Rights Agreement" means the Registration Rights Agreement
dated as of the date hereof by and between the Initial Purchaser and the
Company, as such agreement may be amended, modified or supplemented from time to
time in accordance with the terms thereof.
"Related Business" means the business conducted (or proposed to be
conducted) by the Company and its Subsidiaries as of the Issue Date and any and
all businesses that in the good faith judgment of the Board of Directors of the
Company are materially related businesses.
"Restricted Investment" means, in one or a series of related transactions,
any Investment, other than investments in Cash Equivalents and other Permitted
Investments; provided, however, that (i) a merger of another person with or into
the Company or a Subsidiary Guarantor in accordance with the terms of this
Indenture shall not be deemed to be a Restricted Investment so long as the
surviving entity is the Company or a Subsidiary Guarantor and (ii) Investments
in any Person, so long as immediately upon such Investment such Person becomes a
Subsidiary Guarantor, shall not be deemed to be a Restricted Investment.
"Restricted Payment" means, with respect to any person, (a) the declaration
or payment of any dividend or other distribution in respect of Equity Interests
of such person or any parent or Subsidiary of such person (including, without
limitation, pursuant to the Employee Stock
17
<PAGE>
Plan), (b) any payment on account of the purchase, redemption or other
acquisition or retirement for value of Equity Interests of such person or any
Subsidiary or parent of such person, (c) other than with the proceeds from the
substantially concurrent sale of, or in exchange for, Refinancing Indebtedness,
any purchase, redemption, or other acquisition or retirement for value of, any
payment in respect of any amendment of the terms of or any defeasance of, any
Subordinated Indebtedness, directly or indirectly, by such person or any
Subsidiary of such person prior to the scheduled maturity, any scheduled
repayment of principal, or scheduled sinking fund payment, as the case may be,
of such Indebtedness and (d) any Restricted Investment by such person; provided,
however, that the term "Restricted Payment" does not include (i) any dividend,
distribution or other payment on or with respect to Equity Interests of an
issuer to the extent payable solely in shares of Qualified Capital Stock of such
issuer; or (ii) any dividend, distribution or other payment to the Company, or
to any of the Subsidiary Guarantors, by the Company or any of its Subsidiaries.
"Restricted Security" means a Note, unless or until it has been
(i) effectively registered under the Securities Act and disposed of in
accordance with the registration statement covering it or (ii) distributed to
the public pursuant to Rule 144 (or any similar provision then in force) under
the Securities Act; provided, that in no case shall an Exchange Note issued in
accordance with this Indenture and the terms and provisions of the Registration
Rights Agreement be a Restricted Security.
"S&P" means Standard & Poor's, a division of The McGraw Hill Companies, and
its successors.
"SEC" means the Securities and Exchange Commission.
"Securities Act" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC promulgated thereunder.
"Senior Debt" of the Company or any Guarantor means Indebtedness of the
Company or such Guarantor arising under the Credit Agreement and without
duplication, certain Existing Indebtedness or Indebtedness that, by the terms of
the instrument creating or evidencing such Indebtedness, is expressly designated
Senior Debt and made senior in right of payment to the Notes or the applicable
Guarantee; provided, that in no event shall Senior Debt include (a) Indebtedness
to any Subsidiary of the Company or any officer, director or employee of the
Company or any Subsidiary of the Company, (b) Indebtedness incurred in violation
of the terms of this Indenture, (c) Indebtedness to trade creditors, (d)
Disqualified Capital Stock, (e) Capitalized Lease Obligations, and (f) any
liability for taxes owed or owing by the Company or such Guarantor.
"Significant Subsidiary" shall have the meaning provided under Regulation
S-X of the Securities Act, as in effect on the Issue Date.
"Special Record Date" for payment of any Defaulted Interest means a date
fixed by the Trustee pursuant to Section 2.12.
18
<PAGE>
"Stated Maturity," when used with respect to any Note, means January 15,
2006.
"Subordinated Indebtedness" means Indebtedness of the Company or a
Subsidiary Guarantor that is subordinated in right of payment by its terms or
the terms of any document or instrument or instrument relating thereto to the
Notes or such Guarantee, as applicable, in any respect or has a final stated
maturity after the Stated Maturity.
"Subsidiary" with respect to any person, means (i) a corporation a majority
of whose Equity Interests with voting power, under ordinary circumstances, to
elect directors is at the time, directly or indirectly, owned by such person, by
such person and one or more Subsidiaries of such person or by one or more
Subsidiaries of such person, (ii) any other person (other than a corporation) in
which such person, one or more Subsidiaries of such person, or such person and
one or more Subsidiaries of such person, directly or indirectly, at the date of
determination thereof has at least majority ownership interest, or (iii) a
partnership in which such person or a Subsidiary of such person is, at the time,
a general partner. Notwithstanding the foregoing, an Unrestricted Subsidiary
shall not be a Subsidiary of the Company or of any Subsidiary of the Company.
Unless the context requires otherwise, Subsidiary means each direct and indirect
Subsidiary of the Company.
"Subsidiary Guarantors" means the parties named as such in the preamble of
this Indenture and future Subsidiaries of the Company specified in Section 11.5.
Subsidiary Guarantors do not include Non-Recourse Subsidiaries or Unrestricted
Subsidiaries.
"Tax Amounts" with respect to any year means (a) an amount equal to the
higher of (i) the product of (A) the taxable income of the relevant Taxpayer for
such year as determined in good faith by its Board of Directors; and (B) the Tax
Percentage (as defined below), and (ii) the product of (A) the alternative
minimum taxable income attributable to such Taxpayer for such year as determined
in good faith by its Board of Directors; and (B) the Tax Percentage, in either
case, reduced by (b) to the extent not previously taken into account, any income
tax benefit attributable to such Taxpayer solely as a result of the
stockholder's investment in such Taxpayer (including without limitation, tax
losses, alternative minimum tax credits, other tax credits and carryforwards and
carrybacks thereof to the extent such benefit is realized in the year for which
the Tax Amount is being determined); provided, however, that in no event shall
such Tax Percentage exceed the greater of (1) the highest aggregate applicable
statutory marginal rate of Federal, state and local income tax (or, when
applicable, alternative minimum tax), to which a corporation doing business in
New York City would be subject in the relevant year of determination (as
certified to the Trustee by a nationally recognized tax accounting firm); and
(2) 50%. Any part of the Tax Amount not distributed in respect of a tax period
for which it is calculated shall be available for distribution in subsequent tax
periods. The term "Tax Percentage" is the highest aggregate applicable statutory
marginal rate of Federal, state and local income tax or, when applicable,
alternative minimum tax, to which an individual shareholder of the Taxpayer
could be subject in the relevant year of determination (calculated in good faith
by the Taxpayer and certified to the Trustee by a nationally recognized tax
accounting firm). Distributions of Tax Amounts may be made from time to time
with respect to a tax year based on reasonable estimates, with a reconciliation
within 40 days of the earlier
19
<PAGE>
of (i) the Taxpayer's filing of the Internal Revenue Service Form 1120S for the
applicable taxable year; and (ii) the last date such form is required to be
filed (without regard to any extensions). The stockholders of each Taxpayer will
enter into a binding agreement with each Taxpayer to reimburse the applicable
Taxpayer for certain positive differences between the distributed amount and the
Tax Amount, which difference must be paid at the time of such reconciliation.
"TIA" means the Trust Indenture Act of 1939, as amended, (15 U.S. Code
ss.77aaa-77bbbb) as in effect on the date of the execution of this Indenture,
except as provided in Section 9.3.
"TNX Shareholders Agreement" means the Shareholders Agreement, dated as of
November 20, 1997, by and among NPR Holding Corporation, certain members of NPR
Holding Corporation's senior management and the other entities and individuals
signatory thereto.
"Transfer Restricted Securities" means Notes that bear or are required to
bear the legend set forth in Section 2.6.
"Trustee" means the party named as such in this Indenture until a successor
replaces it in accordance with the provisions of this Indenture and thereafter
means such successor.
"Trust Officer" means any officer within the corporate trust division (or
any successor group) of the Trustee or any other officer of the Trustee
customarily performing functions similar to those performed by the Persons who
at that time shall be such officers, and also means, with respect to a
particular corporate trust matter, any other officer of the Trustee to whom such
trust matter is referred because of his knowledge of and familiarity with the
particular subject.
"Unrestricted Subsidiary" means any subsidiary of the Company that does not
own any Capital Stock of, or own or hold any Lien on any property of, the
Company or any other Subsidiary of the Company and that, at the time of
determination, shall be an Unrestricted Subsidiary (as designated by the Board
of Directors of the Company); provided, that (i) such subsidiary shall not
engage, to any substantial extent, in any line or lines of business activity
other than a Related Business, (ii) neither immediately prior thereto nor after
giving pro forma effect to such designation would there exist a Default or Event
of Default and (iii) immediately after giving pro forma effect thereto, the
Company could incur at least $1.00 of Indebtedness pursuant to the Debt
Incurrence Ratio in Section 4.11. The Board of Directors of the Company may
designate any Unrestricted Subsidiary to be a Subsidiary, provided that (i) no
Default or Event of Default is existing or will occur as a consequence thereof
and (ii) immediately after giving effect to such designation, on a pro forma
basis, the Company could incur at least $1.00 of Indebtedness pursuant to the
Debt Incurrence Ratio in Section 4.11. Each such designation shall be evidenced
by filing with the Trustee a certified copy of the resolution giving effect to
such designation and an Officers' Certificate certifying that such designation
complied with the foregoing conditions. As of the Issue Date, The Riverfront
Development Corporation shall be an Unrestricted Subsidiary.
20
<PAGE>
"U.S. Government Obligations" means direct non-callable obligations of, or
noncallable obligations guaranteed by, the United States of America for the
payment of which obligation or guarantee the full faith and credit of the United
States of America is pledged.
"Wholly-owned Subsidiary" means a Subsidiary all the Equity Interests of
which are owned by the Company or one or more Wholly-owned Subsidiaries of the
Company.
SECTION 1.2. Incorporation by Reference of TIA.
Whenever this Indenture refers to a provision of the TIA, such provision is
incorporated by reference in and made a part of this Indenture. The following
TIA terms used in this Indenture have the following meanings:
"Commission" means the SEC.
"indenture securities" means the Notes.
"obligor" on the indenture securities means the Company, each Subsidiary
Guarantor and any other obligor on the Notes.
All other TIA terms used in this Indenture that are defined by the TIA,
defined by TIA reference to another statute or defined by SEC rule and not
otherwise defined herein have the meanings assigned to them thereby.
SECTION 1.3. Rules of Construction.
Unless the context otherwise requires:
(1) a term has the meaning assigned to it;
(2) an accounting term not otherwise defined has the meaning assigned to it
in accordance with GAAP;
(3) "or" is not exclusive;
(4) words in the singular include the plural, and words in the plural
include the singular;
(5) provisions apply to successive events and transactions;
(6) "herein," "hereof" and other words of similar import refer to this
Indenture as a whole and not to any particular Article, Section or other
subdivision; and
21
<PAGE>
(7) references to Sections or Articles means reference to such Section or
Article in this Indenture, unless stated otherwise.
ARTICLE II
THE NOTES
SECTION 2.1. Form and Dating.
The Notes and the Trustee's certificate of authentication, in respect
thereof, shall be substantially in the form of Exhibit A hereto, which Exhibit
is part of this Indenture. The Notes may have notations, legends or endorsements
required by law, stock exchange rule or usage. The Company shall approve the
form of the Notes and any notation, legend or endorsement on them. Any such
notations, legends or endorsements not contained in the form of Note attached as
Exhibit A hereto shall be delivered in writing to the Trustee. Each Note shall
be dated the date of its authentication.
The terms and provisions contained in the forms of Notes shall constitute,
and are hereby expressly made, a part of this Indenture and, to the extent
applicable, the Company and the Trustee, by their execution and delivery of this
Indenture, expressly agree to such terms and provisions and to be bound thereby.
Each Global Note shall represent such of the outstanding Notes as shall be
specified therein and each shall represent the aggregate amount of outstanding
Notes that may from time to time be reduced or increased, as appropriate, to
reflect exchanges, repurchases and redemptions. Any endorsement of a Global Note
to reflect the amount of any increase or decrease in the amount of outstanding
Notes represented thereby shall be made by the Trustee or the Note Custodian, at
the direction of the Trustee, in accordance with instructions given by the
Holder thereof as required by Section 2.6.
SECTION 2.2. Execution and Authentication.
Two Officers shall sign, or one Officer shall sign and one Officer shall
attest to, the Note for the Company by manual or facsimile signature.
If an Officer whose signature is on a Note was an Officer at the time of
such execution but no longer holds that office at the time the Trustee
authenticates the Note, the Note shall be valid nevertheless and the Company
shall nevertheless be bound by the terms of the Notes and this Indenture.
22
<PAGE>
A Note shall not be valid until an authorized signatory of the Trustee
manually signs the certificate of authentication on the Note but such signature
shall be conclusive evidence that the Note has been authenticated pursuant to
the terms of this Indenture.
The Trustee shall authenticate (i) Original Notes for original issue on the
date hereof in the aggregate principal amount of $140,000,000, (ii) subject to
Section 4.11, Additional Notes in an aggregate principal amount of up to
$60,000,000 and (iii) Exchange Notes for original issue in the aggregate
principal amount of up to $200,000,000, in each case upon a written order of the
Company in the form of an Officers' Certificate; provided that such Exchange
Notes shall be issuable only upon the valid surrender for cancellation of
Initial Notes of a like aggregate principal amount in accordance with the
Registration Rights Agreement. The Additional Notes shall have identical terms
and conditions (i) if issued prior to the issuance of the Exchange Notes, to the
Original Notes or (ii) if issued after the issuance of the Exchange Notes, to
the Exchange Notes (subject to registration thereof pursuant to the Securities
Act). Any Additional Notes shall be part of the same issue as the Original Notes
and will vote on all matters with the Original Notes. The Officers' Certificate
shall specify the amount of Notes to be authenticated, the date on which the
Notes are to be authenticated and whether the Notes are to be Original Notes,
Additional Notes or Exchange Notes. The aggregate principal amount of Notes
outstanding at any time may not exceed $200,000,000, except as provided in
Section 2.7. Upon the written order of the Company in the form of an Officers'
Certificate, the Trustee shall authenticate Notes in substitution of Notes
originally issued to reflect any name change of the Company.
The Trustee may appoint an authenticating agent acceptable to the Company
to authenticate Notes. Unless otherwise provided in the appointment, an
authenticating agent may authenticate Notes whenever the Trustee may do so. Each
reference in this Indenture to authentication by the Trustee includes
authentication by such agent. An authenticating agent has the same rights as an
Agent to deal with the Company, any Affiliate of the Company, or any of their
respective Subsidiaries.
Notes shall be issuable only in registered form without coupons in
denominations of $1,000 and any integral multiples thereof.
SECTION 2.3. Registrar and Paying Agent.
The Company shall maintain an office or agency in the Borough of Manhattan,
The City of New York, where Notes may be presented for registration of transfer
or for exchange ("Registrar"), and an office or agency where Notes may be
presented for payment ("Paying Agent"), and where notices and demands to or upon
the Company in respect of the Notes may be served. The Company and Affiliates of
the Company may act as Registrar or Paying Agent, except that, for the purposes
of Articles III, VIII and X hereof and as otherwise specified in this Indenture,
neither the Company nor any Affiliate of the Company shall act as Paying Agent.
The Registrar shall keep a register of the Notes and of their transfer and
exchange. The Company may have one or more co-Registrars and one or more
additional Paying Agents. The term "Registrar" includes any co-registrar
23
<PAGE>
and the term "Paying Agent" includes any additional Paying Agent. The Company
hereby initially appoints the Trustee as Registrar and Paying Agent, and by its
acknowledgment and acceptance on the signature page hereto, the Trustee hereby
initially agrees so to act.
The Company shall enter into an appropriate written agency agreement with
any Agent (including the Paying Agent) not a party to this Indenture, which
agreement shall implement the provisions of this Indenture that relate to such
Agent, and shall furnish a copy of each such agreement to the Trustee. The
Company shall promptly notify the Trustee in writing of the name and address of
any such Agent. If the Company fails to maintain a Registrar or Paying Agent,
the Trustee shall act as such.
The Company initially appoints The Depository Trust Company ("DTC") to act
as Depositary with respect to the Global Notes.
The Company initially appoints the Trustee to act as Note Custodian with
respect to the Global Notes.
Upon the occurrence of an Event of Default described in Section 6.1(iv) or
(v) hereof, the Trustee shall, or upon the occurrence of any other Event of
Default by notice to the Company, the Registrar and the Paying Agent, the
Trustee may assume the duties and obligations of the Registrar and the Paying
Agent hereunder.
The Company may conclusively rely on, and will be protected from relying
on, instructions from the Holder of the Global Note or DTC for all purposes.
24
<PAGE>
SECTION 2.4. Paying Agent to Hold Assets in Trust.
The Company shall require each Paying Agent other than the Trustee to agree
in writing that each such Paying Agent shall hold in trust for the benefit of
Holders or the Trustee all assets held by such Paying Agent for the payment of
principal of, premium, if any, or interest (or Liquidated Damages, if any) on,
the Notes (whether such assets have been distributed to it by the Company or any
other obligor on the Notes), and shall notify the Trustee in writing of any
Default in making any such payment. If either of the Company or a Subsidiary of
the Company acts as Paying Agent, it shall segregate such assets and hold them
as a separate trust fund for the benefit of the Holders or the Trustee. The
Company at any time may require a Paying Agent to distribute all assets held by
it to the Trustee and account for any assets disbursed and the Trustee may at
any time during the continuance of any payment Default or any Event of Default,
upon written request to a Paying Agent, require such Paying Agent to distribute
all assets held by it to the Trustee and to account for any assets distributed.
Upon distribution to the Trustee of all assets that shall have been delivered by
the Company to the Paying Agent, the Paying Agent (if other than the Company)
shall have no further liability for such assets.
SECTION 2.5. Noteholder Lists.
The Trustee shall preserve in as current a form as is reasonably
practicable the most recent list available to it of the names and addresses of
Holders and shall otherwise comply with TIA ss.312(a). If the Trustee or any
Paying Agent is not the Registrar, the Company shall furnish to the Trustee on
or before the third Business Day preceding each Interest Payment Date and at
such other times as the Trustee or any such Paying Agent may request in writing
a list in such form and as of such date as the Trustee or any such Paying Agent
reasonably may require of the names and addresses of Holders and the Company
shall otherwise comply with TIA ss.312(a).
Neither the Company nor the Trustee shall be liable for any delay by the
Holder of the Global Notes or DTC in identifying the beneficial owners of Notes.
SECTION 2.6. Transfer and Exchange.
(a) Transfer and Exchange of Definitive Notes. When Definitive Notes
are presented to the Registrar with a request:
(x) to register the transfer of such Definitive Notes; or
(y) to exchange such Definitive Notes for an equal principal amount of
Definitive Notes of other authorized denominations,
the Registrar shall register the transfer or make the exchange as requested if
its reasonable requirements for such transaction are met; provided, however,
that the Definitive Notes surrendered for registration of transfer or exchange:
25
<PAGE>
(i) shall be duly endorsed or accompanied by a written instrument of
transfer in form reasonably satisfactory to the Company and the Registrar, duly
executed by the Holder thereof or such Holder's attorney duly authorized in
writing; and
(ii) in the case of Transfer Restricted Securities that are Definitive
Notes, shall be accompanied by the following additional information and
documents, as applicable:
(A) if such Transfer Restricted Security is being delivered to the
Registrar by a Holder for registration in the name of such Holder, without
transfer, a certification from such Holder to that effect (in substantially
the form set forth on the reverse of the Note); or
(B) if such Transfer Restricted Security is being transferred to a
"qualified institutional buyer" (within the meaning of Rule 144A
promulgated under the Securities Act) that is aware that any sale of Notes
to it will be made in reliance on Rule 144A under the Securities Act and
that is acquiring such Transfer Restricted Security for its own account or
for the account of another such "qualified institutional buyer," a
certification from such Holder to that effect (in substantially the form
set forth on the reverse of the Note); or
(C) if such Transfer Restricted Security is being transferred pursuant
to an exemption from registration in accordance with Rule 144, or outside
the United States in an offshore transaction in compliance with Rule 904
under the Securities Act, or pursuant to an effective registration
statement under the Securities Act, a certification from such Holder to
that effect (in substantially the form set forth on the reverse of the
Note); or
(D) if such Transfer Restricted Security is being transferred in
reliance on another exemption from the registration requirements of the
Securities Act and with all applicable securities laws of the States of the
United States, a certification from such Holder to that effect (in
substantially the form set forth on the reverse of the Note) and an Opinion
of Counsel reasonably acceptable to the Company and to the Registrar to the
effect that such transfer is in compliance with the Securities Act.
(b) Restrictions on Transfer of a Definitive Note for a Beneficial
Interest in a Global Note. A Definitive Note may not be exchanged for a
beneficial interest in a Global Note except upon satisfaction of the
requirements set forth below. Upon receipt by the Trustee of a Definitive Note,
duly endorsed or accompanied by appropriate instruments of transfer, in form
satisfactory to the Trustee, together with:
26
<PAGE>
(i) if such Definitive Note is a Transfer Restricted Security,
certification, substantially in the form set forth on the reverse of the
Note, that such Definitive Note is being transferred to a "qualified
institutional buyer" (as defined in Rule 144A under the Securities Act) in
accordance with Rule 144A under the Securities Act; and
(ii) whether or not such Definitive Note is a Transfer Restricted
Security, written instructions directing the Trustee to make, or to direct
the Note Custodian to make, an endorsement on the Global Note to reflect an
increase in the aggregate principal amount of the Notes represented by the
Global Note,
then the Trustee shall cancel such Definitive Note and cause, or direct the Note
Custodian to cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Note Custodian, the aggregate principal
amount of Notes represented by the Global Note to be increased accordingly. If
no Global Notes are then outstanding, the Company shall issue and the Trustee
shall authenticate a new Global Note in the appropriate principal amount.
(c) Transfer and Exchange of Global Notes. The transfer and exchange
of Global Notes or beneficial interests therein shall be effected through the
Depositary, in accordance with this Indenture (including applicable restrictions
on transfer set forth herein, if any) and the procedures of the Depositary
therefor.
(d) Transfer of a Beneficial Interest in a Global Note for a
Definitive Note.
(i) Any Person having a beneficial interest in a Global Note may upon
request exchange such beneficial interest for a Definitive Note. Upon
receipt by the Trustee of written instructions or such other form of
instructions as is customary for the Depositary, from the Depositary or its
nominee on behalf of any Person having a beneficial interest in a Global
Note, and upon receipt by the Trustee of a written instruction or such
other form of instructions as is customary for the Depositary or the Person
designated by the Depositary as having such a beneficial interest in a
Transfer Restricted Security only, the following additional information and
documents (all of which may be submitted by facsimile):
(A) if such beneficial interest is being transferred to the
Person designated by the Depositary as being the beneficial owner, a
certification from the transferor to that effect (in substantially the
form set forth on the reverse of the Note); or
(B) if such beneficial interest is being transferred to a
"qualified institutional buyer" (within the meaning of Rule 144A
promulgated under the Securities Act), that is aware that any sale of
Notes to it will be made in reliance on Rule 144A under the Securities
Act and that is acquiring such beneficial interest in the Transfer
Restricted Security for its own account or the account of another such
27
<PAGE>
"qualified institutional buyer", a certification to that effect from
the transferor (in substantially the form set forth on the reverse of
the Note); or
(C) if such beneficial interest is being transferred pursuant to
an exemption from registration in accordance with Rule 144, or outside
the United States in an offshore transaction in compliance with Rule
904 under the Securities Act, or pursuant to an effective registration
statement under the Securities Act, a certification from the
transferor to that effect (in substantially the form set forth on the
reverse of the Note); or
(D) if such beneficial interest is being transferred in reliance
on another exemption from the registration requirements of the
Securities Act and in accordance with all applicable securities laws
of the States of the United States, a certification to that effect
from the transferor (in substantially the form set forth on the
reverse of the Note) and an Opinion of Counsel from the transferee or
transferor reasonably acceptable to the Company and to the Registrar
to the effect that such transfer is in compliance with the Securities
Act,
then the Trustee or the Note Custodian, at the direction of the Trustee,
will cause, in accordance with the standing instructions and procedures
existing between the Depositary and the Note Custodian, the aggregate
principal amount of the Global Note to be reduced and, following such
reduction, the Company will execute and, upon receipt of an authentication
order in the form of an Officers' Certificate, the Trustee's authenticating
agent will authenticate and deliver to the transferee a Definitive Note in
the appropriate principal amount.
(ii) Definitive Notes issued in exchange for a beneficial interest in
a Global Note pursuant to this Section 2.6(d) shall be registered in such
names and in such authorized denominations as the Depositary, pursuant to
instructions from its direct or indirect participants or otherwise, shall
instruct the Trustee. The Trustee shall deliver such Definitive Notes to
the persons in whose names such Notes are so registered.
(e) Restrictions on Transfer and Exchange of Global Notes.
Notwithstanding any other provisions of this Indenture (other than the
provisions set forth in subsection (f) of this Section 2.6), a Global Note may
not be transferred as a whole except by the Depositary to a nominee of the
Depositary or by a nominee of the Depositary to the Depositary or another
nominee of the Depositary or by the Depositary or any such nominee to a
successor Depositary or a nominee of such successor Depositary.
(f) Authentication of Definitive Notes in Absence of Depositary. If at
any time:
28
<PAGE>
(i) the Depositary for the Notes notifies the Company that the
Depositary is unwilling or unable to continue as Depositary for the Global
Notes and a successor Depositary for the Global Notes is not appointed by
the Company within ninety days after delivery of such notice; or
(ii) the Company, in its sole discretion, notifies the Trustee in
writing that it elects to cause the issuance of Definitive Notes under this
Indenture, then the Company will execute, and the Trustee, upon receipt of
an Officers' Certificate requesting the authentication and delivery of
Definitive Notes, will, or its authenticating agent will, authenticate and
deliver Definitive Notes, in an aggregate principal amount equal to the
principal amount of the Global Notes, in exchange for such Global Notes.
(g) Legends.
(i) Except as permitted by the following paragraph (ii), each Note
certificate evidencing the Global Notes and the Definitive Notes (and all
Notes issued in exchange therefor or substitution thereof) shall bear a
legend in substantially the following form:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE THIRD SENTENCE HEREOF. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR (B) IT IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT AND (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE
COMPANY) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN
EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES
29
<PAGE>
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED, A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED
STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER
THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING."
(ii) Upon any sale or transfer of a Transfer Restricted Security
(including any Transfer Restricted Security represented by a Global Note)
pursuant to Rule 144 under the Act or an effective registration statement
under the Securities Act:
(A) in the case of any Transfer Restricted Security that is a
Definitive Note, the Registrar shall permit the Holder thereof to
exchange such Transfer Restricted Security for a Definitive Note that
does not bear the legend set forth above and rescind any restriction
on the transfer of such Transfer Restricted Security; and
(B) any such Transfer Restricted Security represented by a Global
Note shall not be subject to the provisions set forth in (i) above
(such sales or transfers being subject only to the provisions of
Section 2.6(c) hereof); provided, however, that with respect to any
request for an exchange of a Transfer Restricted Security that is
represented by a Global Note for a Definitive Note that does not bear
a legend, which request is made in reliance upon Rule 144, the Holder
thereof shall certify in writing to the Registrar that such request is
being made pursuant to Rule 144 (such certification to be
substantially in the form set forth on the reverse of the Note).
(iii) Any Exchange Notes issued in connection with the Exchange Offer
shall not bear the legend set forth in (i) above and the Trustee shall
rescind any restriction on the transfer of such Exchange Notes.
(h) Cancellation and/or Adjustment of Global Note. At such time as all
beneficial interests in a Global Note have either been exchanged for Definitive
Notes, redeemed, repurchased or cancelled, such Global Note shall be returned to
or retained and cancelled by the Trustee. At any time prior to such
cancellation, if any beneficial interest in a Global Note is exchanged for
Definitive Notes, redeemed, repurchased or cancelled, the principal amount of
Notes represented by such Global Note shall be reduced and an endorsement shall
be made on such Global Note, by the Trustee or the Note Custodian, at the
direction of the Trustee, to reflect such reduction.
30
<PAGE>
(i) Obligations with respect to Transfers and Exchanges of Definitive
Notes.
(i) To permit registrations of transfers and exchanges, the Company
shall execute and the Trustee or any authenticating agent of the Trustee
shall authenticate Definitive Notes and Global Notes at the Registrar's
request.
(ii) No service charge shall be made to a Holder for any registration
of transfer or exchange, but the Company may require payment of a sum
sufficient to cover any transfer tax, assessments, or similar governmental
charge payable in connection therewith (other than any such transfer taxes,
assessments, or similar governmental charge payable upon exchanges or
transfers pursuant to Section 2.2 (fourth paragraph), 2.10, 3.7, 4.14, 9.5,
or 10.1 hereof).
(iii) The Registrar shall not be required to register the transfer of
or exchange of (a) any Definitive Note selected for redemption in whole or
in part pursuant to Article III, except the unredeemed portion of any
Definitive Note being redeemed in part, or (b) any Note for a period
beginning 15 Business Days before the mailing of a notice of an offer to
repurchase pursuant to Article X or Section 4.14 hereof or redemption of
Notes pursuant to Article III hereof and ending at the close of business on
the day of such mailing.
(iv) The Trustee shall have no obligation or duty to monitor,
determine or inquire as to compliance with any restrictions on transfer
imposed under this Indenture or under applicable law with respect to any
transfer of any interest in any Note (including any transfers between or
among Depositary participants or beneficial owners of interests in any
Global Note) other than to require delivery of such certificates and other
documentation or evidence as are expressly required by, and to do so if and
when expressly required by the terms of, this Indenture, and to examine the
same to determine substantial compliance as to form with the express
requirements thereof.
(j) Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for all
purposes, and none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
SECTION 2.7. Replacement Notes.
If a mutilated Note is surrendered to the Trustee or if the Holder of a
Note claims and submits an affidavit or other evidence, satisfactory to the
Trustee, to the Trustee to the effect that the Note has been lost, destroyed or
wrongfully taken, the Company shall issue and the Trustee shall authenticate a
replacement Note if the Trustee's requirements are met. Such Holder must provide
an indemnity bond or other indemnity, sufficient in the judgment of both the
Company and the Trustee, to protect the Company, the Trustee or any Agent from
any loss which any of them may
31
<PAGE>
suffer if a Note is replaced. The Company may charge such Holder for its
reasonable, out-of-pocket expenses in replacing a Note.
Every replacement Note is an additional obligation of the Company.
SECTION 2.8. Outstanding Notes.
Notes outstanding at any time are all the Notes that have been
authenticated by the Trustee (including any Note represented by a Global Note)
except those cancelled by it, those delivered to it for cancellation, those
reductions in the interest in a Global Note effected by the Trustee hereunder
and those described in this Section 2.8 as not outstanding. A Note does not
cease to be outstanding because the Company or an Affiliate of the Company holds
the Note, except as provided in Section 2.9 hereof.
If a Note is replaced pursuant to Section 2.7 hereof (other than a
mutilated Note surrendered for replacement), it ceases to be outstanding unless
the Trustee receives proof satisfactory to it that the replaced Note is held by
a bona fide purchaser. A mutilated Note ceases to be outstanding upon surrender
of such Note and replacement thereof pursuant to Section 2.7 hereof.
If on a Redemption Date or the Maturity Date the Paying Agent (other than
the Company or an Affiliate of the Company) holds cash sufficient to pay all of
the principal and interest and premium, if any, due on the Notes payable on that
date and payment of the Notes called for redemption is not otherwise prohibited,
then on and after that date such Notes cease to be outstanding and interest on
them ceases to accrue.
SECTION 2.9. Treasury Notes.
In determining whether the Holders of the required principal amount of
Notes have concurred in any direction, amendment, supplement, waiver or consent,
Notes owned by the Company or Affiliates of the Company shall be disregarded,
except that, for the purposes of determining whether the Trustee shall be
protected in relying on any such direction, amendment, supplement, waiver or
consent, only Notes that a Trust Officer of the Trustee actually knows are so
owned shall be disregarded.
SECTION 2.10. Temporary Notes.
Until Definitive Notes are ready for delivery, the Company may prepare and
the Trustee shall authenticate temporary Notes. Temporary Notes shall be
substantially in the form of Definitive Notes but may have variations that the
Company reasonably and in good faith consider appropriate for temporary Notes.
Without unreasonable delay, the Company shall prepare and the Trustee shall,
upon receipt of a written order of the Company in the form of an Officers'
Certificate, authenticate Definitive Notes in exchange for temporary Notes.
Until so exchanged, the temporary
32
<PAGE>
Notes shall in all respects be entitled to the same benefits under this
Indenture as permanent Notes authenticated and delivered hereunder.
SECTION 2.11. Cancellation.
The Company at any time may deliver Notes to the Trustee for cancellation.
The Registrar and the Paying Agent shall forward to the Trustee any Notes
surrendered to them for registration, transfer, exchange or payment. The
Trustee, or at the direction of the Trustee, the Registrar or the Paying Agent
(other than the Company or an Affiliate of the Company), and no one else, shall
cancel and, without the written direction of the Company to the contrary, shall
dispose of all Notes surrendered for transfer, exchange, payment or cancellation
in accordance with its customary procedures. Subject to Section 2.7 hereof, the
Company may not issue new Notes to replace Notes that have been paid or
delivered to the Trustee for cancellation. No Notes shall be authenticated in
lieu of or in exchange for any Notes cancelled as provided in this Section 2.11
hereof, except as expressly permitted in the form of Notes and as permitted by
this Indenture.
SECTION 2.12. Defaulted Interest.
Interest on any Note which is payable, and is punctually paid or duly
provided for, on any Interest Payment Date shall be paid to the person in whose
name that Note (or one or more predecessor Notes) is registered at the close of
business on the Record Date for such interest.
Any interest on any Note which is payable, but is not punctually paid or
duly provided for, on any Interest Payment Date plus any interest payable on the
defaulted interest at the rate and in the manner provided in Section 4.1 hereof
and the Note (herein called "Defaulted Interest"), shall forthwith cease to be
payable to the registered holder on the relevant Record Date, or, as applicable,
the Special Record Date (as defined below), and such Defaulted Interest may be
paid by the Company, at its election in each case, as provided in clause (1) or
(2) below:
(1) The Company may elect to make payment of any Defaulted Interest to
the persons in whose names the Notes (or their respective predecessor
Notes) are registered at the close of business on a Special Record Date for
the payment of such Defaulted Interest, which shall be fixed in the
following manner. The Company shall notify the Trustee and the Paying Agent
in writing of the amount of Defaulted Interest proposed to be paid on each
Note and the date of the proposed payment, and at the same time the Company
shall deposit with the Paying Agent an amount of cash equal to the
aggregate amount proposed to be paid in respect of such Defaulted Interest
or shall make arrangements satisfactory to the Paying Agent for such
deposit prior to the date of the proposed payment, such cash when deposited
to be held in trust for the benefit of the persons entitled to such
Defaulted Interest as provided in this clause (1). Thereupon the Paying
Agent shall fix a special record date for the payment of such Defaulted
Interest (a "Special Record Date"), which shall be not more than 15 days,
and not less than 10 days prior to the date of the proposed payment and not
less than 10 days after the receipt by the Paying Agent of the
33
<PAGE>
notice of the proposed payment. The Paying Agent shall promptly notify the
Company and the Trustee of such Special Record Date and, in the name and at
the expense of the Company, shall cause notice of the proposed payment of
such Defaulted Interest and the Special Record Date therefor to be mailed,
first-class postage prepaid, to each Holder at his address as it appears in
the Note register not less than 10 days prior to such Special Record Date.
Notice of the proposed payment of such Defaulted Interest and the Special
Record Date therefor having been mailed as aforesaid, such Defaulted
Interest shall be paid to the persons in whose names the Notes (or their
respective predecessor Notes) are registered on such Special Record Date
and shall no longer be payable pursuant to the following clause (2).
(2) The Company may make payment of any Defaulted Interest in any
other lawful manner not inconsistent with the requirements of any
securities exchange on which the Notes may be listed, and upon such notice
as may be required by such exchange, if, after notice given by the Company
to the Trustee and the Paying Agent of the proposed payment pursuant to
this clause, such manner shall be deemed practicable by the Trustee and the
Paying Agent.
Subject to the foregoing provisions of this Section, each Note delivered
under this Indenture upon the registration of transfer of or in exchange for or
in lieu of any other Note shall carry the rights to interest accrued and unpaid,
and to accrue, which were carried by such other Note.
SECTION 2.13. CUSIP Numbers.
The Company in issuing the Notes may use "CUSIP" numbers (if then generally
in use), and, if so, the Trustee shall use "CUSIP" numbers in notices of
redemption as a convenience to Holders; provided that any such notice may state
that no representation is made as to the correctness of such numbers either as
printed on the Notes or as contained in any notice of a redemption and that
reliance may be placed only on the other identification numbers printed on the
Notes, and any such redemption shall not be affected by any defect in or
omission of such numbers. The Company will promptly notify the Trustee of any
change in the "CUSIP" numbers.
34
<PAGE>
ARTICLE III
REDEMPTION
SECTION 3.1. Right of Redemption.
Redemption of Notes, as permitted by the provisions of this Indenture,
shall be made in accordance with such provisions and this Article III. Except as
described in this Section and Paragraph 5 of the Notes, the Company will not
have the right to redeem any Notes prior to January 15, 2002. The Notes will be
redeemable for cash at the option of the Company, in whole or in part, at any
time on or after January 15, 2002, upon not less than 30 days nor more than 60
days notice to each holder of Notes, at the following redemption prices
(expressed as percentages of the principal amount) if redeemed during the
12-month period commencing January 15 of the years indicated below, in each case
(subject to the right of Holders of record on a Record Date to receive interest
due on an Interest Payment Date that is on or prior to such Redemption Date)
together with accrued and unpaid interest and Liquidated Damages, if any,
thereon to the Redemption Date:
Year Percentage
---- ----------
2002.............................................................104.8750%
2003.............................................................102.4375%
2004 and thereafter..............................................100.0000%
Until January 15, 2001 upon an Public Equity Offering of common stock for
cash of the Company, up to 35% of the sum of (i) the original aggregate
principal amount of the Notes and (ii) the original aggregate principal amount
of any Additional Notes may be redeemed at the option of the Company within 90
days of such Public Equity Offering, on not less than 30 days, but not more than
60 days, notice to each holder of the Notes to be redeemed, with cash from the
Net Cash Proceeds of such Public Equity Offering, at a redemption price equal to
109 3/4% of principal (subject to the right of Holders of record on a Record
Date to receive interest due on an Interest Payment Date that is on or prior to
such Redemption Date), together with accrued and unpaid interest and Liquidated
Damages, if any, to the date of redemption; provided, however, that immediately
following such redemption not less than 65% of the sum of (i) the original
aggregate principal amount of the Notes and (ii) the original aggregate
principal amount of any Additional Notes remains outstanding.
The Notes will not have the benefit of any sinking fund.
Except as provided in this Section and paragraph 5 of the Notes, the Notes
may not otherwise be redeemed at the option of the Company.
35
<PAGE>
SECTION 3.2. Notices to Trustee.
If the Company elects to redeem Notes pursuant to Paragraph 5 of the Notes,
it shall notify the Trustee and the Paying Agent in writing of the Redemption
Date and the principal amount of Notes to be redeemed and whether it wants the
Paying Agent to give notice of redemption to the Holders.
If the Company elects to reduce the principal amount of Notes to be
redeemed pursuant to Paragraph 5 of the Notes by crediting against any such
redemption Notes it has not previously delivered to the Trustee and the Paying
Agent for cancellation, it shall so notify the Trustee, in the form of an
Officers' Certificate, and the Paying Agent of the amount of the reduction and
deliver such Notes with such notice.
The Company shall give each notice to the Trustee and the Paying Agent
provided for in this Section 3.2 at least 45 days before the Redemption Date
(unless a shorter notice shall be satisfactory to the Trustee and the Paying
Agent). Any such notice may be cancelled at any time prior to notice of such
redemption being mailed to any Holder and shall thereby be void and of no
effect.
SECTION 3.3. Selection of Notes to Be Redeemed.
If less than all of the Notes are to be redeemed pursuant to Paragraph 5
thereof, the Trustee shall select the Notes to be redeemed on a pro rata basis,
by lot or by such other method as the Trustee shall determine to be appropriate
and fair and in such manner as complies with any applicable Depositary, legal
and stock exchange requirements.
The Trustee shall make the selection from the Notes outstanding and not
previously called for redemption and shall promptly notify the Company and the
Paying Agent in writing of the Notes selected for redemption and, in the case of
any Note selected for partial redemption, the principal amount thereof to be
redeemed. Notes in denominations of $1,000 may be redeemed only in whole. The
Trustee may select for redemption portions (equal to $1,000 or any integral
multiple thereof) of the principal of Notes that have denominations larger than
$1,000. Provisions of this Indenture that apply to Notes called for redemption
also apply to portions of Notes called for redemption.
SECTION 3.4. Notice of Redemption.
At least 30 days, but not more than 60 days prior to the Redemption Date,
the Company shall mail a notice of redemption by first class mail, postage
prepaid, to the Trustee, the Paying Agent and each Holder whose Notes are to be
redeemed. At the Company's request, the Paying Agent shall give the notice of
redemption in the Company's name and at the Company's expense. Each notice for
redemption shall identify the Notes to be redeemed and shall state:
36
<PAGE>
(1) the Redemption Date;
(2) the Redemption Price, including accrued and unpaid interest and
Liquidated Damages, if any, to be paid upon such redemption;
(3) the name and address of the Paying Agent;
(4) that Notes called for redemption must be surrendered to the Paying
Agent at the address specified in such notice to collect the Redemption
Price;
(5) that, unless (a) the Company defaults in its obligation to deposit
with the Paying Agent cash which through the scheduled payment of principal
and interest in respect thereof in accordance with their terms shall
provide the amount to fund the Redemption Price in accordance with Section
3.6 hereof or (b) such redemption payment is prohibited, interest on Notes
called for redemption ceases to accrue on and after the Redemption Date and
the only remaining right of the Holders of such Notes is to receive payment
of the Redemption Price, including accrued and unpaid interest (and
Liquidated Damages, if any) to the Redemption Date, upon surrender to the
Paying Agent of the Notes called for redemption and to be redeemed;
(6) if any Note is being redeemed in part, the portion of the
principal amount, equal to $1,000 or any integral multiple thereof, of such
Note to be redeemed and that, after the Redemption Date, and upon surrender
of such Note, a new Note or Notes in aggregate principal amount equal to
the unredeemed portion thereof shall be issued;
(7) if less than all the Notes are to be redeemed, the identification
of the particular Notes (or portion thereof) to be redeemed, as well as the
aggregate principal amount of such Notes to be redeemed and the aggregate
principal amount of Notes to be outstanding after such partial redemption;
(8) the CUSIP number of the Notes to be redeemed; and
(9) that the notice is being sent pursuant to this Section 3.4 and
pursuant to the optional redemption provisions of Paragraph 5 of the Notes.
SECTION 3.5. Effect of Notice of Redemption.
Once notice of redemption is mailed in accordance with Section 3.4 hereof,
Notes called for redemption become due and payable on the Redemption Date and at
the Redemption Price, including accrued and unpaid interest (and Liquidated
Damages, if any) to the Redemption Date. Upon surrender to the Trustee or Paying
Agent, such Notes called for redemption shall be paid at the Redemption Price,
including interest and Liquidated Damages, if any, accrued and unpaid to the
Redemption Date; provided that if the Redemption Date is after a regular Record
Date and on or
37
<PAGE>
prior to the Interest Payment Date, to which such Record Date relates, the
accrued interest (and Liquidated Damages, if any) shall be payable to the Holder
of the redeemed Notes registered on the relevant Record Date; and provided,
further, that if a Redemption Date is a Legal Holiday, payment shall be made on
the next succeeding Business Day and no interest shall accrue for the period
from such Redemption Date to such succeeding Business Day.
SECTION 3.6. Deposit of Redemption Price.
On or prior to the Redemption Date, the Company shall deposit with the
Paying Agent (other than the Company or an Affiliate of the Company) cash
sufficient to pay the Redemption Price of all Notes to be redeemed on such
Redemption Date (other than Notes or portions thereof called for redemption on
that date that have been delivered by the Company to the Trustee for
cancellation). The Paying Agent shall promptly return to the Company any cash so
deposited which is not required for that purpose upon the written request of the
Company.
If the Company complies with the preceding paragraph and payment of the
Notes called for redemption is not prohibited for any reason, interest on the
Notes to be redeemed shall cease to accrue on the applicable Redemption Date,
whether or not such Notes are presented for payment. Notwithstanding anything
herein to the contrary, if any Note surrendered for redemption in the manner
provided in the Notes shall not be so paid upon surrender for redemption because
of the failure of the Company to comply with the preceding paragraph, interest
shall continue to accrue and be paid from the Redemption Date until such payment
is made on the unpaid principal, and, to the extent lawful, on any interest not
paid on such unpaid principal, in each case at the rate and in the manner
provided in Section 4.1 hereof and the Note.
SECTION 3.7. Notes Redeemed in Part.
Upon surrender of a Note that is to be redeemed in part, the Company shall
execute and the Trustee shall authenticate and deliver to the Holder, without
service charge to the Holder, a new Note or Notes equal in principal amount to
the unredeemed portion of the Note surrendered.
ARTICLE IV
COVENANTS
SECTION 4.1. Payment of Notes.
The Company shall pay the principal of and interest (and Liquidated
Damages, if any) on the Notes on the dates and in the manner provided herein and
in the Notes. An installment of principal of or interest (or Liquidated Damages,
if any) on the Notes shall be considered paid on the date it is due if the
Trustee or Paying Agent (other than the Company or an Affiliate of the Company)
holds for the benefit of the Holders (on or before 10:00 a.m. New York City time
to the extent
38
<PAGE>
necessary to provide the funds to the Depositary in accordance with the
Depositary's procedures) on that date cash deposited and designated for and
sufficient to pay the installment.
The Company shall pay interest on overdue principal and on overdue
installments of interest (and Liquidated Damages, if any) at the rate specified
in the Notes compounded semi-annually, to the extent lawful.
SECTION 4.2. Maintenance of Office or Agency.
The Company and the Guarantors shall maintain in the Borough of Manhattan,
The City of New York, an office or agency where Notes may be presented or
surrendered for payment, where Notes may be surrendered for registration of
transfer or exchange and where notices and demands to or upon the Company and
the Guarantors in respect of the Notes and this Indenture may be served. The
Company and the Guarantors shall give prompt written notice to the Trustee and
the Paying Agent of the location, and any change in the location, of such office
or agency. If at any time the Company and the Guarantors shall fail to maintain
any such required office or agency or shall fail to furnish the Trustee and the
Paying Agent with the address thereof, such presentations, surrenders, notices
and demands may be made or served at the address of the Trustee set forth in
Section 13.2 hereof.
The Company and the Guarantors may also from time to time designate one or
more other offices or agencies where the Notes may be presented or surrendered
for any or all such purposes and may from time to time rescind such
designations; provided, however, that no such designation or rescission shall in
any manner relieve the Company and the Guarantors of their obligation to
maintain an office or agency in the Borough of Manhattan, The City of New York,
for such purposes. The Company and the Guarantors shall give prompt written
notice to the Trustee and the Paying Agent of any such designation or rescission
and of any change in the location of any such other office or agency. The
Company hereby initially designates the Corporate Trust Office of the Trustee as
such office.
SECTION 4.3. Limitation on Restricted Payments.
The Company and the Guarantors shall not, and shall not permit any of their
Subsidiaries to, directly or indirectly, make any Restricted Payment if, after
giving effect to such Restricted Payment on a pro forma basis, (1) a Default or
an Event of Default shall have occurred and be continuing, (2) the Company is
not permitted to incur at least $1.00 of additional Indebtedness pursuant to the
Debt Incurrence Ratio in Section 4.11 or (3) the aggregate amount of all
Restricted Payments made by the Company and its Subsidiaries, including after
giving effect to such proposed Restricted Payment, from and after the Issue
Date, would exceed the sum of (a) 50% of the aggregate Consolidated Net Income
of the Company for the period (taken as one accounting period), commencing on
the first day of the first full fiscal quarter commencing after the Issue Date,
to and including the last day of the fiscal quarter ended immediately prior to
the date of each such calculation (or, in the event Consolidated Net Income for
such period is a deficit, then minus 100%
39
<PAGE>
of such deficit), plus (b) the aggregate Net Cash Proceeds received by the
Company from the sale of the Company's Qualified Capital Stock (other than (i)
to a Subsidiary of the Company and (ii) to the extent applied in connection with
a Qualified Exchange), after the Issue Date.
The foregoing clauses (2) and (3) of the immediately preceding paragraph,
however, shall not prohibit (t) pro rata dividends and other distributions on
Equity Interests of a Subsidiary by such Subsidiary, (u) Restricted Investments,
provided that, after giving pro forma effect to any such Investment, the
aggregate amount of all such Investments made on or after the Issue Date that
are outstanding (after giving effect to any such Investments that are returned
to the Company or the Subsidiary that made such prior Investment, without
restriction, in cash on or prior to the date of any such calculation) at any
time does not exceed $10.0 million plus (i) any cash proceeds received by the
Company or any Guarantor from the Packer Avenue Proceeding and (ii) the Net Cash
Proceeds received by the Company from the sale (other than to any of its
Affiliates, to the extent used to effect a Qualified Exchange, or to the extent
used to make Restricted Payments other than pursuant to this clause (u)) of its
Qualified Capital Stock after the Issue Date, (v)(i) payments pursuant to the
Employee Stock Plan and (ii) repurchases of Capital Stock from employees of the
Company or its Subsidiaries upon their death (or from such employees' estate or
heirs in the case of any such death) or disability or the termination of their
employment, such payments under (i) and (ii) collectively not to exceed $15.0
million in the aggregate on and after the Issue Date and (w) payments required
to be made under put rights pursuant to the TNX Shareholders Agreement not to
exceed $10.0 million in the aggregate, and the provisions of the immediately
preceding paragraph shall not prohibit (x) a Qualified Exchange, (y) the payment
of any dividend on Qualified Capital Stock within 60 days after the date of its
declaration if such dividend could have been made on the date of such
declaration in compliance with the foregoing provisions and (z) so long as the
Company is a Subchapter S Corporation or substantially similar pass-through
entity for federal income tax purposes, cash distributions paid by the Company
to its shareholders from time to time in amounts permitted by and otherwise in
accordance with the definition of Permitted Tax Distribution. The full amount of
any Restricted Payment made pursuant to the foregoing clauses (t), (u), (v) and
(y) (but not pursuant to clauses (w), (x) and (z)) of the immediately preceding
sentence, however, shall be deducted in the calculation of the aggregate amount
of Restricted Payments available to be made referred to in clause (3) of the
immediately preceding paragraph.
For purposes of this Section 4.3, the amount of any Restricted Payment, if
other than in cash, shall be the fair market value thereof, as determined in the
good faith reasonable judgment of the Board of Directors of the Company.
Additionally, at the time of each Restricted Payment, the Company shall deliver
an Officers' Certificate to the Trustee describing in reasonable detail the
nature of such Restricted Payment, stating the amount of such Restricted
Payment, stating in reasonable detail the provisions of this Indenture pursuant
to which such Restricted Payment was made and certifying that such Restricted
Payment was made in compliance with the terms of this Indenture.
40
<PAGE>
SECTION 4.4. Corporate and Partnership Existence.
Except as otherwise permitted by Article V, Section 4.14 or Section 11.4,
the Company and the Guarantors shall do or cause to be done all things necessary
to preserve and keep in full force and effect their respective corporate,
partnership or other organizational existence, as the case may be, and the
corporate, partnership or other organizational existence, as the case may be, of
each of their Subsidiaries in accordance with the respective organizational
documents of each of them and the material rights (charter and statutory) and
material corporate franchises of the Company, the Guarantors and each of their
respective Subsidiaries; provided, however, that neither the Company nor any
Guarantor shall be required to preserve, with respect to themselves, any right
or franchise, and with respect to any of their respective Subsidiaries, any such
existence, right or franchise, if (a) the Company shall determine that the
preservation thereof is no longer desirable in the conduct of the business of
the Company and (b) the loss thereof is not adverse in any material respect to
the Holders.
SECTION 4.5. Payment of Taxes and Other Claims.
The Company and the Guarantors shall, and shall cause each of their
Subsidiaries to, pay or discharge or cause to be paid or discharged, before the
same shall become delinquent, (i) all material taxes, assessments and
governmental charges (including withholding taxes and any penalties, interest
and additions to taxes) levied or imposed upon the Company, any Guarantor or any
of their Subsidiaries or any of their respective properties and assets and (ii)
all lawful claims, whether for labor, materials, supplies or services, which
have become due and payable and which by law have or may become a Lien upon the
property and assets of the Company, any Guarantor or any of their Subsidiaries;
provided, however, that neither the Company nor any Guarantor shall be required
to pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings and for which disputed amounts adequate
reserves have been established in accordance with GAAP.
SECTION 4.6. Maintenance of Properties and Insurance.
The Company and the Guarantors shall cause all material properties used or
useful to the conduct of their business and the business of each of their
Subsidiaries to be maintained and kept in good condition, repair and working
order (reasonable wear and tear excepted) and supplied with all necessary
equipment and shall cause to be made all necessary repairs, renewals,
replacements, betterments and improvements thereof, all as in their reasonable
judgment may be necessary, so that the business carried on in connection
therewith may be properly conducted at all times; provided, however, that
nothing in this Section 4.6 shall prevent the Company or any Guarantor from
discontinuing any operation or maintenance of any of such properties, or
disposing of any of them, if such discontinuance or disposal is (a)(i) in the
judgment of the Board of Directors of the Company, desirable in the conduct of
the business of the Company and (ii) not adverse in any material respect to the
Holders or (b) otherwise permitted under Section 4.14.
41
<PAGE>
The Company and the Guarantors shall provide, or cause to be provided, for
themselves and each of their Subsidiaries, insurance (including appropriate
self-insurance) against loss or damage of the kinds that, in the reasonable,
good faith opinion of the Board of Directors of the Company is adequate and
appropriate for the conduct of the business of the Company, the Guarantors and
such Subsidiaries in a prudent manner, with (except for self-insurance)
reputable insurers or with the government of the United States of America or an
agency or instrumentality thereof, in such amounts, with such deductibles, and
by such methods as shall be customary, in the reasonable, good faith opinion of
the Company and adequate and appropriate for the conduct of the business of the
Company, the Guarantors and such Subsidiaries in a prudent manner for entities
similarly situated in the industry.
SECTION 4.7. Compliance Certificate; Notice of Default.
(a) The Company shall deliver to the Trustee within 120 days after the end
of its fiscal year an Officers' Certificate, one of the signers of which shall
be the principal executive, principal financial or principal accounting officer
of the Company, complying with Section 314(a)(4) of the TIA and stating that a
review of its activities and the activities of its Subsidiaries, if any, during
the preceding fiscal year has been made under the supervision of the signing
Officers with a view to determining whether the Company has kept, observed,
performed and fulfilled its obligations under this Indenture (without regard to
notice requirements or grace periods) and further stating, as to each such
Officer signing such certificate, whether or not the signer knows of any failure
by the Company, any Guarantor or any Subsidiary of the Company to comply with
any conditions or covenants in this Indenture and, if such signer does know of
such a failure to comply, the certificate shall describe such failure with
particularity. The Officers' Certificate shall also notify the Trustee should
the relevant fiscal year end on any date other than the current fiscal year end
date.
(b) The Company shall, so long as any of the Notes are outstanding, deliver
to the Trustee, promptly upon becoming aware of any Default or Event of Default,
an Officers' Certificate specifying such Default or Event of Default and what
action the Company is taking or proposes to take with respect thereto. The
Trustee shall not be deemed to have knowledge of any Default, any Event of
Default or any such fact unless one of its Trust Officers receives written
notice thereof from the Company or any of the Holders.
SECTION 4.8. Reports.
Whether or not the Company is subject to the reporting requirements of
Section 13 or 15(d) of the Exchange Act, the Company shall furnish to the
Trustee, to each Holder and to prospective purchasers of Notes identified to the
Company by an Initial Purchaser, within 15 days after it is or would have been
(if it were subject to such reporting requirements) required to file such with
the Commission, annual and quarterly financial statements substantially
equivalent to financial statements that would have been included in reports
filed with the Commission, if the Company were subject to the requirements of
Section 13 or 15(d) of the Exchange Act, including, with respect to
42
<PAGE>
annual information only, a report thereon by the Company's certified independent
public accountants as such would be required in such reports to the Commission,
and, in each case, together with a management's discussion and analysis of
financial condition and results of operations which would be so required; and,
unless the Commission shall not accept such reports, file with the Commission
the annual, quarterly and other reports which it is or would have been required
to file with the Commission. Notwithstanding anything contrary herein the
Trustee shall have no duty to review such documents for purposes of determining
compliance with any provisions of this Indenture.
SECTION 4.9. Limitation on Status as Investment Company.
The Company and the Subsidiaries shall not become required to register as
an "investment company" (as that term is defined in the Investment Company Act
of 1940, as amended), or otherwise become subject to regulation under the
Investment Company Act.
SECTION 4.10. Limitation on Transactions with Affiliates.
Neither the Company nor any of its Subsidiaries shall be permitted on or
after the Issue Date to enter into or suffer to exist any contract, agreement,
arrangement or transaction with any Affiliate (an "Affiliate Transaction"), or
any series of related Affiliate Transactions (other than Exempted Affiliate
Transactions), (i) unless it is determined that the terms of such Affiliate
Transaction are fair and reasonable to the Company, and no less favorable to the
Company, than could have been obtained in an arm's length transaction with a
non-Affiliate, (ii) if involving consideration to either party in excess of $1.0
million unless such Affiliate Transaction(s) is the subject of an Officers'
Certificate addressed and delivered to the Trustee certifying that such
Affiliate Transaction (or Transactions) has been approved by a majority of the
members of the Board of Directors that are disinterested in such transaction and
(iii) if involving consideration to either party in excess of $10.0 million,
unless, in addition, the Company, prior to the consummation thereof, obtains a
written favorable opinion as to the fairness of such transaction to the Company
from a financial point of view from an independent investment banking firm of
national reputation or, if pertaining to a matter for which such investment
banking firms do not customarily render such opinions, an appraisal or valuation
firm of national reputation; provided, however, that clause (iii) of this
Section 4.10 also shall be applicable to any Affiliate Transaction involving
consideration to either party in excess of $5.0 million but equal to or less
than $10.0 million unless such Affiliate Transaction is only with an Affiliate
(x) engaged in business substantially similar and related to the business then
conducted by the Company and its Subsidiaries (as permitted under this
Indenture) and (y) such Affiliate Transaction is entered into in the ordinary
course of business for purposes customary in the Company's industry.
SECTION 4.11. Limitation on Incurrence of Additional Indebtedness and
Disqualified Capital Stock.
Except as set forth in this Section 4.11, the Company and the Guarantors
shall not, and shall not permit any of their Subsidiaries to, directly or
indirectly, issue, assume, guaranty, incur,
43
<PAGE>
become directly or indirectly liable with respect to (including as a result of
an Acquisition), or otherwise become responsible for, contingently or otherwise
(individually and collectively, to "incur" or, as appropriate, an"incurrence"),
any Indebtedness or issue any Disqualified Capital Stock (including Acquired
Indebtedness), other than Permitted Indebtedness. Notwithstanding the foregoing,
if (i) no Default or Event of Default shall have occurred and be continuing at
the time of, or would occur after giving effect on a pro forma basis to, such
incurrence of Indebtedness or issuance of Disqualified Capital Stock and (ii) on
the date of such incurrence or issuance (the "Incurrence Date"), the
Consolidated Coverage Ratio of the Company for the Reference Period immediately
preceding the Incurrence Date, after giving effect on a pro forma basis to such
incurrence of such Indebtedness or issuance of Disqualified Capital Stock and,
to the extent set forth in the definition of Consolidated Coverage Ratio, the
use of proceeds thereof, would be at least 2.0 to l (the "Debt Incurrence
Ratio"), then the Company may incur such Indebtedness or issue Disqualified
Capital Stock and the Guarantors may incur such Indebtedness (other than
Disqualified Capital Stock).
In addition, the foregoing limitations shall not apply to:
(a) the incurrence by the Company or any Guarantor of Purchase Money
Indebtedness on or after the Issue Date; provided, that (i) the aggregate
principal amount of such Indebtedness incurred on or after the Issue Date and
outstanding at any time pursuant to this paragraph (a) (including any
Indebtedness incurred to refinance, replace or refund such Indebtedness) shall
not exceed $25.0 million, and (ii) in each case, such Indebtedness shall not
constitute more than 100% of the cost (determined in accordance with GAAP) to
the Company or such Guarantor, as applicable, of the property so purchased,
leased or financed;
(b) if no Event of Default shall have occurred and be continuing, the
incurrence by the Company or any Guarantor of Indebtedness in an aggregate
principal amount outstanding at any time (including Indebtedness incurred to
refinance, replace or refund such Indebtedness) of up to $25.0 million;
(c) the incurrence by the Company or any Guarantor of Indebtedness
pursuant to the Credit Agreement up to an aggregate principal amount outstanding
at any time (including any Indebtedness incurred to refinance, replace or refund
such Indebtedness) of $50.0 million, minus the amount of any such Indebtedness
(i) retired with the Net Cash Proceeds from any Asset Sale applied to reduce
permanently the outstanding amounts or the commitments with respect to such
Indebtedness pursuant to clause (1)(b)(ii) of the first paragraph of Section
4.14 or (ii) assumed by a transferee in an Asset Sale;
(d) the incurrence by the Company or any Guarantor of Existing
Indebtedness; and
(e) the incurrence by any Non-Recourse Subsidiary of Permitted
Non-Recourse Vessel Indebtedness.
44
<PAGE>
Indebtedness or Disqualified Capital Stock of any Person which is
outstanding at the time such Person becomes a Subsidiary of the Company
(including upon designation of any subsidiary or other person as a Subsidiary)
or is merged with or into or consolidated with the Company or a Subsidiary of
the Company shall be deemed to have been incurred at the time such Person
becomes such a Subsidiary of the Company or is merged with or into or
consolidated with the Company or a Subsidiary of the Company, as applicable. The
Company and the Guarantors shall not, and shall not permit any of their
Subsidiaries to, directly or indirectly, incur, or suffer to exist any
Indebtedness that is contractually subordinate in right of payment to any other
Indebtedness of the Company or a Guarantor unless, by its terms, such
Indebtedness is subordinate to the same extent in right of payment to the Notes
or the Guarantee, as applicable.
SECTION 4.12. Limitations on Dividends and Other Payment Restrictions
Affecting Subsidiaries.
The Company and the Guarantors shall not, and shall not permit any of their
Subsidiaries to, directly or indirectly, create, assume or suffer to exist any
consensual restriction on the ability of any Subsidiary of the Company to pay
dividends or make other distributions to or on behalf of, or to pay any
obligation to or on behalf of, or otherwise to transfer assets or property to or
on behalf of, or make or pay loans or advances to or on behalf of, the Company
or any Subsidiary of the Company, except (a) restrictions imposed by the Notes
or this Indenture or by other indebtedness of the Company (which may also be
guaranteed by the Guarantors) ranking pari passu with the Notes (and the
guarantees, as applicable), provided such restrictions are no more restrictive
than those imposed by this Indenture and the Notes, (b) restrictions imposed by
applicable law, (c) restrictions under the Existing Indebtedness and Permitted
Non-Recourse Vessel Indebtedness, (d) restrictions under any Acquired
Indebtedness not incurred in violation of this Indenture or any agreement
relating to any property, asset, or business acquired by the Company or any of
its Subsidiaries, which restrictions in each case existed at the time of
acquisition, were not put in place in connection with or in anticipation of such
acquisition and are not applicable to any person, other than the person
acquired, or to any property, asset or business, other than the property, assets
and business so acquired, (e) any such restriction or requirement imposed by
Indebtedness incurred under Section 4.11, provided such restriction or
requirement is no more restrictive than that imposed by the Credit Agreement as
of the Issue Date, (f) restrictions with respect solely to a Subsidiary of the
Company imposed pursuant to a binding agreement which has been entered into for
the sale or disposition of all or substantially all of the Equity Interests or
assets of such Subsidiary, provided further such restrictions apply solely to
the Equity Interests or assets of such Subsidiary which are being sold, (g)
restrictions on transfer contained in Purchase Money Indebtedness incurred
pursuant to clause (a) of the second paragraph of Section 4.11, provided such
restrictions relate only to the transfer of the property acquired with the
proceeds of such Purchase Money Indebtedness, and (h) in connection with and
pursuant to permitted Refinancings, replacements of restrictions imposed
pursuant to clauses (a), (c) or (d) of this paragraph that are not more
restrictive than those being replaced and do not apply to any other person or
assets other than those that would have been covered by the restrictions in the
Indebtedness so refinanced. Notwithstanding the foregoing, neither (a) customary
provisions restricting subletting or assignment of any lease entered into in the
45
<PAGE>
ordinary course of business, consistent with industry practice, nor (b) Liens
permitted under the terms of this Indenture on assets securing Senior Debt or
Purchase Money Indebtedness incurred in accordance with Section 4.11 shall in
and of themselves be considered a restriction on the ability of the applicable
Subsidiary to transfer such agreement or assets, as the case may be.
SECTION 4.13. Reserved.
SECTION 4.14. Limitation on Sales of Assets and Subsidiary Stock.
The Company and the Guarantors shall not, and shall not permit any of their
Subsidiaries to, in one or a series of related transactions, convey, sell,
transfer, assign or otherwise dispose of, directly or indirectly, any of its
property, business or assets, including by merger or consolidation (in the case
of a Guarantor or a Subsidiary of the Company), and including any sale or other
transfer or issuance of any Equity Interests of any Subsidiary of the Company,
whether by the Company or a Subsidiary or through the issuance, sale or transfer
of Equity Interests by a Subsidiary of the Company, and including any sale and
leaseback transaction (any of the foregoing, an "Asset Sale"), unless (1)(a) the
Net Cash Proceeds therefrom (the "Asset Sale Offer Amount") are applied, subject
to the next paragraph below, within 330 days after the date of such Asset Sale,
to (i) the optional redemption of (a) Indebtedness secured by the items so
subject to such Asset Sale or (b) the Notes in accordance with the terms of this
Indenture and other indebtedness of the Company ranking on a parity with the
Notes from time to time outstanding with similar provisions requiring the
Company to make an offer to purchase or to redeem such Indebtedness with the
proceeds of asset sales, pro rata in proportion to the respective principal
amounts (or accreted values in the case of Indebtedness issued with an original
issue discount) of the Notes and such other Indebtedness then outstanding or
(ii) to the repurchase of (a) Indebtedness secured by the items so subject to
such Asset Sale or (b) the Notes and such other Indebtedness ranking on a parity
with the Notes and having similar provisions requiring the Company to purchase
or redeem such Indebtedness with the proceeds from asset sales pursuant to a
cash offer subject only to conditions, if any, required by law (pro rata in
proportion to the respective principal amounts (or accreted values in the case
of Indebtedness issued with an original issue discount) of the Notes and such
other Indebtedness then outstanding) (the "Asset Sale Offer") at a purchase
price of 100% of principal amount (or accreted value in the case of Indebtedness
issued with an original issue discount) (the "Asset Sale Offer Price") together
with accrued and unpaid interest and Liquidated Damages, if any, to the date of
payment, made within 330 days of such Asset Sale or (b) within 330 days
following such Asset Sale, the Asset Sale Offer Amount is (i) invested in assets
and property (except in connection with the acquisition of a Wholly-owned
Subsidiary, other than notes, bonds, obligation and securities) which in the
good faith reasonable judgment of the Board of Directors of the Company shall
immediately constitute or be a part of a Related Business of the Company or such
Subsidiary (if it continues to be a Subsidiary) immediately following such
transaction or (ii) used to retire permanently Indebtedness permitted to be
incurred pursuant to clause (c) of the second paragraph of Section 4.11
(including that in the case of a revolver or similar arrangement that makes
credit available, such commitment is so permanently reduced by such amount), (2)
at least 75% of the consideration for such Asset Sale or series of related Asset
Sales consists of Cash or Cash Equivalents, (3) no Default
46
<PAGE>
or Event of Default shall have occurred and be continuing at the time of, or
would occur after giving effect, on a pro forma basis, to, such Asset Sale, and
(4) the Board of Directors of the Company determines in good faith that the
Company or such Subsidiary, as applicable, receives fair market value for such
Asset Sale.
An acquisition of Notes pursuant to an Asset Sale Offer may be deferred
until the accumulated Net Cash Proceeds from Asset Sales not applied to the uses
set forth in clause (1)(a)(i) or clause (l)(b) above (the "Excess Proceeds")
exceeds $10.0 million and that each Asset Sale Offer shall remain open for 20
Business Days following its commencement (the "Asset Sale Offer Period"). Upon
expiration of the Asset Sale Offer Period, the Company shall apply the Asset
Sale Offer Amount plus an amount equal to accrued and unpaid interest and
Liquidated Damages, if any, to the purchase of all Indebtedness properly
tendered (on a pro rata basis (in $1,000 increments) if the Asset Sale Offer
Amount is insufficient to purchase all Indebtedness so tendered) at the Asset
Sale Offer Price (together with accrued interest and Liquidated Damages, if
any). To the extent that the aggregate amount of Notes tendered pursuant to an
Asset Sale Offer is less than the Asset Sale Offer Amount, the Company may use
any remaining Net Cash Proceeds for general corporate purposes as otherwise
permitted by this Indenture and following each Asset Sale Offer the Excess
Proceeds amount shall be reset to zero. For purposes of clause (2) above, total
consideration received means the total consideration received for such Asset
Sales minus the amount of Purchase Money Indebtedness or Permitted Non-Recourse
Vessel Indebtedness secured solely by and repaid with the proceeds from the
assets sold or assumed by a transferee.
Notwithstanding, and without complying with, the provisions of this
Section 4.14:
(i) the Company and its Subsidiaries may, in the ordinary course of
business, (1) convey, sell, transfer, assign or otherwise dispose of
inventory acquired and held for resale in the ordinary course of business
or (2) liquidate Cash Equivalents;
(ii) the Company and its Subsidiaries may (x) convey, sell, transfer,
assign or otherwise dispose of assets pursuant to and in accordance with
the limitation on mergers, sales or consolidations provisions in this
Indenture and (y) make Restricted Payments permitted by Section 4.3;
(iii) the Company and its Subsidiaries may sell or dispose of damaged,
worn out or other obsolete personal property in the ordinary course of
business so long as such property is no longer necessary for the proper
conduct of the business of the Company or such Subsidiary, as applicable;
(iv) the Company and the Guarantors may convey, sell, transfer, assign
or otherwise dispose of assets to the Company or any of its Subsidiary
Guarantors; and
47
<PAGE>
(v) the Company and each of its Subsidiaries may surrender or waive
contract rights or settle, release or surrender contract, tort or other
claims of any kind or grant Liens not prohibited by this Indenture.
All Net Cash Proceeds from an Event of Loss (other than the proceeds of any
business interruption insurance) shall be invested, or used to repurchase (a)
Indebtedness secured by the items so subject to such Event of Loss or (b) Notes
and on a pro rata basis with the Notes other Indebtedness ranking on a parity
with the Notes, all within the period and as otherwise provided above in the
first paragraph of this Section 4.14.
In addition to the foregoing, the Company shall not, and shall not permit
any of its Subsidiaries to, directly or indirectly make any Asset Sale of any of
the Equity Interests of any Subsidiary of the Company except (i) pursuant to an
Asset Sale of all the Equity Interests of such Subsidiary or (ii) pursuant to an
Asset Sale of common stock with no preferences or special rights or privileges
and with no redemption or prepayment provisions, provided that after such sale,
the Company or its Subsidiaries own a majority of the voting and economic Equity
Interests of such Subsidiary.
Any Asset Sale Offer shall be made in compliance with all applicable laws,
rules, and regulations, including, if applicable, Regulation 14E of the Exchange
Act and the rules and regulations thereunder and all other applicable Federal
and state securities laws. To the extent that the provisions of any securities
laws or regulations conflict with the provisions of this Section 4.14,
compliance by the Company or any of its subsidiaries with such laws and
regulations shall not in and of itself cause a breach of its obligations under
this Section 4.14.
If the payment date in connection with an Asset Sale Offer hereunder is on
or after an interest payment Record Date and on or before the associated
Interest Payment Date, any accrued and unpaid interest (and Liquidated Damages,
if any) shall be paid to the person in whose name a Note is registered at the
close of business on such Record Date, and such interest (and Liquidated
Damages, if applicable) shall not be payable to Holders who tender Notes
pursuant to such Asset Sale Offer.
SECTION 4.15. Waiver of Stay, Extension or Usury Laws.
Each of the Company and the Guarantors covenants (to the extent that it may
lawfully do so) that it shall not at any time insist upon, plead, or in any
manner whatsoever claim or take the benefit or advantage of, any stay or
extension law or any usury law or other law which would prohibit or forgive the
Company or any Guarantor from paying all or any portion of the principal of,
premium of, or interest (or Liquidated Damages, if any) on the Notes as
contemplated herein, wherever enacted, now or at any time hereafter in force, or
which may affect the covenants or the performance of this Indenture; and (to the
extent that it may lawfully do so) each of the Company and the Guarantors hereby
expressly waives all benefit or advantage of any such law, and covenants
48
<PAGE>
that it shall not hinder, delay or impede the execution of any power herein
granted to the Trustee, but shall suffer and permit the execution of every such
power as though no such law had been enacted.
SECTION 4.16. Limitation on Liens Securing Indebtedness.
The Company and the Guarantors shall not, and shall not permit any of their
Subsidiaries to, create, incur, assume or suffer to exist any Lien of any kind,
other than Permitted Liens, upon any of their respective assets now owned or
hereafter acquired on or after the Issue Date of this Indenture or upon any
income or profits therefrom securing any Indebtedness of the Company or any
Guarantor, provided that only with respect to other senior Indebtedness of the
Company (which may also be guaranteed by the Guarantors) ranking on a parity
with the Notes (and the guarantees, as applicable), the Company provides, and
causes its Subsidiaries to provide, concurrently therewith, that the Notes are
equally and ratably so secured.
SECTION 4.17. Rule 144A Information Requirement.
The Company shall furnish to the Holders of the Securities and prospective
purchasers of Securities designated by the Holders of Transfer Restricted
Securities, upon their request, the information required to be delivered
pursuant to Rule 144A(d)(4) under the Securities Act until such time as either
the Company has concluded an offer to exchange the Exchange Notes for the
Initial Notes or a registration statement relating to resales of the Securities
has become effective under the Securities Act. The Company shall also furnish
such information during the pendency of any suspension of effectiveness of such
resale registration statement.
SECTION 4.18. Limitations on Lines of Business.
Neither the Company nor any of its Subsidiaries shall directly or
indirectly engage to any substantial extent in any line or lines of business
activity other than that which, in the reasonable good faith judgment of the
Board of Directors of the Company, is a Related Business.
ARTICLE V
SUCCESSOR CORPORATION
SECTION 5.1. Limitation on Merger, Sale or Consolidation.
The Company shall not consolidate with or merge with or into another person
or, directly or indirectly, sell, lease, convey or transfer all or substantially
all of its assets (computed on a consolidated basis), whether in a single
transaction or a series of related transactions, to another Person or group of
affiliated Persons or adopt a plan of liquidation, unless (i) either (a) the
Company is the continuing entity or (b) the resulting, surviving or transferee
entity or, in the case of a plan of liquidation, the entity which receives the
greatest value from such plan of liquidation is a corporation
49
<PAGE>
organized under the laws of the United States, any state thereof or the District
of Columbia and expressly assumes by supplemental indenture all of the
obligations of the Company in connection with the Notes and this Indenture; (ii)
no Default or Event of Default shall exist or shall occur immediately after
giving effect on a pro forma basis to such transaction; and (iii) (unless such
transaction is solely the merger of the Company and one of its previously
existing Wholly-owned Subsidiaries which is also a Guarantor and such
transaction is not in connection with any other transaction) immediately after
giving effect to such transaction on a pro forma basis, the consolidated
resulting, surviving or transferee entity or, in the case of a plan of
liquidation, the entity which receives the greatest value from such plan of
liquidation would immediately thereafter be permitted to incur at least $1.00 of
additional Indebtedness pursuant to the Debt Incurrence Ratio set forth in
Section 4.11.
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Company or consummation of a plan of liquidation in
accordance with the foregoing, the successor corporation formed by such
consolidation or into which the Company is merged or to which such transfer is
made or, in the case of a plan of liquidation, the entity which receives the
greatest value from such plan of liquidation shall succeed to (except in the
case of a lease), and be substituted for, and may exercise every right and power
of, the Company under this Indenture with the same effect as if such successor
corporation had been named therein as the Company, and (except in the case of a
lease) the Company shall be released from the obligations under the Notes and
this Indenture except with respect to any obligations that arise from, or are
related to, such transaction.
For purposes of the foregoing, the transfer (by lease, assignment, sale or
otherwise) of all or substantially all of the properties and assets of one or
more Subsidiaries, the Company's interest in which constitutes all or
substantially all of the properties and assets of the Company shall be deemed to
be the transfer of all or substantially all of the properties and assets of the
Company.
SECTION 5.2. Successor Corporation Substituted.
Upon any consolidation or merger or any transfer of all or substantially
all of the assets of the Company or consummation of a plan of liquidation in
accordance with Section 5.1 the successor corporation formed by such
consolidation or into which the Company is merged or to which such transfer is
made or, in the case of a plan of liquidation, the entity which receives the
greatest value from such plan of liquidation shall succeed to, and (except in
the case of a lease) be substituted for, and may exercise every right and power
of, the Company under this Indenture with the same effect as if such successor
corporation had been named therein as the Company, and (except in the case of a
lease) the Company shall be released from the obligations under the Notes and
this Indenture except with respect to any obligations that arise from, or are
related to, such transaction.
50
<PAGE>
ARTICLE VI
EVENTS OF DEFAULT AND REMEDIES
SECTION 6.1. Events of Default.
"Event of Default," wherever used herein, means any one of the following
events (whatever the reason for such Event of Default and whether it shall be
caused voluntarily or involuntarily or effected, without limitation, by
operation of law or pursuant to any judgment, decree or order of any court or
any order, rule or regulation of any administrative or governmental body):
(i) failure by the Company to pay any installment of interest (or
Liquidated Damages, if any) on the Notes as and when the same becomes due
and payable, and the continuance of any such failure for a period of 30
days;
(ii) failure by the Company to pay all or any part of the principal,
or premium, if any, on the Notes when and as the same becomes due and
payable at maturity, upon redemption, by acceleration, or otherwise,
including, without limitation, payment of the Change of Control Purchase
Price or the Asset Sale Offer Price, or otherwise;
(iii) failure by the Company or any Subsidiary of the Company to
observe or perform any other covenant or agreement contained in the Notes
or this Indenture and, the continuance of such failure for a period of 30
days after written notice is given to the Company by the Trustee or to the
Company and the Trustee by the Holders of at least 25% in aggregate
principal amount of the Notes outstanding, specifying such Default;
(iv) a decree, judgment, or order by a court of competent jurisdiction
shall have been entered adjudicating the Company or any of its Significant
Subsidiaries as bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization of the Company or any of its Significant
Subsidiaries under any bankruptcy or similar law, and such decree or order
shall have continued undischarged and unstayed for a period of 60 days; or
a decree, judgment or order of a court of competent jurisdiction appointing
a receiver, liquidator, trustee, or assignee in bankruptcy or insolvency
for the Company, any of its Significant Subsidiaries, or any substantial
part of the property of any such Person, or for the winding up or
liquidation of the affairs of any such Person, shall have been entered, and
such decree, judgment, or order shall have remained in force undischarged
and unstayed for a period of 60 days;
(v) the Company or any of its Significant Subsidiaries shall institute
proceedings to be adjudicated a voluntary bankrupt, or shall consent to the
filing of a bankruptcy proceeding against it, or shall file a petition or
answer or consent seeking reorganization under any bankruptcy or similar
law or similar statute, or shall consent to the filing of any such
petition, or shall consent to the appointment of a Custodian, receiver,
51
<PAGE>
liquidator, trustee, or assignee in bankruptcy or insolvency of it or any
substantial part of its assets or property, or shall make a general
assignment for the benefit of creditors, or shall admit in writing its
inability to pay its debts generally as they become due, fail generally to
pay its debts as they become due, or take any corporate action in
furtherance of any of the foregoing;
(vi) a default in any issue of Indebtedness of the Company or any of
its Subsidiaries with an aggregate principal amount in excess of $10.0
million (a) resulting from the failure to pay principal or interest when
due or (b) as a result of which the maturity of such Indebtedness has been
accelerated prior to its stated maturity; and
(vii) final unsatisfied judgments not covered by insurance for the
payment of money, or the issuance of any warrant of attachment against any
portion of the property or assets of the Company or any of its
Subsidiaries, aggregating in excess of $10.0 million, at any one time shall
be rendered against the Company or any of its Subsidiaries and not be
stayed, bonded or discharged for a period (during which execution shall not
be effectively stayed) of 60 days.
If a Default occurs and is continuing, the Trustee must, within 90 days
after the occurrence of such default, give to the Holders notice of such
default.
SECTION 6.2. Acceleration of Maturity Date; Rescission and Annulment.
If an Event of Default occurs and is continuing (other than an Event of
Default specified in Section 6.1 (iv) or section 6.1 (v) above relating to the
Company or any of its Significant Subsidiaries), then in every such case, unless
the principal of all of the Notes shall have already become due and payable,
either the Trustee or the Holders of at least 25% in aggregate principal amount
of the Notes then outstanding, by notice in writing to the Company (and to the
Trustee if given by Holders) (an "Acceleration Notice"), may declare all
principal, determined as set forth below, and accrued interest (and Liquidated
Damages, if any) thereon to be due and payable immediately. If an Event of
Default specified in Section 6.1 (iv) or Section 6.1 (v) above, relating to the
Company or any of its Significant Subsidiaries occurs, all principal and accrued
interest (and Liquidated Damages, if any) thereon shall be immediately due and
payable on all outstanding Notes without any declaration or other act on the
part of Trustee or the Holders.
At any time after such a declaration of acceleration being made and before
a judgment or decree for payment of the money due has been obtained by the
Trustee as hereinafter provided in this Article VI, the Holders of not less than
a majority in aggregate principal amount of then outstanding Notes, by written
notice to the Company and the Trustee, may rescind, on behalf of all Holders,
any such declaration of acceleration if:
(1) the Company has paid or deposited with the Trustee cash sufficient
to pay:
52
<PAGE>
(A) all overdue interest and Liquidated Damages, if any, on all
Notes,
(B) the principal of (and premium, if any, applicable to) any
Notes which would become due other than by reason of such declaration
of acceleration, and interest thereon at the rate borne by the Notes,
(C) to the extent that payment of such interest is lawful,
interest upon overdue interest at the rate borne by the Notes,
(D) all sums paid or advanced by the Trustee hereunder and the
compensation, expenses, disbursements and advances of the Trustee and
its agents and counsel, and all other amounts due the Trustee under
Section 7.7 and
(2) all Events of Default, other than the non-payment of the principal
of, premium, if any, and interest on Notes which have become due solely by
such declaration of acceleration, have been cured or waived as provided in
Section 6.12.
Notwithstanding the previous sentence of this Section 6.2, no waiver shall be
effective against any Holder for any Event of Default or event which with notice
or lapse of time or both would be an Event of Default with respect to (i) any
covenant or provision which cannot be modified or amended without the consent of
the Holder of each outstanding Note affected thereby, unless all such affected
Holders agree, in writing, to waive such Event of Default or other event and
(ii) any provision requiring supermajority approval to amend, unless such
default has been waived by such a supermajority. No such waiver shall cure or
waive any subsequent default or impair any right consequent thereon.
SECTION 6.3. Collection of Indebtedness and Suits for Enforcement by
Trustee.
The Company covenants that if an Event of Default in payment of principal,
premium or interest specified in clause (i) or (ii) of Section 6.1 hereof occurs
and is continuing, the Company shall, upon demand of the Trustee, pay to it, for
the benefit of the Holders of such Notes, the whole amount then due and payable
on such Notes for principal, premium (if any), and interest (and Liquidated
Damages, if any), and, to the extent that payment of such interest shall be
legally enforceable, interest on any overdue principal (and premium, if any),
and on any overdue interest (and Liquidated Damages, if any), at the rate borne
by the Notes, and, in addition thereto, such further amount as shall be
sufficient to cover the costs and expenses of collection, including compensation
to, and expenses, disbursements and advances of the Trustee and its agents and
counsel and all other amounts due the Trustee under Section 7.7.
53
<PAGE>
If the Company fails to pay such amounts forthwith upon such demand, the
Trustee, in its own name and as trustee of an express trust in favor of the
Holders, may institute a judicial proceeding for the collection of the sums so
due and unpaid, may prosecute such proceeding to judgment or final decree and
may enforce the same against the Company or any other obligor upon the Notes and
collect the moneys adjudged or decreed to be payable in the manner provided by
law out of the property of the Company or any other obligor upon the Notes,
wherever situated.
If an Event of Default occurs and is continuing, the Trustee may in its
discretion proceed to protect and enforce its rights and the rights of the
Holders by such appropriate judicial proceedings as the Trustee shall deem most
effective to protect and enforce any such rights, whether for the specific
enforcement of any covenant or agreement in this Indenture or in aid of the
exercise of any power granted herein, or to enforce any other proper remedy.
SECTION 6.4. Trustee May File Proofs of Claim.
In case of the pendency of any receivership, insolvency, liquidation,
bankruptcy, reorganization, arrangement, adjustment, composition or other
judicial proceeding relative to the Company or any other obligor upon the Notes
or the property of the Company or of such other obligor or their creditors, the
Trustee (irrespective of whether the principal of the Notes shall then be due
and payable as therein expressed or by declaration or otherwise and irrespective
of whether the Trustee shall have made any demand on the Company for the payment
of overdue principal, premium, if any (and Liquidated Damages, if any), or
interest) shall be entitled and empowered, by intervention in such proceeding or
otherwise to take any and all actions under the TIA, including
(1) to file and prove a claim for the whole amount of principal (and
premium, if any) and interest (and Liquidated Damages, if any) owing and
unpaid in respect of the Notes and to file such other papers or documents
as may be necessary or advisable in order to have the claims of the Trustee
(including any claim for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agent and counsel and all
other amounts due the Trustee under Section 7.7) and of the Holders allowed
in such judicial proceeding, and
(2) to collect and receive any moneys or other property payable or
deliverable on any such claims and to distribute the same;
and any custodian, receiver, assignee, trustee, liquidator, sequestrator or
other similar official in any such judicial proceeding is hereby authorized by
each Holder to make such payments to the Trustee and, in the event that the
Trustee shall consent to the making of such payments directly to the Holders, to
pay to the Trustee any amount due it for the reasonable compensation, expenses,
disbursements and advances of the Trustee and its agents and counsel, and any
other amounts due the Trustee under Section 7.7 hereof.
54
<PAGE>
Nothing herein contained shall be deemed to authorize the Trustee to
authorize or consent to or accept or adopt on behalf of any Holder any plan of
reorganization, arrangement, adjustment or composition affecting the Notes or
the rights of any Holder thereof or to authorize the Trustee to vote in respect
of the claim of any Holder in any such proceeding.
SECTION 6.5. Trustee May Enforce Claims Without Possession of Notes.
All rights of action and claims under this Indenture or the Notes may be
prosecuted and enforced by the Trustee without the possession of any of the
Notes or the production thereof in any proceeding relating thereto, and any such
proceeding instituted by the Trustee shall be brought in its own name as trustee
of an express trust in favor of the Holders, and any recovery of judgment shall,
after provision for the payment of compensation to, and expenses, disbursements
and advances of the Trustee and its agents and counsel and all other amounts due
the Trustee under Section 7.7, be for the ratable benefit of the Holders of the
Notes in respect of which such judgment has been recovered.
SECTION 6.6. Priorities.
Any money collected by the Trustee pursuant to this Article VI shall be
applied in the following order, at the date or dates fixed by the Trustee and,
in case of the distribution of such money on account of principal, premium (if
any), or interest (or Liquidated Damages, if any), upon presentation of the
Notes and the notation thereon of the payment if only partially paid and upon
surrender thereof if fully paid:
FIRST: To the Trustee in payment of all amounts due pursuant to Section 7.7
hereof;
SECOND: To the Holders in payment of the amounts then due and unpaid for
principal of, premium (if any), and interest (and Liquidated Damages, if any)
on, the Notes in respect of which or for the benefit of which such money has
been collected, ratably, without preference or priority of any kind, according
to the amounts due and payable on such Notes for principal, premium (if any),
and interest (and Liquidated Damages, if any), respectively; and
THIRD: To the Company, the Subsidiary Guarantors or such other Person as
may be lawfully entitled thereto, the remainder, if any, each as their
respective interests may appear.
The Trustee may, but shall not be obligated to, fix a record date and
payment date for any payment to the Holders under this Section 6.6.
SECTION 6.7. Limitation on Suits.
No Holder of any Note shall have any right to order or direct the Trustee
to institute any proceeding, judicial or otherwise, with respect to this
Indenture, or for the appointment of a receiver or trustee, or for any other
remedy hereunder, unless
55
<PAGE>
(A) such Holder has previously given written notice to the Trustee of
a continuing Event of Default;
(B) the Holders of not less than 25% in aggregate principal amount of
then outstanding Notes shall have made written request to the Trustee to
institute proceedings in respect of such Event of Default in its own name
as Trustee hereunder;
(C) such Holder or Holders have offered to the Trustee reasonable
security or indemnity against the costs, expenses and liabilities to be
incurred or reasonably probable to be incurred in compliance with such
request;
(D) the Trustee for 60 days after its receipt of such notice, request
and offer of indemnity has failed to institute any such proceeding; and
(E) no direction inconsistent with such written request has been given
to the Trustee during such 60-day period by the Holders of a majority in
aggregate principal amount of the outstanding Notes;
it being understood and intended that no one or more Holders shall have any
right in any manner whatsoever by virtue of, or by availing of, any provision of
this Indenture to affect, disturb or prejudice the rights of any other Holders,
or to obtain or to seek to obtain priority or preference over any other Holders
or to enforce any right under this Indenture, except in the manner herein
provided and for the equal and ratable benefit of all the Holders.
SECTION 6.8. Unconditional Right of Holders to Receive Principal, Premium
and Interest.
Notwithstanding any other provision of this Indenture, the Holder of any
Note shall have the right, which is absolute and unconditional, to receive
payment of the principal of, and premium (if any), and interest (and Liquidated
Damages, if any) on, such Note on the Maturity Dates of such payments as
expressed in such Note (in the case of redemption, the Redemption Price on the
applicable Redemption Date, in the case of a Change of Control, the Change of
Control Purchase Price on the Change of Control Purchase Date, and in the case
of an Asset Sale, the Asset Sale Offer Price on the relevant purchase date) and
to institute suit for the enforcement of any such payment after such respective
dates, and such rights shall not be impaired without the consent of such Holder.
56
<PAGE>
SECTION 6.9. Rights and Remedies Cumulative.
Except as otherwise provided with respect to the replacement or payment of
mutilated, destroyed, lost or stolen Notes in Section 2.7 hereof, no right or
remedy herein conferred upon or reserved to the Trustee or to the Holders is
intended to be exclusive of any other right or remedy, and every right and
remedy shall, to the extent permitted by law, be cumulative and in addition to
every other right and remedy given hereunder or now or hereafter existing at law
or in equity or otherwise. The assertion or employment of any right or remedy
hereunder, or otherwise, shall not prevent the concurrent assertion or
employment of any other appropriate right or remedy.
SECTION 6.10. Delay or Omission Not Waiver.
No delay or omission by the Trustee or by any Holder of any Note to
exercise any right or remedy arising upon any Event of Default shall impair the
exercise of any such right or remedy or constitute a waiver of any such Event of
Default. Every right and remedy given by this Article VI or by law to the
Trustee or to the Holders may be exercised from time to time, and as often as
may be deemed expedient, by the Trustee or by the Holders, as the case may be.
SECTION 6.11. Control by Holders.
Subject to all provisions of this Indenture and applicable law, the Holders
of a majority in aggregate principal amount of the Notes at the time outstanding
shall have the right to direct the time, method and place of conducting any
proceeding for any remedy available to the Trustee, or exercising any trust or
power conferred on the Trustee, provided, that
(1) such direction shall not be in conflict with any rule of law or
with this Indenture,
(2) the Trustee shall not determine that the action so directed would
be unjustly prejudicial to the Holders not taking part in such direction,
and
(3) the Trustee may take any other action deemed proper by the Trustee
which is not inconsistent with such direction.
SECTION 6.12. Waiver of Existing or Past Default.
Subject to Section 6.8, the Holder or Holders of not less than a majority
in aggregate principal amount of the outstanding Notes may, on behalf of all
Holders, waive any existing or past Default or Event of Default hereunder and
its consequences under this Indenture, except a default
(A) in the payment of the principal of, premium, if any, or interest
(or Liquidated Damages, if any) on, any Note as specified in clauses (i)
and (ii) of Section 6.1 hereof and not yet cured, or
57
<PAGE>
(B) in respect of a covenant or provision hereof which, under Article
IX, cannot be modified or amended without the consent of the Holder of each
outstanding Note affected.
Upon any such waiver, such default shall cease to exist, and any Event of
Default arising therefrom shall be deemed to have been cured, for every purpose
of this Indenture; but no such waiver shall extend to any subsequent or other
default or impair the exercise of any right arising therefrom.
SECTION 6.13. Undertaking for Costs.
All parties to this Indenture agree, and each Holder of any Note by his
acceptance thereof shall be deemed to have agreed, that in any suit for the
enforcement of any right or remedy under this Indenture, or in any suit against
the Trustee for any action taken, suffered or omitted to be taken by it as
Trustee, any court may in its discretion require the filing by any party
litigant in such suit of an undertaking to pay the costs of such suit, and that
such court may in its discretion assess reasonable costs, including reasonable
attorneys' fees and expenses, against any party litigant in such suit, having
due regard to the merits and good faith of the claims or defenses made by such
party litigant; but the provisions of this Section 6.13 shall not apply to any
suit instituted by the Company, to any suit instituted by the Trustee, to any
suit instituted by any Holder, or group of Holders, holding in the aggregate
more than 10% in aggregate principal amount of the outstanding Notes, or to any
suit instituted by any Holder for enforcement of the payment of principal of, or
premium (if any), or interest (or Liquidated Damages, if any) on, any Note on or
after the respective Maturity Date expressed in such Note (including, in the
case of redemption, on or after the Redemption Date).
SECTION 6.14. Restoration of Rights and Remedies.
If the Trustee or any Holder has instituted any proceeding to enforce any
right or remedy under this Indenture and such proceeding has been discontinued
or abandoned for any reason, or has been determined adversely to the Trustee or
to such Holder, then and in every case, subject to any determination in such
proceeding, the Company, the Subsidiary Guarantors, the Trustee and the Holders
shall be restored severally and respectively to their former positions hereunder
and thereafter all rights and remedies of the Trustee and the Holders shall
continue as though no such proceeding had been instituted.
58
<PAGE>
ARTICLE VII
TRUSTEE
The Trustee hereby accepts the trust imposed upon it by this Indenture and
covenants and agrees to perform the same, as herein expressed, subject to the
terms hereof.
SECTION 7.1. Duties of Trustee.
(a) If a Default or an Event of Default has occurred and is
continuing, the Trustee shall exercise such of the rights and powers vested
in it by this Indenture and use the same degree of care and skill in their
exercise as a prudent Person would exercise or use under the circumstances
in the conduct of his or her own affairs.
(b) Except during the continuance of a Default or an Event of Default:
(1) The Trustee need perform only those duties as are
specifically set forth in this Indenture and no others, and no
covenants or obligations shall be implied in or read into this
Indenture which are adverse to the Trustee, and
(2) In the absence of bad faith on its part, the Trustee may
conclusively rely, as to the truth of the statements and the
correctness of the opinions expressed therein, upon certificates or
opinions furnished to the Trustee and conforming to the requirements
of this Indenture. However, in the case of any such certificates or
opinions which by any provision hereof are specifically required to be
furnished to the Trustee, the Trustee shall examine the certificates
and opinions to determine whether or not they conform to the
requirements of this Indenture.
(c) The Trustee may not be relieved from liability for its own
negligent action, its own negligent failure to act, or its own willful
misconduct, except that:
(1) This paragraph does not limit the effect of paragraph (b) of
this Section 7.1,
(2) The Trustee shall not be liable for any error of judgment
made in good faith by a Trust Officer, unless it is proved that the
Trustee was negligent in ascertaining the pertinent facts, and
(3) The Trustee shall not be liable with respect to any action it
takes or omits to take in good faith in accordance with a direction
received by it pursuant to Section 6.11 hereof.
59
<PAGE>
(d) No provision of this Indenture shall require the Trustee to expend
or risk its own funds or otherwise incur any financial liability in the
performance of any of its duties hereunder or to take or omit to take any
action under this Indenture or at the request, order or direction of the
Holders or in the exercise of any of its rights or powers if it shall have
reasonable grounds for believing that repayment of such funds or adequate
indemnity against such risk or liability is not reasonably assured to it.
(e) Every provision of this Indenture that in any way relates to the
Trustee is subject to paragraphs (a), (b), (c), (d) and (f) of this Section
7.1.
(f) The Trustee shall not be liable for interest on any assets
received by it except as the Trustee may agree in writing with the Company
(including without limitation to the extent the Trustee receives funds
prior to the interest payment date in order to comply with the provisions
of Section 4.1). Assets held in trust by the Trustee need not be segregated
from other assets except to the extent required by law.
SECTION 7.2. Rights of Trustee.
Subject to Section 7.1 hereof:
(a) The Trustee may conclusively rely on any document believed by it
to be genuine and to have been signed or presented by the proper Person. The
Trustee need not investigate any fact or matter stated in such document.
(b) Before the Trustee acts or refrains from acting, it may consult
with counsel and may require an Officers' Certificate or an Opinion of Counsel,
which shall conform to Sections 13.4 and 13.5 hereof. The Trustee shall not be
liable for any action it takes or omits to take in good faith in reliance on
such certificate or advice of counsel.
(c) The Trustee may act through its attorneys and agents and shall not
be responsible for the misconduct or negligence of any agent appointed with due
care.
(d) The Trustee shall not be liable for any action it or its agent
takes or omits to take in good faith which it believes to be authorized or
within its rights or powers conferred upon it by this Indenture.
(e) The Trustee shall not be bound to make any investigation into the
facts or matters stated in any resolution, certificate, statement, instrument,
opinion, notice, request, direction, consent, order, bond, debenture or other
paper or document, but the Trustee, in its discretion, may make such further
inquiry or investigation into such facts or matters as it may see fit.
60
<PAGE>
(f) The Trustee shall be under no obligation to exercise any of the
rights or powers vested in it by this Indenture at the request, order or
direction of any of the Holders, pursuant to the provisions of this Indenture,
unless such Holders shall have offered to the Trustee reasonable security or
indemnity against the costs, expenses and liabilities which may be incurred
therein or thereby.
(g) Unless otherwise specifically provided for in this Indenture, any
demand, request, direction or notice from the Company or any Subsidiary
Guarantor shall be sufficient if signed by an Officer of the Company or such
Subsidiary Guarantor, as applicable.
(h) The Trustee shall have no duty to inquire as to the performance of
the Company's or any Subsidiary Guarantor's covenants in Article IV hereof or as
to the performance by any Agent of its duties hereunder. In addition, the
Trustee shall not be deemed to have knowledge of any Default or Event of Default
except (i) any Event of Default occurring pursuant to Sections 6.1(i), 6.1(ii)
and 4.1 hereof, or (ii) any Default or Event of Default of which the Trustee
shall have received written notification or obtained actual knowledge.
(i) Whenever in the administration of this Indenture the Trustee shall
deem it desirable that a matter be proved or established prior to taking,
suffering or omitting any action hereunder, the Trustee (unless other evidence
be herein specifically prescribed) may, in the absence of bad faith on its part,
rely upon an Officers' Certificate.
(j) The Trustee may conclusively rely on, and will be protected in
relying on, instructions from the Holder of the Global Note or DTC for all
purposes.
(k) The Trustee may consult with counsel of its selection and the
advice of such counsel or any Opinion of Counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reliance thereon.
SECTION 7.3. Individual Rights of Trustee.
The Trustee in its individual or any other capacity may become the owner or
pledgee of Notes and may otherwise deal with the Company, any Subsidiary
Guarantor, any of their Subsidiaries, or their respective Affiliates with the
same rights it would have if it were not Trustee. Any Agent may do the same with
like rights. However, the Trustee must comply with Sections 7.10 and 7.11
hereof.
SECTION 7.4. Trustee's Disclaimer.
The Trustee makes no representation as to the validity or adequacy of this
Indenture or the Notes and it shall not be accountable for the Company's use of
the proceeds from the Notes, and it shall not be responsible for any statement
in the Notes, other than the Trustee's certificate of
61
<PAGE>
authentication, or the use or application of any funds received by a Paying
Agent other than the Trustee.
SECTION 7.5. Notice of Default.
If an Event of Default occurs and is continuing and if it is known to the
Trustee, the Trustee shall mail to each Noteholder notice of the uncured Event
of Default within 90 days after such Event of Default occurs. Except in the case
of an Event of Default in payment of principal (or premium, if any), of, or
interest (or Liquidated Damages, if any) on, any Note (including the payment of
the Change of Control Purchase Price on the Change of Control Payment Date, the
payment of the Redemption Price on the Redemption Date and the payment of the
Asset Sale Offer Price on the relevant purchase date), the Trustee may withhold
the notice if and so long as a Trust Officer in good faith determines that
withholding the notice is in the interest of the Noteholders.
SECTION 7.6. Reports by Trustee to Holders.
Within 60 days after each May 15 beginning with the May 15 following the
date of this Indenture, the Trustee shall, if required by law, mail to each
Noteholder a brief report dated as of such May 15 that complies with TIA
ss.313(a). The Trustee also shall comply with TIA ss.313(b) and 313(c).
The Company shall promptly notify the Trustee in writing if the Notes
become listed on any stock exchange or automatic quotation system.
A copy of each report at the time of its mailing to Noteholders shall be
mailed to the Company and filed with the SEC and each stock exchange, if any, on
which the Notes are listed.
SECTION 7.7. Compensation and Indemnity.
The Company and the Subsidiary Guarantors jointly and severally agree to
pay to the Trustee from time to time such compensation as the Company and the
Trustee shall from time to time agree for its services. The Trustee's
compensation shall not be limited by any law on compensation of a trustee of an
express trust. The Company and the Subsidiary Guarantors shall reimburse the
Trustee upon request for all reasonable disbursements, expenses and advances
incurred or made by it in accordance with this Indenture. Such expenses shall
include the reasonable compensation, disbursements and expenses of the Trustee's
agents, accountants, experts and counsel.
The Company and the Subsidiary Guarantors jointly and severally agree to
indemnify each of the Trustee (in its capacity as Trustee) and any predecessor
trustee and each of its officers, directors, attorneys-in-fact and agents for,
and hold it harmless against, any claim, demand, damage, expense (including but
not limited to reasonable compensation, disbursements and expenses of the
Trustee's agents and counsel), loss or liability incurred by it without
negligence or bad faith on the part of the Trustee, arising out of or in
connection with the acceptance or administration of this trust
62
<PAGE>
and its rights or duties hereunder, including the reasonable costs and expenses
of defending itself against any claim or liability in connection with the
exercise or performance of any of its powers or duties hereunder. The Trustee
shall notify the Company promptly of any claim asserted against the Trustee for
which it may seek indemnity. The Company and the Subsidiary Guarantors shall
defend the claim and the Trustee shall provide reasonable cooperation at the
Company's and the Subsidiary Guarantors' expense in the defense. The Trustee may
have separate counsel and the Company and the Subsidiary Guarantors shall pay
the reasonable fees and expenses of such counsel; provided, that the Company and
the Subsidiary Guarantors will not be required to pay such fees and expenses if
they assume the Trustee's defense and there is no conflict of interest between
the Company and the Subsidiary Guarantors and the Trustee in connection with
such defense. The Company and the Subsidiary Guarantors need not pay for any
settlement made without their written consent. The Company and the Subsidiary
Guarantors need not reimburse any expense or indemnify against any loss or
liability to the extent incurred by the Trustee through its negligence, bad
faith or willful misconduct.
To secure the Company's and the Subsidiary Guarantors' payment obligations
in this Section 7.7, the Trustee shall have a lien prior to the Notes on all
assets held or collected by the Trustee, in its capacity as Trustee, except
assets held in trust to pay principal and premium, if any, of or interest on
particular Notes.
When the Trustee incurs expenses or renders services after an Event of
Default specified in Section 6.1(iv) or (v) of this Indenture occurs, the
expenses and the compensation for the services are intended to constitute
expenses of administration under any Bankruptcy Law.
The Company's and the Subsidiary Guarantors' obligations under this Section
7.7 and any lien arising hereunder shall survive the resignation or removal of
the Trustee, the discharge of the Company's and the Subsidiary Guarantors'
obligations pursuant to Article VIII of this Indenture and any rejection or
termination of this Indenture under any Bankruptcy Law.
SECTION 7.8. Replacement of Trustee.
The Trustee may resign by so notifying the Company in writing. The Holder
or Holders of a majority in aggregate principal amount of the outstanding Notes
may remove the Trustee by so notifying the Company and the Trustee in writing
and may appoint a successor trustee with the Company's consent. The Company may
remove the Trustee if:
(a) the Trustee fails to comply with Section 7.10 hereof;
(b) the Trustee is adjudged bankrupt or insolvent;
(c) a receiver, custodian or other public officer takes charge of the
Trustee or its property;
63
<PAGE>
(d) the Trustee becomes incapable of acting; or
(e) in the absence of a Default or an Event of Default, the Company
elects to remove the Trustee, in its discretion and without the requirement of a
reason or cause.
If the Trustee resigns or is removed or if a vacancy exists in the office
of Trustee for any reason, the Company shall promptly appoint a successor
Trustee. Within one year after the successor Trustee takes office, the Holder or
Holders of a majority in principal amount of the Notes may appoint a successor
Trustee to replace the successor Trustee appointed by the Company.
A successor Trustee shall deliver a written acceptance of its appointment
to the retiring Trustee and to the Company. Immediately after that and provided
that all sums owing to the retiring Trustee provided for in Section 7.7 hereof
have been paid, the retiring Trustee shall transfer all property held by it as
trustee to the successor Trustee, subject to the lien provided in Section 7.7
hereof, the resignation or removal of the retiring Trustee shall become
effective, and the successor Trustee shall have all the rights, powers and
duties of the Trustee under this Indenture. A successor Trustee shall mail
notice of its succession to each Holder.
If a successor Trustee does not take office within 60 days after the
retiring Trustee resigns or is removed, the retiring Trustee, the Company or the
Holder or Holders of at least 10% in principal amount of the outstanding Notes
may petition any court of competent jurisdiction for the appointment of a
successor Trustee.
If the Trustee fails to comply with Section 7.10 hereof, any Noteholder may
petition any court of competent jurisdiction for the removal of the Trustee and
the appointment of a successor Trustee.
Notwithstanding replacement of the Trustee pursuant to this Section 7.8,
the Company's and the Subsidiary Guarantors' obligations under Section 7.7
hereof shall continue for the benefit of the retiring Trustee.
SECTION 7.9. Successor Trustee by Merger, Etc.
If the Trustee consolidates with, merges or converts into, or transfers all
or substantially all of its corporate trust business to, another corporation,
the resulting, surviving or transferee corporation without any further act
shall, if such resulting, surviving or transferee corporation is otherwise
eligible hereunder, be the successor Trustee.
SECTION 7.10. Eligibility; Disqualification.
The Trustee shall at all times satisfy the requirements of TIA
ss.310(a)(1), (2) and (5). The Trustee shall have a combined capital and surplus
of at least $25 million as set forth in its most recent published annual report
of condition. The Trustee shall comply with TIA ss.310(b).
64
<PAGE>
SECTION 7.11. Preferential Collection of Claims Against Company.
The Trustee shall comply with TIA ss.311(a), excluding any creditor
relationship listed in TIA ss.311(b). A Trustee who has resigned or been
removed shall be subject to TIA ss.311(a) to the extent indicated.
ARTICLE VIII
DISCHARGE; LEGAL DEFEASANCE AND COVENANT DEFEASANCE
SECTION 8.1. Discharge; Option to Effect Legal Defeasance or Covenant
Defeasance.
This Indenture shall cease to be of further effect (except that the
Company's and the Subsidiary Guarantors' obligations under Section 7.7 and the
Trustee's and the Paying Agent's obligations under Sections 8.6 and 8.7 shall
survive) when all outstanding Notes theretofore authenticated and issued have
been delivered (other than destroyed, lost or stolen Notes that have been
replaced or paid) to the Trustee for cancellation and the Company or the
Subsidiary Guarantors have paid all sums payable hereunder. In addition, the
Company may elect at any time to have Section 8.2 or Section 8.3, at the
Company's option, of this Indenture applied to all outstanding Notes upon
compliance with the conditions set forth below in this Article VIII.
SECTION 8.2. Legal Defeasance and Discharge.
The Company may, at its option and at any time within one year of the
Stated Maturity of the Notes, elect to have its obligations and the obligations
of the Guarantors discharged with respect to the outstanding Notes ("Legal
Defeasance"). Such Legal Defeasance means that the Company shall be deemed to
have paid and discharged the entire indebtedness represented, and this Indenture
shall cease to be of further effect as to all outstanding Notes and Guarantees,
except as to (i) rights of Holders of outstanding Notes to receive payments in
respect of the principal of, premium, if any, and interest (and Liquidated
Damages, if any) on such Notes when such payments are due from the trust
described in Section 8.5; (ii) the Company's obligations with respect to such
Notes concerning issuing temporary Notes, registration of Notes, mutilated,
destroyed, lost or stolen Notes, and the maintenance of an office or agency for
payment and money for security payments held in trust; (iii) the rights, powers,
trust, duties, and immunities of the Trustee, and the Company's obligations in
connection therewith; and (iv) the Legal Defeasance provisions of this
Indenture. Subject to compliance with this Article VIII, the Company may
exercise its option under this Section 8.2 notwithstanding the prior exercise of
its option under Section 8.3 hereof with respect to the Notes.
65
<PAGE>
SECTION 8.3. Covenant Defeasance.
In addition, the Company may, at its option and at any time, elect to have
the obligations of the Company and the Guarantors released from their respective
obligations under the covenants contained in Sections 4.3, 4.6, 4.7, 4.8, 4.10,
4.11, 4.12, 4.14, 4.15, 4.16, 4.17, and 4.18, Article V and Article X hereof
with respect to the outstanding Notes on or after the date of the conditions set
forth below are satisfied ("Covenant Defeasance"), and the Notes shall
thereafter be deemed not "outstanding" for the purposes of any direction,
waiver, consent or declaration or act of Holders (and the consequences of any
thereof) in connection with such covenants, but shall continue to be deemed
"outstanding" for all other purposes hereunder. For this purpose, such Covenant
Defeasance means that, with respect to the outstanding Notes, neither the
Company nor any Subsidiary Guarantor need comply with and shall have any
liability in respect of any term, condition or limitation set forth in any such
covenant, whether directly or indirectly, by reason of any reference elsewhere
herein to any such covenant or by reason of any reference in any such covenant
to any other provision herein or in any other document, but, except as specified
above, the remainder of this Indenture and such Notes shall be unaffected
thereby. In addition, upon the Company's exercise under Section 8.1 hereof of
the option applicable to this Section 8.3, Sections 6.1(iii) through 6.1(vi)
hereof shall not constitute Events of Default with respect to the Notes.
SECTION 8.4. Conditions to Legal or Covenant Defeasance.
The following shall be the conditions to the application of either Section
8.2 or 8.3 hereof to the outstanding Notes:
(a) (i) The Company shall irrevocably have deposited or caused to be
deposited with the Trustee (or another trustee satisfying the requirements of
Section 7.10 hereof who shall agree to comply with the provisions of this
Article VIII applicable to it), in trust, for the benefit of the Holders of the
Notes, cash, U.S. Government Obligations, or a combination thereof, in such
amounts as will be sufficient, in the opinion of a nationally recognized firm of
independent public accountants, to pay the principal of, premium, if any, and
interest (and Liquidated Damages, if any) on such outstanding Notes on the
stated date for payment thereof or on the redemption date of such principal or
installment date of principal of, premium, if any, or interest on such Notes,
and the holders of Notes must have a valid, perfected, exclusive security
interest in such trust, (ii) in the case of Legal Defeasance before the date
that is one year prior to the Stated Maturity, the Company shall have delivered
to the Trustee an opinion of counsel in the United States reasonably acceptable
to the trustee confirming that (A) the Company has received from, or there has
been published by, the Internal Revenue Service a ruling or (B) since the date
of this Indenture, there has been a change in the applicable Federal income tax
law, in either case to the effect that, and based thereon such opinion of
counsel shall confirm that, the Holders of such outstanding Notes will not
recognize income, gain or loss for Federal income tax purposes as a result of
such Legal Defeasance and will be subject to Federal income tax on the same
amounts, in the same manner and at the same times as would have been the case if
such Legal Defeasance had not occurred; (iii) in the case of Covenant Defeasance
before the date that is one year prior to the Stated Maturity, the Company shall
66
<PAGE>
have delivered to the Trustee an opinion of counsel in the United States
reasonably acceptable to such Trustee confirming that the Holders of such
outstanding Notes will not recognize income, gain or loss for Federal income tax
purposes as a result of such Covenant Defeasance and will be subject to Federal
income tax on the same amounts, in the same manner and at the same times as
would have been the case if such Covenant Defeasance had not occurred; (iv) no
Default or Event of Default shall have occurred and be continuing on the date of
such deposit; (v) such Legal Defeasance or Covenant Defeasance will not result
in a breach or violation of, or constitute a default under any material
agreement or instrument to which the Company or any of its Subsidiaries is a
party or by which the Company or any of its Subsidiaries is bound; (vi) the
Company shall have delivered to the Trustee an Officers' Certificate stating
that the deposit was not made by the Company with the intent of preferring the
Holders of such Notes over the other creditors of the Company with the intent of
defeating, hindering, delaying or defrauding other creditors of the Company; and
(vii) the Company shall have delivered to the Trustee an Officers' Certificate
and an opinion of counsel, each stating that the conditions precedent provided
for in, in the case of the Officers' Certificate, (i) through (vi) and, in the
case of the opinion of counsel, clauses (i), (with respect to the validity and
perfection of the security interest) (ii), (iii) and (v) of this paragraph, have
been complied with.
SECTION 8.5. Deposited Cash and U.S. Government Obligations to be Held in
Trust; Other Miscellaneous Provisions.
Subject to Section 8.6 hereof, all cash and U.S. Government Obligations
(including the proceeds thereof) deposited with the Trustee (or other qualifying
trustee, collectively for purposes of this Section 8.5, the "Paying Agent")
pursuant to Section 8.4 hereof in respect of the outstanding Notes shall be held
in trust and applied by the Paying Agent, in accordance with the provisions of
such Notes and this Indenture, to the payment, either directly or through any
other Paying Agent as the Trustee may determine, to the Holders of such Notes of
all sums due and to become due thereon in respect of principal, premium, if any,
and interest (and Liquidated Damages, if any), but such money need not be
segregated from other funds except to the extent required by law.
The Company shall pay and indemnify the Trustee against any tax, fee or
other charge imposed on or assessed against the U.S. Government Obligations
deposited pursuant to Section 8.4 or the principal and interest received in
respect thereof other than any such tax, fee or other charge which by law is for
the account of the Holders of Outstanding Notes.
SECTION 8.6. Repayment to the Company.
(a) Anything in this Article VIII to the contrary notwithstanding, the
Trustee or the Paying Agent shall deliver or pay to the Company from time to
time upon the request of the Company any cash or U.S. Government Obligations
held by it as provided in Section 8.4 hereof which in the opinion of a
nationally recognized firm of independent public accountants expressed in a
written certification thereof delivered to the Trustee (which may be the opinion
delivered under Section 8.4 hereof), are in excess of the amount thereof that
would then be required to be deposited to effect an equivalent Legal Defeasance
or Covenant Defeasance.
67
<PAGE>
(b) Any cash and U.S. Government Obligations (including the proceeds
thereof) deposited with the Trustee or any Paying Agent, or then held by the
Company, in trust for the payment of the principal of, premium, if any, or
interest (and Liquidated Damages, if any) on any Note and remaining unclaimed
for two years after such principal, and premium, if any, or interest has become
due and payable shall be paid to the Company on its written request; and the
Holder of such Note shall thereafter look only to the Company for payment
thereof, and all liability of the Trustee or such Paying Agent with respect to
such trust money shall thereupon cease; provided, however, that the Trustee or
such Paying Agent, before being required to make any such repayment, may at the
expense of the Company cause to be published once, in the New York Times and The
Wall Street Journal (national edition), notice that such money remains unclaimed
and that, after a date specified therein, which shall not be less than 30 days
from the date of such notification or publication, any unclaimed balance of such
money then remaining will be repaid to the Company.
SECTION 8.7. Reinstatement.
If the Trustee or Paying Agent is unable to apply any cash or U.S.
Government Obligations in accordance with Section 8.2 or 8.3 hereof, as the case
may be, of this Indenture by reason of any order or judgment of any court or
governmental authority enjoining, restraining or otherwise prohibiting such
application, then the Company's and the Subsidiary Guarantors' obligations under
this Indenture and the Notes shall be revived and reinstated as though no
deposit had occurred pursuant to Section 8.2 or 8.3 hereof until such time as
the Trustee or Paying Agent is permitted to apply such money in accordance with
Sections 8.2 and 8.3 hereof, as the case may be; provided, however, that, if the
Company makes any payment of principal of, premium, if any, or interest (and
Liquidated Damages, if any) on any Note following the reinstatement of its
obligations, the Company shall be subrogated to the rights of the Holders of
such Notes to receive such payment from the cash or U.S. Government Obligations
held by the Trustee or Paying Agent.
ARTICLE IX
AMENDMENTS, SUPPLEMENTS AND WAIVERS
SECTION 9.1. Supplemental Indentures Without Consent of Holders.
Without the consent of any Holder, the Company or any Subsidiary Guarantor,
when authorized by Board Resolutions, and the Trustee, at any time and from time
to time, may enter into one or more indentures supplemental hereto, in form
satisfactory to the Trustee, for any of the following purposes:
(1) to cure any ambiguity, defect, or inconsistency, or make any other
provisions with respect to matters or questions arising under this
Indenture which shall not be inconsistent with the provisions of this
68
<PAGE>
Indenture, provided such action pursuant to this clause (1) shall not
adversely affect the interests of any Holder in any respect;
(2) to add to the covenants of the Company or the Subsidiary
Guarantors for the benefit of the Holders, or to surrender any right or
power herein conferred upon the Company or the Subsidiary Guarantors or
make any other change that does not adversely affect the rights of any
Holder;
(3) to provide for collateral for or additional Subsidiary Guarantors
of the Notes;
(4) to evidence the succession of another Person to the Company, and
the assumption by any such successor of the obligations of the Company,
herein and in the Notes in accordance with Article V;
(5) to comply with the TIA;
(6) to evidence the succession of another corporation to any
Subsidiary Guarantor and assumption by any such successor of the Guarantee
of such Subsidiary Guarantor (as set forth in Section 11.4) in accordance
with Article XI;
(7) to evidence the release of any Subsidiary Guarantor in accordance
with Article XI;
(8) to evidence and provide for the acceptance of appointment
hereunder by a successor Trustee with respect to the Notes;
(9) in any other case where a supplemental indenture is required or
permitted to be entered into pursuant to the provisions of this Indenture
without the consent of any Holder;
(10) to provide for the issuance and authorization of the Exchange
Notes; or
(11) to provide for the issuance and authorization of any Additional
Notes.
SECTION 9.2. Amendments, Supplemental Indentures and Waivers with Consent
of Holders.
Subject to Section 6.8 hereof, with the consent of the Holders of at least
a majority in aggregate principal amount of the Notes then outstanding
(including consents obtained in
69
<PAGE>
connection with a tender offer or exchange offer for such Notes), by written act
of said Holders delivered to the Company and the Trustee, the Company or any
Subsidiary Guarantor, when authorized by Board Resolutions, and the Trustee may
amend or supplement this Indenture or the Notes or enter into an indenture or
indentures supplemental hereto for the purpose of adding any provisions to or
changing in any manner or eliminating any of the provisions of this Indenture or
the Notes or of modifying in any manner the rights of the Holders under this
Indenture or the Notes; provided that no such modification may, without the
consent of holders of at least 66 2/3% in aggregate principal amount of Notes at
the time outstanding, modify the provisions (including the defined terms
therein) of Article X or Article XI of this Indenture in a manner adverse to the
holders. Subject to Section 6.8, the Holder or Holders of not less than a
majority in aggregate principal amount of then outstanding Notes may waive
compliance by the Company or any Subsidiary Guarantor with any provision of this
Indenture or the Notes. Notwithstanding any of the above, however, no such
amendment, supplemental indenture or waiver shall, without the consent of the
Holder of each outstanding Note affected thereby:
(1) change the Maturity Date on any Note, or reduce the principal
amount thereof or the rate (or extend the time for payment) of interest
thereon or any premium payable upon the redemption at the option of the
Company thereof, or change the place of payment where, or the coin or
currency in which, any Note or any premium or the interest thereon is
payable, or impair the right to institute suit for the enforcement of any
such payment on or after the Maturity Date thereof (or in the case of
redemption at the option of the Company, on or after the Redemption Date),
or reduce the Change of Control Purchase Price or the Asset Sale Offer
Price or alter the provisions (including the defined terms used herein) of
Article III of this Indenture or Paragraph 5 of the Notes regarding the
right of the Company to redeem the Notes at its option in a manner adverse
to the Holders; or
(2) reduce the percentage in principal amount of the outstanding
Notes, the consent of whose Holders is required for any such amendment,
supplemental indenture or wavier provided for in this Indenture; or
(3) modify any of the waiver provisions, except to increase any
required percentage or to provide that certain other provisions of this
Indenture cannot be modified or waived without the consent of the Holder of
each outstanding Note affected thereby; or
(4) cause the Notes or any Guarantee to become subordinate in right of
payment to any other Indebtedness.
70
<PAGE>
It shall not be necessary for the consent of the Holders under this Section
9.2 to approve the particular form of any proposed amendment, supplement or
waiver, but it shall be sufficient if such consent approves the substance
thereof.
After an amendment, supplement or waiver under this Section becomes
effective, the Company shall mail to the Holders affected thereby a notice
briefly describing the amendment, supplement or waiver. Any failure of the
Company to mail such notice, or any defect therein, shall not, however, in any
way impair or affect the validity of any such supplemental indenture or waiver.
After an amendment, supplement or waiver under this Section 9.2 or under
Section 9.4 hereof becomes effective, it shall bind each Holder.
In connection with any amendment, supplement or waiver under this Article
IX, the Company may, but shall not be obligated to, offer to any Holder who
consents to such amendment, supplement or waiver, or to all Holders,
consideration for such Holder's consent to such amendment, supplement or waiver.
SECTION 9.3. Compliance with TIA.
Every amendment, waiver or supplement of this Indenture or the Notes shall
comply with the TIA as then in effect.
SECTION 9.4. Revocation and Effect of Consents.
Until an amendment, waiver or supplement becomes effective, a consent to it
by a Holder is a continuing consent by the Holder and every subsequent Holder of
a Note or portion of a Note that evidences the same debt as the consenting
Holder's Note, even if notation of the consent is not made on any Note. However,
any such Holder or subsequent Holder may revoke the consent as to his Note or
portion of his Note by written notice to the Company or the Person designated by
the Company as the Person to whom consents should be sent if such revocation is
received by the Company or such Person before the date on which the Trustee
receives an Officers' Certificate certifying that the Holders of the requisite
principal amount of Notes have consented (and not theretofore revoked such
consent) to the amendment, supplement or waiver.
The Company may, but shall not be obligated to, fix a record date for the
purpose of determining the Holders entitled to consent to any amendment,
supplement or waiver, which record date shall be the date so fixed by the
Company notwithstanding the provisions of the TIA. If a record date is fixed,
then notwithstanding the last sentence of the immediately preceding paragraph,
those Persons who were Holders at such record date, and only those Persons (or
their duly designated proxies), shall be entitled to revoke any consent
previously given, whether or not such Persons continue to be Holders after such
record date.
71
<PAGE>
After an amendment, supplement or waiver becomes effective, it shall bind
every Noteholder, unless it makes a change described in Section 9.2 hereof, in
which case, the amendment, supplement or waiver shall bind only each Holder of a
Note who has consented to it and every subsequent Holder of a Note or portion of
a Note that evidences the same debt as the consenting Holder's Note; provided,
that any such waiver shall not impair or affect the right of any Holder to
receive payment of principal and premium of and interest (and Liquidated
Damages, if any) on a Note, on or after the respective dates set for such
amounts to become due and payable expressed in such Note, or to bring suit for
the enforcement of any such payment on or after such respective dates.
SECTION 9.5. Notation on or Exchange of Notes.
If an amendment, supplement or waiver changes the terms of a Note, the
Trustee may require the Holder of the Note to deliver it to the Trustee or
require the Holder to put an appropriate notation on the Note. The Trustee may
place an appropriate notation on the Note about the changed terms and return it
to the Holder. Alternatively, if the Company or the Trustee so determines, the
Company in exchange for the Note shall issue and the Trustee shall authenticate
a new Note that reflects the changed terms. Any failure to make the appropriate
notation or to issue a new Note shall not affect the validity of such amendment,
supplement or waiver.
SECTION 9.6. Trustee to Sign Amendments, Etc.
The Trustee shall execute any amendment, supplement or waiver authorized
pursuant to this Article IX; provided, that the Trustee may, but shall not be
obligated to, execute any such amendment, supplement or waiver which affects the
Trustee's own rights, duties or immunities under this Indenture. The Trustee
shall be entitled to receive, and shall be fully protected in relying upon, an
Opinion of Counsel stating that the execution of any amendment, supplement or
waiver authorized pursuant to this Article IX is authorized or permitted by this
Indenture.
72
<PAGE>
ARTICLE X
RIGHT TO REQUIRE REPURCHASE
SECTION 10.1. Repurchase of Notes at Option of the Holder Upon a Change of
Control.
(a) In the event that a Change of Control has occurred, each holder of
Notes shall have the right, at such holder's option, pursuant to an offer
(subject only to conditions required by applicable law, if any) by the Company
(the "Change of Control Offer"), to require the Company to repurchase all or any
part of such holder's Notes (provided, that the principal amount of such Notes
must be $1,000 or an integral multiple thereof) on a date (the "Change of
Control Purchase Date") that is no later than 45 Business Days after the
occurrence of such Change of Control, at a cash price equal to 101% of the
principal amount thereof (the "Change of Control Purchase Price"), together with
accrued and unpaid interest and Liquidated Damages, if any, to the Change of
Control Purchase Date.
(b) In the event that, pursuant to this Section 10.1, the Company
shall be required to commence a Change of Control Offer, the Company shall
follow the procedures set forth in this Section 10.1 as follows:
(i) the Change of Control Offer shall commence within 15 Business Days
following the occurrence of a Change of Control;
(ii) the Change of Control Offer shall remain open for at least 20
Business Days following its commencement (the "Change of Control Offer
Period");
(iii) upon the expiration of the Change of Control Offer Period, the
Company promptly shall purchase all of the tendered Notes at the Change of
Control Purchase Price;
(iv) if the Change of Control is on or after an interest payment
Record Date and on or before the associated Interest Payment Date, any
accrued and unpaid interest (and Liquidated Damages, if any, due on such
Interest Payment Date) will be paid to the Person in whose name a Note is
registered at the close of business on such Record Date, and such interest
(and Liquidated Damages, if applicable) will not be payable to Noteholders
who tender Notes pursuant to the Change of Control Offer;
(v) the Company shall provide the Trustee and the Paying Agent with
written notice of the Change of Control Offer at least three Business Days
before the commencement of any Change of Control Offer; and
73
<PAGE>
(vi) on or before the commencement of any Change of Control Offer, the
Company or the Trustee (upon the request and at the expense of the Company)
shall send, by first-class mail, a notice to each of the Noteholders, which
(to the extent consistent with this Indenture) shall govern the terms of
the Change of Control Offer and shall state:
(A) that the Change of Control Offer is being made pursuant to
this Section 10.1 and that all Notes, or portions thereof, tendered
will be accepted for payment;
(B) the Change of Control Purchase Price (including the amount of
accrued but unpaid interest (and Liquidated Damages, if any)) and the
Change of Control Purchase Date;
(C) that any Note, or portion thereof, not tendered or accepted
for payment will continue to accrue interest;
(D) that, unless the Company defaults in depositing cash with the
Paying Agent in accordance with the last paragraph of this Section
10.1, or such payment is prevented for any reason, any Note, or
portion thereof, accepted for payment pursuant to the Change of
Control Offer shall cease to accrue interest after the Change of
Control Purchase Date;
(E) that Holders electing to have a Note, or portion thereof,
purchased pursuant to a Change of Control Offer will be required to
surrender the Note, with the form entitled "Option of Holder to Elect
Purchase" on the reverse of the Note completed, to the Paying Agent
(which may not for purposes of this Section 10.1, notwithstanding
anything in this Indenture to the contrary, be the Company or any
Affiliate of the Company) at the address specified in the notice prior
to the expiration of the Change of Control Offer;
(F) that Holders will be entitled to withdraw their election, in
whole or in part, if the Paying Agent receives, prior to the
expiration of the Change of Control Offer, a facsimile transmission or
letter setting forth the name of the Holder, the principal amount of
the Notes the Holder is withdrawing and a statement containing a
facsimile signature and stating that such Holder is withdrawing his
election to have such principal amount of Notes purchased;
74
<PAGE>
(G) that Holders whose Notes are purchased only in part will be
issued new Notes equal in principal amount to the unpurchased portion
of the Notes surrendered; and
(H) a brief description of the events resulting in such Change of
Control.
Any Change of Control Offer shall be made in compliance with all applicable
laws, rules and regulations, including, if applicable, Regulation 14E under the
Exchange Act and the rules thereunder and all other applicable Federal and state
securities laws and any provisions of this Indenture which conflict with such
laws shall be deemed to be superseded by the provisions of such laws.
On or before the Change of Control Purchase Date, the Company shall (i)
accept for payment Notes or portions thereof properly tendered pursuant to the
Change of Control Offer, (ii) deposit with the Paying Agent cash sufficient to
pay the Change of Control Purchase Price (together with accrued and unpaid
interest and Liquidated Damages, if any), of all Notes so tendered and (iii)
deliver to the Trustee Notes so accepted together with an Officers' Certificate
listing the Notes or portions thereof being purchased by the Company. The Paying
Agent promptly will pay the Holders of Notes so accepted an amount equal to the
Change of Control Purchase Price (together with accrued and unpaid interest and
Liquidated Damages, if any), and the Trustee promptly will authenticate and
deliver to such Holders a new Note equal in principal amount to any unpurchased
portion of the Note surrendered. Any Notes not so accepted will be delivered
promptly by the Company to the Holder thereof. The Company publicly will
announce the results of the Change of Control Offer on or as soon as practicable
after the Change of Control Purchase Date.
ARTICLE XI
GUARANTEE
SECTION 11.1. Guarantee.
(a) In consideration of good and valuable consideration, the receipt
and sufficiency of which is hereby acknowledged, to the fullest extent permitted
by applicable law, each of the Subsidiary Guarantors hereby irrevocably and
unconditionally guarantees (the "Guarantee") to the Trustee and its successors
and assigns, irrespective of the validity and enforceability against the Company
and any other Subsidiary Guarantors of this Indenture, the Notes or the
obligations of the Company under this Indenture or the Notes, that: (x) the
principal of and premium (if any), and interest (and Liquidated Damages, if any)
on the Notes will be paid in full when due, whether at the Maturity Date or
Interest Payment Date, by acceleration, call for redemption, upon a Change of
Control, an Asset Sale Offer or otherwise; (y) all other obligations of the
Company to
75
<PAGE>
the Holders or the Trustee under this Indenture or the Notes will be promptly
paid in full or performed, all in accordance with the terms of this Indenture
and the Notes; and (z) in case of any extension of time of payment or renewal of
any Notes or any of such other obligations, they will be paid in full when due
or performed in accordance with the terms of the extension or renewal, whether
at maturity, by acceleration, call for redemption, upon a Change of Control, an
Asset Sale Offer or otherwise. Failing payment when due of any amount so
guaranteed for whatever reason, each Subsidiary Guarantor shall be obligated to
pay the same before failure so to pay becomes an Event of Default.
If the Company or a Subsidiary Guarantor defaults in the payment of the
principal of, premium, if any, or interest (or Liquidated Damages, if any) on,
the Notes when and as the same shall become due, whether upon maturity,
acceleration, call for redemption, upon a Change of Control Offer, upon an Asset
Sale Offer or otherwise, without the necessity of action by the Trustee or any
Holder, each Subsidiary Guarantor shall be required, jointly and severally, to
promptly make such payment in full.
(b) Each Subsidiary Guarantor hereby agrees to the fullest extent
permitted by applicable law, that its obligations with regard to this Guarantee
shall be unconditional, irrespective of the validity, regularity or
enforceability of the Notes or this Indenture, the absence of any action to
enforce the same, any delays in obtaining or realizing upon or failures to
obtain or realize upon collateral, the recovery of any judgment against the
Company, any action to enforce the same or any other circumstances that might
otherwise constitute a legal or equitable discharge or defense of a Subsidiary
Guarantor. Each Subsidiary Guarantor hereby waives to the fullest extent
permitted by applicable law diligence, presentment, demand of payment, filing of
claims with a court in the event of insolvency or bankruptcy of the Company, any
right to require a proceeding first against the Company or right to require the
prior disposition of the assets of the Company to meet its obligations, protest,
notice and all demands whatsoever and covenants that this Guarantee will not be
discharged except by complete performance of the obligations contained in the
Notes and this Indenture.
(c) If any Holder or the Trustee is required by any court or otherwise
to return to either the Company or any Subsidiary Guarantor, or any Custodian or
similar official acting in relation to either the Company or such Subsidiary
Guarantor, any amount paid by either the Company or such Subsidiary Guarantor to
the Trustee or such Holder, this Guarantee, to the extent theretofore
discharged, shall be reinstated in full force and effect. Each Subsidiary
Guarantor agrees that it will not be entitled to any right of subrogation in
relation to the Holders in respect of any obligations guaranteed hereby until
payment in full of all obligations guaranteed hereby. Each Subsidiary Guarantor
further agrees that, as between such Subsidiary Guarantor, on the one hand, and
the Holders and the Trustee, on the other hand, (i) the maturity of the
obligations guaranteed hereby may be accelerated as provided in Section 6.2
hereof for the purposes of this Guarantee, notwithstanding any stay, injunction
or other prohibition preventing such acceleration as to the Company of the
obligations guaranteed hereby, and (ii) in the event of any declaration of
acceleration of those obligations as provided in Section 6.2 hereof, those
obligations (whether or not due and
76
<PAGE>
payable) will forthwith become due and payable by each of the Subsidiary
Guarantors for the purpose of this Guarantee.
(d) It is the intention of each Subsidiary Guarantor and the Company
that the obligations of each Subsidiary Guarantor hereunder shall be in, but not
in excess of, the maximum amount permitted by applicable law. Accordingly, if
the obligations in respect of the Guarantee would be annulled, avoided or
subordinated to the creditors of any Subsidiary Guarantor by a court of
competent jurisdiction in a proceeding actually pending before such court as a
result of a determination both that such Guarantee was made by such Subsidiary
Guarantor without fair consideration and, immediately after giving effect
thereto, such Subsidiary Guarantor was insolvent or unable to pay its debts as
they mature or left with an unreasonably small capital, then the obligations of
such Subsidiary Guarantor under such Guarantee shall be reduced by such court if
and to the extent such reduction would result in the avoidance of such
annulment, avoidance or subordination; provided, however, that any reduction
pursuant to this paragraph shall be made in the smallest amount as is strictly
necessary to reach such result. For purposes of this paragraph, "fair
consideration", "insolvency", "unable to pay its debts as they mature",
"unreasonably small capital" and the effective times of reductions, if any,
required by this paragraph shall be determined in accordance with applicable
law.
SECTION 11.2. Execution and Delivery of Guarantee.
Each Subsidiary Guarantor shall, by virtue of such Subsidiary Guarantor's
execution and delivery of this Indenture or such Subsidiary Guarantor's
execution and delivery of an indenture supplement pursuant to Section 11.1
hereof, be deemed to have signed on each Note issued hereunder the notation of
guarantee set forth on the form of the Notes attached hereto as Exhibit A to the
same extent as if the signature of such Subsidiary Guarantor appeared on such
Note.
The delivery of any Note by the Trustee, after the authentication thereof
hereunder, shall constitute due delivery of the guarantee set forth in Section
11.1 on behalf of each Subsidiary Guarantor. The notation of a guarantee set
forth on any Note shall be null and void and of no further effect with respect
to the guarantee of any Subsidiary Guarantor which, pursuant to Section 11.4, is
released from such Guarantee.
SECTION 11.3. Certain Bankruptcy Events.
Each Subsidiary Guarantor hereby covenants and agrees, to the fullest
extent that it may do so under applicable law, that in the event of the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Company, such Subsidiary Guarantor shall not file (or join in any filing of), or
otherwise seek to participate in the filing of, any motion or request seeking to
stay or to prohibit (even temporarily) execution on the Guarantee and hereby
waives and agrees not to take the benefit of any such stay of execution, whether
under Section 362 or 105 of the United States Bankruptcy Code or otherwise.
77
<PAGE>
SECTION 11.4. Limitation on Merger of Subsidiary Guarantors and Release of
Subsidiary Guarantors.
No Subsidiary Guarantor shall consolidate or merge with or into (whether or
not such Subsidiary Guarantor is the surviving person) another person unless (i)
subject to the provisions of the following paragraph and certain other
provisions of this Indenture, the person formed by or surviving any such
consolidation or merger (if other than such Subsidiary Guarantor) assumes all
the obligations of such Subsidiary Guarantor pursuant to a supplemental
indenture in form reasonably satisfactory to the Trustee, pursuant to which such
person shall unconditionally guarantee, on a senior basis, all of such
Subsidiary Guarantor's obligations under such Subsidiary Guarantor's guarantee
and this Indenture on the terms set forth in this Indenture, and (ii)
immediately before and immediately after giving effect to such transaction on a
pro forma basis, no Default or Event of Default shall have occurred or be
continuing.
Upon the sale or disposition (whether by merger, stock purchase, asset sale
or otherwise) of a Subsidiary Guarantor or all of its assets to an entity which
is not a Subsidiary Guarantor or the designation of a Subsidiary to become an
Unrestricted Subsidiary, which transaction is otherwise in compliance with this
Indenture (including, without limitation, the provisions of Section 4.11), such
Subsidiary Guarantor shall be deemed released from its obligations under its
Guarantee of the Notes; provided, however, that any such termination shall occur
only to the extent that all obligations of such Subsidiary Guarantor under all
of its guarantees of, and under all of its pledges of assets or other security
interests which secure, any Indebtedness of the Company or any other Subsidiary
of the Company shall also terminate upon such release, sale or transfer.
SECTION 11.5. Future Subsidiary Guarantors.
If any Person becomes a Subsidiary of the Company, whether pursuant to the
acquisition by the Company or any Subsidiary Guarantor of Equity Interests of
such Person, or otherwise, such Subsidiary (in each case, a "Subsidiary
Guarantor") shall, to the fullest extent permitted by applicable law,
irrevocably and unconditionally guarantee the obligations of the Company with
respect to payment and performance of the Notes and the other obligations of the
Company under this Indenture to the same extent that such obligations are
guaranteed by the other Subsidiary Guarantors pursuant to Section 11.1 hereof.
Each Subsidiary Guarantor shall, within five Business Days after becoming a
Subsidiary of the Company, execute and deliver to the Trustee a supplemental
indenture, which shall be in a form satisfactory to the Trustee, making such
Subsidiary Guarantor a party to this Indenture.
78
<PAGE>
ARTICLE XII
RESERVED
ARTICLE XIII
MISCELLANEOUS
SECTION 13.1. TIA Controls.
If any provision of this Indenture limits, qualifies, or conflicts with the
duties imposed by operation of the TIA, the imposed duties, upon qualification
of this Indenture under the TIA, shall control.
SECTION 13.2. Notices.
Any notices or other communications to the Company or any Subsidiary
Guarantor or the Trustee required or permitted hereunder shall be in writing,
and shall be sufficiently given if made by hand delivery, by telecopier or
registered or certified mail, postage prepaid, return receipt requested,
addressed as follows:
if to the Company or any Subsidiary Guarantor:
The Holt Group, Inc.
701 North Broadway
Gloucester City, New Jersey 08030
Attention: Thomas J. Holt, Sr. and John A. Evans, Esquire
Telecopy: (609) 742-3066
with a copy to:
Pepper Hamilton LLP
3000 Two Logan Square
Eighteeth and Arch Streets
Philadelphia, Pennsylvania 19103-4750
Attention: Lisa D. Kabnick
Telecopy: (215) 981-4750
79
<PAGE>
if to the Trustee:
The Bank of New York
101 Barclay Street, 21st Floor
New York, New York 10286
Attention: Corporate Trust Trustee Administration
Telecopy: (212) 815-5915
Any party by notice to each other party may designate additional or
different addresses as shall be furnished in writing by such party. Any notice
or communication to any party shall be deemed to have been given or made as of
the date so delivered, if personally delivered; when receipt is acknowledged, if
telecopied; and five Business Days after mailing if sent by registered or
certified mail, postage prepaid (except that a notice of change of address shall
not be deemed to have been given until actually received by the addressee).
Any notice or communication mailed to a Noteholder shall be mailed to him
by first class mail or other equivalent means at his address as it appears on
the registration books of the Registrar and shall be sufficiently given to him
if so mailed within the time prescribed.
Failure to mail a notice or communication to a Noteholder or any defect in
it shall not affect its sufficiency with respect to other Noteholders. If a
notice or communication is mailed in the manner provided above, it is duly
given, whether or not the addressee receives it.
SECTION 13.3. Communications by Holders with Other Holders.
Noteholders may communicate pursuant to TIA ss.312(b) with other
Noteholders with respect to their rights under this Indenture or the Notes. The
Company, the Trustee, the Registrar and any other Person shall have the
protection of TIA ss.312(c).
SECTION 13.4. Certificate and Opinion as to Conditions Precedent.
Upon any request or application by the Company or any Subsidiary Guarantor
to the Trustee to take any action under this Indenture, such Person shall
furnish to the Trustee:
(1) an Officers' Certificate (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of the signers,
all conditions precedent, if any, provided for in this Indenture relating
to the proposed action have been met; and
(2) an Opinion of Counsel (in form and substance reasonably
satisfactory to the Trustee) stating that, in the opinion of such counsel,
all such conditions precedent have been met.
80
<PAGE>
SECTION 13.5. Statements Required in Certificate or Opinion.
Each certificate or opinion with respect to compliance with a condition or
covenant provided for in this Indenture shall include:
(1) a statement that the Person making such certificate or opinion has
read such covenant or condition;
(2) a brief statement as to the nature and scope of the examination or
investigation upon which the statements or opinions contained in such
certificate or opinion are based;
(3) a statement that, in the opinion of such Person, he or she has
made such examination or investigation as is necessary to enable him or her
to express an informed opinion as to whether or not such covenant or
condition has been met; and
(4) a statement as to whether or not, in the opinion of each such
Person, such condition or covenant has been met; provided, however, that
with respect to matters of fact an Opinion of Counsel may rely on an
Officers' Certificate or certificates of public officials.
SECTION 13.6. Rules by Trustee, Paying Agent, Registrar.
The Trustee may make reasonable rules for action by or at a meeting of
Noteholders. The Paying Agent or Registrar may make reasonable rules for its
functions.
SECTION 13.7. Legal Holidays.
A "Legal Holiday" is a Saturday, a Sunday or a day on which banking
institutions in New York, New York are authorized or obligated by law or
executive order to close. If a payment date is a Legal Holiday at such place,
payment may be made at such place on the next succeeding day that is not a Legal
Holiday, and no interest shall accrue for the intervening period.
SECTION 13.8. Governing Law.
THIS INDENTURE, THE GUARANTEES AND THE NOTES SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, AS APPLIED TO
CONTRACTS MADE AND PERFORMED WITHIN THE STATE OF NEW YORK. EACH OF THE COMPANY
AND THE SUBSIDIARY GUARANTORS HEREBY IRREVOCABLY SUBMITS TO THE JURISDICTION OF
ANY NEW YORK STATE COURT SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW
YORK OR ANY FEDERAL COURT SITTING IN THE
81
<PAGE>
BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN RESPECT OF ANY SUIT, ACTION OR
PROCEEDING ARISING OUT OF OR RELATING TO THIS INDENTURE AND THE NOTES, AND
IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, JURISDICTION OF THE AFORESAID COURTS. EACH OF THE COMPANY AND
THE SUBSIDIARY GUARANTORS IRREVOCABLY WAIVES, TO THE FULLEST EXTENT IT MAY
EFFECTIVELY DO SO UNDER APPLICABLE LAW, ANY OBJECTION WHICH IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT AND ANY CLAIM THAT ANY SUCH SUIT, ACTION OR PROCEEDING
BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE TRUSTEE OR ANY NOTEHOLDER TO SERVE PROCESS
IN ANY OTHER MANNER PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR
OTHERWISE PROCEED AGAINST THE COMPANY AND THE SUBSIDIARY GUARANTORS IN ANY OTHER
JURISDICTION.
SECTION 13.9. No Adverse Interpretation of Other Agreements.
This Indenture may not be used to interpret another indenture, loan or debt
agreement of the Company or any Subsidiary Guarantor or any of their respective
Subsidiaries. Any such indenture, loan or debt agreement may not be used to
interpret this Indenture.
SECTION 13.10. No Personal Liability of Stockholders, Officers, Directors,
Employees.
No direct or indirect stockholder, employee, officer or director, as such,
past, present or future of the Company, the Guarantors or any successor entity
shall have any personal liability in respect of the obligations of the Company
or the Guarantors under this Indenture or the Notes solely by reason of his or
its status as such stockholder, employee, officer or director, except that this
provision shall not limit the obligation of any Guarantor pursuant to its
guarantee of the Notes. Each Holder of a Note by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Notwithstanding the foregoing,
nothing in this paragraph shall in any way limit the obligation of any
Subsidiary Guarantor pursuant to its guarantee of the Notes.
SECTION 13.11. Successors.
All agreements of the Company and the Subsidiary Guarantors in this
Indenture and the Notes shall bind its successor. All agreements of the Trustee
in this Indenture shall bind its successor.
82
<PAGE>
SECTION 13.12. Duplicate Originals.
All parties may sign any number of copies or counterparts of this
Indenture. Each signed copy or counterpart shall be an original, but all of them
together shall represent the same agreement.
SECTION 13.13. Severability.
In case any one or more of the provisions in this Indenture or in the Notes
or in the Guarantees shall be held invalid, illegal or unenforceable, in any
respect for any reason, the validity, legality and enforceability of any such
provision in every other respect and of the remaining provisions shall not in
any way be affected or impaired thereby, it being intended that all of the
provisions hereof shall be enforceable to the full extent permitted by law.
SECTION 13.14. Table of Contents, Headings, Etc.
The Table of Contents, Cross-Reference Table and headings of the Articles
and the Sections of this Indenture have been inserted for convenience of
reference only, are not to be considered a part hereof and shall in no way
modify or restrict any of the terms or provisions hereof.
SECTION 13.15. Qualification of Indenture.
The Company shall qualify this Indenture under the TIA in accordance with
the terms and conditions of the Registration Rights Agreement and shall pay all
reasonable costs and expenses (including reasonable attorneys' fees for the
Company and the Trustee) incurred in connection therewith, including, but not
limited to, costs and expenses of qualification of this Indenture and the Notes
and printing this Indenture and the Notes. The Trustee shall be entitled to
receive from the Company any such Officers' Certificates, Opinions of Counsel or
other documentation as it may reasonably request in connection with any such
qualification of this Indenture under the TIA.
SECTION 13.16. Registration Rights.
Certain Holders of the Notes may be entitled to certain registration rights
with respect to such Notes pursuant to, and subject to the terms of, the
Registration Rights Agreement.
83
<PAGE>
SIGNATURES
IN WITNESS WHEREOF, the parties hereto have caused this Indenture to be
duly executed as of the date first written above.
THE HOLT GROUP, INC.,
a Delaware corporation
By: /s/ John Evans
------------------------------
Name: John Evans
Title: Vice President
THE BANK OF NEW YORK,
as Trustee
By: /s/ Mary Beth Lewicki
------------------------------
Name: Mary Beth Lewicki
Title: Assistant Vice President
HOLT CARGO SYSTEMS, INC.,
as Guarantor
By: /s/ John Evans
------------------------------
Name: John Evans
Title: Vice President
HOLT HAULING AND WAREHOUSING
SYSTEM, INC.,
as Guarantor
By: /s/ John Evans
------------------------------
Name: John Evans
Title: Vice President
<PAGE>
WILMINGTON STEVEDORES, INC.,
as Guarantor
By: /s/ John Evans
------------------------------
Name: John Evans
Title: Vice President
MURPHY MARINE SERVICES, INC.,
as Guarantor
By: /s/ John Evans
------------------------------
Name: John Evans
Title: Vice President
NPR HOLDING CORPORATION,
as Guarantor
By: /s/ Ronald Katims
------------------------------
Name: Ronald Katims
Title: President
NPR, INC.,
as Guarantor
By: /s/ Ronald Katims
------------------------------
Name: Ronald Katims
Title: President
<PAGE>
NPR S.A., INC.,
as Guarantor
By: /s/ Ronald Katims
------------------------------
Name: Ronald Katims
Title: President
NPR-NAVIERAS RECEIVABLES, INC.,
as Guarantor
By: /s/ Ronald Katims
------------------------------
Name: Ronald Katims
Title: President
<PAGE>
EXHIBIT A
[FORM OF NOTE]
THE HOLT GROUP, INC.
9 3/4% SERIES A(1) SENIOR NOTE DUE 2006
CUSIP No. ______________
No. $
The Holt Group, Inc., a Delaware corporation (hereinafter called the
"Company", which term includes any successors under the Indenture hereinafter
referred to), for value received, hereby promises to pay to ___________________,
or registered assigns, the principal sum of _____________________ Dollars,
on __________ __, 2006.
Interest Payment Dates: January 15 and July 15
Record Dates: January 1 and July 1
Reference is made to the further provisions of this Note on the reverse
side, which will, for all purposes, have the same effect as if set forth at this
place.
IN WITNESS WHEREOF, the Company has caused this Instrument to be duly
executed.
Dated:
THE HOLT GROUP, INC.,
a Delaware corporation
By:
------------------------------
Name:
Title:
Attest:
--------------------------
Name:
Title:
- ----------
(1) Series A should be replaced with Series B in the Exchange Notes.
A-1
<PAGE>
[FORM OF TRUSTEE'S CERTIFICATE OF AUTHENTICATION]
This is one of the Notes described in the within-mentioned Indenture.
THE BANK OF NEW YORK,
as Trustee
By
--------------------------------
Authorized Signatory
Dated:
A-2
<PAGE>
THE HOLT GROUP, INC.
9 3/4% Series A(2) Senior Note due 2006
Unless and until it is exchanged in whole or in part for Notes in
definitive form, this Note may not be transferred except as a whole by the
Depositary to a nominee of the Depositary or by a nominee of the Depositary to
the Depositary or another nominee of the Depositary or by the Depositary or any
such nominee to a successor Depositary or a nominee of such successor
Depositary. Unless this certificate is presented by an authorized representative
of The Depository Trust Company (55 Water Street, New York, New York) ("DTC"),
to the Company or its agent for registration of transfer, exchange or payment,
and any certificate issued is registered in the name of Cede & Co. or such other
name as requested by an authorized representative of DTC (and any payment is
made to Cede & Co. or such other entity as is requested by an authorized
representative of DTC), ANY TRANSFER, PLEDGE OR OTHER USE HEREOF FOR VALUE OR
OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as the registered owner
hereof, Cede & Co., has an interest herein.(3)
THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE THIRD SENTENCE HEREOF. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED IN
RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR (B) IT IS ACQUIRING THIS
NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S UNDER THE
SECURITIES ACT AND (2) AGREES THAT IT WILL NOT RESELL OR OTHERWISE TRANSFER
THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS SUBSIDIARIES, (B) TO A
PERSON WHOM THE SELLER REASONABLY BELIEVES IS A QIB PURCHASING FOR ITS OWN
ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE TRANSACTION MEETING THE
REQUIREMENTS OF RULE 903 OR 904 OF THE SECURITIES ACT, (D) IN A TRANSACTION
MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES ACT, (E) IN
ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
- ----------
(2) Series A should be replaced with Series B in the Exchange Notes.
(3) This paragraph should only be added if the Note is issued in global form.
A-3
<PAGE>
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF COUNSEL
ACCEPTABLE TO THE COMPANY) OR (F) PURSUANT TO AN EFFECTIVE REGISTRATION
STATEMENT AND, IN EACH CASE, IN ACCORDANCE WITH THE APPLICABLE SECURITIES
LAWS OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE JURISDICTION
AND (3) AGREES THAT IT WILL DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN
INTEREST HEREIN IS TRANSFERRED, A NOTICE SUBSTANTIALLY TO THE EFFECT OF
THIS LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED
STATES" HAVE THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER
THE SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF THE
FOREGOING.(4)
1. Interest.
The Holt Group, Inc., a Delaware corporation (hereinafter called the
"Company," which term includes any successors under the Indenture hereinafter
referred to), promises to pay interest on the principal amount of this Note at
the rate of 9 3/4% per annum. To the extent it is lawful, the Company promises
to pay interest on any interest payment due but unpaid on such principal amount
at a rate of 9 3/4% per annum compounded semi-annually.
The Company will pay interest semi-annually on January 15 and July 15
of each year (each, an "Interest Payment Date"), commencing July 15, 1998, to
the persons in whose names such Notes are registered at the close of business on
January 1 and July 1 immediately preceding such Interest Payment Date. Interest
on the Notes will accrue from the most recent date to which interest has been
paid or, if no interest has been paid on the Notes, from the date of the
original issuance. Interest will be computed on the basis of a 360-day year
consisting of twelve 30-day months.
On and after the date of redemption, interest will cease to accrue on
the Notes or portions thereof called for redemption, unless the Company defaults
in the payment thereof.
2. Method of Payment.
The Company shall pay interest (and Liquidated Damages, if any) on the
Notes (except defaulted interest) to the Persons who are the registered Holders
at the close of business on the Record Date immediately preceding the Interest
Payment Date. Holders must surrender Notes to a Paying Agent to collect
principal payments. Except as provided below, the Company shall pay principal
and interest (and Liquidated Damages, if any) in such coin
- ----------
(4) This paragraph should be included only for the Initial Notes.
A-4
<PAGE>
or currency of the United States of America as at the time of payment shall be
legal tender for payment of public and private debts ("Cash"). The Notes will be
payable as to principal, premium and interest (and Liquidated Damages, if any)
at the office or agency of the Company maintained for such purpose within the
Borough of Manhattan, the City and State of New York or, at the option of the
Company, payment of principal, premium and interest (and Liquidated Damages, if
any) may be made by check mailed to the Holders at their addresses set forth in
the register of Holders, and provided that payment by wire transfer of
immediately available funds will be required with respect to principal of and
interest (and Liquidated Damages, if any) and premium on all Global Notes and
all other Notes the Holders of which shall have provided wire transfer
instructions to the Company or the Paying Agent at least 5 Business Days prior
to the relevant record date.
3. Paying Agent and Registrar.
Initially, The Bank of New York (the "Trustee"), will act as Paying
Agent and Registrar. The Company may change any Paying Agent, Registrar or
co-Registrar without notice to the Holders. The Company or any of its
Subsidiaries may, subject to certain exceptions, act as Paying Agent, Registrar
or co-Registrar.
4. Indenture.
The Company issued the Notes under an Indenture, dated as of January
21, 1998 (the "Indenture"), between the Company and the Trustee. Capitalized
terms herein are used as defined in the Indenture unless otherwise defined
herein. The terms of the Notes include those stated in the Indenture and those
made part of the Indenture by reference to the Trust Indenture Act of 1939, as
in effect on the date of the Indenture. The Notes are subject to all such terms,
and Holders of Notes are referred to the Indenture and said Act for a statement
of them. The Notes are senior unsecured obligations of the Company limited in
aggregate principal amount to $200,000,000, of which $140,000,000 in aggregate
principal amount will be initially issued on the Closing Date. Subject to the
conditions set forth in the Indenture, the Company may issue up to an additional
$60,000,000 aggregate principal amount of Additional Notes. Each Holder of this
Note, by accepting the same, (a) agrees to and shall be bound by such
provisions, (b) authorizes and directs the Trustee on his behalf to take such
action as may be provided in the Indenture and (c) appoints the Trustee his
attorney-in-fact for such purpose.
5. Redemption.
Except as provided in this Paragraph 5 or in Article III of the
Indenture, the Company will not have the right to redeem any Notes prior to
January 15, 2002. The Notes will be redeemable for cash at the option of the
Company, in whole or in part, at any time on or after January 15, 2002, upon not
less than 30 days nor more than 60 days notice to each holder of Notes, at the
following redemption prices (expressed as percentages of the principal
A-5
<PAGE>
amount) if redeemed during the 12-month period commencing January 15 of the
years indicated below, in each case (subject to the right of Holders of record
on a Record Date to receive interest due on an Interest Payment Date that is on
or prior to such Redemption Date) together with accrued and unpaid interest and
Liquidated Damages, if any, thereon to the Redemption Date:
Year Percentage
---- ----------
2002.........................................................104.8750%
2003.........................................................102.4375%
2004 and thereafter..........................................100.0000%
Until January 15, 2001 upon an Public Equity Offering of common stock
for cash of the Company, up to 35% of the sum of (i) the original aggregate
principal amount of the Notes and (ii) the original aggregate principal amount
of any Additional Notes may be redeemed at the option of the Company within 90
days of such Public Equity Offering, on not less than 30 days, but not more than
60 days, notice to each holder of the Notes to be redeemed, with cash from the
Net Cash Proceeds of such Public Equity Offering, at a redemption price equal to
109 3/4% of principal (subject to the right of Holders of record on a Record
Date to receive interest due on an Interest Payment Date that is on or prior to
such Redemption Date), together with accrued and unpaid interest and Liquidated
Damages, if any, to the date of redemption; provided, however, that immediately
following such redemption not less than 65% of the sum of (i) the original
aggregate principal amount of the Notes and (ii) the original aggregate
principal amount of any Additional Notes remains outstanding. In the case of a
partial redemption, the Trustee shall select the Notes or portions thereof for
redemption on a pro rata basis, by lot or in such other manner it deems
appropriate and fair. The Notes may be redeemed in part in multiples of $1,000
only. The Notes will not have the benefit of any sinking fund.
Any such redemption will comply with Article III of the Indenture.
6. Notice of Redemption.
Notice of any redemption will be sent, by first class mail, at least
30 days and not more than 60 days prior to the date fixed for redemption to the
holder of each Note to be redeemed to such Holder's last address as then shown
upon the registry books of the Registrar. Any notice which relates to a Note to
be redeemed in part only must state the portion of the principal amount equal to
the unredeemed portion thereof and must state that on and after the date of
redemption, upon surrender of such Note, a new Note or Notes in a principal
amount equal to the unredeemed portion thereof will be issued.
A-6
<PAGE>
Except as set forth in the Indenture, from and after any Redemption
Date, if monies for the redemption of the Notes called for redemption shall have
been deposited with the Paying Agent on such Redemption Date, the Notes called
for redemption will cease to bear interest and the only right of the Holders of
such Notes will be to receive payment of the Redemption Price, plus any accrued
and unpaid interest (and Liquidated Damages, if any) to the Redemption Date.
7. Denominations; Transfer; Exchange.
The Notes are in registered form, without coupons, in denominations of
$1,000 and integral multiples of $1,000. A Holder may register the transfer of,
or exchange Notes in accordance with, the Indenture. The Registrar may require a
Holder, among other things, to furnish appropriate endorsements and transfer
documents and to pay any taxes and fees required by law or permitted by the
Indenture. The Registrar need not register the transfer of or exchange any Notes
(a) selected for redemption except the unredeemed portion of any Note being
redeemed in part or (b) for a period beginning 15 Business Days before the
mailing of a notice of an offer to repurchase or redemption and ending at the
close of business on the day of such mailing.
8. Persons Deemed Owners.
Prior to due presentment for the registration of a transfer of any
Note, the Trustee, any Agent and the Company may deem and treat the Person in
whose name any Note is registered as the absolute owner of such Note for all
purposes, and none of the Trustee, any Agent or the Company shall be affected by
notice to the contrary.
9. Unclaimed Money.
If money for the payment of principal or interest remains unclaimed
for two years, the Trustee and the Paying Agent(s) will pay the money back to
the Company at its written request. After that, all liability of the Trustee and
such Paying Agent(s) with respect to such money shall cease.
10. Discharge Prior to Redemption or Maturity.
Except as set forth in the Indenture, if the Company irrevocably
deposits with the Trustee, in trust, for the benefit of the Holders, cash, U.S.
Government Obligations or a combination thereof, in such amounts as will be
sufficient in the opinion of a nationally recognized firm of independent public
accountants selected by the Trustee, to pay the principal of, premium, if any,
and interest (and Liquidated Damages, if any) on the Notes to redemption or
maturity and complies with the other provisions of the Indenture relating
thereto, the Company will be discharged from certain provisions of the Indenture
and the Notes (including the financial covenants, but excluding its obligation
to pay the principal of,
A-7
<PAGE>
premium, if any, and interest (and Liquidated Damages, if any) on the Notes).
Upon satisfaction of certain additional conditions set forth in the Indenture,
the Company may elect to have its obligations discharged with respect to
outstanding Notes.
11. Amendment; Supplement; Waiver.
Subject to certain exceptions, the Indenture or the Notes may be
amended or supplemented with the written consent of the Holders of a majority in
aggregate principal amount of the Notes then outstanding, and any existing
Default or Event of Default or compliance with any provision may be waived with
the consent of the Holders of a majority in aggregate principal amount of the
Notes then outstanding. Without notice to or consent of any Holder, the parties
thereto may under certain circumstances amend or supplement the Indenture or the
Notes to, among other things, cure any ambiguity, defect or inconsistency, or
make any other change that does not adversely affect the rights of any Holder of
a Note.
12. Restrictive Covenants.
The Indenture imposes certain limitations on the ability of the
Company and any Subsidiary Guarantor to, among other things, incur additional
Indebtedness and issue Preferred Stock, pay dividends or make certain other
Restricted Payments, enter into certain transactions with Affiliates, incur
Liens, sell assets and subsidiary stock, merge or consolidate with any other
Person or transfer (by lease, assignment or otherwise) substantially all of the
properties and assets of the Company. The limitations are subject to a number of
important qualifications and exceptions. The Company must periodically report to
the Trustee on compliance with such limitations.
13. Ranking.
Payment of principal, premium, if any, and interest (and Liquidated
Damages, if any) on the Notes is senior, in the manner and to the extent set
forth in the Indenture, to all existing and future Indebtedness of the Company
that is subordinated to the Notes.
14. Repurchase at Option of Holder.
(a) If there is a Change of Control, the Company shall be required to
offer to purchase on the Change of Control Purchase Date all outstanding Notes
at a purchase price equal to 101% of the principal amount thereof, plus accrued
and unpaid interest (and Liquidated Damages, if any), if any, to the Change of
Control Purchase Date. Holders of Notes will receive a Change of Control Offer
from the Company prior to any related Change of Control Purchase Date and may
elect to have such Notes purchased by completing the form entitled "Option of
Holder to Elect Purchase" appearing below.
A-8
<PAGE>
(b) The Indenture imposes certain limitations on the ability of the
Company, the Subsidiary Guarantors or any of their respective Subsidiaries to
sell assets and subsidiary stock. In the event the proceeds from an Asset Sale
exceed certain amounts, as specified in the Indenture, the Company will be
required either to reinvest the proceeds of such Asset Sale in a Related
Business, repay certain Indebtedness or make an offer to purchase each Holder's
Notes at 100% of the principal amount thereof, plus accrued interest (and
Liquidated Damages, if any), if any, to the purchase date.
15. Notation of Guarantee.
As set forth more fully in the Indenture, the Persons constituting
Subsidiary Guarantors from time to time, in accordance with the provisions of
the Indenture, unconditionally and jointly and severally guarantee, in
accordance with Section 11.1 of the Indenture, to the Holder and to the Trustee
and its successors and assigns, that (i) the principal of and interest (and
Liquidated Damages, if any) on the Note will be paid, whether at the Maturity
Date or Interest Payment Dates, by acceleration, call for redemption, upon a
Change of Control Offer, upon an Asset Sale Offer or otherwise, and all other
obligations of the Company to the Holder or the Trustee under the Indenture or
this Note will be promptly paid in full or performed, all in accordance with the
terms of the Indenture and this Note, and (ii) in the case of any extension of
payment or renewal of this Note or any of such other obligations, they will be
paid in full when due or performed in accordance with the terms of such
extension or renewal, whether at the Maturity Date, as so extended, by
acceleration, call for redemption, upon a Change of Control Offer, upon an Asset
Sale Offer or otherwise. Such guarantees shall cease to apply, and shall be null
and void, with respect to any Subsidiary Guarantor who, pursuant to Article XI
of the Indenture, is released from its guarantees, or whose guarantees otherwise
cease to be applicable pursuant to the terms of the Indenture.
When a successor assumes all the obligations of its predecessor under
the Notes and the Indenture, the predecessor will be released from those
obligations.
16. Defaults and Remedies.
If any Event of Default occurs and is continuing, the Trustee or the
Holders of at least 25% in aggregate principal amount of the then outstanding
Notes may declare all the Notes to be due and payable immediately.
Notwithstanding the foregoing, in the case of an Event of Default arising from
certain events of bankruptcy or insolvency with respect to the Company or any of
its Significant Subsidiaries, all outstanding Notes will become due and payable
without further action or notice. Noteholders may not enforce the Indenture, the
Notes or the Guarantees except as provided in the Indenture. Subject to certain
limitations, Holders of a majority in aggregate principal amount of the then
outstanding Notes may direct the Trustee in its exercise of any trust or power.
The Trustee may withhold from Noteholders notice of any continuing Default or
Event of Default (except a Default or Event of Default
A-9
<PAGE>
relating to the payment of principal or interest) if it determines that
withholding notice is in their interest.
17. Trustee Dealings with Company.
The Trustee under the Indenture, in its individual or any other
capacity, may make loans to, accept deposits from, and perform services for the
Company, any Guarantor, any of their Subsidiaries or any of their respective
Affiliates, and may otherwise deal with such Persons as if it were not the
Trustee.
18. No Recourse Against Others.
No direct or indirect stockholder, employee, officer or director, as
such, past, present or future of the Company, the Guarantors or any successor
entity shall have any personal liability in respect of the obligations of the
Company or the Guarantors under this Indenture or the Notes solely by reason of
his or its status as such stockholder, employee, officer or director, except
that this provision shall not limit the obligation of any Guarantor pursuant to
its guarantee of the Notes. Each Holder of a Note by accepting a Note waives and
releases all such liability. The waiver and release are part of the
consideration for the issuance of the Notes. Notwithstanding the foregoing,
nothing in this paragraph shall in any way limit the obligation of any
Subsidiary Guarantor pursuant to any guarantee of the Notes.
19. Authentication.
This Note shall not be valid until the Trustee or authenticating agent
signs the certificate of authentication on the other side of this Note.
20. Abbreviations and Defined Terms.
Customary abbreviations may be used in the name of a Holder of a Note
or an assignee, such as: TEN COM (= tenants in common), TEN ENT (= tenants by
the entireties), JT TEN (= joint tenants with right of survivorship and not as
tenants in common), CUST (= Custodian), and U/G/M/A (= Uniform Gifts to Minors
Act).
21. CUSIP Numbers.
Pursuant to a recommendation promulgated by the Committee on Uniform
Note Identification Procedures, the Company will cause CUSIP numbers to be
printed on the Notes as a convenience to the Holders of the Notes. No
representation is made as to the accuracy of such numbers as printed on the
Notes and reliance may be placed only on the other identification numbers
printed hereon.
A-10
<PAGE>
22. Additional Rights of Holders of Transfer Restricted Securities.(5)
In addition to the rights provided to Holders of Notes under the
Indenture, Holders of Notes shall have all the rights set forth in the
Registration Rights Agreement.
23. Governing Law.
The Indenture and the Notes shall be governed by and construed in
accordance with the internal laws of the State of New York.
- ----------
(5) This paragraph should be included only for the Initial Notes.
A-11
<PAGE>
[FORM OF ASSIGNMENT]
I or we assign this Note to
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Print or type name, address and zip code of assignee)
Please insert Social Security or other identifying number of assignee
- -------------------------------
and irrevocably appoint __________ agent to transfer this Note on the books of
the Company. The agent may substitute another to act for him.
Dated: Signed:
-------------------- ----------------------------------------------
- --------------------------------------------------------------------------------
(Sign exactly as name appears on
the other side of this Note)
Signature Guarantee*
- ----------
* NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized signature Guarantee Programs: (i)
The Securities Transfer Agent Medallion Program (STAMP); (ii) The New York
Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange Medallion
Program (SEMP); or (iv) in such other guarantee program acceptable to the
Trustee.
A-12
<PAGE>
OPTION OF HOLDER TO ELECT PURCHASE
If you want to elect to have this Note purchased by the Company pursuant to
Section 4.14 or Article X of the Indenture, check the appropriate box: |_|
Section 4.14 |_| Article X.
If you want to elect to have only part of this Note purchased by the
Company pursuant to Section 4.14 or Article X of the Indenture, as the case may
be, state the amount you want to be purchased: $________.
Date: Signature:
---------------------- ------------------------------------------
(Sign exactly as your name appears
on the other side of this Note)
Signature Guarantee**
- ----------
** NOTICE: The Signature must be guaranteed by an Institution which is a
member of one of the following recognized signature Guarantee Programs:
(i) The Securities Transfer Agent Medallion Program (STAMP); (ii) The New
York Stock Exchange Medallion Program (MNSP); (iii) The Stock Exchange
Medallion Program (SEMP); or (iv) in such other guarantee program
acceptable to the Trustee.
A-13
<PAGE>
SCHEDULE OF EXCHANGES OF DEFINITIVE NOTES(6)
The following exchanges of a part of this Global Note for Definitive Notes
have been made:
<TABLE>
<CAPTION>
Amount of Amount of Principal Amount Signature of
decrease in increase in of this Global authorized signatory
Principal Amount Principal Amount Note following of Trustee or
Date of of this Global of this Global such decrease (or Notes
Exchange Note Note increase) Custodian
- ----------------------------------------------------------------------------------------------------------------------
<S> <C> <C> <C> <C>
</TABLE>
- ----------
(6) This schedule should only be added if the Note is issued in global form.
A-14
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
TRANSFER RESTRICTED SECURITIES(7)
Re: 9 3/4% SERIES A SENIOR NOTES DUE 2006 OF THE HOLT GROUP, INC.
This Certificate relates to $______ principal amount of Notes held in
(check applicable space) _____ book-entry or ______ definitive form by
_________________ (the "Transferor").
The Transferor (check applicable box):
|_| has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depositary a Note or
Notes in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
|_| has requested the Trustee by written order to exchange or register the
transfer of a Note or Notes.
In connection with such request and in respect of each such Note, the
Transferor does hereby certify that Transferor is familiar with the Indenture
relating to the above-captioned Notes and as provided in Section 2.6 of such
Indenture, the transfer of this Note does not require registration under the
Securities Act (as defined below) because:
|_| Such Note is being acquired for the Transferor's own account, without
transfer (in satisfaction of Section 2.6(a)(ii)(A) or Section 2.6(d)(i)(A) of
the Indenture).
|_| Such Note is being transferred to a "qualified institutional buyer"
(within the meaning of Rule 144A promulgated under the Securities Act), that is
aware that any sale of Notes to it will be made in reliance on Rule 144A under
the Securities Act and that is acquiring such Transfer Restricted Security for
its own account, or for the account of another such "qualified institutional
buyer" (in satisfaction of Section 2.06(a)(ii)(B) or Section 2.06(d)(i)(B) of
the Indenture).
|_| Such Note is being transferred pursuant to an exemption from
registration in accordance with Rule 144, or outside the United States in an
Offshore Transaction in compliance with Rule 904 under the Securities Act, or
pursuant to an effective registration statement under the Securities Act (in
satisfaction of Section 2.6(a)(ii)(C) or Section 2.6(d)(i)(C) of the Indenture).
- ----------
(7) This Certificate shall be included only for Initial Notes.
A-15
<PAGE>
|_| Such Note is being transferred in reliance on and in compliance with an
exemption from the registration requirements of the Securities Act and in
accordance with applicable securities laws of the states of the United States,
other than as provided in the immediately preceding paragraph. An Opinion of
Counsel to the effect that such transfer does not require registration under the
Securities Act accompanies this Certificate (in satisfaction of Section
2.6(a)(ii)(D) or Section 2.6(d)(i)(D) of the Indenture).
-----------------------------------
[INSERT NAME OF TRANSFEROR]
By:
------------------------------
Date:
----------------------
A-16
<PAGE>
CERTIFICATE TO BE DELIVERED UPON EXCHANGE OR REGISTRATION OF TRANSFER OF
NOTES(8)
Re: 9 3/4% SERIES B SENIOR NOTES DUE 2006 OF THE HOLT GROUP, INC.
This Certificate relates to $______ principal amount of Notes held in
(check applicable box) _____ book-entry or ______ definitive form by _____ (the
"Transferor").
The Transferor (check applicable box):
|_| has requested the Trustee by written order to deliver in exchange for
its beneficial interest in the Global Note held by the Depositary a Note or
Notes in definitive, registered form of authorized denominations and an
aggregate principal amount equal to its beneficial interest in such Global Note
(or the portion thereof indicated above); or
|_| has requested the Registrar by written order to exchange or register
the transfer of a Note or Notes.
- ----------
(8) This certificate shall be included only for the Exchange Notes.
A-17
THE HOLT GROUP, INC.
(Payment of Principal and Interest Guaranteed
by the Guarantors referred to herein)
$140,000,000
9 3/4% Series A Senior Notes due 2006
PURCHASE AGREEMENT
January 14, 1998
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
<PAGE>
$140,000,000
9 3/4% Series A Senior Notes due 2006
of
THE HOLT GROUP, INC.
(Payment of Principal and Interest Guaranteed by the
Guarantors referred to herein)
PURCHASE AGREEMENT
January 14, 1998
Donaldson, Lufkin & Jenrette
Securities Corporation
277 Park Avenue
New York, New York 10172
Ladies and Gentlemen:
The Holt Group, Inc., a Delaware corporation (the "Company"), proposes
to issue and sell to Donaldson, Lufkin & Jenrette Securities Corporation (the
"Initial Purchaser") an aggregate of $140,000,000 in principal amount of its 9
3/4% Series A Senior Notes due 2006 (the "Series A Notes"), subject to the terms
and conditions set forth herein. The Series A Notes are to be issued pursuant to
the provisions of an indenture (the "Indenture"), to be dated as of the Closing
Date (as defined herein), among the Company, the Guarantors (as defined herein)
and The Bank of New York, as trustee (the "Trustee"). The Series A Notes and the
Series B Notes (as defined herein) issuable in exchange therefor are
collectively referred to herein as the "Notes." The Notes will be guaranteed
(the "Subsidiary Guarantees") by each of the entities listed on Schedule I
hereto (each, a "Guarantor" and, collectively, the "Guarantors") and by future
subsidiaries of the Company, except for any Non-Recourse Subsidiaries (as
defined in the Indenture). Capitalized terms used but not defined herein shall
have the meanings given to such terms in the Offering Memorandum (as defined
herein).
<PAGE>
1. Offering Memorandum. The Series A Notes will be offered and sold to
the Initial Purchaser pursuant to one or more exemptions from the registration
requirements under the Securities Act of 1933, as amended (the "Act"). The
Company and the Guarantors have prepared a preliminary offering memorandum,
dated December 30, 1997 (the "Preliminary Offering Memorandum"), and a final
offering memorandum, dated January 14, 1998 (the "Offering Memorandum"),
relating to the Series A Notes and the Subsidiary Guarantees.
Upon original issuance thereof, and until such time as the same is no
longer required pursuant to the Indenture, the Series A Notes (and all
securities issued in exchange therefor, in substitution thereof or upon
conversion thereof) shall bear the following legend:
"THIS NOTE (OR ITS PREDECESSOR) HAS NOT BEEN REGISTERED UNDER THE U.S.
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND,
ACCORDINGLY, MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED
WITHIN THE UNITED STATES OR TO, OR FOR THE ACCOUNT OR BENEFIT OF, U.S.
PERSONS, EXCEPT AS SET FORTH IN THE THIRD SENTENCE HEREOF. BY ITS
ACQUISITION HEREOF OR OF A BENEFICIAL INTEREST HEREIN, THE HOLDER (1)
REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL BUYER" (AS DEFINED
IN RULE 144A UNDER THE SECURITIES ACT) (A "QIB") OR (B) IT IS ACQUIRING
THIS NOTE IN AN OFFSHORE TRANSACTION IN COMPLIANCE WITH REGULATION S
UNDER THE SECURITIES ACT, (2) AGREES THAT IT WILL NOT RESELL OR
OTHERWISE TRANSFER THIS NOTE EXCEPT (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QIB PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QIB IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (C) IN AN OFFSHORE
TRANS ACTION MEETING THE REQUIREMENTS OF RULE 903 OR 904 OF THE
SECURITIES ACT, (D) IN A TRANSACTION MEETING THE REQUIREMENTS OF RULE
144 UNDER THE SECURITIES ACT, (E) IN ACCORDANCE WITH ANOTHER EXEMPTION
FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT (AND BASED
UPON AN OPINION OF COUNSEL ACCEPTABLE TO THE COMPANY) OR (F) PURSUANT
2
<PAGE>
TO AN EFFECTIVE REGISTRATION STATEMENT AND, IN EACH CASE, IN ACCORDANCE
WITH THE APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED STATES
OR ANY OTHER APPLICABLE JURISDICTION AND (3) AGREES THAT IT WILL
DELIVER TO EACH PERSON TO WHOM THIS NOTE OR AN INTEREST HEREIN IS
TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS LEGEND. AS
USED HEREIN, THE TERMS "OFFSHORE TRANSACTION" AND "UNITED STATES" HAVE
THE MEANINGS GIVEN TO THEM BY RULE 902 OF REGULATION S UNDER THE
SECURITIES ACT. THE INDENTURE CONTAINS A PROVISION REQUIRING THE
TRUSTEE TO REFUSE TO REGISTER ANY TRANSFER OF THIS NOTE IN VIOLATION OF
THE FOREGOING."
2. Agreements to Sell and Purchase. On the basis of the
representations, warranties and covenants contained in this Agreement, and
subject to the terms and conditions contained herein, the Company agrees to
issue and sell to the Initial Purchaser, and the Initial Purchaser agrees to
purchase from the Company, an aggregate principal amount of $140,000,000 of
Series A Notes at a purchase price equal to 97% of the principal amount thereof
(the "Purchase Price").
3. Terms of Offering. The Initial Purchaser has advised the Company
that the Initial Purchaser will make offers and sales (the "Exempt Re sales") of
the Series A Notes purchased hereunder on the terms set forth in the Offering
Memorandum, as amended or supplemented, solely to (i) persons whom the Initial
Purchaser reasonably believes to be "qualified institutional buyers" as defined
in Rule 144A under the Act ("QIBs") and (ii) persons permitted to purchase the
Series A Notes in offshore transactions in reliance upon Regulation S under the
Act (each, a "Regulation S Purchaser") (such persons specified in clauses (i)
and (ii) being referred to herein as the "Eligible Purchasers"). The Initial
Purchaser will offer the Series A Notes to Eligible Purchasers initially at a
price equal to 100% of the principal amount thereof. Such price may be changed
at any time without notice.
Holders (including subsequent transferees) of the Series A Notes will
have registration rights set forth in the registration rights agreement (the
"Registration Rights Agreement"), to be dated the Closing Date, in
substantially the form of Exhibit A hereto, for so long as such Series A Notes
constitute "Transfer Restricted Securities" (as defined in the Registration
Rights Agreement). Pursuant to the Registration Rights Agreement, the Company
and the Guarantors will agree to
3
<PAGE>
file with the Securities and Exchange Commission (the "Commission"), under the
circumstances set forth therein, (i) a registration statement under the Act (the
"Exchange Offer Registration Statement") relating to the Company's 9 3/4% Series
B Senior Notes due 2006 (the "Series B Notes"), to be offered in exchange for
the Series A Notes (such offer to exchange being referred to herein as the
"Exchange Offer") and the Subsidiary Guarantees thereof, and/or (ii) a shelf
registration statement pursuant to Rule 415 under the Act (the "Shelf
Registration Statement" and, together with the Exchange Offer Registration
Statement, the "Registration Statements") relating to the resale by certain
holders of the Series A Notes and to use their best efforts to cause such
Registration Statements to be declared and remain effective and usable for the
periods specified in the Registration Rights Agreement and to consummate the
Exchange Offer. This Agreement, the Indenture, the Notes, the Subsidiary
Guarantees and the Registration Rights Agreement are hereinafter sometimes
referred to collectively as the "Operative Documents."
4. Delivery and Payment.
(a) Delivery of, and payment of the Purchase Price for, the Series A
Notes shall be made at the offices of Skadden, Arps, Slate, Meagher & Flom LLP,
919 Third Avenue, New York, New York, or such other location as may be mutually
acceptable. Such delivery and payment shall be made at 9:00 a.m., New York City
time, on the third business day following the date of this Agreement, or at such
other time as shall be agreed upon by the Initial Purchaser and the Company. The
time and date of such delivery and payment are herein called the "Closing Date."
(b) One or more of the Series A Notes in definitive global form,
registered in the name of Cede & Co., as nominee of the Depository Trust Company
("DTC"), having an aggregate principal amount corresponding to the aggregate
principal amount of the Series A Notes (collectively, the "Global Note"), shall
be delivered by the Company to the Initial Purchaser (or as the Initial
Purchaser directs), in each case with any transfer taxes thereon duly paid by
the Company against payment by the Initial Purchaser of the Purchase Price
therefor by wire transfer in same day funds to the order of the Company. The
Global Note shall be made available to the Initial Purchaser for inspection not
later than 9:30 a.m., New York City time, on the business day immediately
preceding the Closing Date.
4
<PAGE>
5. Agreements of the Company and the Guarantors. Each of the Company
and the Guarantors, jointly and severally, hereby agrees with the Initial
Purchaser as follows:
(a) To advise the Initial Purchaser promptly and, if requested by
the Initial Purchaser, confirm such advice in writing, (i) of the issuance by
any state securities commission of any stop order suspending the qualification
or exemption from qualification of any Series A Notes for offering or sale in
any jurisdiction designated by the Initial Purchaser pursuant to Section 5(e)
hereof, or the initiation of any proceeding by any state securities commission
or any other federal or state regulatory authority for such purpose and (ii) of
the happening of any event during the period referred to in Section 5(c) below
that makes any statement of a material fact made in the Preliminary Offering
Memorandum or the Offering Memorandum untrue or that requires any additions to
or changes in the Preliminary Offering Memorandum or the Offering Memorandum in
order to make the statements therein, in light of the circumstances under which
they are made, not misleading. The Company shall use its best efforts to
prevent the issuance of any stop order or order suspending the qualification or
exemption of any Series A Notes under any state securities or Blue Sky laws and,
if at any time any state securities commission or other federal or state
regulatory authority shall issue an order suspending the qualification or
exemption of any Series A Notes under any state securities or Blue Sky laws, the
Company shall use its best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time.
(b) To furnish the Initial Purchaser and those persons identified by
the Initial Purchaser to the Company, without charge, as many copies of the
Preliminary Offering Memorandum or the Offering Memorandum, and any amendments
or supplements thereto, as the Initial Purchaser may reasonably request for the
time period specified in Section 5(c). Subject to the Initial Purchaser's
compliance with its representations and warranties and agreements set forth in
Section 7 hereof, the Company and the Guarantors consent to the use of the
Preliminary Offering Memorandum and the Offering Memorandum, and any amendments
and supplements thereto, by the Initial Purchaser in connection with Exempt
Resales.
(c) During such period as in the opinion of counsel for the Initial
Purchaser an Offering Memorandum is required by law to be delivered in
connection with Exempt Resales by the Initial Purchaser and in connection with
market-making activities of the Initial Purchaser for so long as any Series A
Notes are outstanding, (i) not to make any amendment or supplement to the
Offering Memorandum of which the Initial Purchaser shall not previously have
5
<PAGE>
been advised or to which the Initial Purchaser shall reasonably object after
being so advised and (ii) to prepare promptly upon the Initial Purchaser's
reasonable request, any amendment or supplement to the Offering Memorandum
which may be necessary in the opinion of counsel for the Initial Purchaser in
connection with such Exempt Resales or such market-making activities.
(d) If, during the period referred to in Section 5(c) above, any
event shall occur or condition shall exist as a result of which, in the opinion
of counsel to the Initial Purchaser, it becomes necessary to amend or supplement
the Offering Memorandum in order to make the statements therein, in light of the
circumstances when such Offering Memorandum is delivered to an Eligible
Purchaser, not misleading, or if, in the opinion of counsel to the Initial
Purchaser, it is necessary to amend or supplement the Offering Memorandum to
comply with any applicable law, promptly to prepare an appropriate amendment or
supplement to such Offering Memorandum so that the statements therein, as so
amended or supplemented, will not, in the light of the circumstances when it is
so delivered, be misleading, or so that such Offering Memorandum will comply
with applicable law, and to furnish to the Initial Purchaser and such other
persons as the Initial Purchaser may designate such number of copies thereof as
the Initial Purchaser may reasonably request. The Company agrees to notify the
Initial Purchaser in writing to suspend use of the Offering Memorandum as
promptly as practicable after the occurrence of an event specified in this
paragraph (d), and the Initial Purchaser hereby agrees upon receipt of such
notice from the Company to suspend use of the Offering Memorandum until the
Company has amended or supplemented the Offering Memorandum in compliance with
this paragraph (d).
(e) Prior to the sale of all Series A Notes pursuant to Exempt
Resales as contemplated hereby, to cooperate with the Initial Purchaser and
counsel to the Initial Purchaser in connection with the registration or
qualification of the Series A Notes for offer and sale to the Initial Purchaser
and pursuant to Exempt Resales under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchaser may request and to continue such
registration or qualification in effect so long as required for Exempt Resales
and to file such consents to service of process or other documents as may be
necessary in order to effect such registration or qualification; provided,
however, that neither the Company nor any Guarantor shall be required in
connection therewith to qualify as a foreign corporation in any jurisdiction in
which it is not now so qualified or to take any action that would subject it to
general consent to service of process or taxation other than as to matters and
transactions relating to the Preliminary Offering Memorandum, the Offering
Memorandum or Exempt Resales, in any jurisdiction in which it is not now so
subject.
6
<PAGE>
(f) So long as the Notes are outstanding, (i) to mail and make
generally available as soon as practicable after the end of each fiscal year to
the record holders of the Notes a financial report of the Company and its
subsidiaries on a consolidated basis (and a similar financial report of all
unconsolidated subsidiaries, if any), all such financial reports to include a
consolidated balance sheet, a consolidated statement of operations, a
consolidated statement of cash flows and a consolidated statement of
shareholders' equity as of the end of and for such fiscal year, together with
comparable information as of the end of and for the preceding year, certified by
the Company's independent public accountants and (ii) to mail and make generally
available as soon as practicable after the end of each quarterly period (except
for the last quarterly period of each fiscal year) to such holders, an unaudited
consolidated balance sheet, an unaudited consolidated statement of operations
and an unaudited consolidated statement of cash flows (and similar financial
reports of all unconsolidated subsidiaries, if any) as of the end of and for
such period, and for the period from the beginning of such year to the close of
such quarterly period, together with comparable information for the
corresponding periods of the preceding year.
(g) So long as the Notes are outstanding, to furnish to the Initial
Purchaser as soon as available copies of all reports or other communications
furnished by the Company or any of the Guarantors to holders of any securities
of the Company which have been registered under Section 12 of the Securities
Exchange Act of 1934, as amended, or furnished to or filed with the Commission
or any national securities exchange on which any class of securities of the
Company or any of the Guarantors is listed and such other publicly available
information concerning the Company and/or its subsidiaries as the Initial
Purchaser may reasonably request.
(h) So long as any of the Series A Notes remain outstanding and
during any period in which the Company and the Guarantors are not subject to
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the "Ex
change Act"), to make available to any holder of Series A Notes in connection
with any sale thereof and any prospective purchaser of such Series A Notes from
such holder, upon request, the information ("Rule 144A Information") required by
Rule 144A(d)(4) under the Act.
(i) Whether or not the transactions contemplated in this Agreement
are consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of the obligations of the Company and the
Guarantors under this Agreement, including: (i) the fees, disbursements and
expenses of counsel to the Company and the Guarantors and accountants of the
Company and the Guarantors in connection with the sale and delivery of the
7
<PAGE>
Series A Notes to the Initial Purchaser and pursuant to Exempt Resales, and all
other fees and expenses in connection with the preparation, printing, filing and
distribution of the Preliminary Offering Memorandum, the Offering Memorandum and
all amendments and supplements to any of the foregoing (including financial
statements), including the mailing and delivering of copies thereof to the
Initial Purchaser and persons designated by it in the quantities specified
herein, (ii) all costs and expenses related to the transfer and delivery of the
Series A Notes to the Initial Purchaser and pursuant to Exempt Resales,
including any transfer or other taxes payable thereon, (iii) all costs of
printing or producing this Agreement, the other Operative Documents and any
other agreements or documents in connection with the offering, purchase, sale or
delivery of the Series A Notes, (iv) all expenses in connection with the
registration or qualification of the Series A Notes and the Subsidiary
Guarantees for offer and sale under the securities or Blue Sky laws of the
several states and all costs of printing or producing any preliminary and
supplemental Blue Sky memoranda in connection therewith (including the filing
fees and fees and disbursements of counsel for the Initial Purchaser in
connection with such registration or qualification and memoranda relating
thereto), (v) the cost of printing certificates representing the Series A Notes
and the Subsidiary Guarantees, (vi) all expenses and listing fees in connection
with the application for quotation of the Series A Notes in the National
Association of Securities Dealers, Inc. ("NASD") Automated Quotation System
PORTAL ("PORTAL"), (vii) the fees and expenses of the Trustee and the Trustee's
counsel in connection with the Indenture, the Notes and the Subsidiary
Guarantees, (viii) the costs and charges of any transfer agent, registrar and/or
depositary (including DTC), (ix) any fees charged by rating agencies for the
rating of the Notes, (x) all costs and expenses of the Exchange Offer and any
Registration Statement, as set forth in the Registration Rights Agreement, and
(xi) and all other costs and expenses incident to the marketing and sale of the
Notes and the performance of the obligations of the Company and the Guarantors
hereunder for which provision is not otherwise made in this Section.
(j) To use its best efforts to effect the inclusion of the Series A
Notes in PORTAL and to maintain the listing of the Series A Notes on PORTAL for
so long as the Series A Notes are outstanding.
(k) To obtain the approval of DTC for "book-entry" transfer of the
Notes, and to comply with all of its agreements set forth in the representation
letters of the Company and the Guarantors to DTC relating to the approval of the
Notes by DTC for "book entry" transfer.
8
<PAGE>
(l) During the period beginning on the date hereof and continuing to
and including the Closing Date, not to offer, sell, contract to sell or
otherwise transfer or dispose of any debt securities of the Company or any
Guarantor or any warrants, rights or options to purchase or otherwise acquire
debt securities of the Company or any Guarantor (other than the Notes and the
Subsidiary Guarantees) without the prior written consent of the Initial
Purchaser.
(m) Not to, and not to permit any of their affiliates (as such term
is defined in Rule 501(b) under the Act) to, sell, offer for sale or solicit
offers to buy or otherwise negotiate in respect of any security (as defined in
the Act) that could be integrated with the sale of the Series A Notes to the
Initial Purchaser or pursuant to Exempt Resales in a manner that would require
the registration of any such sale of the Series A Notes under the Act.
(n) Not to voluntarily claim, and to actively resist any attempts to
claim, the benefit of any usury laws against the holders of any Notes.
(o) To cause the Exchange Offer to be made in the appropriate form
to permit Series B Notes and Subsidiary Guarantees thereof by the Guarantors
registered pursuant to the Act to be offered in exchange for the Series A Notes
and the Subsidiary Guarantees and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer.
(p) To comply with all of its agreements set forth in the
Registration Rights Agreement.
(q) Except in connection with the Exchange Offer or the filing of
the Shelf Registration Statement, as the case may be, not to, and not to
authorize or knowingly permit any person acting on its behalf to, solicit any
offer to buy or offer to sell the Series A Notes by means of any form of general
solicitation or general advertising (including, without limitation, as such
terms are used in Regulation D under the Act) or in any manner involving a
public offering within the meaning of Section 4(2) of the Act.
(r) To use its best efforts to do and perform all things required or
necessary to be done and performed under this Agreement by it prior to the
Closing Date and to satisfy all conditions precedent to the delivery of the
Series A Notes and the Subsidiary Guarantees.
9
<PAGE>
(s) Upon the issuance of any Additional Notes (as defined in the
Indenture) to cause such Additional Notes to be duly authorized, executed and
delivered and enforceable in accordance with the Indenture.
6. Representations and Warranties of the Company and the Guarantors.
As of the date hereof, each of the Company and the Guarantors, jointly and
severally, represents and warrants to, and agrees with, the Initial Purchaser
that:
(a) Each of the Preliminary Offering Memorandum and the Offering
Memorandum does not, and any supplement or amendment to it will not, contain any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading, except that the
representations and warranties contained in this paragraph (a) shall not apply
to statements in or omissions from the Preliminary Offering Memorandum or the
Offering Memorandum (or any supplement or amendment thereto) based upon
information relating to the Initial Purchaser furnished to the Company in
writing by the Initial Purchaser expressly for use therein. No contract,
document, legal proceeding or other matter regarding the Company or any
Guarantor that would be required to be described in the Offering Memorandum if
the Offering Memorandum were contained in a registration statement on Form S-1
filed under the Act is not so described. No stop order preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any amendment or
supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act, has been issued.
(b) Each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation and is in good standing under
the laws of its jurisdiction of incorporation and has the requisite corporate
power and authority to carry on its business as described in the Preliminary
Offering Memorandum and the Offering Memorandum and to own, lease and operate
its properties, and each is duly qualified and is in good standing as a foreign
corporation authorized to do business in each jurisdiction in which the nature
of its business or its ownership or leasing of property requires such
qualification, except where the failure to be so qualified or in good standing
would not (i) have a material adverse effect on the earnings, business, assets,
condition (financial or otherwise), management, results of operations or
prospects of the Company and the Guarantors, taken as a whole, (ii) materially
interfere with or materially adversely affect the issuance or marketability of
the Series A Notes pursuant hereto or (iii) adversely affect in any manner the
validity of this Agreement or any other
10
<PAGE>
Operative Document (any of the events referred to in clauses (i), (ii) and
(iii), a "Material Adverse Effect"). The Company and each Guarantor has the
requisite corporate power and authority to authorize the offering of the Notes
and the Subsidiary Guarantees, respectively, and the Company and each Guarantor
has the requisite corporate power and authority to execute, deliver and perform
its obligations under each Operative Document to which it is a party.
(c) All outstanding shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid, nonassessable and not
subject to any preemptive or similar rights.
(d) The Riverfront Development Corporation ("Riverfront") and the
entities listed on Schedule I hereto are the only subsidiaries, direct or
indirect, of the Company. All of the outstanding shares of capital stock of each
of the Company's subsidiaries have been duly authorized and validly issued and
are fully paid and nonassessable, and are owned by the Company, directly or
indirectly through one or more subsidiaries, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature (each, a
"Lien"). Riverfront owns beneficially and of record approximately 1.1 million
shares, or approximately 17% of the outstanding shares, of Atlantic Container
Line AB and, except as set forth in the Preliminary Offering Memorandum, such
shares are owned by Riverfront free and clear of any Lien.
(e) This Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors.
(f) The Indenture has been duly authorized by the Company and each
of the Guarantors and, on the Closing Date, will have been validly executed and
delivered by the Company and each Guarantor. When the Indenture has been duly
executed and delivered by the Company and each Guarantor, the Indenture will be
a valid and binding agreement of the Company and each Guarantor, enforceable
against the Company and each Guarantor in accordance with its terms, except as
(i) the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability. On the Closing Date,
the Indenture will conform in all material respects to the requirements of the
Trust Indenture Act of 1939, as amended (the "TIA" or "Trust Indenture Act"),
and the rules and regulations of the Commission applicable to an indenture
which is qualified thereunder.
11
<PAGE>
(g) The Series A Notes have been duly authorized and, on the Closing
Date, will have been validly executed and delivered by the Company. When the
Series A Notes have been issued, executed and authenticated in accordance with
the provisions of the Indenture and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement, the Series A Notes
will be entitled to the benefits of the Indenture and will be valid and binding
obligations of the Company, enforceable in accordance with their terms, except
as (i) the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability. On the Closing Date,
the Series A Notes will conform as to legal matters to the description thereof
contained in the Offering Memorandum.
(h) On the Closing Date, the Series B Notes will have been duly
authorized by the Company. When the Series B Notes are issued, executed and
authenticated in accordance with the terms of the Exchange Offer and the
Indenture and delivered in exchange for Series A Notes in accordance with the
Indenture and the Exchange Offer, the Series B Notes will be entitled to the
benefits of the Indenture and will be the valid and binding obligations of the
Company, enforceable against the Company in accordance with their terms, except
as (i) the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting creditors' rights generally and
(ii) rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
(i) The Subsidiary Guarantee to be endorsed on the Series A Notes by
each Guarantor has been duly authorized by such Guarantor and, on the Closing
Date, will have been duly executed and delivered by each such Guarantor. When
the Series A Notes have been issued, executed and authenticated in accordance
with the Indenture and delivered to and paid for by the Initial Purchaser in
accordance with the terms of this Agreement, the Subsidiary Guarantee of each
Guarantor endorsed thereon will be entitled to the benefits of the Indenture and
will be the valid and binding obligation of such Subsidiary Guarantor,
enforceable against such Subsidiary Guarantor in accordance with its terms,
except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability. On the
Closing Date, the Subsidiary Guarantees to be endorsed on the Series A Notes
will conform as to legal matters to the description thereof contained in the
Offering Memorandum.
12
<PAGE>
(j) The Subsidiary Guarantee to be endorsed on the Series B Notes by
each Guarantor has been duly authorized by such Guarantor and, when issued, will
have been duly executed and delivered by each such Guarantor. When the Series B
Notes have been issued, executed and authenticated in accordance with the terms
of the Exchange Offer and the Indenture, the Guarantee of each Subsidiary
Guarantor endorsed thereon will be entitled to the benefits of the Indenture and
will be the valid and binding obligation of such Guarantor, enforceable against
such Guarantor in accordance with its terms, except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. When the Series B Notes are
issued, authenticated and delivered, the Subsidiary Guarantees to be endorsed on
the Series B Notes will conform as to legal matters to the description thereof
contained in the Offering Memorandum.
(k) The Registration Rights Agreement has been duly authorized by
the Company and each Guarantor and, on the Closing Date, will have been duly
executed and delivered by the Company and each Guarantor. When the Registration
Rights Agreement has been duly executed and delivered by the Company and each
Guarantor, the Registration Rights Agreement will be a valid and binding
agreement of the Company and each Guarantor, enforceable against the Company and
each Guarantor in accordance with its terms, except as (i) the enforceability
thereof may be limited by bankruptcy, insolvency, fraudulent conveyance or
similar laws affecting creditors' rights generally and (ii) rights of
acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. On the Closing Date, the
Registration Rights Agreement will conform as to legal matters to the
description thereof contained in the Offering Memorandum.
(l) Each of (i) The Stock Purchase Agreement, dated as of September
25, 1997, by and between Holt Cargo Systems, Inc., a Delaware corporation, NPR
Holdings Corporation, a Delaware corporation ("NPR Holdings"), and the
Shareholders of NPR Holdings, as amended by the Amendment thereto dated as of
November 20, 1997 (as amended, the "Stock Purchase Agreement"); (ii) The
Contribution Agreement, dated as of November 20, 1997, between the Company and
Thomas J. Holt, Sr.; and (iii) The Securities Purchase Agreement, dated as of
November 20, 1997, between HS Funding, Inc. ("HS Funding"), a Delaware
corporation, the Company and the Guarantors (the agreements referenced in
clauses (i), (ii) and (iii) being referred to herein collectively as the
"Acquisition Agreements") has been duly authorized, executed and delivered by
each party thereto (other than HS Funding and the Sellers and NPR under the
13
<PAGE>
Stock Purchase Agreement) and is a valid and binding agreement of each party
thereto (other than HS Funding and the Sellers and NPR under the Stock Purchase
Agreement), enforceable against the parties thereto (other than HS Funding and
the Sellers and NPR under the Stock Purchase Agreement) in accordance with its
terms, except as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditors' rights generally and (ii) rights
of acceleration and the availability of equitable remedies may be limited by
equitable principles of general applicability. Each of the Acquisition
Agreements conforms as to legal matters to the description thereof contained in
the Offering Memorandum.
(m) Neither the Company nor any of its subsidiaries is in violation
of its respective charter or by-laws. Neither the Company nor any of its
subsidiaries is in default in the performance of any obligation, agreement,
covenant or condition contained in any indenture, loan agreement, mortgage,
bond, lease or other agreement or instrument that is material to the Company and
its subsidiaries, taken as a whole, to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound, except for any such defaults as would not,
singly or in the aggregate, reasonably be expected to have a Material Adverse
Effect; and there exists no condition that, with notice, the passage of time or
otherwise, would constitute a default under any such document or instrument,
except for any such defaults or violations as would not, singly or in the
aggregate, reasonably be expected to have a Material Adverse Effect.
(n) The execution, delivery and performance of this Agreement and
the other Operative Documents by the Company and each of the Guarantors,
compliance by the Company and each of the Guarantors with all provisions hereof
and thereof and the consummation of the transactions contemplated hereby and
thereby will not (i) require any consent, approval, authorization or other order
of, or qualification with, any court or governmental body or agency (except such
as may be required under the securities or Blue Sky laws of the various states),
(ii) conflict with or constitute a breach of any of the terms or provisions of,
or a default under, the charter or by-laws of the Company or any of its
subsidiaries or any indenture, loan agreement, mortgage, lease or other
agreement or instrument that is material to the Company and its subsidiaries,
taken as a whole, to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries or their respective property is
bound, (iii) violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or any governmental body or
agency having jurisdiction over the Company, any of its subsidiaries or their
respective property, (iv) result in the imposition or creation of (or the
14
<PAGE>
obligation to create or impose) a Lien under, any agreement or instrument to
which the Company or any of its subsidiaries is a party or by which the Company
or any of its subsidiaries or their respective property is bound, or (v) result
in the termination, suspension or revocation of any Authorization (as defined
herein) of the Company or any of its subsidiaries or result in any other
impairment of the rights of the holder of any such Authorization. After giving
effect to the issuance of the Notes and the application of the proceeds
therefrom, the Company is in compliance with all financial covenants contained
in any indenture, loan agreement, mortgage, lease or other agreement or
instrument that is material to the Company and its subsidiaries, taken as a
whole, to which the Company or any of its subsidiaries is a party or by which
the Company or any of its subsidiaries or their respective property is bound.
(o) To the knowledge of the Company, no action has been taken and no
law, statute, rule or regulation or order has been enacted, adopted or issued by
any governmental agency or body which prevents the execution, delivery and
performance of any of the Operative Documents, the consummation of any of the
transactions contemplated thereunder or the issuance of the Series A Notes, or
suspends the sale of the Series A Notes in any jurisdiction referred to in
Section 5(e). To the knowledge of the Company, no injunction, restraining order
or other order or relief of any nature by a federal or state court or other
tribunal of competent jurisdiction has been issued with respect to the Company
which would prevent or suspend the issuance or sale of the Series A Notes in any
jurisdiction referred to in Section 5(e) or the consummation of any transaction
contemplated by the Operative Documents.
(p) The Company and its subsidiaries have good and marketable title
in fee simple to all real property and good and marketable title to all personal
property owned by them which is material to the business of the Company and its
subsidiaries, in each case, free and clear of all Liens and defects, except such
as are described in the Preliminary Offering Memorandum and the Offering Memo
randum, or such as do not materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries. Any real property and buildings held under lease
by the Company or any of its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material and
do not interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries.
(q) There are no legal or governmental proceedings pending or
threatened, to which the Company or any of its subsidiaries is or could be a
party or to which any of their respective property or assets is or could be
15
<PAGE>
subject, which might result, singly or in the aggregate, in a Material Adverse
Effect, except such as are described in the Preliminary Offering Memorandum.
(r) (i) Neither the Company nor any of its subsidiaries has violated
any foreign, federal, state or local law or regulation relating to the
protection of human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental Laws") or any
provisions of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"), or the rules and regulations promulgated thereunder, except for such
violations which, singly or in the aggregate, would not have a Material Adverse
Effect.
(ii) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties
or compliance with Environmental Laws or any Authorization, any
related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the
aggregate, have a Material Adverse Effect.
(iii) Without limiting the foregoing, except as
disclosed in the Preliminary Offering Memorandum and the Offering
Memorandum:
(A) Except to the extent the following would
not result in a Material Adverse Effect, other than the
generation, use and storage of (1) asbestos; (2)
polychlorinated biphenyls; (3) petroleum, its
derivatives, by-products and other hydrocarbons; or (4)
any other toxic, radioactive, caustic or otherwise
hazardous substance regulated under Environmental Laws
(collectively, "Hazardous Materials") in compliance with
all applicable Environmental Laws: (a) no Hazardous
Materials are located on any properties owned, leased or
operated by the Company or any of its subsidiaries; (b)
no Hazardous Materials have been released into the
environment or deposited, discharged, placed or disposed
of, at, on, under or near any of such properties; (c) no
portion of any such property is being used for the
disposal, storage, treatment, processing or other
handling of Hazardous Materials; (d) no such property is
affected by Contamination ("Hazardous Materials
Contamination") (whether now existing or hereafter
occurring) of the improvements, buildings, facilities,
personalty, soil, groundwater, air or other elements on
16
<PAGE>
or of the relevant property by Hazardous Materials, or
any derivatives thereof, or on or of any other property
as a result of Hazardous Materials, or any derivatives
thereof, generated on, emanating from or disposed of in
connection with the relevant property; (e) to the best
knowledge of the Company and the Guarantors, no
previous owner or occupant of such properties has used
any portion of the properties for the treatment,
storage, disposal, processing or other handling of
Hazardous Materials; and (f) with respect to properties
previously owned, leased or operated by the Company or
any of its subsidiaries, to the best knowledge of the
Company and the Guarantors, no Hazardous Materials have
been released into the environment, or deposited,
discharged, placed or disposed of, at, on, under or near
any such properties during the time of the Company's or
any subsidiary's ownership, lease or operation thereof.
(B) Except to the extent the following would
not result in a Material Adverse Effect, no asbestos or
asbestos-containing materials are present on any of the
properties now or previously owned, leased or operated
by the Company or any of its subsidiaries.
(C) Except to the extent the following would
not result in a Material Adverse Effect, no
polychlorinated biphenyls are located on or in any
properties now or previously owned, leased or operated
by the Company or any of its subsidiaries, in the form
of electrical transformers, fluorescent light fixtures
with ballasts, cooling oils or any other device or form.
(D) Except to the extent the following would
not result in a Material Adverse Effect, no underground
storage tanks are located on any properties now or
previously owned, leased or operated by the Company or
any of its subsidiaries, or were located on any such
property and subsequently removed or filled.
(E) Except as to the extent the following
(or the matters referred to in any of the following)
would not result in a Material Adverse Effect, no
notice, notification, demand, request for information,
complaint, citation, summons, investigation,
administrative order, consent order and agreement,
litigation or settlement directed at the Company or any
of its subsidiaries or any property owned, leased or
operated by the Company or any of its subsidiaries with
respect to Hazardous Materials or Hazardous Materials
17
<PAGE>
Contamination is in existence or, to the knowledge of
the Company or any Guarantor, proposed, threatened or
anticipated with respect to or in connection with the
operation of any properties now or previously owned,
leased or operated by the Company or any of its
subsidiaries. Except to the extent the following would
not result in a Material Adverse Effect, all such
properties and their existing and prior uses comply, and
at all times have complied, with any applicable
governmental requirements relating to environmental
matters of Hazardous Materials and there is no condition
on any of such properties which is in violation of any
applicable governmental requirements relating to
Hazardous Materials, and neither the Company nor any of
its subsidiaries has received any communication from or
on behalf of any governmental authority that any such
condition exists.
(F) There has been no environmental
investigation, study, audit, test, review or other
analysis conducted of which the Company or any Guarantor
has knowledge in relation to the current or prior
business of the Company or any of its subsidiaries or
any property or facility now or previously owned,
leased or operated by the Company or any of its
subsidiaries which has not been delivered to the Initial
Purchaser at least five business days prior to the date
here of.
(iv) In the ordinary course of its business, the Company
and each of its subsidiaries, where required or appropriate, has
conducted environmental investigations of, and has reviewed
information regarding, its business properties and operations; on
the basis of such review, the Company and the Guarantors have
reasonably concluded that such associated costs and liabilities are
not likely to have a Material Adverse Effect.
(v) For purposes of this Section 6(r), the term
"Company" or "subsidiary" shall include any business or business
entity (including a corporation) which is, in whole or in part, a
predecessor of the Company as defined or any subsidiary of the
Company.
(s) Each of the Company and its subsidiaries has such permits,
licenses, consents, exemptions, franchises, authorizations and other approvals
(each, an "Authorization") of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory organizations and all
courts and other tribunals, as are necessary to own, lease, license and operate
its respective properties and to conduct its business, except where the failure
to have any such Authorization or to make any such
18
<PAGE>
filing or notice would not, singly or in the aggregate, have a Material Adverse
Effect. Each such Authorization is valid and in full force and effect and each
of the Company and its subsidiaries is in compliance with all the terms and
conditions thereof and with the rules and regulations of the authorities and
governing bodies having jurisdiction with respect thereto; and no event has
occurred (including, without limitation, the receipt of any notice from any
authority or governing body) which allows or, after notice or lapse of time or
both, would allow, revocation, suspension or termination of any such
Authorization or results or, after notice or lapse of time or both, would result
in any other impairment of the rights of the holder of any such Authorization;
and such Authorizations contain no restrictions that are burdensome to the
Company or any of its subsidiaries; except where such failure to be valid and in
full force and effect or to be in compliance, the occurrence of any such event
or the presence of any such restriction would not, singly or in the aggregate,
have a Material Adverse Effect.
(t) There is (A) no significant unfair labor practice complaint,
grievance or arbitration proceeding pending or threatened against the Company or
any of its subsidiaries before the National Labor Relations Board or any state
or local labor relations board, (B) no strike, labor dispute, slowdown or
stoppage ("Labor Dispute") in which the Company or any of its subsidiaries is
involved nor, to the best knowledge of the Company and each Guarantor, is any
Labor Dispute imminent, other than routine disciplinary and grievance matters,
and neither the Company nor any Guarantor is aware of any existing or imminent
Labor Dispute by the employees of any of their principal customers, suppliers or
contractors, and (C) no question concerning union representation within the
meaning of the National Labor Relations Act existing with respect to the
employees of the Company or any of its subsidiaries and, to the knowledge of the
Company and each Guarantor, no union organizing activities with respect to such
employees are taking place, except with respect to any matter specified in
clause (A), (B), or (C) above as would not, singly or in the aggregate, have a
Material Adverse Effect.
(u) Except as otherwise disclosed in the Offering Memorandum or as
would not, singly or in the aggregate, be reasonably expected to have a Material
Adverse Effect, the Company and each Guarantor owns or possesses all patents,
patent rights, licenses, inventions, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names, in each case to the
extent disclosed in the Offering Memorandum as being owned or possessed by and
material to the business of any of the Issuers, as applicable (collectively, the
"Intellectual Property"), presently employed by them in connection with the
businesses now operated by them, and no Issuer has received any notice of
infringement of or conflict with asserted rights of others with respect to any
19
<PAGE>
of the foregoing. The use of such Intellectual Property in connection with the
business and operations of the Company and each Guarantor does not infringe on
the rights of any person except as would not, singly or in the aggregate, be
reasonably expected to have a Material Adverse Effect.
(v) The Company and each of its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged; and neither the Company nor any of its subsidiaries (i) has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other material expenditures will have to be made in order to
continue such insurance or (ii) has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage expires
or to obtain similar coverage from similar insurers at a cost that would not
reasonably be expected to have a Material Adverse Effect.
(w) Except as disclosed in the Offering Memorandum, no relationship,
direct or indirect, exists between or among the Company or any of its
subsidiaries on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company or any of its subsidiaries or any
affiliate of such persons, on the other hand, which would be required by the Act
to be described in the Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1 filed with the
Commission.
(x) The Company and each of its subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded account ability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(y) All indebtedness of the Company and the Guarantors that will be
repaid with the proceeds of the issuance and sale of the Series A Notes was
incurred, and the indebtedness represented by the Series A Notes is being
incurred, for proper purposes and in good faith and each of the Company and the
Guarantors was, at the time of the incurrence of such indebtedness that will be
repaid with the proceeds of the issuance and sale of the Series A Notes, and
will be on the Closing Date (after giving effect to the application of the
proceeds from the issuance of the Series A Notes) solvent, and had at the time
of the incurrence of such indebtedness that will be repaid with the proceeds of
the issuance and sale of the Series A Notes and will have on the Closing Date
(after giving
20
<PAGE>
effect to the application of the proceeds from the issuance of the Series A
Notes) sufficient capital for carrying on their respective business and were, at
the time of the incurrence of such indebtedness that will be repaid with the
proceeds of the issuance and sale of the Series A Notes, and will be on the
Closing Date (after giving effect to the application of the proceeds from the
issuance of the Series A Notes) able to pay their respective debts as they
mature.
(z) The accountants, BDO Seidman LLP, that have certified the
financial statements and supporting schedules included in the Preliminary
Offering Memorandum and the Offering Memorandum are independent public
accountants with respect to the Company and the Guarantors, as required by the
Act and the Securities Exchange Act of 1934, as amended. The historical
financial statements, together with related schedules and notes, set forth in
the Prelimary Offering Memorandum and the Offering Memorandum comply as to form
in all material respects with the requirements applicable to registration
statements on Form S-1 under the Act.
(aa) The historical financial statements of Holt Hauling &
Warehousing System, Inc., Holt Cargo Systems, Inc., The Riverfront Development
Corporation and Murphy Marine Services, Inc., (collectively, "Holt"), together
with related schedules and notes forming part of the Offering Memorandum (and
any amendment or supplement thereto), present fairly the combined financial
position, results of operations and changes in financial position of Holt on the
basis stated in the Offering Memorandum at the respective dates or for the
respective periods to which they apply; the historical financial statements NPR
Holding Corporation, together with related schedules and notes forming part of
the Offering Memorandum (and any amendment or supplement thereto), present
fairly the consolidated financial position, results of operations and changes in
financial position of NPR Holding Corporation on the basis stated in the
Offering Memorandum at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data set forth
in the Offering Memorandum (and any amendment or supplement thereto) are, in all
material respects, fairly presented and prepared on a basis consistent with such
financial statements and the books and records of the Company and the
Guarantors.
21
<PAGE>
(bb) The pro forma financial statements included in the Preliminary
Offering Memorandum and the Offering Memorandum have been prepared on a basis
consistent with the historical financial statements of the Company and its
subsidiaries and give effect to assumptions used in the preparation thereof on a
reasonable basis and in good faith and present fairly the historical and
proposed transactions contemplated by the Preliminary Offering Memorandum and
the Offering Memorandum; and such pro forma financial statements comply as to
form in all material respects with the requirements applicable to pro forma
financial statements included in registration statements on Form S-1 under the
Act. The "Pro Forma Adjusted Financial Data" (as defined in the Preliminary
Offering Memorandum and the Offering Memorandum) have been prepared on a basis
consistent with the historical financial statements of the Company and its
subsidiaries and give effect to assumptions used in the preparation thereof on a
reasonable basis and in good faith and present fairly the historical and
proposed transactions contemplated by the Preliminary Offering Memorandum and
the Offering Memorandum.
(cc) The Company is not and, after giving effect to the offering and
sale of the Series A Notes and the application of the net proceeds thereof as
described in the Offering Memorandum, will not be, an "investment company," as
such term is defined in the Investment Company Act of 1940, as amended.
(dd) There are no contracts, agreements or understandings between
the Company or any Guarantor and any person granting such person the right to
require the Company or such Guarantor to file a registration statement under the
Act with respect to any securities of the Company or such Guarantor or to
require the Company or such Guarantor to include such securities with the Notes
and Subsidiary Guarantees registered pursuant to any Registration Statement.
(ee) Neither the Company nor any of its subsidiaries nor any agent
thereof acting on the behalf of them has taken, and none of them will take, any
action that might cause this Agreement or the issuance or sale of the Series A
Notes to violate Regulation G (12 C.F.R. Part 207), Regulation T (12 C.F.R. Part
220), Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of
the Board of Governors of the Federal Reserve System.
(ff) No "nationally recognized statistical rating organization" as
such term is defined for purposes of Rule 436(g)(2) under the Act (i) has
imposed (or has informed the Company
22
<PAGE>
or any Guarantor that it is considering imposing) any condition (financial or
otherwise) on the Company's or any Guarantor's retaining any rating assigned to
the Company or any Guarantor, any securities of the Company or any Guarantor or
(ii) has indicated to the Company or any Guarantor that it is considering (a)
the downgrading, suspension, or withdrawal of, or any review for a possible
change that does not indicate the direction of the possible change in, any
rating so assigned or (b) any change in the outlook for any rating of the
Company, any Guarantor or any securities of the Company or any Guarantor.
(gg) Since the respective dates as of which information is given in
the Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there has not occurred any material adverse change or any
development involving a prospective material adverse change in the earnings,
business, assets, condition (financial or otherwise), management, results of
operations or prospects of the Company and its subsidiaries, taken as a whole,
(ii) there has not been any material adverse change or any development involving
a prospective material adverse change in the capital stock or in the long-term
debt of the Company or any of its subsidiaries and (iii) other than in the
ordinary course of business, neither the Company nor any of its subsidiaries has
incurred any material liability or obligation, direct or contingent.
(hh) The information heretofore furnished by the Company or any
Guarantor to the Initial Purchaser for purposes of or in connection with the
issuance of the Bridge Notes, the Series A Notes or any transactions
contemplated hereby does not, and all such information hereafter furnished by
the Company or any Guarantor to the Initial Purchaser will not (in each case
taken together and on the date as of which such information is furnished),
contain any untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements contained therein, in light of the
circumstances under which they are made, not misleading. The Company and the
Guarantors have disclosed to the Initial Purchaser any and all facts which
materially and adversely affect or may affect (to the extent the Issuers can now
reasonably foresee), the business, operations or financial condition of the
Company and the Guarantors, taken as a whole, or the ability of the Company and
the Guarantors, taken as a whole, to perform the obligations under the Notes and
Guarantees and the Indenture.
(ii) Each of the Preliminary Offering Memorandum and the Offering
Memorandum, as of its date, contains all the information specified in, and
meeting the requirements of, Rule 144A(d)(4) under the Act.
23
<PAGE>
(jj) When the Series A Notes and the Subsidiary Guarantees are
issued and delivered pursuant to this Agreement, neither the Series A Notes nor
the Subsidiary Guarantees will be of the same class (within the meaning of Rule
144A under the Act) as any security of the Company or the Guarantors that is
listed on a national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated inter-dealer
quotation system.
(kk) No form of general solicitation or general advertising (as
defined in Regulation D under the Act) was used by the Company, the Guarantors
or any of their respective representatives (other than the Initial Purchaser, as
to whom the Company and the Guarantors make no representation) in connection
with the offer and sale of the Series A Notes contemplated hereby, including,
but not limited to, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio, or
any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising. No securities of the same class as the
Series A Notes have been issued and sold by the Company within the six-month
period immediately prior to the date hereof.
(ll) Prior to the effectiveness of any Registration Statement, the
Indenture is not required to be qualified under the TIA.
(mm) None of the Company, the Guarantors nor any of their respective
affiliates or any person acting on its or their behalf (other than the Initial
Purchaser, as to whom the Company and the Guarantors make no representation) has
engaged or will engage in any directed selling efforts within the meaning of
Regulation S under the Act ("Regulation S") with respect to the Series A Notes
or the Subsidiary Guarantees.
(nn) The Company, the Guarantors and their respective affiliates and
all persons acting on their behalf (other than the Initial Purchaser, as to whom
the Company and the Guarantors make no representation) have complied with and
will comply with the offering restriction requirements of Regulation S in
connection with the offering of the Series A Notes outside the United States
and, in connection therewith, the Offering Memorandum will contain the
disclosure required by Rule 902(h).
(oo) The Series A Notes sold in reliance on Regulation S will be
represented upon issuance by a temporary global security that may not be
exchanged for definitive securities until the expiration of the 40-day
restricted period referred to in Rule
24
<PAGE>
903(c)(3) of the Act and only upon certification of beneficial ownership of such
Series A Notes by non-U.S. persons or U.S. persons who purchased such Series A
Notes in transactions that were exempt from the registration requirements of the
Act.
(pp) Assuming compliance by the Initial Purchaser with its
representations and warranties contained in Article VII hereof, the Series A
Notes offered and sold in reliance on Regulation S have been and will be offered
and sold only in offshore transactions.
(qq) The sale of the Series A Notes pursuant to Regulation S is not
part of a plan or scheme on the part of the Company or any Guarantor to evade
the registration provisions of the Act.
(rr) No registration under the Act of the Series A Notes or the
Subsidiary Guarantees is required for the sale of the Series A Notes and the
Subsidiary Guarantees to the Initial Purchaser as contemplated hereby or for the
Exempt Resales assuming the accuracy of the Initial Purchaser's representations
and warranties set forth in, and compliance by the Initial Purchaser with the
agreements set forth in, Section 7 hereof.
(ss) Each certificate signed by any officer of the Company or any
Guarantor and delivered to the Initial Purchaser or counsel for the Initial
Purchaser shall be deemed to be a representation and warranty by the Company or
such Guarantor to the Initial Purchaser as to the matters covered thereby.
(tt) Except for the Initial Purchaser, there are no contracts,
agreements or understandings between the Company or any Guarantor and any person
that would give rise to a valid claim against the Company or any Guarantor or
the Initial Purchaser for a brokerage commission, finder's fee or like payment
in connection with the issuance, purchase and sale of the Notes.
(uu) (i) The estimated balance sheet, dated December 29, 1997 (the
"Estimated Balance Sheet"), delivered by the Company to the Initial Purchaser
and which is the basis of the agreed-upon procedures report required by Section
9(i)(i) hereof does, and (ii) the estimated balance sheet, to be dated the
Closing Date (the "Closing Estimated Balance Sheet") to be delivered by the
Company to the Initial Purchaser and which will be the basis of the agreed-upon
procedures report required by Section 9(i)(i) hereof will, present fairly the
consolidated financial position, results of operations and changes in financial
position of the Company and its subsidiaries for the respective periods to which
they apply; each of
25
<PAGE>
the Estimated Balance Sheet and the Closing Estimated Balance Sheet have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except that such
statements are unaudited.
The Company acknowledges that the Initial Purchaser and, for
purposes of the opinions to be delivered to the Initial Purchaser pursuant to
Section 9 hereof, counsel to the Company and the Guarantors and counsel to the
Initial Purchaser will rely upon the accuracy and truth of the foregoing
representations and hereby consents to such reliance.
7. Initial Purchaser's Representations and Warranties. The Initial
Purchaser represents and warrants to, and agrees with, the Company and the
Guarantors:
(a) The Initial Purchaser is either a QIB or an Accredited
Institution, in either case, with such knowledge and experience in financial and
business matters as is necessary in order to evaluate the merits and risks of an
investment in the Series A Notes.
(b) The Initial Purchaser (A) is not acquiring the Series A Notes
with a view to any distribution thereof or with any present intention of
offering or selling any of the Series A Notes in a transaction that would
violate the Act or the securities laws of any state of the United States or any
other applicable jurisdiction and (B) will be reoffering and reselling the
Series A Notes only (x) to QIBs in reliance on the exemption from the
registration requirements of the Act provided by Rule 144A and (y) in offshore
transactions in reliance upon Regulation S under the Act.
(c) The Initial Purchaser agrees that no form of general
solicitation or general advertising (within the meaning of Regulation D under
the Act) has been or will be used by the Initial Purchaser or any of its
representatives in connection with the offer and sale of the Series A Notes
pursuant hereto, including, but not limited to, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(d) The Initial Purchaser agrees that, in connection with Exempt
Resales, the Initial Purchaser will solicit offers to buy the Series A Notes
only from, and will offer to sell the Series A Notes only to, Eligible
26
<PAGE>
Purchasers. The Initial Purchaser further agrees that it will offer to sell the
Series A Notes only to, and will solicit offers to buy the Series A Notes only
from (A) Eligible Purchasers that the Initial Purchaser reasonably believes are
QIBs, and (B) Regulation S Purchasers.
(e) None of the Initial Purchaser nor any of its affiliates or any
person acting on its or their behalf has engaged or will engage in any directed
selling efforts within the meaning of Regulation S with respect to the Series A
Notes or the Subsidiary Guarantees.
(f) The Series A Notes offered and sold by the Initial Purchaser
pursuant hereto in reliance on Regulation S have been and will be offered and
sold only in offshore transactions.
(g) The Initial Purchaser agrees that it has not offered or sold
and, prior to the end of the 40-day period commencing on the day after the later
of the Offering and the date of issuance of the Notes, it will not offer, Series
A Notes initially offered pursuant to Regulation S within the United States or
to, or for the account of or benefit of, U.S. Persons except pursuant to Rule
144A or another exemption from the registration requirements under the Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it will not
cause any advertisement with respect to the Series A Notes (including any
"tombstone" advertisement) to be published in any newspaper or periodical or
posted in any public place and will not issue any circular relating to the
Series A Notes, except such advertisements as permitted by and include the
statements required by Regulation S.
(h) With respect to Series A Notes initially offered or sold in an
Exempt Resale by the Initial Purchaser pursuant to Regulation S, the Initial
Purchaser agrees that, at or prior to confirmation of a sale of such Series A
Notes by it to any distributor, dealer or person receiving a selling concession,
fee or other remuneration during the 40-day restricted period referred to in
Rule 903(c)(3) under the Act, it will send to such distributor, dealer or person
receiving a selling concession, fee or other remuneration a confirmation or
notice to substantially the following effect:
"The Series A Notes covered hereby have not been registered under the
US. Securities Act of 1933, as amended (the "Securities Act"), and may
not be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of your distribution at
any time or (ii) otherwise until 40 days after the later of the
commencement of the Offering and the Closing Date, except in either
27
<PAGE>
case in accordance with Regulation S under the Securities Act (or Rule
144A in transactions that are exempt from the registration requirements
of the Securities Act), and in connection with any subsequent sale by
you of the Series A Notes covered hereby in reliance on Regulation S
during the period referred to above to any distributor, dealer or
person receiving a selling concession, fee or other remuneration, you
must deliver a notice to substantially the foregoing effect. Terms used
above have the meanings assigned to them in Regulation S."
(i) The sale of the Series A Notes offered and sold by such Initial
Purchaser pursuant hereto in reliance on Regulation S is not part of a plan or
scheme to evade the registration provisions of the Act.
(j) The Initial Purchaser further represents and agrees that (1) it has
not offered or sold and will not offer or sell any Series A Notes to persons in
the United Kingdom prior to the expiration of the period of six months from the
issue date of the Series A Notes, except to persons whose ordinary activities
involve them in acquiring, holding, managing or disposing of investments (as
principal or agent) for the purposes of their business or otherwise in
circumstances which have not resulted and will not result in an offer to the
public in the United Kingdom within the meaning of the Public Offers of
Securities Regulations 1995, (ii) it has complied and will comply with all
applicable provisions of the Financial Services Act 1986 with respect to
anything done by it in relation to the Series A Notes in, from or otherwise
involving the United Kingdom and (iii) it has only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issuance of the Series A Notes to a person who is of a kind
described in Article 11(3) of the Financial Services Act of 1986 (Investment
Advertisements) (Exemptions) Order 1996 or is a person to whom the document may
otherwise lawfully be issued or passed on.
(k) The Initial Purchaser agrees that it will not offer, sell or
deliver any of the Series A Notes in any jurisdiction outside the United States
except under circumstances that will result in compliance with the applicable
laws thereof, and that it will take at its own expense whatever action is
required to permit its purchase and resale of the Series A Notes in such
jurisdictions. The Initial Purchaser understands that no action has been taken
to permit a public offering in any jurisdiction outside the United States where
action would be required for such purpose.
28
<PAGE>
The Initial Purchaser acknowledges that the Company and the Guarantors
and, for purposes of the opinions to be delivered to the Initial Purchaser
pursuant to Section 9 hereof, counsel to the Company and the Guarantors and
counsel to the Initial Purchaser will rely upon the accuracy and truth of the
foregoing representations and the Initial Purchaser hereby consents to such
reliance.
8. Indemnification.
(a) The Company and each Guarantor agree, jointly and severally, to
indemnify and hold harmless the Initial Purchaser, its directors, its officers
and each person, if any, who controls the Initial Purchaser within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, from and against any
and all losses, claims, damages, liabilities and judgments (including, without
limitation, any legal or other expenses incurred in connection with
investigating or defending any matter, including any action that could give rise
to any such losses, claims, damages, liabilities or judgments) caused by any
untrue statement or alleged untrue statement of a material fact contained in the
Offering Memorandum (or any amendment or supplement thereto), the Preliminary
Offering Memorandum or any Rule 144A Information provided by the Company or any
Guarantor to any holder or prospective purchaser of Series A Notes pursuant to
Section 5(h) hereof or caused by any omission or alleged omission to state
therein a material fact required to be stated therein or necessary to make the
statements therein not misleading, except insofar as such losses, claims,
damages, liabilities or judgments are caused by any such untrue statement or
omission or alleged untrue statement or omission based upon information relating
to the Initial Purchaser furnished in writing to the Company by such Initial
Purchaser; provided, however, that the foregoing indemnity agreement with
respect to any Preliminary Offering Memorandum shall not inure to the benefit of
the Initial Purchaser if it failed to deliver a Final Offering Memorandum (as
then amended or supplemented, provided by the Company to the Initial Purchaser
in the requisite quantity and on a timely basis to permit proper delivery on or
prior to the Closing Date) to the person asserting any losses, claims, damages
and liabilities and judgments caused by any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Offering Memorandum,
or caused by any omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statement therein not
misleading, if such material misstatement or omission or alleged material
misstatement or omission was cured in the Offering Memorandum.
(b) The Initial Purchaser agrees to indemnify and hold harmless the
Company and the Guarantors, and their respective directors and officers and each
person, if any, who controls (within the meaning of Section 15
29
<PAGE>
of the Act or Section 20 of the Exchange Act) the Company or the Guarantors, to
the same extent as the foregoing indemnity from the Company and the Guarantors
to the Initial Purchaser, but only with reference to information relating to the
Initial Purchaser furnished in writing to the Company by the Initial Purchaser
expressly for use in the Preliminary Offering Memorandum or the Offering
Memorandum (or any amendment or supplement thereto).
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"Indemnified Party"), the Indemnified Party shall promptly notify the person
against whom such indemnity may be sought (the "Indemnifying Party") in writing
and the Indemnifying Party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the Indemnified Party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), the Initial Purchaser shall not be required to
assume the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Initial Purchaser). Any Indemnified Party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the Indemnified
Party unless (i) the employment of such counsel shall have been specifically
authorized in writing by the Indemnifying Party, (ii) the Indemnifying Party
shall have failed promptly to assume the defense of such action or employ
counsel reasonably satisfactory to the Indemnified Party or (iii) the named
parties to any such action (including any impleaded parties) include both the
Indemnified Party and the Indemnifying Party, and the Indemnified Party shall
have been advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those available to the
Indemnifying Party (in which case the Indemnifying Party shall not have the
right to assume the defense of such action on behalf of the Indemnified Party).
In any such case, the Indemnifying Party shall not, in connection with any one
action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the fees and expenses of more than one separate firm of attorneys (in
addition to any local counsel) for all Indemnified Parties and all such fees and
expenses shall be reimbursed as they are incurred. Such firm shall be designated
in writing by the Initial Purchaser, in the case of the parties indemnified
pursuant to Section 8(a), and by the Company, in the case of parties indemnified
pursuant to Section 8(b). The Indemnifying Party shall indemnify and hold
30
<PAGE>
harmless the Indemnified Party from and against any and all losses, claims,
damages, liabilities and judgments by reason of any settlement of any action (i)
effected with its written consent or (ii) effected without its written consent
if the settlement is entered into more than 45 days after the Indemnifying Party
shall have received a request from the Indemnified Party for reimbursement for
the fees and expenses of counsel (in any case where such fees and expenses are
at the expense of the Indemnifying Party) and, prior to the date of such
settlement, the Indemnifying Party shall have failed to comply with such
reimbursement request. No Indemnifying Party shall, without the prior written
consent of the Indemnified Party, effect any settlement or compromise of, or
consent to the entry of judgment with respect to, any pending or threatened
action in respect of which the Indemnified Party is or could have been a party
and indemnity or contribution may be or could have been sought hereunder by the
Indemnified Party, unless such settlement, compromise or judgment (i) includes
an unconditional release of the Indemnified Party from all liability on claims
that are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or failure to
act, by or on behalf of the Indemnified Party.
(d) To the extent the indemnification provided for in this Section 8 is
unavailable to an Indemnified Party or insufficient in respect of any losses,
claims, damages, liabilities or judgments referred to therein, then each
Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall
contribute to the amount paid or payable by such Indemnified Party as a result
of such losses, claims, damages, liabilities and judgments (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Guarantors, on the one hand, and the Initial Purchaser, on the
other hand, from the offering of the Series A Notes or (ii) if the allocation
provided by clause 8(d)(i) above is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause 8(d)(i) above but also the relative fault of the Company and the
Guarantors, on the one hand, and the Initial Purchaser, on the other hand, in
connection with the statements or omissions which resulted in such losses,
claims, damages, liabilities or judgments, as well as any other relevant
equitable considerations. The relative benefits received by the Company and the
Guarantors, on the one hand, and the Initial Purchaser, on the other hand, shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Series A Notes (before deducting expenses) received by the
Company, and the total discounts and commissions received by the Initial
Purchaser bear to the total price to investors of the Series A Notes, in each
case as set forth in the table on the cover page of the Offering Memorandum. The
relative fault of the Company and the Guarantors, on the one hand, and the
Initial Purchaser, on the other hand, shall be determined by reference to, among
31
<PAGE>
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Guarantors, on the one hand, or the
Initial Purchaser, on the other hand, and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Guarantors, and the Initial Purchaser, agree that
it would not be just and equitable if contribution pursuant to this Section 8(d)
were determined by pro rata allocation or by any other method of allocation
which does not take account of the equitable considerations referred to in the
immediately preceding paragraph. The amount paid or payable by an Indemnified
Party as a result of the losses, claims, damages, liabilities or judgments
referred to in the immediately preceding paragraph shall be deemed to include,
subject to the limitations set forth above, any legal or other expenses
incurred by such Indemnified Party in connection with investigating or defending
any matter, including any action, that could have given rise to such losses,
claims, damages, liabilities or judgments. Notwithstanding the provisions of
this Section 8, the Initial Purchaser shall not be required to contribute any
amount in excess of the amount by which the total discounts and commissions
received by such Initial Purchaser exceeds the amount of any damages which the
Initial Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The remedies provided for in this Section 8 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any
Indemnified Party at law or in equity.
9. Conditions of Initial Purchaser's Obligations. The obligations of
the Initial Purchaser to purchase the Series A Notes under this Agreement are
subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company and the
Guarantors contained in this Agreement shall be true and correct on the date
hereof and on the Closing Date with the same force and effect as if made on and
as of the Closing Date.
(b) On or after the date hereof, no "nationally recognized statistical
rating organization" as such term is defined for purposes of rule 436(g)(2)
32
<PAGE>
under the Act shall have given notice that it has assigned (or is considering
assigning) a lower rating to the Notes than that on which the Notes were
marketed.
(c) Since the respective dates as of which information is given in the
Offering Memorandum other than as set forth in the Offering Memorandum
(exclusive of any amendments or supplements thereto subsequent to the date of
this Agreement), (i) there shall not have occurred any change or any development
involving a prospective change in the earnings, business, assets, condition
(financial or otherwise), management, results of operations or prospects of the
Company and its subsidiaries, taken as a whole, (ii) there shall not have been
any change or any development involving a prospective change in the capital
stock or in the long-term debt of the Company or any of its subsidiaries and
(iii) neither the Company nor any of its subsidiaries shall have incurred any
liability or obligation, direct or contingent, the effect of which, in any such
case described in clause 9(c)(i), 9(c)(ii) or 9(c)(iii), in the judgment of the
Initial Purchaser, is material and adverse and, in the judgment of the Initial
Purchaser, makes it impracticable to market the Series A Notes on the terms and
in the manner contemplated in the Offering Memorandum.
(d) The Initial Purchaser shall have received on the Closing Date a
certificate dated the Closing Date, signed by the President and the Chief
Financial Officer of the Company and each of the Guarantors, confirming the
matters set forth in Sections 6(ag), 9(a) and 9(b) and stating that each of the
Company and the Guarantors has complied with all the agreements and satisfied
all of the conditions herein contained and required to be complied with or
satisfied on or prior to the Closing Date.
(e) On the Closing Date, the Initial Purchaser shall have received an
opinion (satisfactory to the Initial Purchaser and its counsel), dated the
Closing Date, of Pepper Hamilton LLP, special counsel for the Company and the
Guarantors, to the effect that:
(i) Each of the Company and its subsidiaries has been duly
incorporated, is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has the
requisite power and authority to carry on its business as described in
the Offering Memorandum and to own, lease and operate its properties.
(ii) Each of the Company and its subsidiaries is duly
qualified and is in good standing as a foreign corporation authorized
to do business in each jurisdiction set forth beside each such entity's
name on a schedule attached to the opinion.
33
<PAGE>
(iii) All the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid, nonassessable and not subject to any preemptive or similar
rights.
(iv) All of the outstanding shares of capital stock of each of
the Company's subsidiaries have been duly authorized and validly issued
and are fully paid and nonassessable, and are owned of record and, to
such counsel's knowledge after due inquiry, beneficially by the
Company, free and clear of any Lien (except as set forth in the
Offering Memorandum) of which such counsel has knowledge after due
inquiry.
(v) The Series A Notes have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Initial Purchaser in
accordance with the terms of this Agreement, will be entitled to the
benefits of the Indenture and will be valid and binding obligations of
the Company, enforceable in accordance with their terms, except as (x)
the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting creditors' rights
generally and (y) rights of acceleration and the availability of
equitable remedies may be limited by equitable principles of general
applicability.
(vi) The Series B Notes have been duly authorized and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered in exchange for Series A Notes in accordance
with the Indenture and the Exchange Offer, will be entitled to the
benefits of the Indenture and will be valid and binding obligations of
the Company enforceable in accordance with their terms, except as (x)
the enforceability thereof may be limited by bankruptcy, insolvency,
fraudulent conveyance or similar laws affecting
34
<PAGE>
creditors' rights generally and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability.
(vii) When the Series B Notes are executed and authenticated
in accordance with the provisions of the Indenture and delivered in
exchange for Series A Notes in accordance with the Indenture and the
Exchange Offer, the Subsidiary Guarantees endorsed thereon will be
entitled to the benefits of the Indenture and will be valid and binding
obligations of the Guarantors, enforceable in accordance with their
terms, except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability.
(viii) The Subsidiary Guarantees have been duly authorized
and, when the Series A Notes are executed and authenticated in
accordance with the provisions of the Indenture and delivered to and
paid for by the Initial Purchaser in accordance with the terms of this
Agreement, the Subsidiary Guarantees endorsed thereon will be entitled
to the benefits of the Indenture and will be valid and binding
obligations of the Guarantors, enforceable in accordance with their
terms, except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability.
(ix) The Indenture has been duly authorized, executed and
delivered by the Company and each Guarantor, and is a valid and binding
agreement of the Company and each Guarantor, enforceable against the
Company and each Guarantor, in accordance with its terms, except as
(x) the enforceability thereof may be limited by bankruptcy,
insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability.
35
<PAGE>
(x) This Agreement has been duly authorized, executed and
delivered by the Company and the Guarantors.
(xi) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and the Guarantors
and is a valid and binding agreement of the Company and each Guarantor,
enforceable against the Company and each Guarantor, in accordance with
its terms, except as (x) the enforceability thereof may be limited by
bankruptcy, insolvency, fraudulent conveyance or similar laws affecting
creditors' rights generally and (y) rights of acceleration and the
availability of equitable remedies may be limited by equitable
principles of general applicability.
(xii) The statements under the captions, "Risk Factors --
Unionized Workforce" (not including the first sentence), "Risk Factors
-- Potential Withdrawal Liability at the Port of New York", "Risk
Factors -- Potential Loss of Jones Act Protection" and "Risk Factors --
Related Entity Transactions" (the second and third sentences of first
paragraph only), "The Acquisition and the Refinancing", "Reorganization
of the Company" (the first paragraph only), "Management's Discussion
and Analysis of Financial Condition and Results of Operations" --
Environmental Matters", "Business -- Holt -- Overview of Port
Facilities -- The Gloucester Facility", "Business -- Holt -- Employee
and Labor Relations", "Business -- Holt -- Government Regulation",
"Business -- Holt -- Properties", "Business -- Holt -- Environmental
Matters", "Business -- Holt -- Legal Proceedings", "Business -- NPR --
TNX Joint Venture", "Business -- NPR -- Government Regulation",
"Business -- NPR -- Employee and Labor Relations", "Business -- NPR --
Environmental Matters", "Business -- NPR -- Legal Proceedings",
"Business -- NPR -- Properties", "Management -- 401(k) Plan",
"Management -- NPR 1997 Phantom Stock Plan", "Certain Transactions"
(first paragraph, fourth paragraph, first through fourth sentences,
36
<PAGE>
fifth paragraph, first, third and fourth sentences, and seventh
paragraph only), "Sole Stockholder" (second sentence only),
"Description of Certain Indebtedness", "Description of The Notes",
"Change of Accountants" (first paragraph, first sentence, and second
paragraph, first and last sentences only) and "Plan of Distribution"
(not including any portion of such section furnished by the Initial
Purchaser, as set forth in Section 11 hereof), insofar as such
statements constitute a summary of the legal matters, documents or
proceedings referred to therein (but expressly excluding financial and
statistical information and data, physical dimensions and number of
facilities, and number or percentages of employees), fairly summarize
the information called for with respect to such legal matters,
documents and proceedings.
The following counsel will provide opinion (xii) for the following
sections of the Offering Memorandum:
(i) "Risk Factors -- Unionized Workforce" (not including the
first sentence), and "Business -- Holt -- Employee and Labor Relations"
o Fox, Rothschild, Philadelphia
(ii) "Risk Factors -- Potential Loss of Jones Act Protection",
"Business -- Holt -- Government Regulation" "Business -- NPR --
Government Regulation and Business -- NPR -- TNX Joint Venture" (first
and second paragraphs only).
o Thompson & Coburn - Washington, D.C.
(iii) "Business -- Holt -- Legal Proceedings"
o Paul Rosen of Spector, Gadon & Rosen, Philadelphia
(iv) "Business -- NPR -- Legal Proceedings" o Fiddler
Gonzalez -- Puerto Rico
(xiii) The execution, delivery and
performance of this Agreement and the other Operative
Documents by the Company and each of the Guarantors, the
compliance by the
37
<PAGE>
Company and each of the Guarantors with all provisions hereof
and thereof and the consummation of the transactions
contemplated hereby and thereby will not (A) require any
consent, approval, authorization or other order of, or
qualification with, any New York, Delaware, Pennsylvania or
federal court or governmental body or agency ("Authorization")
(except such as may be required under the securities or Blue
Sky laws of the various states), (B) conflict with or
constitute a breach of any of the terms or provisions of, or a
default under, the charter or by-laws of the Company, any
Guarantor or any of their respective subsidiaries or any
indenture, loan agreement, mortgage, lease or other agreement
or instrument that is material to the Company, any Guarantor
and their respective subsidiaries, taken as a whole, to which
the Company, any Guarantor or any of their respective
subsidiaries is a party or by which the Company, any Guarantor
or any of their respective subsidiaries or their respective
property is bound and of which such counsel has knowledge
(other than as set forth on a Schedule to such opinion (the
"Scheduled Documents")), (C) violate or conflict with any
applicable law, rule or regulation of the United States, the
State of New York or the Commonwealth of Pennsylvania, or any
judgment, order or decree known to such counsel of any court
or any governmental body or agency of the United States, the
State of New York or the Commonwealth of Pennsylvania, or any
having jurisdiction over the Company, any Guarantor, any of
their respective subsidiaries or their respective property,
(D) result in the imposition or creation of (or the obligation
to create or impose) a Lien under, any agreement or
instrument to which the Company, any Guarantor or any of their
respective subsidiaries is a party or by which the Company,
any Guarantor or any of its subsidiaries or their respective
property is bound and of which such counsel has knowledge, or
(E) result in the termination, suspension or revocation of any
Authorization (as defined below) of the Company, any
Guarantor or any of their respective subsidiaries and of which
such counsel has knowledge or result in any other impairment
of the rights of the holder of any such Authorization.
38
<PAGE>
(xiv) To the best of such counsel's knowledge after
due inquiry, there is no legal or governmental proceeding
pending which would be required to be described in the
Offering Memorandum if the Offering Memorandum were a
prospectus included in a registration statement on Form S-1
and is not so described.
(xv) Neither the Company nor any Guarantor is, and,
after giving effect to the offering and sale of the Series A
Notes to the Initial Purchaser and the application of the net
proceeds thereof as described in the Offering Memorandum,
neither the Company nor any Guarantor will be, an "investment
company," as such term is defined in the Investment Company
Act of 1940, as amended.
(xvi) Each of the Preliminary Offering Memorandum and
the Offering Memorandum, as of its date, complied in form with
the requirements of Rule 144A(d)(4) under the Act.
(xvii) To the best of such counsel's knowledge after
due inquiry, there are no contracts, agreements or under
standings between the Company or any Guarantor and any person
granting such person the right to require the Company or such
Guarantor to file a registration statement under the Act with
respect to any securities of the Company or such Guarantor or
to require the Company or such Guarantor to include such
securities with the Notes and Subsidiary Guarantees registered
pursuant to any Registration Statement.
(xviii) The Indenture complies as to form in all
material respects with the requirements of the TIA, and the
rules and regulations of the Commission applicable to an
indenture which is qualified thereunder. Assuming the
accuracy of the Initial Purchaser's representations and
warranties set forth in, and compliance by the Initial
Purchaser with the agreements set forth in Section 7 hereof,
it is not necessary in connection with the offer, sale and
delivery of the Series A Notes to the Initial Purchaser in the
manner contemplated by this Agreement or in connection with
the Exempt Resales to qualify the Indenture under the TIA.
39
<PAGE>
(xix) No registration under the Act of the
Series A Notes is required for the sale of the Series A Notes
to the Initial Purchaser as contemplated by this Agreement or
for the Exempt Resales, assuming (A) the accuracy of, and
compliance with, the Initial Purchaser's representations and
agreements contained in Section 7 of this Agreement, (B) the
accuracy of, and compliance with, the representations and
agreements of the Company and the Guarantors set forth in this
Agreement and (C) that the offer, sale and delivery of the
Series A Notes to the Initial Purchaser and in the Exempt
Resales have been made as contemplated by this Agreement and
the Offering Memorandum.
(xx) Although the discussions set forth in
the Offering Memorandum under the heading "CERTAIN U.S.
FEDERAL INCOME TAX CONSIDERATIONS" do not purport to discuss
all possible U.S. federal income tax consequences of the
acquisition, ownership and disposition of the Notes, such
counsel believes such discussion constitutes, in all material
respects, a fair and accurate summary of the U.S. federal
income tax consequences of the acquisition, ownership and
disposition of the Notes, based upon current law.
Such counsel shall further state that such counsel has participated in
conferences with officers and other representatives of the Company and the
Guarantors and representatives of the independent public accountants for the
Company and the Guarantors at which the contents of the Preliminary Offering
Memorandum and the Offering Memorandum were discussed, although such counsel has
not independently verified the accuracy, completeness or fairness of such
contents; and that such counsel advises that it has no reason to believe that,
as of the date of the Preliminary Offering Memorandum or as of the Closing Date,
the Offering Memorandum, as amended or supplemented, if applicable, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes no responsibility for, and
has not independently verified, the accuracy, completeness or fairness of the
financial statements, notes and schedules and other financial data contained
therein.
40
<PAGE>
(f) The Initial Purchaser shall have received on the Closing Date an
opinion (satisfactory to the Initial Purchaser and its counsel) dated the
Closing Date, of John Evans, Esq., General Counsel of the Company and the
Guarantors, substantially to the effect that:
(i) The execution, delivery and performance of this Agreement
and the other Operative Documents by the Company and each of the
Guarantors, the compliance by the Company and each of the Guarantors
with all provisions hereof and thereof and the consummation of the
transactions contemplated hereby and thereby will not conflict with or
constitute a breach of any of the terms or provisions of, or a default
under, the Scheduled Documents.
(ii) The Company and its subsidiaries have good and marketable
title in fee simple to all real property and good and marketable title
to all personal property owned by them which is material to the
business of the Company and its subsidiaries, in each case, free and
clear of all Liens and defects except such as are described in the
Offering Memorandum or such as do not materially affect the value of
such property and do not interfere with the use made and proposed to be
made of such property by the Company and its subsidiaries; to such
counsel's knowledge, any real property and buildings held under lease
by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company and its subsidiaries, in
each case except as described in the Offering Memorandum.
(iii) Neither the Company nor any of its subsidiaries has
violated any Environmental Law or any provisions of ERISA, or the
rules and regulations promulgated thereunder, except for such
violations which, singly or in the aggregate, would not have a Material
Adverse Effect.
41
<PAGE>
(iv) Each of the Company and its subsidiaries has such
Authorizations of, and has made all filings with and notices to, all
governmental or regulatory authorities and self-regulatory
organizations and all courts and other tribunals, including, without
limitation, under any applicable Environmental Laws, as are necessary
to own, lease, license and operate its respective properties and to
conduct its business, except where the failure to have any such
Authorization or to make any such filing or notice would not, singly or
in the aggregate, have a Material Adverse Effect. Each such
Authorization is valid and in full force and effect and each of the
Company and its subsidiaries is in compliance with all the terms and
conditions thereof and with the rules and regulations of the
authorities and governing bodies having jurisdiction with respect
thereto; and no event has occurred (including the receipt of any notice
from any authority or governing body) which allows or, after notice or
lapse of time or both, would allow, revocation, suspension or
termination of any such Authorization or results or, after notice or
lapse of time or both, would result in any other impairment of the
rights of the holder of any such Authorization; and such Authorizations
contain no restrictions that are burdensome to the Company or any of
its subsidiaries; except where such failure to be valid and in full
force and effect or to be in compliance, the occurrence of any such
event or the presence of any such restriction would not, singly or in
the aggregate, have a Material Adverse Effect.
(v) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws and, to the best of such
counsel's knowledge after due inquiry, neither the Company nor any of
its subsidiaries is in default in the performance of any obligation,
agreement, covenant or condition contained in any indenture, loan
agreement, mortgage, lease or other agreement or instrument that is
material to the Company and its subsidiaries, taken as a whole, to
which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries or their respective property is
bound.
42
<PAGE>
Such counsel shall further state that such counsel has participated in
conferences with officers and other representatives of the Company and the
Guarantors and representatives of the independent public accountants for the
Company and the Guarantors at which the contents of the Preliminary Offering
Memorandum and the Offering Memorandum were discussed, although such counsel has
not independently verified the accuracy, completeness or fairness of such
contents; and that such counsel advises that it has no reason to believe that,
as of the date of the Offering Memorandum or as of the Closing Date, the
Offering Memorandum, as amended or supplemented, if applicable, contains any
untrue statement of a material fact or omits to state a material fact necessary
in order to make the statements therein, in light of the circumstances under
which they were made, not misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes no responsibility for, and
has not independently verified, the accuracy, completeness or fairness of the
financial statements, notes and schedules and other financial data contained
therein.
(g) The Initial Purchaser shall have received on the Closing Date an
opinion, dated the Closing Date, of Skadden, Arps, Slate, Meagher & Flom LLP,
special counsel for the Initial Purchaser, in form and substance reasonably
satisfactory to the Initial Purchaser.
(h) The Initial Purchaser shall have received (i) at the time this
Agreement is executed, a letter dated the date hereof in form and substance
satisfactory to the Initial Purchaser from BDO Seidman LLP, independent public
accountants ("BDO"), and (ii) at the Closing Date a letter dated the Closing
Date, in each case containing the information and statements of the type
ordinarily included in accountants' "comfort letters" to the Initial Purchaser
with respect to the financial statements and certain financial information
contained in the Offering Memorandum.
(i) The Initial Purchaser shall have received (i) at the time this
Agreement is executed, an agreed-upon procedures report dated December 29, 1997
in form and substance satisfactory to the Initial Purchaser from BDO, and (ii)
at the Closing Date, an agreed-upon procedures report dated the Closing Date
from BDO, in each case certifying as to the compliance by the Company with all
financial covenants contained in any indenture, loan agreement, mortgage, lease
or other agreement or instrument that is material to the Company and its
subsidiaries, taken as a whole, to which the Company or any of its
43
<PAGE>
subsidiaries is a party or by which the Company or any of its subsidiaries or
their respective property is bound.
(j) The Initial Purchaser shall have received at the Closing Date, (i)
a letter from the Company in form and substance satisfactory to the Initial
Purchaser, dated the Closing Date, confirming the statements about the Company
and Holt (as defined in the Offering Memorandum) made by the Company to the
Initial Purchaser in its letter, dated December 30, 1997 concerning such
statements, and (ii) a letter from the Company in form and substance
satisfactory to the Initial Purchaser, dated the Closing Date, confirming the
statements about the Company and NPR in its letter dated December 30, 1997
concerning such statements.
(k) The Initial Purchaser shall have received the Estimated Balance
Sheet and the Closing Estimated Balance Sheet.
(l) The Series A Notes shall have been approved by the NASD for trading
and duly listed in PORTAL.
(m) The Company and the Guarantors shall have executed the Registration
Rights Agreement and the Initial Purchaser shall have received an original copy
thereof, duly executed by the Company and the Guarantors.
(n) The Company, the Guarantors and the Trustee shall have executed the
Indenture and the Initial Purchaser shall have received an original copy
thereof, duly executed by the Company, the Guarantors and the Trustee.
(o) The Company will use the proceeds from the offering of the Series A
Notes in the manner described in the Offering Memorandum under the caption "Use
of Proceeds" (including the repayment in full of all the Company's obligations
under the Bridge Notes upon receipt of such proceeds).
(p) The Company and the Guarantors shall not have failed at or prior to
the Closing Date to perform or comply with any of the agreements herein
contained and required to be performed or complied with by the Company and/or
the Guarantors at or prior to the Closing Date.
44
<PAGE>
(q) The Initial Purchaser shall have received a solvency certificate,
in form and substance satisfactory to the Initial Purchaser, executed by the
Chief Financial Officer of the Company, dated as of the Closing Date.
10. Effectiveness of Agreement and Termination. This Agreement shall
become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time on or prior to the Closing
Date by the Initial Purchaser by written notice to the Company if any of the
following has occurred: (i) any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic conditions or
in the financial markets of the United States or elsewhere that, in the Initial
Purchaser's judgment, is material and adverse and, in the Initial Purchaser's
judgment, makes it impracticable to market the Series A Notes on the terms and
in the manner contemplated in the Offering Memorandum, (ii) the suspension or
material limitation of trading in securities or other instruments on the New
York Stock Exchange, the American Stock Exchange, the Chicago Board of Options
Exchange, the Chicago Mercantile Exchange, the Chicago Board of Trade or the
Nasdaq National Market or limitation on prices for securities or other
instruments or any such exchange on the Nasdaq National Market, (iii) the
suspension of trading of any securities of the Company or any Guarantor on any
exchange or in the over-the-counter market, (iv) the enactment, publication,
decree or other promulgation of any federal or state statute, regulation, rule
or order of any court or other govern mental authority which in your opinion
materially and adversely affects, or will materially and adversely affect, the
business, prospects, financial condition or results of operations of the
Company and its subsidiaries, taken as a whole, (v) the declaration of a banking
moratorium by either federal or New York State authorities or (vi) the taking of
any action by any federal, state or local government or agency in respect of its
monetary or fiscal affairs which in your opinion has a material adverse effect
on the financial markets in the United States.
11. Information of Initial Purchaser. The Company and each Guarantor
acknowledge for all purposes of this Agreement that the last paragraph on the
cover page of the Preliminary Offering Memorandum and the Offering Memorandum,
45
<PAGE>
the first paragraph on page 1 of the Preliminary Offering Memorandum and the
Offering Memorandum, the information contained in the third, fifth and ninth
paragraphs under the caption "Plan of Distribution" in the Preliminary Offering
Memorandum and the Offering Memorandum constitute the only information relating
to the Initial Purchaser furnished to the Company in writing by the Initial
Purchaser expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum and that the Initial Purchaser shall not be deemed to have
provided any other information (and therefore are not responsible for any such
statement or omission) pertaining to any arrangement or agreement with respect
to any party other than the Initial Purchaser.
12. Miscellaneous. Notices given pursuant to any provision of this
Agreement shall be addressed as follows: (i) if to the Company or any Guarantor,
to The Holt Group, Inc., 701 North Broadway, Gloucester, NJ 08030, Attention:
Thomas J. Holt, Sr. and John A. Evans, with a copy to Pepper, Hamilton & Scheetz
LLP, 3000 Two Logan Square, 18th & Arch Streets, Philadelphia, PA 19103,
Attention: Lisa D. Kabnick, Esq.; (ii) if to the Initial Purchaser, to
Donaldson, Lufkin & Jenrette Securities Corporation, 277 Park Avenue, New York,
New York 10172, Attention: Syndicate Department, with a copy to Skadden, Arps,
Slate, Meagher & Flom LLP at 300 South Grand Avenue, Suite 3400, Los Angeles,
California 90071, Attention: Nick P. Saggese, Esq.; or (iii) in any case to
such other address as the person to be notified may have requested in writing.
The respective indemnities, contribution agreements, representations,
warranties and other statements of the Company, the Guarantors and the Initial
Purchaser set forth in or made pursuant to this Agreement shall remain operative
and in full force and effect, and will survive delivery of and payment for the
Series A Notes, regardless of (i) any investigation, or statement as to the
results thereof, made by or on behalf of the Initial Purchaser, the officers or
directors of the Initial Purchaser, any person controlling the Initial
Purchaser, the Company, any Guarantor, the officers or directors of the Company
or any Guarantor, or any person controlling the Company or any Guarantor, (ii)
acceptance of the Series A Notes and payment for them hereunder and (iii)
termination of this Agreement.
If for any reason the Series A Notes are not delivered by or on behalf
of the Company as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10), the Company and each Guarantor, jointly
and severally, agree to reimburse the Initial Purchaser for all out-of-pocket
expenses (including the fees and disbursements of counsel) incurred by them.
46
<PAGE>
Notwithstanding any termination of this Agreement, the Company shall be liable
for all expenses which it has agreed to pay pursuant to Section 5(i) hereof. The
Company and each Guarantor also agree, jointly and severally, to reimburse the
Initial Purchaser and its directors and officers and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act for any and all fees and expenses (including,
without limitation, the fees and expenses of counsel) incurred by them in
connection with enforcing their rights under this Agreement (including, without
limitation, its rights under Section 8).
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Company, the Guarantors,
the Initial Purchaser, the Initial Purchaser's directors and officers, any
controlling persons referred to herein, the directors of the Company and the
Guarantors and their respective successors and assigns, all as and to the extent
provided in this Agreement, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include a purchaser of any of the Series A Notes from the Initial Purchaser
merely because of such purchase.
This Agreement shall be governed and construed in accordance with the
laws of the State of New York.
This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
47
<PAGE>
Please confirm that the foregoing correctly sets forth the
agreement among the Company, the Guarantors and the Initial Purchaser.
Very truly yours,
THE HOLT GROUP, INC.
By: /s/ Thomas J. Holt, Sr.
----------------------------------
Name: Thomas J. Holt, Sr.
Title: President
HOLT HAULING AND
WAREHOUSING SYSTEM, INC.
By: /s/ Thomas J. Holt, Sr.
----------------------------------
Name: Thomas J. Holt, Sr.
Title: President
HOLT CARGO SYSTEMS, INC.
By: /s/ Thomas J. Holt, Sr.
----------------------------------
Name: Thomas J. Holt, Sr.
Title: President
MURPHY MARINE SERVICES, INC.
By: /s/ Thomas J. Holt, Sr.
----------------------------------
Name: Thomas J. Holt, Sr.
Title: Chairman of the Board
<PAGE>
WILMINGTON STEVEDORES, INC.
By: /s/ Thomas J. Holt, Sr.
----------------------------------
Name: Thomas J. Holt, Sr.
Title: Chairman of the Board
NPR HOLDING CORPORATION, INC.
By: /s/ Ronald M. Katims
----------------------------------
Name: Ronald M. Katims
Title: President
NPR-NAVIERAS RECEIVABLES, INC.
By: /s/ Ronald M. Katims
----------------------------------
Name: Ronald M. Katims
Title: President
NPR, INC.
By: /s/ Ronald M. Katims
----------------------------------
Name: Ronald M. Katims
Title: President
NPR, S.A., INC.
By: /s/ Ronald M. Katims
----------------------------------
Name: Ronald M. Katims
Title: President
<PAGE>
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ Warren Woo
------------------------------------
Name: Warren Woo
Title: Managing Director
<PAGE>
SCHEDULE I
GUARANTORS
----------
HOLT HAULING AND WAREHOUSING SYSTEM, INC.
HOLT CARGO SYSTEMS, INC.
MURPHY MARINE SERVICES, INC
WILMINGTON STEVEDORES, INC.
NPR HOLDING CORPORATION, INC.
NPR-NAVIERAS RECEIVABLES, INC.
NPR, INC.
NPR, S.A., INC.
I-1
EXCHANGE
REGISTRATION RIGHTS AGREEMENT
Dated as of January 21, 1998
by and among
THE HOLT GROUP, INC.
THE SUBSIDIARIES OF THE HOLT GROUP, INC. SIGNATORY HERETO
and
DONALDSON, LUFKIN & JENRETTE SECURITIES CORPORATION
<PAGE>
This Registration Rights Agreement (this "Agreement") is made and entered into
as of January 21, 1998, by and among THE HOLT GROUP, INC., a Delaware
corporation (the "Company"), each of the subsidiaries of the Company signatory
hereto (the "Guarantors"), and Donaldson, Lufkin & Jenrette Securities
Corporation (the "Initial Purchaser"), who has agreed to purchase the Company's
9 3/4% Series A Senior Notes due 2006 (the "Series A Notes") pursuant to the
Purchase Agreement (as defined below).
This Agreement is made pursuant to the Purchase Agreement, dated January 14,
1998 (the "Purchase Agreement"), by and among the Company, the Guarantors and
the Initial Purchaser. In order to induce the Initial Purchaser to purchase the
Series A Notes, the Company has agreed to provide the registration rights set
forth in this Agreement. The execution and delivery of this Agreement is a
condition to the obligations of the Initial Purchaser set forth in Section 3 of
the Purchase Agreement. Capitalized terms used herein and not otherwise defined
shall have the meaning assigned to them the Indenture (the "Indenture") dated
January 21, 1998, between the Company, the Guarantors and The Bank of New York,
as Trustee, relating to the Series A Notes and the Series B Notes (as defined
herein).
The parties hereby agree as follows:
SECTION 1. DEFINITIONS
As used in this Agreement, the following capitalized terms shall have
the following meanings:
Act: The Securities Act of 1933, as amended.
Affiliate: As defined in Rule 144 of the Act.
Broker-Dealer: Any broker or dealer registered under the Exchange Act.
Certificated Securities: Definitive Notes, as defined in the Indenture.
Closing Date: The date hereof.
Commission: The United States Securities and Exchange Commission.
Consummate: An Exchange Offer shall be deemed "Consummated" for
purposes of this Agreement upon the occurrence of (a) the filing and
effectiveness under the Act of the Exchange Offer Registration Statement
relating to the Series B Notes to be issued in the Exchange Offer, (b) the
maintenance of such Exchange Offer Registration Statement continuously effective
and the keeping of the Exchange Offer open for a period not less than the period
required pursuant to Section 3(b) hereof and (c) the delivery by the Company to
the Registrar under the Indenture of Series B Notes in the same aggregate
principal amount as the aggregate principal amount of Series A Notes tendered by
Holders thereof pursuant to the Exchange Offer.
<PAGE>
Effectiveness Deadline: As defined in Section 3(a) and 4(a) hereof.
Exchange Act: The Securities Exchange Act of 1934, as amended.
Exchange Offer: The exchange and issuance by the Company of a principal
amount of Series B Notes (which shall be registered pursuant to the Exchange
Offer Registration Statement) equal to the outstanding principal amount of
Series A Notes that are tendered by such Holders in connection with such
exchange and issuance.
Exchange Offer Registration Statement: The Registration Statement
relating to the Exchange Offer, including the related Prospectus.
Exempt Resales: The transactions in which the Initial Purchasers
propose to sell the Series A Notes to certain "qualified institutional buyers,"
as such term is defined in Rule 144A under the Act and pursuant to Regulation S
under the Act.
Filing Deadline: As defined in Sections 3(a) and 4(a) hereof.
Holders: As defined in Section 2 hereof.
Prospectus: The prospectus included in a Registration Statement at the
time such Registration Statement is declared effective, as amended or
supplemented by any prospectus supplement and by all other amendments thereto,
including post-effective amendments, and all material incorporated by reference
into such Prospectus.
Recommencement Date: As defined in Section 6(d) hereof.
Registration Default: As defined in Section 5 hereof.
Registration Statement: Any registration statement of the Company and
the Guarantors relating to (a) an offering of Series B Notes pursuant to an
Exchange Offer or (b) the registration for resale of Transfer Restricted
Securities pursuant to the Shelf Registration Statement, in each case, (i) that
is filed pursuant to the provisions of this Agreement and (ii) including the
Prospectus included therein, all amendments and supplements thereto (including
post-effective amendments) and all exhibits and material incorporated by
reference therein.
Regulation S: Regulation S promulgated under the Act.
Restricted Broker-Dealer: Any Broker-Dealer that holds Series B Notes
that were acquired in the Exchange Offer in exchange for Series A Notes that
such Broker-Dealer acquired for its own account as a result of market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its affiliates).
2
<PAGE>
Rule 144: Rule 144 promulgated under the Act.
Series B Notes: The Company's 9 3/4% Series B Senior Notes due 2006 to
be issued pursuant to the Indenture: (i) in the Exchange Offer or (ii) as
contemplated by Section 4 hereof.
Shelf Registration Statement: As defined in Section 4 hereof.
Suspension Notice: As defined in Section 6(d) hereof.
TIA: The Trust Indenture Act of 1939 (15 U.S.C. Section 77aaa-77bbbb)
as in effect on the date of the Indenture.
Transfer Restricted Securities: Each Note, until the earliest to occur
of (a) the date on which such Note is exchanged in the Exchange Offer and
entitled to be resold to the public by the Holder thereof without complying with
the prospectus delivery requirements of the Act, (b) the date on which such Note
has been disposed of in accordance with a Shelf Registration Statement, (c) the
date on which such Note is disposed of by a Broker-Dealer pursuant to the "Plan
of Distribution" contemplated by the Exchange Offer Registration Statement
(including delivery of the Prospectus contained therein) or (d) the date on
which such Note is distributed to the public pursuant to Rule 144 under the Act.
SECTION 2. HOLDERS
A Person is deemed to be a holder of Transfer Restricted Securities
(each, a "Holder") whenever such Person owns Transfer Restricted Securities.
SECTION 3. REGISTERED EXCHANGE OFFER
(a) Unless the Exchange Offer shall not be permitted by applicable
federal law or Commission policy (after the procedures set forth in Section
6(a)(i) below have been complied with), the Company and the Guarantors shall (i)
cause the Exchange Offer Registration Statement to be filed with the Commission
as soon as practicable after the Closing Date (the "Exchange Offer Filing
Date"), but in no event later than 90 days after the Closing Date (such 90th day
being the "Filing Deadline"), (ii) use its best efforts to cause such Exchange
Offer Registration Statement to become effective at the earliest possible time,
but in no event later than 180 days after the Closing Date (such 180th day being
the "Effectiveness Deadline"), (iii) in connection with the foregoing, (A) file
all pre-effective amendments to such Exchange Offer Registration Statement as
may be necessary in order to cause it to become effective, (B) file, if
applicable, a post-effective amendment to such Exchange Offer Registration
Statement pursuant to Rule 430A under the Act and (C) cause all necessary
filings, if any, in connection with the registration and qualification of the
Series B Notes to be made under the Blue Sky laws of such jurisdictions as are
necessary to permit Consummation of the Exchange Offer; provided, however, that
neither the Company nor any Guarantor shall be required to register or qualify
as a
3
<PAGE>
foreign corporation where it is not now so qualified or to take any action that
would subject it to the service of process in suits or to taxation, other than
as to matters and transactions relating to the Registration Statement, in any
jurisdiction where it is not now so subject, and (iv) upon the effectiveness of
such Exchange Offer Registration Statement, commence and Consummate the Exchange
Offer. The Exchange Offer shall be on the appropriate form permitting
registration of the Series B Notes to be offered in exchange for the Series A
Notes that are Transfer Restricted Securities and to permit resales of Series B
Notes by Broker-Dealers that tendered into the Exchange Offer Series A Notes
that such Broker-Dealer acquired for its own account as a result of market
making activities or other trading activities (other than Series A Notes
acquired directly from the Company or any of its Affiliates) as contemplated by
Section 3(c) below.
(b) The Company and the Guarantors shall use their respective best
efforts to cause the Exchange Offer Registration Statement to be effective
continuously, and shall keep the Exchange Offer open for a period of not less
than the minimum period required under applicable federal and state securities
laws to Consummate the Exchange Offer; provided, however, that in no event shall
such period be less than 30 business days. The Company and the Guarantors shall
cause the Exchange Offer to comply with all applicable federal and state
securities laws. No securities other than the Series B Notes shall be included
in the Exchange Offer Registration Statement. The Company and the Guarantors
shall use their respective best efforts to cause the Exchange Offer to be
Consummated on the earliest practicable date after the Exchange Offer
Registration Statement has become effective, but in no event later than 30
business days thereafter.
(c) The Company shall include a "Plan of Distribution" section in the
Prospectus contained in the Exchange Offer Registration Statement and indicate
therein that any Broker-Dealer who holds Transfer Restricted Securities that
were acquired for the account of such Broker-Dealer as a result of market-making
activities or other trading activities (other than Transfer Restricted
Securities acquired directly from the Company or any Affiliate of the Company),
may exchange such Transfer Restricted Securities pursuant to the Exchange Offer;
however, such Broker-Dealer may be deemed to be an "underwriter" within the
meaning of the Act and must, therefore, deliver a prospectus meeting the
requirements of the Act in connection with its initial sale of any Series B
Notes received by such Broker-Dealer in the Exchange Offer and that the
Prospectus contained in the Exchange Offer Registration Statement may be used to
satisfy such prospectus delivery requirement. Such "Plan of Distribution"
section shall also contain all other information with respect to such sales by
such Broker-Dealers that the Commission may require in order to permit such
sales pursuant thereto, but such "Plan of Distribution" shall not name any such
Broker-Dealer or disclose the amount of Transfer Restricted Securities held by
any such Broker-Dealer, except to the extent required by the Commission as a
result of a change in policy, rules or regulations after the date of this
Agreement.
To the extent necessary to ensure that the Exchange Offer Registration
Statement is available for sales of Series B Notes by Broker-Dealers, the
Company and the Guarantors agree to use their respective best efforts to keep
the Exchange Offer Registration Statement continuously effective, supplemented
and amended as required by the provisions of Section 6(d) hereof and in
conformity with the requirements of
4
<PAGE>
this Agreement, the Act and the policies, rules and regulations of the
Commission as announced from time to time, for a period of one year from the
date on which the Exchange Offer is Consummated, or such shorter period as will
terminate when all Transfer Restricted Securities covered by such Registration
Statement have been sold pursuant thereto. The Company and the Guarantors shall
promptly provide sufficient copies of the latest version of such Prospectus to
such Broker-Dealers promptly upon request, and in no event later than one day
after such request, at any time during such period.
SECTION 4. SHELF REGISTRATION
(a) Shelf Registration. If (i) the Exchange Offer is not permitted by
applicable law or Commission policy (after the Company and the Guarantors have
complied with the procedures set forth in Section 6(a)(i) below) or (ii) if any
Holder of Transfer Restricted Securities shall notify the Company within 20
business days following the Consummation of the Exchange Offer that (A) such
Holder was prohibited by law or Commission policy from participating in the
Exchange Offer or (B) such Holder may not resell the Series B Notes acquired by
it in the Exchange Offer to the public without delivering a prospectus and the
Prospectus contained in the Exchange Offer Registration Statement is not
appropriate or available for such resales by such Holder or (C) such Holder is a
Broker-Dealer and holds Series A Notes acquired directly from the Company or any
of its Affiliates, then the Company and the Guarantors shall:
(x) cause to be filed, on or prior to 30 days after the
earlier of (i) the date on which the Company determines that the
Exchange Offer Registration Statement cannot be filed as a result of
clause (a)(i) above and (ii) the date on which the Company receives the
notice specified in clause (a) (ii) above, (such earlier date, the
"Filing Deadline"), a shelf registration statement pursuant to Rule 415
under the Act (which may be an amendment to the Exchange Offer
Registration Statement (the "Shelf Registration Statement")), relating
to all Transfer Restricted Securities; provided, that in no event shall
the Filing Deadline be prior to the 90th day following the Closing
Date, and
(y) use their respective best efforts to cause such Shelf
Registration Statement to become effective on or prior to 90th day
after the Filing Deadline (such 90th day, the "Effectiveness
Deadline");
If, after the Company has filed an Exchange Offer Registration
Statement that satisfies the requirements of Section 3(a) above, the Company is
required to file and make effective a Shelf Registration Statement solely
because the Exchange Offer is not permitted under applicable federal law, then
the filing of the Exchange Offer Registration Statement shall be deemed to
satisfy the requirements of clause (x) above; provided that, in such event, the
Company shall remain obligated to meet the Effectiveness Deadline set forth in
clause (y).
The Company and the Guarantors shall use their respective best efforts
to keep any Shelf Registration Statement required by this Section 4(a)
continuously effective, supplemented and amended as required by and subject to
the provisions of Sections 6(b) and (c) hereof to the extent necessary to ensure
5
<PAGE>
that it is available for sales of Transfer Restricted Securities by the Holders
thereof entitled to the benefit of this Section 4(a), and to ensure that it
conforms with the requirements of this Agreement, the Act and the policies,
rules and regulations of the Commission as announced from time to time, for a
period of at least two years (as extended pursuant to Section 6(c)(i) following
the date on which such Shelf Registration Statement first became effective under
the Act, or such shorter period as will terminate when all Transfer Restricted
Securities covered by such Shelf Registration Statement have been sold pursuant
thereto.
(b) Provision by Holders of Certain Information in Connection with the
Shelf Registration Statement. No Holder of Transfer Restricted Securities may
include any of its Transfer Restricted Securities in any Shelf Registration
Statement pursuant to this Agreement unless and until such Holder furnishes to
the Company in writing, within 20 days after receipt of a request therefor, the
information specified in Item 507 or 508 of Regulation S-K, as applicable, of
the Act for use in connection with any Shelf Registration Statement or
Prospectus or preliminary Prospectus included therein. No Holder of Transfer
Restricted Securities shall be entitled to liquidated damages pursuant to
Section 5 hereof unless and until such Holder shall have provided all such
information within such 20 day period. Each selling Holder agrees to promptly
furnish additional information required to be disclosed in order to make the
information previously furnished to the Company by such Holder not materially
misleading.
SECTION 5. LIQUIDATED DAMAGES
If (i) any Registration Statement required by this Agreement is not
filed with the Commission on or prior to the applicable Filing Deadline, (ii)
any such Registration Statement has not been declared effective by the
Commission on or prior to the applicable Effectiveness Deadline, (iii) the
Exchange Offer has not been Consummated within 30 days after the Exchange Offer
Registration Statement is first declared effective by the Commission or (iv) any
Registration Statement required by this Agreement is filed and declared
effective but shall thereafter cease to be effective or fail to be usable for
its intended purpose without being succeeded immediately by a post-effective
amendment to such Registration Statement that cures such failure and that is
itself declared effective immediately (each such event referred to in clauses
(i) through (iv), a "Registration Default"), then the Company and the Guarantors
hereby jointly and severally agree to pay to each Holder of Transfer Restricted
Securities affected thereby liquidated damages ("Liquidated Damages") in an
amount equal to $.05 per week per $1,000 in principal amount of Transfer
Restricted Securities held by such Holder for each week or portion thereof that
the Registration Default continues for the first 90-day period immediately
following the occurrence of such Registration Default. The amount of the
liquidated damages shall increase by an additional $.05 per week per $1,000 in
principal amount of Transfer Restricted Securities with respect to each
subsequent 90-day period until all Registration Defaults have been cured, up to
a maximum amount of liquidated damages of $.50 per week per $1,000 in principal
amount of Transfer Restricted Securities; provided that the Company and the
Guarantors shall in no event be required to pay liquidated damages for more than
one Registration Default at any given time. Notwithstanding anything to the
contrary set forth herein, (1) upon filing of the Exchange Offer Registration
6
<PAGE>
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (i) above, (2) upon the effectiveness of the Exchange Offer Registration
Statement (and/or, if applicable, the Shelf Registration Statement), in the case
of (ii) above, (3) upon Consummation of the Exchange Offer, in the case of (iii)
above, or (4) upon the filing of a post-effective amendment to the Registration
Statement or an additional Registration Statement that causes the Exchange Offer
Registration Statement (and/or, if applicable, the Shelf Registration Statement)
to again be declared effective or made usable in the case of (iv) above, the
liquidated damages payable with respect to the Transfer Restricted Securities as
a result of such clause (i), (ii), (iii) or (iv), as applicable, shall cease.
All accrued liquidated damages shall be paid to the Holders entitled
thereto, in the manner provided for the payment of interest in the Indenture, on
each Interest Payment Date, as more fully set forth in the Indenture and the
Notes. All obligations of the Company and the Guarantors set forth in the
preceding paragraph that are outstanding with respect to any Transfer Restricted
Security at the time such security ceases to be a Transfer Restricted Security
shall survive until such time as all such obligations with respect to such
security shall have been satisfied in full.
SECTION 6. REGISTRATION PROCEDURES
(a) Exchange Offer Registration Statement. In connection with the
Exchange Offer, the Company and the Guarantors shall comply with all applicable
provisions of Section 6(c) below, shall use their respective best efforts to
effect such exchange and to permit the resale of Series B Notes by
Broker-Dealers that tendered in the Exchange Offer Series A Notes that such
Broker-Dealer acquired for its own account as a result of its market making
activities or other trading activities (other than Series A Notes acquired
directly from the Company or any of its Affiliates) being sold in accordance
with the intended method or methods of distribution thereof, and shall comply
with all of the following provisions:
(i) If, following the date hereof there has been announced a
change in Commission policy with respect to exchange offers such as the
Exchange Offer, that in the reasonable opinion of counsel to the
Company raises a substantial question as to whether the Exchange Offer
is permitted by applicable federal law, the Company and the Guarantors
hereby agree to seek a no-action letter or other favorable decision
from the Commission allowing the Company and the Guarantors to
Consummate an Exchange Offer for such Transfer Restricted Securities.
The Company and the Guarantors hereby agree to pursue the issuance of
such a decision to the Commission staff level. In connection with the
foregoing, the Company and the Guarantors hereby agree to take all such
other actions as may be requested by the Commission or otherwise
required in connection with the issuance of such decision, including
without limitation (A) participating in telephonic conferences with the
Commission, (B) delivering to the Commission staff an analysis prepared
by counsel to the Company setting forth the legal bases, if any, upon
which such counsel has concluded that such an Exchange Offer should be
permitted and (C) diligently pursuing a resolution (which need not be
favorable) by the Commission staff.
7
<PAGE>
(ii) As a condition to its participation in the Exchange
Offer, each Holder of Transfer Restricted Securities (including,
without limitation, any Holder who is a Broker Dealer) shall furnish,
upon the request of the Company, prior to the Consummation of the
Exchange Offer, a written representation to the Company and the
Guarantors (which may be contained in the letter of transmittal
contemplated by the Exchange Offer Registration Statement) to the
effect that (A) it is not an Affiliate of the Company, (B) it is not
engaged in, and does not intend to engage in, and has no arrangement or
understanding with any person to participate in, a distribution of the
Series B Notes to be issued in the Exchange Offer and (C) it is
acquiring the Series B Notes in its ordinary course of business. Each
Holder using the Exchange Offer to participate in a distribution of the
Series B Notes hereby acknowledges and agrees that, if the resales are
of Series B Notes obtained by such Holder in exchange for Series A
Notes acquired directly from the Company or an Affiliate thereof, it
(1) could not, under Commission policy as in effect on the date of this
Agreement, rely on the position of the Commission enunciated in Morgan
Stanley and Co., Inc. (available June 5, 1991) and Exxon Capital
Holdings Corporation (available May 13, 1988), as interpreted in the
Commission's letter to Shearman & Sterling dated July 2, 1993, and
similar no-action letters (including, if applicable, any no-action
letter obtained pursuant to clause (i) above), and (2) must comply with
the registration and prospectus delivery requirements of the Act in
connection with a secondary resale transaction and that such a
secondary resale transaction must be covered by an effective
registration statement containing the selling security holder
information required by Item 507 or 508, as applicable, of Regulation
S-K.
(iii) Prior to effectiveness of the Exchange Offer
Registration Statement, the Company and the Guarantors shall provide a
supplemental letter to the Commission (A) stating that the Company and
the Guarantors are registering the Exchange Offer in reliance on the
position of the Commission enunciated in Exxon Capital Holdings
Corporation (available May 13, 1988), Morgan Stanley and Co., Inc.
(available June 5, 1991) as interpreted in the Commission's letter to
Shearman & Sterling dated July 2, 1993, and, if applicable, any
no-action letter obtained pursuant to clause (i) above, (B) including a
representation that neither the Company nor any Guarantor has entered
into any arrangement or understanding with any Person to distribute the
Series B Notes to be received in the Exchange Offer and that, to the
best of the Company's and each Guarantor's information and belief, each
Holder participating in the Exchange Offer is acquiring the Series B
Notes in its ordinary course of business and has no arrangement or
understanding with any Person to participate in the distribution of the
Series B Notes received in the Exchange Offer and (C) any other
undertaking or representation required by the Commission as set forth
in any no-action letter obtained pursuant to clause (i) above, if
applicable.
(b) Shelf Registration Statement. In connection with the Shelf
Registration Statement, the Company and the Guarantors shall comply with all the
provisions of Section 6(c) below and shall use their respective best efforts to
effect such registration to permit the sale of the Transfer Restricted
8
<PAGE>
Securities being sold in accordance with the intended method or methods of
distribution thereof (as indicated in the information furnished to the Company
pursuant to Section 4(b) hereof), and pursuant thereto the Company and the
Guarantors will prepare and file with the Commission a Registration Statement
relating to the registration on any appropriate form under the Act, which form
shall be available for the sale of the Transfer Restricted Securities in
accordance with the intended method or methods of distribution thereof within
the time periods and otherwise in accordance with the provisions hereof.
(c) Adjustments. The Company covenants and agrees that it will include
in any Registration Statement the same adjustments to the Company's audited
financial statements for the year ended December 31, 1997 as applied to the
Company's pro forma financial information contained in the Offering Memorandum
under the caption "Unaudited Pro Forma and Pro Forma Adjusted Condensed
Financial Data," and that the Company shall use its best efforts to, and shall
cause its independent public accountants to use their best efforts to, defend
the inclusion of such adjustments in such Registration Statement with the
Commission; provided that so long as the relevant Filing Deadline was met with
respect to a Registration Statement, the Company's defense of such position may
be terminated if the Company shall have defended such position in at least two
written submissions and conducted related negotiations with the Commission and
the Company believes in good faith that further negotiation or submissions with
the Commission would give rise to a Registration Default. In the event that
Commission policy prevents the presentation of such adjustments in tabular form,
the Company shall use its best efforts to, and shall cause its independent
public accountants to use their best efforts to, present and defend such
adjustments in a textual format.
(d) General Provisions. In connection with any Registration Statement
and any related Prospectus required by this Agreement, the Company and the
Guarantors shall:
(i) use their respective best efforts to keep such
Registration Statement continuously effective and provide all requisite
financial statements for the period specified in Section 3 or 4 of this
Agreement, as applicable. Upon the occurrence of any event that would
cause any such Registration Statement or the Prospectus contained
therein (A) to contain a material misstatement or omission or (B) not
to be effective and usable for resale of Transfer Restricted Securities
during the period required by this Agreement, the Company and the
Guarantors shall file promptly an appropriate amendment to such
Registration Statement or supplement to such Prospectus curing such
defect, and, if Commission review is required, use their respective
best efforts to cause such amendment to be declared effective as soon
as practicable;
(ii) prepare and file with the Commission such amendments and
post-effective amendments to the applicable Registration Statement as
may be necessary to keep such Registration Statement effective for the
applicable period set forth in Section 3 or 4 hereof, as the case may
be; cause the Prospectus to be supplemented by any required Prospectus
supplement, and as so supplemented to be filed pursuant to Rule 424
under the Act, and to comply fully with Rules 424, 430A and 462, as
9
<PAGE>
applicable, under the Act in a timely manner; and comply with the
provisions of the Act with respect to the disposition of all securities
covered by such Registration Statement during the applicable period in
accordance with the intended method or methods of distribution by the
sellers thereof set forth in such Registration Statement or supplement
to the Prospectus;
(iii) advise the selling Holders promptly and, if requested by
such Persons, confirm such advice in writing, (A) when the Prospectus
or any Prospectus supplement or post-effective amendment has been
filed, and, with respect to any applicable Registration Statement or
any post-effective amendment thereto, when the same has become
effective, (B) of any request by the Commission for amendments to the
Registration Statement or amendments or supplements to the Prospectus
or for additional information relating thereto, (C) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement under the Act or of the suspension by any state
securities commission of the qualification of the Transfer Restricted
Securities for offering or sale in any jurisdiction, or the initiation
of any proceeding for any of the preceding purposes, (D) of the
existence of any fact or the happening of any event that makes any
statement of a material fact made in the Registration Statement, the
Prospectus, any amendment or supplement thereto or any document
incorporated by reference therein untrue, or that requires the making
of any additions to or changes in the Registration Statement in order
to make the statements therein not misleading, or that requires the
making of any additions to or changes in the Prospectus in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading. If at any time the Commission
shall issue any stop order suspending the effectiveness of the
Registration Statement, or any state securities commission or other
regulatory authority shall issue an order suspending the qualification
or exemption from qualification of the Transfer Restricted Securities
under state securities or Blue Sky laws, the Company and the Guarantors
shall use their respective best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(iv) subject to Section 6(d)(i), if any fact or event
contemplated by Section 6(d)(iii)(D) above shall exist or have
occurred, prepare a supplement or post-effective amendment to the
Registration Statement or related Prospectus or any document
incorporated therein by reference or file any other required document
so that, as thereafter delivered to the purchasers of Transfer
Restricted Securities, the Prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(v) furnish to the Initial Purchaser and each selling Holder
named in any Registration Statement or Prospectus in connection with
such exchange or sale, if any, before filing with the Commission,
copies of any Registration Statement or any Prospectus included therein
or any amendments or supplements to any such Registration Statement or
Prospectus (including all documents incorporated by reference after the
initial filing of such Registration Statement), which documents will be
subject to the review and comment
10
<PAGE>
of such selling Holders in connection with such sale, if any, for a
period of at least five business days, and the Company will not file
any such Registration Statement or Prospectus or any amendment or
supplement to any such Registration Statement or Prospectus (including
all such documents incorporated by reference) to which such selling
Holders shall reasonably object within five Business Days after the
receipt thereof. A selling Holder shall be deemed to have reasonably
objected to such filing if such Registration Statement, amendment,
Prospectus or supplement, as applicable, as proposed to be filed,
contains a material misstatement or omission or fails to comply with
the applicable requirements of the Act;
(vi) promptly prior to the filing of any document that is to
be incorporated by reference into a Registration Statement or
Prospectus, provide copies of such document to the selling Holders in
connection with such exchange or sale, if any, make the Company's and
the Guarantors' representatives available for discussion of such
document and other customary due diligence matters, and include such
information in such document prior to the filing thereof as such
selling Holders may reasonably request;
(vii) subject to reasonable confidentiality procedures, make
available at reasonable times for inspection by the selling Holders
participating in any disposition pursuant to such Registration
Statement and any attorney or accountant retained by such selling
Holders, all financial and other records, pertinent corporate documents
of the Company and the Guarantors and cause the Company's and the
Guarantors' officers, directors and employees to supply all information
reasonably requested by any such selling Holder, attorney or accountant
in connection with such Registration Statement or any post-effective
amendment thereto subsequent to the filing thereof and prior to its
effectiveness;
(viii) if requested by any selling Holders in connection with
such exchange or sale, promptly include in any Registration Statement
or Prospectus, pursuant to a supplement or post-effective amendment if
necessary, such information as such selling Holders may reasonably
request to have included therein, including, without limitation,
information relating to the "Plan of Distribution" of the Transfer
Restricted Securities; and make all required filings of such Prospectus
supplement or post-effective amendment as soon as practicable after the
Company is notified of the matters to be included in such Prospectus
supplement or post-effective amendment;
(ix) furnish to each selling Holder in connection with such
exchange or sale, without charge, at least one copy of the Registration
Statement, as first filed with the Commission, and of each amendment
thereto, including all documents incorporated by reference therein and
all exhibits (including exhibits incorporated therein by reference);s
(x) deliver to each selling Holder, without charge, as many
copies of the Prospectus (including each preliminary prospectus) and
any amendment or supplement thereto as such Persons reasonably may
11
<PAGE>
request; the Company and the Guarantors hereby consent to the use (in
accordance with law) of the Prospectus and any amendment or supplement
thereto by each of the selling Holders in connection with the offering
and the sale of the Transfer Restricted Securities covered by the
Prospectus or any amendment or supplement thereto;
(xi) upon the request of any selling Holder, enter into such
agreements (including underwriting agreements) and make such
representations and warranties and take all such other customary
actions in connection therewith in order to expedite or facilitate the
disposition of the Transfer Restricted Securities pursuant to any
applicable Registration Statement contemplated by this Agreement as may
be reasonably requested by any Holder of Transfer Restricted Securities
in connection with any sale or resale pursuant to any applicable
Registration Statement. In such connection, the Company and the
Guarantors shall:
(A) upon request of any selling Holder, furnish (or
in the case of paragraphs (2) and (3), use its best efforts to
cause to be furnished) to each selling Holder, upon the
effectiveness of the Shelf Registration Statement or upon
Consummation of the Exchange Offer, as the case may be:
(1) a certificate, dated such date, signed
on behalf of the Company and each Guarantor by (x)
the President or any Vice President and (y) a
principal financial or accounting officer of the
Company and such Guarantor, confirming, as of the
date thereof, the matters set forth in paragraphs (a)
through (c) of Section 9 of the Purchase Agreement
and such other similar matters as the selling Holders
may reasonably request;
(2) opinions, dated the date of Consummation
of the Exchange Offer, or the date of effectiveness
of the Shelf Registration Statement, as the case may
be, of counsel for the Company and the Guarantors
covering matters similar to those set forth in
paragraphs (e) and (f) of Section 9 of the Purchase
Agreement and such other matter as the selling
Holders may reasonably request, and in any event
including a statement to the effect that such counsel
has participated in conferences with officers and
other representatives of the Company and the
Guarantors, and representatives of the independent
public accountants for the Company and the
Guarantors, at which the contents of the applicable
Registration Statement and Prospectus were discussed,
although such counsel has not independently verified
the accuracy, completeness or fairness of such
contents; and that such counsel advises that, on the
basis of the foregoing, no facts came to such
counsel's attention that caused such counsel to
believe that the applicable Registration Statement,
at the time such Registration Statement or any
post-effective amendment thereto became effective
and, in the case of the Exchange Offer Registration
Statement, as of the date of Consummation of the
Exchange Offer, contained an untrue
12
<PAGE>
statement of a material fact or omitted to state a
material fact required to be stated therein or
necessary to make the statements therein not
misleading, or that the Prospectus contained in such
Registration Statement as of its date and, in the
case of the opinion dated the date of Consummation of
the Exchange Offer, as of the date of Consummation,
contained an untrue statement of a material fact or
omitted to state a material fact necessary in order
to make the statements therein, in the light of the
circumstances under which they were made, not
misleading. Without limiting the foregoing, such
counsel may state further that such counsel assumes
no responsibility for, and has not independently
verified, the accuracy, completeness or fairness of
the financial statements, notes and schedules and
other financial data included in any Registration
Statement contemplated by this Agreement or the
related Prospectus; and
(3) a customary comfort letter, dated the
date of Consummation of the Exchange Offer, or as of
the date of effectiveness of the Shelf Registration
Statement, as the case may be, from the Company's
independent accountants, in the customary form and
covering matters of the type customarily covered in
comfort letters to underwriters in connection with
underwritten offerings, and affirming the matters set
forth in the comfort letters delivered pursuant to
Section 9(h) of the Purchase Agreement; and
(B) deliver such other documents and certificates as
may be reasonably requested by the selling Holders to evidence
compliance with clause (A) above and with any customary
conditions contained in the any agreement entered into by the
Company and the Guarantors pursuant to this clause (xi);
(xii) prior to any public offering of Transfer Restricted
Securities, cooperate with the selling Holders and their counsel in
connection with the registration and qualification of the Transfer
Restricted Securities under the securities or Blue Sky laws of such
jurisdictions as the selling Holders may request and do any and all
other acts or things necessary or advisable to enable the disposition
in such jurisdictions of the Transfer Restricted Securities covered by
the applicable Registration Statement; provided, however, that neither
the Company nor any Guarantor shall be required to register or qualify
as a foreign corporation where it is not now so qualified or to take
any action that would subject it to the service of process in suits or
to taxation, other than as to matters and transactions relating to the
Registration Statement, in any jurisdiction where it is not now so
subject;
(xiii) issue, upon the request of any Holder of Series A Notes
covered by any Shelf Registration Statement contemplated by this
Agreement, Series B Notes having an aggregate principal amount equal to
the aggregate principal amount of Series A Notes surrendered to the
Company by such Holder in exchange therefor or being sold by such
Holder; such Series B Notes to be registered in the name of such Holder
or in the name of the purchaser(s) of such Series B Notes, as the case
13
<PAGE>
may be; in return, the Series A Notes held by such Holder shall be
surrendered to the Company for cancellation;
(xiv) in connection with any sale of Transfer Restricted
Securities that will result in such securities no longer being Transfer
Restricted Securities, cooperate with the selling Holders to facilitate
the timely preparation and delivery of certificates representing
Transfer Restricted Securities to be sold and not bearing any
restrictive legends; and to register such Transfer Restricted
Securities in such denominations and such names as the selling Holders
may request at least two Business Days prior to such sale of Transfer
Restricted Securities;
(xv) use their respective best efforts to cause the
disposition of the Transfer Restricted Securities covered by the
Registration Statement to be registered with or approved by such other
governmental agencies or authorities as may be necessary to enable the
seller or sellers thereof to consummate the disposition of such
Transfer Restricted Securities, subject to the proviso contained in
clause (xii) above;
(xvi) provide a CUSIP number for all Transfer Restricted
Securities not later than the effective date of a Registration
Statement covering such Transfer Restricted Securities and provide the
Trustee under the Indenture with printed certificates for the Transfer
Restricted Securities which are in a form eligible for deposit with the
Depository Trust Company;
(xvii) otherwise use their respective best efforts to comply
with all applicable rules and regulations of the Commission, and make
generally available to its security holders with regard to any
applicable Registration Statement, as soon as practicable, a
consolidated earnings statement meeting the requirements of Rule 158
(which need not be audited) covering a twelve-month period beginning
after the effective date of the Registration Statement (as such term is
defined in paragraph (c) of Rule 158 under the Act);
(xviii) make appropriate officers of the Company available to
the selling Holders for meetings with prospective purchasers of the
Transfer Restricted Securities and prepare and present to potential
investors customary "road show" material in a manner consistent with
other new issuances of other securities similar to the Transfer
Restricted Securities;
(xix) cause the Indenture to be qualified under the TIA not
later than the effective date of the first Registration Statement
required by this Agreement and, in connection therewith, cooperate with
the Trustee and the Holders to effect such changes to the Indenture as
may be required for such Indenture to be so qualified in accordance
with the terms of the TIA; and execute and use its best efforts to
cause the Trustee to execute, all documents that may be required to
effect such changes and all other forms and documents required to be
filed with the Commission to enable such Indenture to be so qualified
in a timely manner; and
14
<PAGE>
(xx) provide promptly to each Holder upon request each
document filed with the Commission pursuant to the requirements of
Section 13 or Section 15(d) of the Exchange Act.
(d) Restrictions on Holders. Each Holder agrees by acquisition of a
Transfer Restricted Security that, upon receipt of the notice referred to in
Section 6(c)(iii)(C) or any notice from the Company of the existence of any fact
of the kind described in Section 6(c)(iii)(D) hereof (in each case, a
"Suspension Notice"), such Holder will forthwith discontinue disposition of
Transfer Restricted Securities pursuant to the applicable Registration Statement
until (i) such Holder has received copies of the supplemented or amended
Prospectus contemplated by Section 6(c)(iv) hereof, or (ii) such Holder is
advised in writing by the Company that the use of the Prospectus may be resumed,
and has received copies of any additional or supplemental filings that are
incorporated by reference in the Prospectus (in each case, the "Recommencement
Date"). Each Holder receiving a Suspension Notice hereby agrees that it will
either (i) destroy any Prospectuses, other than permanent file copies, then in
such Holder's possession which have been replaced by the Company with more
recently dated Prospectuses or (ii) deliver to the Company (at the Company's
expense) all copies, other than permanent file copies, then in such Holder's
possession of the Prospectus covering such Transfer Restricted Securities that
was current at the time of receipt of the Suspension Notice. The time period
regarding the effectiveness of such Registration Statement set forth in Section
3 or 4 hereof, as applicable (e.g., the one-year period set forth under Section
3(c) and the two-year period set forth under Section 4(a)), shall be extended by
a number of days equal to the number of days in the period, from and including
the date of delivery of the Suspension Notice to the date of delivery of the
Recommencement Date.
SECTION 7. REGISTRATION EXPENSES
(a) All expenses incident to the Company's and the Guarantors'
performance of or compliance with this Agreement will be borne by the Company,
regardless of whether a Registration Statement becomes effective, including
without limitation: (i) all registration and filing fees and expenses; (ii) all
fees and expenses of compliance with federal securities and state Blue Sky or
securities laws; (iii) all expenses of printing (including printing certificates
for the Series B Notes to be issued in the Exchange Offer and printing of
Prospectuses, messenger and delivery services and telephone; (iv) all fees and
disbursements of counsel for the Company, the Guarantors and the Holders of
Transfer Restricted Securities; (v) all application and filing fees in
connection with listing the Series B Notes on a national securities exchange or
automated quotation system pursuant to the requirements hereof; and (vi) all
fees and disbursements of independent certified public accountants of the
Company and the Guarantors (including the expenses of any special audit and
comfort letters required by or incident to such performance).
The Company will, in any event, bear its and the Guarantors' internal
expenses (including, without limitation, all salaries and expenses of its
officers and employees performing legal or accounting duties), the expenses of
any annual audit and the fees and expenses of any Person, including special
experts, retained by the Company or the Guarantors.
15
<PAGE>
(b) In connection with any Shelf Registration Statement required by
this Agreement (including, without limitation, the Exchange Offer Registration
Statement and the Shelf Registration Statement), the Company and the Guarantors
will reimburse the Initial Purchasers and the Holders of Transfer Restricted
Securities being tendered in the Exchange Offer and/or resold pursuant to the
"Plan of Distribution" contained in the Exchange Offer Registration Statement or
registered pursuant to the Shelf Registration Statement, as applicable, for the
reasonable fees and disbursements of not more than one counsel, who shall be
Skadden, Arps, Slate, Meagher & Flom & Affiliates LLP, unless another firm shall
be chosen by the Holders of a majority in principal amount of the Transfer
Restricted Securities for whose benefit such Registration Statement is being
prepared.
SECTION 8. INDEMNIFICATION
(a) The Company and the Guarantors agree, jointly and severally, to
indemnify and hold harmless each Holder, its directors, its officers and each
Person, if any, who controls such Holder (within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act), from and against any and all losses,
claims, damages, liabilities, judgments, (including without limitation, any
legal or other expenses incurred in connection with investigating or defending
any matter, including any action that could give rise to any such losses,
claims, damages, liabilities or judgments) caused by any untrue statement or
alleged untrue statement of a material fact contained in any Registration
Statement, preliminary prospectus or Prospectus (or any amendment or supplement
thereto) provided by the Company to any holder or any prospective purchaser of
Series B Notes, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or judgments are caused by an untrue statement or omission or
alleged untrue statement or omission that is based upon information relating to
any of the Holders furnished in writing to the Company by any of the Holders;
provided, however, that the foregoing indemnity agreement with respect to any
Registration Statement or Prospectus shall not inure in the benefit of any
Holder if it failed to deliver a Prospectus (as then supplemented, provided by
the Company to such Holder in the requisite quantity and on a timely basis to
permit proper delivery) to the person asserting any losses, claims, damages and
liabilities and judgements caused by any untrue statement or alleged untrue
statement of a material fact contained in any Registration Statement or
Prospectus, or caused by any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, if such material misstatement or omission or alleged
material misstatement or omission was cured in the Registration Statement, as
amended, or Prospectus, as supplemented.
(b) Each Holder of Transfer Restricted Securities agrees, severally and
not jointly, to indemnify and hold harmless the Company and the Guarantors, and
their respective directors and officers, and each person, if any, who controls
(within the meaning of Section 15 of the Act or Section 20 of the Exchange Act)
the Company or the Guarantors to the same extent as the foregoing indemnity from
the Company and the Guarantors to each of the Indemnified
16
<PAGE>
Holders, but only with reference to information relating to such Indemnified
Holder furnished in writing to the Company by such Indemnified Holder expressly
for use in any Registration Statement. In no event shall any Indemnified Holder
be liable or responsible for any amount in excess of the amount by which the
total amount received by such Indemnified Holder with respect to its sale of
Transfer Restricted Securities pursuant to a Registration Statement exceeds (i)
the amount paid by such Indemnified Holder for such Transfer Restricted
Securities and (ii) the amount of any damages that such Indemnified Holder has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission.
(c) In case any action shall be commenced involving any person in
respect of which indemnity may be sought pursuant to Section 8(a) or 8(b) (the
"indemnified party"), the indemnified party shall promptly notify the person
against whom such indemnity may be sought (the "indemnifying person") in writing
and the indemnifying party shall assume the defense of such action, including
the employment of counsel reasonably satisfactory to the indemnified party and
the payment of all fees and expenses of such counsel, as incurred (except that
in the case of any action in respect of which indemnity may be sought pursuant
to both Sections 8(a) and 8(b), an Indemnified Holder shall not be required to
assume the defense of such action pursuant to this Section 8(c), but may employ
separate counsel and participate in the defense thereof, but the fees and
expenses of such counsel, except as provided below, shall be at the expense of
the Indemnified Holder). Any indemnified party shall have the right to employ
separate counsel in any such action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the expense of the indemnified
party unless (in respect of which) the employment of such counsel shall have
been specifically authorized in writing by the indemnifying party, (ii) the
indemnifying party shall have failed to assume the defense of such action or
employ counsel reasonably satisfactory to the indemnified party or (iii) the
named parties to any such action (including any impleaded parties) include both
the indemnified party and the indemnifying party, and the indemnified party
shall have been advised by such counsel that there may be one or more legal
defenses available to it which are different from or additional to those
available to the indemnifying party (in which case the indemnifying party shall
not have the right to assume the defense of such action on behalf of the
indemnified party). In any such case, the indemnifying party shall not, in
connection with any one action or separate but substantially similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the fees and expenses of more than one separate
firm of attorneys (in addition to any local counsel) for all indemnified parties
and all such fees and expenses shall be reimbursed as they are incurred. Such
firm shall be designated in writing by a majority of the Indemnified Holders, in
the case of the parties indemnified pursuant to Section 8(a), and by the
Company, in the case of parties indemnified pursuant to Section 8(b). The
indemnifying party shall indemnify and hold harmless the indemnified party from
and against any and all losses, claims, damages, liabilities and judgments by
reason of any settlement of any action (i) effected with its written consent or
(ii) effected without its written consent if the settlement is entered into more
than 45 business days after the indemnifying party shall have received a request
from the indemnified party for reimbursement for the fees and expenses of
counsel (in any case where such fees and expenses are at the expense of the
indemnifying party) and, prior to the date of such settlement, the indemnifying
party shall have failed to comply with such reimbursement request. No
indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement or compromise of, or consent to the entry of
judgment with respect to, any pending or threatened action in respect of which
17
<PAGE>
the indemnified party is or could have been a party and indemnity or
contribution may be or could have been sought hereunder by the indemnified
party, unless such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all liability on claims that
are or could have been the subject matter of such action and (ii) does not
include a statement as to or an admission of fault, culpability or a failure to
act, by or on behalf of the indemnified party.
(d) To the extent that the indemnification provided for in this Section
8 is unavailable to an indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to therein, then each indemnifying
party, in lieu of indemnifying such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a result of such losses,
claims, damages, liabilities or judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the
Guarantors, on the one hand, and the Holders, on the other hand, from their sale
of Transfer Restricted Securities or (ii) if the allocation provided by clause
8(d)(i) is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Company and the Guarantors, on the one hand,
and of the Indemnified Holder, on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or judgments, as well as any other relevant equitable
considerations. The relative fault of the Company and the Guarantors, on the one
hand, and of the Indemnified Holder, on the other hand, shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or such Guarantor, on the one
hand, or by the Indemnified Holder, on the other hand, and the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a result of
the losses, claims, damages, liabilities and judgments referred to above shall
be deemed to include, subject to the limitations set forth in the second
paragraph of Section 8(a), any legal or other fees or expenses reasonably
incurred by such party in connection with investigating or defending any action
or claim.
The Company, the Guarantors and each Holder agree that it would not be
just and equitable if contribution pursuant to this Section 8(d) were determined
by pro rata allocation (even if the Holders were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in the immediately preceding paragraph. The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or judgments referred to in the immediately
preceding paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any matter, including any
action that could have given rise to such losses, claims, damages, liabilities
or judgments. Notwithstanding the provisions of this Section 8, no Holder or its
related Indemnified Holders shall be required to contribute, in the aggregate,
any amount in excess of the amount by which the total received by such Holder
with respect to the sale of its Transfer Restricted Securities pursuant to a
Registration Statement exceeds the sum of (A) the amount paid by such Holder for
such Transfer Restricted Securities plus (B) the amount of any damages which
such Holder has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty
18
<PAGE>
of fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Holders' obligations to contribute pursuant
to this Section 8(c) are several in proportion to the respective principal
amount of Transfer Restricted Securities held by each of the Holders hereunder
and not joint.
SECTION 9. RULE 144 and RULE 144A
The Company and each Guarantor agrees with each Holder, for so long as
any Transfer Restricted Securities remain outstanding and during any period in
which the Company or such Guarantor (i) is not subject to Section 13 or 15(d) of
the Exchange Act, to make available, upon request of any Holder of Transfer
Restricted Securities, to any Holder or beneficial owner of Transfer Restricted
Securities in connection with any sale thereof and any prospective purchaser of
such Transfer Restricted Securities designated by such Holder or beneficial
owner, the information required by Rule 144A(d)(4) under the Act in order to
permit resales of such Transfer Restricted Securities pursuant to Rule 144A, and
(ii) is subject to Section 13 or 15 (d) of the Exchange Act, to make all filings
required thereby in a timely manner in order to permit resales of such Transfer
Restricted Securities pursuant to Rule 144.
SECTION 10. MISCELLANEOUS
(a) Remedies. The Company and the Guarantors acknowledge and agree that
any failure by the Company and/or the Guarantors to comply with their respective
obligations under Sections 3 and 4 hereof may result in material irreparable
injury to the Initial Purchasers or the Holders for which there is no adequate
remedy at law, that it will not be possible to measure damages for such injuries
precisely and that, in the event of any such failure, the Initial Purchasers or
any Holder may obtain such relief as may be required to specifically enforce the
Company's and the Guarantors' obligations under Sections 3 and 4 hereof. The
Company and the Guarantors further agree to waive the defense in any action for
specific performance that a remedy at law would be adequate.
(b) No Inconsistent Agreements. Neither the Company nor any Guarantor
will, on or after the date of this Agreement, enter into any agreement with
respect to its securities that is inconsistent with the rights granted to the
Holders in this Agreement or otherwise conflicts with the provisions hereof.
Neither the Company nor any Guarantor has previously entered into any agreement
granting any registration rights with respect to its securities to any Person.
The rights granted to the Holders hereunder do not in any way conflict with and
are not inconsistent with the rights granted to the holders of the Company's and
the Guarantors' securities under any agreement in effect on the date hereof.
(c) Amendments and Waivers. The provisions of this Agreement may not be
amended, modified or supplemented, and waivers or consents to or departures from
the provisions hereof may not be given unless (i) in the case of Section 5
hereof and this Section 10(c)(i), the Company has obtained the written consent
of Holders of all outstanding Transfer Restricted Securities and (ii)
19
<PAGE>
in the case of all other provisions hereof, the Company has obtained the written
consent of Holders of a majority of the outstanding principal amount of Transfer
Restricted Securities (excluding Transfer Restricted Securities held by the
Company of its Affiliates). Notwithstanding the foregoing, a waiver or consent
to departure from the provisions hereof that relates exclusively to the rights
of Holders whose securities are being tendered pursuant to the Exchange Offer
and that does not affect directly or indirectly the rights of other Holders
whose securities are not being tendered pursuant to such Exchange Offer may be
given by the Holders of a majority of the outstanding principal amount of
Transfer Restricted Securities subject to such Exchange Offer.
(d) Third-Party Beneficiary. The Holders shall be third-party
beneficiaries to the agreements made hereunder between the Company and the
Guarantors, on the one hand, and the Initial Purchasers, on the other hand, and
shall have the right to enforce such agreements directly to the extent they may
deem such enforcement necessary or advisable to protect its rights or the rights
of Holders hereunder.
(e) Notices. All notices and other communications provided for or
permitted hereunder shall be made in writing by hand-delivery, first-class mail
(registered or certified, return receipt requested), telex, telecopier, or air
courier guaranteeing overnight delivery:
(i) if to a Holder, at the address set forth on the records of
the Registrar under the Indenture, with a copy to the Registrar under
the Indenture; and
(ii) if to the Company or the Guarantors, to:
The Holt Group, Inc.
701 North Broadway
Gloucester, NJ 08030
Telecopier No.: 609-742-3066
Attention: Thomas J. Holt, Sr.
With a copy to:
Pepper Hamilton LLP
3000 Two Logan Square
18th & Arch Streets
Philadelphia, PA 19103
Telecopier No.: 215-981-4750
Attention: Lisa Kabnick, Esq.
All such notices and communications shall be deemed to have been duly
given: at the time delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; when
transmission confirmed, if telecopied; and on the next business day, if timely
delivered to an air courier guaranteeing overnight delivery.
20
<PAGE>
Copies of all such notices, demands or other communications shall be
concurrently delivered by the Person giving the same to the Trustee at the
address specified in the Indenture.
Upon the date of filing of the Exchange Offer or a Shelf Registration
Statement, as the case may be, notice shall be delivered to Donaldson, Lufkin &
Jenrette Securities Corporation, on behalf of the Initial Purchasers (in the
form attached hereto as Exhibit A) and shall be addressed to: Attention: Louise
Guarneri (Compliance Department), 277 Park Avenue, New York, New York 10172.
(f) Successors and Assigns. This Agreement shall inure to the benefit
of and be binding upon the successors and assigns of each of the parties,
including without limitation and without the need for an express assignment,
subsequent Holders of Transfer Restricted Securities; provided, that nothing
herein shall be deemed to permit any assignment, transfer or other disposition
of Transfer Restricted Securities in violation of the terms hereof or of the
Purchase Agreement or the Indenture. If any transferee of any Holder shall
acquire Transfer Restricted Securities in any manner, whether by operation of
law or otherwise, such Transfer Restricted Securities shall be held subject to
all of the terms of this Agreement, and by taking and holding such Transfer
Restricted Securities such Person shall be conclusively deemed to have agreed to
be bound by and to perform all of the terms and provisions of this Agreement,
including the restrictions on resale set forth in this Agreement and, if
applicable, the Purchase Agreement, and such Person shall be entitled to receive
the benefits hereof.
(g) Counterparts. This Agreement may be executed in any number of
counterparts and by the parties hereto in separate counterparts, each of which
when so executed shall be deemed to be an original and all of which taken
together shall constitute one and the same agreement.
(h) Headings. The headings in this Agreement are for convenience of
reference only and shall not limit or otherwise affect the meaning hereof.
(i) Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO THE
CONFLICT OF LAW RULES THEREOF.
(j) Severability. In the event that any one or more of the provisions
contained herein, or the application thereof in any circumstance, is held
invalid, illegal or unenforceable, the validity, legality and enforceability of
any such provision in every other respect and of the remaining provisions
contained herein shall not be affected or impaired thereby.
(k) Entire Agreement. This Agreement is intended by the parties as a
final expression of their agreement and intended to be a complete and exclusive
statement of the agreement and
21
<PAGE>
understanding of the parties hereto in respect of the subject matter contained
herein. There are no restrictions, promises, warranties or undertakings, other
than those set forth or referred to herein with respect to the registration
rights granted with respect to the Transfer Restricted Securities. This
Agreement supersedes all prior agreements and understandings between the parties
with respect to such subject matter.
22
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
THE HOLT GROUP, INC.
By: /s/ Thomas J. Holt, Sr.
-----------------------------------
Name: Thomas J. Holt, Sr.
Title: President
HOLT HAULING AND
WAREHOUSING SYSTEM, INC.
By: /s/ Thomas J. Holt, Sr.
-----------------------------------
Name: Thomas J. Holt, Sr.
Title: President
HOLT CARGO SYSTEMS, INC.
By: /s/ Thomas J. Holt, Sr.
-----------------------------------
Name: Thomas J. Holt, Sr.
Title: President
MURPHY MARINE SERVICES, INC.
By: /s/ Thomas J. Holt, Sr.
-----------------------------------
Name: Thomas J. Holt, Sr.
Title: Chairman
WILMINGTON STEVEDORES, INC.
By: /s/ Thomas J. Holt, Sr.
-----------------------------------
Name: Thomas J. Holt, Sr.
Title: Chairman
23
<PAGE>
NPR HOLDING CORPORATION, INC.
By: /s/ Ronald M. Katims
-----------------------------------
Name: Ronald M. Katims
Title: President
NPR-NAVIERAS RECEIVABLES, INC.
By: /s/ Ronald M. Katims
-----------------------------------
Name: Ronald M. Katims
Title: President
NPR, INC.
By: /s/ Ronald M. Katims
-----------------------------------
Name: Ronald M. Katims
Title: President
NPR, S.A., INC.
By: /s/ Ronald M. Katims
-----------------------------------
Name: Ronald M. Katims
Title: President
24
<PAGE>
DONALDSON, LUFKIN & JENRETTE
SECURITIES CORPORATION
By: /s/ David Posnick
--------------------------------
Name: David Posnick
Title: Senior Vice President
25
<PAGE>
SCHEDULE I
I-1
<PAGE>
EXHIBIT A
NOTICE OF FILING OF
EXCHANGE OFFER / SHELF REGISTRATION STATEMENT
To: Donaldson, Lufkin & Jenrette Securities Corporation
277 Park Avenue
New York, New York 10172
Attention: Louise Guarneri (Compliance Department)
Fax: (212) 892-7272
From: The Holt Group, Inc.
701 North Broadway
Gloucester, NJ 08030
_____ % Senior Notes Due 2006
Date: ________________, 1998
For your information only (NO ACTION REQUIRED):
Today, ______, 199_, we filed Exchange Offer Registration Statement/a
Shelf Registration Statement with the Securities and Exchange Commission.
A-1
STOCK PURCHASE AGREEMENT
------------------------
STOCK PURCHASE AGREEMENT made this 25th day of September, 1997 by and
among NPR HOLDING CORPORATION, a Delaware corporation (the "Company"), each of
the shareholders of the Company set forth on the signature pages hereto (each, a
"Seller" and collectively, the "Sellers") and HOLT CARGO SYSTEMS, INC., a
Delaware corporation (the "Purchaser").
WHEREAS, the Sellers collectively own one hundred percent (100%) of the
issued and outstanding capital stock of the Company;
WHEREAS, the Purchaser desires to purchase and the Sellers desire to
sell, a certain number of shares of Class A-1 Common Stock, Class B Common Stock
and Class C Common Stock such that the shares transferred hereby will represent
at least 92% of the Common Stock, as more particularly set forth herein;
WHEREAS, the Purchaser will contribute to the capital of the Company an
amount necessary to allow the Company to repay certain outstanding indebtedness
of the Company and to redeem the outstanding preferred stock of the Company, as
more particularly set forth herein;
WHEREAS, the Management Sellers will have the option to retain certain
shares of capital stock of the Company, as more particularly set forth herein;
NOW THEREFORE, in consideration of the mutual covenants and agreements
set forth herein and for good and valuable consideration, the receipt of which
is hereby acknowledged, the parties agree as follows:
ARTICLE I
DEFINITIONS
-----------
Section 1.1. Definitions. As used in this Agreement, and unless the
context requires a different meaning, the following terms have the meanings
indicated:
"Act" means the Securities Act of 1933, as amended, and the rules and
regulations of the Commission thereunder.
<PAGE>
"Affiliate" means, with respect to any Person, (i) any other Person
(including, but not limited to, all directors, officers and partners of such
Person) or indirectly controlling, controlled by, or under direct or indirect
common control with, such Person, including, without limitation each member of
management, (ii) any other Person of which such Person is an officer, director
or partner or (iii) any member of the Family Group of such Person or of any
individual who is an Affiliate of such Person by reason of clause (i) or (ii) of
this definition. The term "Family Group" means, as to any individual, such
individual's spouse, ancestors, lineal descendants, siblings, mother-in-law,
father-in-law, sons-in-law, daughters-in-law, brothers-in-law, stepchildren,
and shall include adoptive relations, together with trusts for the benefit of
any of the foregoing, provided that all of the income beneficiaries and
remaindermen of any such trust are such individual's spouse, ancestors or lineal
descendants. A Person shall be deemed to control another Person if such Person
possesses, directly or indirectly, the power to direct or cause the direction of
the management and policies of such other Person, whether through the ownership
of voting securities, by contract or otherwise.
"Agreement" means this Agreement, as the same may be amended,
supplemented or modified in accordance with the terms hereof and in effect.
"Audited Financial Statements" has the meaning set forth in Section
6.5(b).
"Balance Sheet" has the meaning set forth in Section 2.4(a).
"Bridge Notes" has the meaning set forth in the DLJ Commitment Letter.
"Business Day" means each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to close.
"Class A-1 Common Stock" has the meaning set forth in Section 2.2.
"Class A-2 Common Stock" has the meaning set forth in Section 2.2.
"Class B Common Stock" has the meaning set forth in Section 2.2.
"Class C Common Stock" has the meaning set forth in Section 2.2.
"Closing" has the meaning set forth in Section 5.1(c).
"Closing Date" has the meaning set forth in Section 5.1(c).
-2-
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended, and the
rules and regulations promulgated thereunder.
"Common Stock" has the meaning set forth in Section 2.2.
"Companies" means the Company and each of its Subsidiaries.
"Company" has the meaning set forth in the first paragraph of this
Agreement.
"Company Property" means any real property and improvements owned,
leased, used, operated or occupied by the Company or any of its Subsidiaries.
"Confidentiality Agreement" has the meaning set forth in Section 6.3.
"DLJ Commitment Fee" has the meaning set forth in the DLJ Commitment
Letter.
"DLJ Commitment Letter" means the commitment letter from DLJ Bridge,
Inc. to Holt Cargo Systems, Inc. dated September 12, 1997 as in effect as of
such date.
"DLJ Takedown Fee" has the meaning set forth in the DLJ Commitment
Letter.
"Downpayment" has the meaning set forth in Section 5.1(d).
"Employment Benefit Plans" has the meaning set forth in Section 2.12.
"Encumbrances" has the meaning set forth in Section 2.5.
"Environmental Claims" means administrative, regulatory or judicial
actions, suits, demands, demand letters, claims, liens, notices of non-
compliance or violation, investigations or proceedings relating in any way to
any Environmental Law or any permit issued under any such Law (hereafter
"Claims"), including (a) Claims by governmental or regulatory authorities for
enforcement, cleanup, removal, response, remedial or other actions or damages
pursuant to any applicable Environmental Law, and (b) Claims by any third party
seeking damages, contribution, indemnification, cost recovery, compensation or
injunctive relief resulting from Hazardous Materials or arising from alleged
injury or threat of injury to health, safety or the environment.
-3-
<PAGE>
"Environmental Law" means any federal, state or local statute, law,
rule, regulation, ordinance, code, policy or rule of common law in effect and in
each case as amended as of the Closing Date, and any judicial or administrative
interpretation thereof as of the Closing Date, including any judicial or
administrative order, consent decree or judgment, relating to the environment,
health, safety or Hazardous Materials, including the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as amended, 42 U.S.C. ss.
9601 et seq.; the Resource Conservation and Recovery Act, as amended, 42 U.S.C.
ss. 6901 et seq.; the Federal Water Pollution Control Act, as amended, 33 U.S.C.
ss. 1251 et seq.; the Toxic Substances Control Act, 15 U.S.C. ss. 2601 et seq.;
the Clean Air Act, 42 U.S.C. ss. 7401 et seq.; the Safe Drinking Water Act, 42
U.S.C. ss. 300f et seq.; the Oil Pollution Act of 1990, 33 U.S.C. ss. 2701 et
seq.; the Hazardous Material Transportation Act, 42 U.S.C. ss. 1801 et. seq.;
the Puerto Rico Public Community Right to Know Act of 1986, 12 L.P.R.A. ss. 1121
et. seq. and their state and local counterparts and equivalents.
"ERISA" means the Employment Retirement Income Security Act of 1974,
and the rules and regulations promulgated thereunder.
"ERISA Affiliate" has the meaning set forth in Section 2.12.
"Escrow Agreement" means that certain Escrow Agreement dated September
5, 1997 by and among the Sellers and the Purchaser.
"Hazardous Materials" means (a) any petroleum or petroleum products,
radioactive materials, asbestos in any form that is friable, urea formaldehyde
foam insulation, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; and (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "extremely
hazardous wastes," "restricted hazardous wastes," "toxic substances," "toxic
pollutants," or words of similar import, under any applicable Environmental Law.
"HSR Act" has the meaning set forth in Section 2.8.
"Interim Financial Statements" has the meaning set forth in Section
2.4(a).
"Joint Venture" means the joint venture entered pursuant to the joint
venture agreement, dated as of August 6, 1997, by and between the Company and
Transroll Navegacao, S.A.
-4-
<PAGE>
"Management Sellers" means Ronald M. Katims, Paul J. Wittig, Mario F.
Escudero, Edward W. O'Donnell, Martin McDonald, Edward G. Cawthon, John S.
Tirpak, Carl Robert Fox, Dean Witter Reynolds Custodian for Mario Escudero (IRA)
and Dean Witter Reynolds Custodian for John Tirpak (IRA).
"Material Adverse Effect" means any event, change or effect that would
materially and adversely affect the financial condition, results of operations,
assets, business or prospects of the Company and its Subsidiaries taken as a
whole, excluding in all cases: (i) events or conditions generally affecting the
industry in which such person and its subsidiaries operate or arising from
changes in general business or economic conditions; (ii) any effect resulting
from any change in law or generally accepted accounting principles, which
generally affects entities such as such person; and (iii) events resulting from
the execution and/or announcement of this Agreement.
"Multiemployer Plan" has the meaning set forth in Section 2.12.
"Offering Memorandum" has the meaning set forth in Section 6.7.
"Permitted Encumbrances" has the meaning set forth in Section 2.5.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or an agency or political subdivision thereof) or other entity of
any kind.
"Preferred Stock" has the meaning set forth in Section 2.2.
"Purchase Price" has the meaning set forth in Section 5.1(b).
"Purchase Price Reduction" has the meaning set forth in Section 6.6.
"Purchaser" has the meaning set forth in the first paragraph of this
Agreement.
"Purchaser Contribution" has the meaning set forth in Section 5.1(b).
"Pyramid" has the meaning set forth in Section 6.6.
"Remaining Debt" has the meaning set forth in Section 5.2(c).
"Returns" has the meaning set forth in Section 2.10.
-5-
<PAGE>
"Sellers" has the meaning set forth in the first paragraph of this
Agreement.
"Shares" has the meaning set forth in Section 5.1(a)
"Subsidiary" means any Person of which the Company (either alone or
together with other Subsidiaries of the Company) owns, directly or indirectly,
more than 50 % of the stock or other equity interests that are generally
entitled to vote for the election of the board of directors or other governing
body of such Person.
"Taxes" has the meaning set forth in Section 2.10.
"Transfer Taxes" has the meaning set forth in Section 10.3.
"Unaudited Financial Statements" has the meaning set forth in Section
2.4(a).
"U.S. Citizen" means an entity which satisfies the citizenship
requirements of 46 U.S.C. ss.802 for purposes of owning vessels operating in the
United States coastwise trades as extended to island Territories and possessions
of the United States by 46 U.S.C. ss. 877.
Section 1.2. Accounting Terms: Financial Statements. All accounting
terms used herein not expressly defined in this Agreement shall have the
respective meanings given to them in accordance with generally accepted
accounting principles in the United States applied on a consistent basis. All
determinations to which accounting principles apply shall be made in accordance
with generally accepted accounting principles in the United States applied on a
consistent basis.
ARTICLE II
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
---------------------------------------------
The Company hereby represents and warrants as follows:
Section 2.1. Existence and Good Standing of the Company and
Subsidiaries. The Company and each of its Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization and has all requisite corporate power and
authority to own, lease and operate its properties and to carry on its business
as now being conducted. The Company and each of its Subsidiaries is duly
qualified or licensed as a foreign corporation to do business, and is in good
standing in each jurisdiction in which the
-6-
<PAGE>
character or location of the property owned, leased or operated by such Person
or the nature of the business conducted by it makes such qualification
necessary, except where the failure to be so qualified or licensed would not
have a Material Adverse Effect. None of the Companies is in material violation
of any term of its Certificate of Incorporation or By-Laws, as amended to date.
Section 2.2. Capitalization.
(a) The authorized capital stock of the Company consists of: (i) 16,000
shares of Class A-1 Common Stock, par value $0.001 per share (the "Class A-1
Common Stock"), of which 15,177.414 shares are issued outstanding and no shares
are held in the Company's treasury, (ii) 16,000 shares of Class A-2 Common
Stock, par value $0.001 per share (the "Class A-2 Common Stock"), of which no
shares are issued and outstanding and no shares are held in the Company's
treasury, (iii) 450 shares of Class B Common Stock, par value $0.001 per share
(the "Class B Common Stock"), all of which shares are issued and outstanding and
none of which shares are held in the Company's treasury, (iv) 2,057 shares of
Class C Common Stock, par value $0.001 per share (the "Class C Common Stock" and
together with the Class A-1 Common Stock, the Class A-2 Common Stock and the
Class B Common Stock, the "Common Stock"), of which 2,056.8 shares are issued
and outstanding and no shares are held in the Company's treasury and (v) 688.86
shares of Series A Preferred Stock, par value $0.01 per share (the "Preferred
Stock"), all of which shares are issued and outstanding and none of which shares
are held in the Company's treasury.
(b) Except as disclosed in (a) above, no other shares of capital stock
or voting securities of the Company are issued, reserved for issuance or
outstanding, there are no outstanding subscriptions, warrants, options or other
rights, commitments or agreements to purchase or acquire any shares of capital
stock or other equity securities of the Company.
(c) Except as disclosed on Schedule 2.2, none of the Companies has any
agreements with any of the Sellers or any other Person that affects the ability
of the Sellers to transfer the Shares, free and clear of all Encumbrances,
pursuant to the terms of this Agreement.
(d) Schedule 2.2 sets forth a complete and accurate list of all
Subsidiaries of each of the Companies, showing the percentage of each of the
Companies' ownership of the outstanding capital stock in each of the
Subsidiaries. The authorized capital stock of each Subsidiary currently consists
of a single class of common stock, the number and authorized shares of which are
set forth opposite each of such Subsidiary's name in Schedule 2.2. Except as set
forth on Schedule 2.2, no other shares of capital stock or voting securities of
any Subsidiary are issued, reserved
-7-
<PAGE>
for issuance or outstanding, there are no outstanding subscriptions, warrants,
options or other rights, commitments or agreements to purchase or acquire any
shares of capital stock or other equity securities of any Subsidiary. Except as
set forth on Schedule 2.2, all of the outstanding capital stock of each
Subsidiary has been validly issued, is fully paid and nonassessable, is free of
any Encumbrances, and has not been issued in violation of preemptive rights.
Section 2.3. Authorization and Validity of Agreement. The Company has
the requisite corporate power and authority to execute and deliver this
Agreement and to perform its obligations hereunder. The execution, delivery and
performance of this Agreement by the Company, and the consummation by the
Company of the transactions contemplated hereby, has been duly authorized and
approved by its Board of Directors and no other corporate or shareholder action
on the part of the Company is necessary to authorize the execution, delivery and
performance of this Agreement by the Company and the consummation of the
transactions contemplated hereby. This Agreement has been duly executed and
delivered by the Company and, assuming the due execution of this Agreement by
the Purchaser and the Sellers, is a valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except to the
extent that its enforceability may be subject to applicable bankruptcy,
insolvency, reorganization and similar laws affecting the enforcement of
creditors' rights generally and to general equitable principles.
Section 2.4. Financial Statements and No Material Adverse Changes.
(a) The Company has heretofore furnished the Purchaser with (a)
unaudited consolidated balance sheets of the Company as of December 31, 1995 and
January 4, 1997 (the January 4, 1997 balance sheet, the "Balance Sheet") and the
related statements of operations, shareholders' equity and cash flows for the
periods then ended (the "Unaudited Financial Statements") and (b) an unaudited
consolidated balance sheet of the Company as at August 31, 1997 and the related
statement of operations for the eight months then ended (the "Interim Financial
Statements"). The Unaudited Financial Statements, including the footnotes
thereto, except as indicated therein, and except for normal year end adjustments
(with respect to the Interim Financial Statements), have been prepared in
accordance with generally accepted accounting principles, consistently applied,
and fairly present in all material respects the financial condition and results
of the operations of the Company and its Subsidiaries taken as a whole at such
dates and for such periods. Schedule 2.4a attached hereto sets forth an itemized
list of all outstanding indebtedness for borrowed money of the Company as of
September 22, 1997.
(b) Except as set forth in Schedule 2.4b attached hereto, since the
date of the Balance Sheet (i) the Company and each of its Subsidiaries have
conducted
-8-
<PAGE>
its business in the ordinary course and in a manner consistent with past
practice and no change, event or circumstance has occurred that would have a
Material Adverse Effect, (ii) other than in the ordinary course of business,
none of the Companies has purchased, sold, leased, pledged or otherwise acquired
or disposed of any properties or assets relating to the business or operations
of any of the Companies and (iii) except as provided herein, none of the
Companies has made any dividends or distributions of cash or property to any of
its shareholders.
(c) Except (i) as and to the extent reflected or adequately reserved
against in the Balance Sheet, (ii) for liabilities which have been incurred
since the date of the Balance Sheet in the ordinary course of business
consistent with past practice and (iii) as set forth on Schedule 2.4c; neither
the Company nor any of its Subsidiaries have any outstanding liabilities or
obligations, secured or unsecured (whether absolute, accrued, contingent or
otherwise), matured or unmatured that would have a Material Adverse Effect.
Section 2.5. Title to Properties: Encumbrances. Except as set forth in
Schedule 2.5 attached hereto and except for such properties and assets which
have been sold or otherwise disposed of in the ordinary course of business, the
Company and each Subsidiary has good title to its material properties and
assets, including, without limitation, the material properties and assets
reflected in the Balance Sheet, subject to no lien, encumbrance, restriction or
claim of any kind or character ("Encumbrances") except for (a) Encumbrances
reflected in the Balance Sheet or on Schedule 2.5, (b) Encumbrances arising by
operation of law, (c) Encumbrances for current taxes, assessments or
governmental charges or levies on property not yet due and delinquent and (d)
Encumbrances which do not materially affect the operation of the businesses of
the Company and its Subsidiaries, taken as a whole (Encumbrances of the type
described in clauses (a) through (d) above, inclusive, are hereinafter sometimes
referred to as "Permitted Encumbrances"). Except as set forth on Schedule 2.5
attached hereto, none of the Company's lancers has any material defect or
mechanical malfunction that would result in any lancer being out of service for
more than one month within the next year, assuming that the Company were to use
its best efforts to repair such lancer, other than defects and malfunctions that
are cured or fixed in the ordinary course of business. Except as expressly set
forth herein, the Company makes no representation or warranty of
merchantability, fitness for a particular purpose or any other express or
implied warranty of any nature (all such implied warranties being hereby
excluded other than good title) with respect to the personal property owned by
the Company, such personal property being in "as is" condition with all faults.
Section 2.6. Transactions with Affiliates. Schedule 2.6 attached hereto
identifies all material contracts, commitments, indebtedness and agreements in
effect as of the date hereof and which will continue in effect after the Closing
Date, by and
-9-
<PAGE>
between the Company or any of its Subsidiaries on the one hand and any Seller or
any of its Affiliates (other than the Company and its Subsidiaries) on the
other.
Section 2.7. Material Contracts. Except as set forth in Schedule 2.7
attached hereto, neither the Company nor any of its Subsidiaries is bound by (i)
any contract, agreement or commitment not in the ordinary course of business
involving annual expenditures or receipts of the Company or any of its
Subsidiaries in excess of $150,000 which is not cancelable without penalty
within 90 days; (ii) any joint venture, partnership or other contract or
agreement involving a material sharing of profits, losses, costs, or liabilities
by the Company or any of its Subsidiaries with any other Person; (iii) any
contract or agreement containing covenants which in any way purport to restrict
the Company's or any of its Subsidiaries' business activity or purport to limit
the freedom of the Company or any of its Subsidiaries to engage in any line of
business or to compete with any Person; (iv) any employment contracts or
agreements with any officer or employee of any of the Companies; and (v) any
collective bargaining or other labor or union contracts or agreements. Except as
otherwise set forth in Schedule 2.7 attached hereto, neither the Company nor any
of its Subsidiaries has violated any term or condition of any such contract set
forth on such Schedules in any manner which would have a Material Adverse
Effect, and to the knowledge of the Company, no action or event has occurred, or
is threatened, which, with or without notice or the passage of time or
otherwise, would constitute or result in such a violation or breach.
Section 2.8. Consents and Approvals: No Violations. Except as set forth
in Schedule 2.8 attached hereto and assuming all filings required by the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the "HSR
Act"), are duly made and the waiting period thereunder has been terminated or
has expired, the execution and delivery of this Agreement by the Company and the
consummation of the transactions contemplated hereby (a) will not violate or
contravene any provision of the Certificate of Incorporation or By-Laws of the
Company or any of its Subsidiaries, (b) will not violate or contravene any
statute, rule, regulation, order or decree of any public body or authority by
which the Company or any of its Subsidiaries is bound or by which any of their
properties or assets are bound, (c) will not require any filing with, or permit,
consent or approval of, or the giving of any notice to, any governmental or
regulatory body, agency or authority on or prior to the Closing Date, and (d)
will not result in a violation or breach of, or constitute (with or without due
notice or lapse of time or both) a default (or give rise to any right of
termination, cancellation, payment or acceleration) under, or result in the
creation of any Encumbrance upon any of the properties or assets of the Company
or any of its Subsidiaries under, any of the terms, conditions or provisions of
any note, bond, mortgage, indenture, license, franchise, permit, agreement,
lease, franchise agreement or any other instrument or obligation to which the
Company or any of its Subsidiaries is a party, or by which it or any of their
properties or assets may be bound, excluding
-10-
<PAGE>
from the foregoing clauses (b), (c) and (d) filings, notices, permits, consents
and approvals the absence of which, and violations, breaches, defaults,
conflicts and liens which would not have a Material Adverse Effect.
Section 2.9. Litigation. Except as set forth in Schedule 2.9 attached
hereto, there is no action, suit or proceeding at law or in equity by any Person
or any arbitration or any administrative or other proceeding by or before any
governmental body, instrumentality or agency, pending or, to the knowledge of
the Company, threatened against the Company or any of its Subsidiaries which if
adversely determined would have a Material Adverse Effect.
Section 2.10. Taxes. The Company and its Subsidiaries have filed or
caused to be filed, or will file or cause to be filed on or prior to the Closing
Date, all material federal, state, local and foreign tax returns and reports
(collectively, the "Returns") which are required to be filed with respect to the
Company and its Subsidiaries on or prior to the Closing Date (taking into
account any properly granted extensions of time to file any Return). Except as
set forth in Schedule 2.10, each of the Returns is complete and accurate in all
material respects. Except as set forth in Schedule 2.10 and except with respect
to any transfers of interest in the Joint Venture, all material federal, state,
local and foreign taxes (including interest and penalties, if any)
(collectively, "Taxes") due and payable with respect to the Company and its
Subsidiaries relating to taxable years or other taxable periods ending on or
prior to the Closing Date have been, or on or prior to the Closing Date will be,
paid or adequately disclosed in accordance with GAAP as a continuing liability
of the Company.
Section 2.11. Compliance with Laws. To the knowledge of the Company,
the Company and each of its Subsidiaries is in compliance with all applicable
laws, regulations, orders, permits, judgments and decrees except where the
failure to so comply would not have a Material Adverse Effect.
Section 2.12. Employee Benefit Plans. Each employee benefit plan within
the meaning of Section 3(3) of ERISA, maintained by the Company and/or any of
its Subsidiaries or any organization which, together with the Company and/or any
such Subsidiary, would be treated as a "single employer" within the meaning of
Section 414(b) or (c) of the Code (an "ERISA Affiliate"), or to which the
Company or any such Subsidiary or ERISA Affiliate contributes (or has any
obligation to contribute) or is a party (collectively, the "Employee Benefit
Plans") is listed on Schedule 2.12 attached hereto. Except as set forth on such
Schedule 2.12, or to the extent that any breach of the representations set forth
in this sentence would not have a Material Adverse Effect on the Company: (a)
each Employee Benefit Plan (other than any Employee Benefit Plan that is a
"multiemployer plan," within the meaning of Section 4001(a)(3) of ERISA (a
"Multiemployer Plan")) is in compliance with applicable law and has been
-11-
<PAGE>
administered and operated in all respects in accordance with its terms; (b) each
Employee Benefit Plan (other than any Multiemployer Plan) which is intended to
be "qualified" within the meaning of Section 401(a) of the Code, has received a
favorable determination letter from the Internal Revenue Service and, to the
knowledge of the Company, no event has occurred and no condition exists which
could reasonably be expected to result in the revocation of any such
determination; (c) the actuarial present value of the accumulated plan benefits
(whether or not vested) under any Employee Benefit Plan covered by Title IV of
ERISA (other than any Multiemployer Plan) as of the close of its most recent
plan year did not exceed the fair value of the assets allocable thereto; (d) no
Employee Benefit Plan covered by Title IV of ERISA (other than any Multiemployer
Plan) has been terminated and no proceedings have been instituted to terminate
or appoint a trustee to administer any such plan; (e) no "reportable event" (as
defined in Section 4043 of ERISA) has occurred with respect any Employee Benefit
Plan covered by Title IV of ERISA (other than any Multiemployer Plan); (f) no
Employee Benefit Plan (other than any Multiemployer Plan) subject to Section 412
of the Code or Section 302 of ERISA has incurred any accumulated funding
deficiency within the meaning of Section 412 of the Code or Section 302 of
ERISA, or obtained a waiver of any minimum funding standard or an extension of
any amortization period under Section 412 of the Code or Section 303 or 304 of
ERISA; (g) the Company and each ERISA Affiliate have made all contributions to
each Multiemployer Plan required by the terms of each such Multiemployer Plan or
any collectively bargained agreement; (h) neither the Company nor any ERISA
Affiliate has incurred any unsatisfied withdrawal liability under Part 1 of
Subtitle E of Title IV of ERISA to any Multiemployer Plan; and (i) neither the
Company nor any of its Subsidiaries, nor, to the Company's knowledge, any other
"disqualified person" or "party in interest" (as defined in Section 4975(e)(2)
of the Code and Section 3(14) of ERISA, respectively) has engaged in any
transactions in connection with any Employee Benefit Plan that could reasonably
be expected to result in the imposition of a penalty pursuant to Section 502 of
ERISA, damages pursuant to Section 409 of ERISA or a tax pursuant to Section
4975 of the Code.
Section 2.13. Environmental Matters. Except as set forth on Schedule
2.13, to the knowledge of the Company:
(a) Hazardous Materials have not been generated, used, treated or
stored on any Company Property, except for quantities used or stored at such
location in compliance with Environmental Laws and required in connection with
the normal operations and maintenance of such location;
(b) Hazardous Materials have not been released or disposed of on any
Company Property, except for quantities released or disposed of on such location
in
-12-
<PAGE>
compliance with Environmental Laws and required in connection with the normal
operation and maintenance of such location;
(c) the Company and its Subsidiaries are in compliance in all material
respects with Environmental Laws and the requirements of permits issued under
such Environmental Laws with respect to any Company Property;
(d) there are no pending or threatened Environmental Claims against the
Company, any of its subsidiaries or any Company Property; and
(e) there are no underground storage tanks located on any Company
Property;
in each such case, except in cases where such existence, occurrence or
circumstance would not have a Material Adverse Effect.
Section 2.14. Subsidiaries and Investments. Set forth on Schedule 2.14
attached hereto is a list of each corporation, partnership, association, trust,
joint venture or other entity in which each Company owns, directly or
indirectly, any equity security or other equity or ownership or proprietary
interest and the extent of such ownership.
Section 2.15. Citizenship. The Company is a U.S. Citizen.
Section 2.16. Broker's or Finder's Fees. The Company has not incurred
any obligation or liability, contingent or otherwise, for brokerage or finders'
fees or agents' commissions or other like payment in connection with this
Agreement and will indemnify and hold the Purchaser harmless from any such
payment alleged to be due by or through the Company as a result of any such
action of the Company, its officers or agents.
ARTICLE III
REPRESENTATIONS OF THE SELLERS
------------------------------
Each Seller represents and warrants severally, and not jointly, as
follows:
Section 3.1. Ownership of Stock. Such Seller is, or will be
immediately prior to, or simultaneously with the consummation of the
transactions contemplated by this Agreement, the lawful owner of the number of
Shares listed opposite the name of such Seller in Schedule 3.1 attached hereto,
free and clear of all Encumbrances. The delivery to the Purchaser of the Shares
of such Seller pursuant to the provisions of this
-13-
<PAGE>
Agreement will transfer to the Purchaser valid title thereto, free and clear of
any and all Encumbrances except for Encumbrances that may be created by the
Purchaser.
Section 3.2. Authorization and Validity of Agreement. Such Seller has
full power and authority to execute and deliver this Agreement, to perform its
obligations hereunder and to consummate the transactions contemplated to be
performed by him, her or it hereby. The execution, delivery and performance of
this Agreement by such Seller, and the consummation by it of the transactions
contemplated to be performed by it hereby, have been duly authorized and
approved by such Seller. This Agreement has been duly executed and delivered by
such Seller and, assuming the due execution of this Agreement by the Purchaser
and the Company, is a valid and binding obligation of such Seller, enforceable
against such Seller in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization and similar laws affecting the enforcement of creditors' rights
generally and to general equitable principles.
Section 3.3. Consents and Approvals: No Violations. Assuming that the
filings required under the HSR Act are made and the waiting period thereunder
has been terminated or has expired, the execution and delivery of this Agreement
by such Seller and the consummation of the transactions contemplated hereby (a)
will not violate any provisions of the certificate of incorporation or by-laws
or other like organizational documents of such Seller (if such Seller is not a
natural person), (b) will not violate any statute, rule, regulation, order or
decree of any public body or authority by which such Seller is bound or by which
any of its properties or assets are bound, (c) will not require any filing with,
or permit, consent or approval of, or the giving of any notice to, any
governmental or regulatory body, agency or authority on or prior to the Closing
Date and (d) will not result in a violation or breach of, constitute (with or
without due notice or lapse of time or both) a default (or give rise to any
right of termination, cancellation, payment or acceleration) under, or result in
the creation of any Encumbrance upon any of the properties or assets of such
Seller under, any of the terms, conditions or provisions of any note, bond,
mortgage, indenture, license, franchise, permit, agreement, lease, franchise
agreement or any other instrument or obligation to which such Seller is a party,
or by which it or any of its properties or assets may be bound, excluding from
the foregoing clauses (b), (c) and (d) filings, notices, permits, consents and
approvals the absence of which, and violations, breaches, defaults, conflicts
and Encumbrances which, would not prevent such Seller from performing its
obligations under this Agreement or the consummation of the transactions
contemplated by this Agreement.
Section 3.4. Broker's or Finder's Fees. The Sellers have incurred no
obligation or liability, contingent or otherwise, for brokerage or finders' fees
or agents' commissions or other like payment in connection with this Agreement
and will
-14-
<PAGE>
indemnify and hold the Purchaser harmless from any such payment alleged to be
due by or through the Company as a result of any such action of the Sellers.
ARTICLE IV
REPRESENTATIONS OF THE PURCHASER
--------------------------------
The Purchaser represents and warrants as follows:
Section 4.1. Existence and Good Standing of the Purchaser:
Authorization.
(a) The Purchaser is a corporation duly organized, validly existing and
in good standing under the laws of the jurisdiction of its incorporation.
(b) The Purchaser has the requisite corporate power and authority to
execute and deliver this Agreement, to perform its obligations hereunder and to
consummate the transactions contemplated hereby. The execution, delivery and
performance of this Agreement by the Purchaser and the consummation of the
transactions contemplated hereby, have been duly authorized and approved by its
Board of Directors and no other corporate or shareholder action on the part of
the Purchaser is necessary to authorize the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated hereby.
This Agreement has been duly executed and delivered by the Purchaser and,
assuming the due execution of this Agreement by the Company and the Sellers, is
a valid and binding obligation of the Purchaser enforceable against the
Purchaser in accordance with its terms, except to the extent that its
enforceability may be subject to applicable bankruptcy, insolvency,
reorganization and similar laws affecting the enforcement of creditors' rights
generally and to general equitable principles.
Section 4.2. Consents and Approvals: No Violations. Except as set forth
on Schedule 4.2 hereto and assuming that the filings required under the HSR Act
are made and the waiting period thereunder has been terminated or has expired,
neither the execution and delivery of this Agreement by the Purchaser nor the
consummation of the transactions contemplated hereby will (a) violate any
provisions of the Certificate of Incorporation or By-Laws of the Purchaser, (b)
violate any statute, rule, regulation, order or decree of any public body or
authority by which the Purchaser is bound or by which any of their properties or
assets are bound, (c) require any filing with, or permit, consent or approval
of, or the giving of any notice to, any governmental or regulatory body, agency
or authority on or prior to the Closing Date or (d) result in a violation or
breach of, constitute (with or without due notice or lapse of time or both) a
default
-15-
<PAGE>
(or give rise to any right of termination, cancellation, payment or
acceleration) under, or result in the creation of any Encumbrance upon any of
the properties or assets of the Purchaser under, any of the terms, conditions or
provisions of any note, bond, mortgage, indenture, license, franchise, permit,
agreement, lease, franchise agreement or any other instrument or obligation to
which the Purchaser is a party, or by which it or any of its properties or
assets may be bound, excluding from the foregoing clauses (b), (c) and (d)
filings, notices, permits, consents and approvals the absence of which, and
violations, breaches, defaults, conflicts and Encumbrances which, would not
prevent the Purchaser from performing its obligations under this Agreement or
the consummation of the transactions contemplated by this Agreement.
Section 4.3. Available Funds. The Purchaser has or will have on the
Closing Date sufficient funds available to it for its own account to perform all
of its obligations under this Agreement.
Section 4.4. Broker's or Finder's Fees. The Purchaser and its officers
and agents have incurred no obligation or liability, contingent or otherwise,
for brokerage or finders' fees or agents' commissions or other like payment in
connection with this Agreement and will indemnify and hold the Company and
Sellers harmless from any such payment alleged to be due by or through the
Purchaser as a result of any such action of the Purchaser, its officers and
agents.
Section 4.5. Acquisition for Own Account. The Shares are being acquired
by the Purchaser for its own account for investment and not with a view to, or
for resale in connection with, the distribution or other disposition of the
Shares or any part thereof in any transaction that would be in violation of the
Act or the securities laws of any state, without prejudice, however, to the
rights of the Purchaser at all times, subject to this Agreement, to sell or
otherwise dispose of all or any part of such securities under an effective
registration statement under the Act or under an exemption from such
registration available under the Act, or to pledge all or any part of such
securities to secure any obligation of the Purchaser.
Section 4.6. Ability to Bear Risk: Evaluation of Risks. The Purchaser
(a) is able to bear the economic risk of holding the Shares for an indefinite
period, (b) can afford to suffer the complete loss of their investment in the
Shares, and (c) has knowledge and experience in financial and business matters
such that it is capable of evaluating the risks of the investment in the Shares.
Section 4.7. U.S. Citizenship. The Purchaser is a U.S. Citizen.
-16-
<PAGE>
ARTICLE V
PURCHASE OF SHARES
------------------
Section 5.1. Purchase and Sale of the Shares.
(a) Sale of Stock. Subject to the terms and conditions set forth in
this Agreement, the Sellers, severally and not jointly, agree to sell, assign,
transfer and deliver to the Purchaser, free and clear of Encumbrances other than
Encumbrances that may be created by the Purchaser, and the Purchaser agrees to
purchase, on the Closing Date, the number and type of shares of capital stock of
the Company set forth opposite the name of such Seller on Schedule 3.1 attached
hereto except with respect to the Management Sellers, in which case, the
Purchaser agrees to purchase and each Management Seller agrees to sell, that
number of shares of Common Stock elected by such Management Seller by giving 10
Business Days prior written notice to the Purchaser. The number of shares of
Common Stock that the Management Sellers elect to retain in the aggregate shall
not exceed 1,414.7871 shares (the shares of Common Stock to be purchased by the
Purchaser are collectively referred to as the "Shares"). The certificates
representing the Shares shall be duly endorsed in blank, or accompanied by stock
powers duly executed in blank, by the Sellers transferring the same.
(b) Purchase Price: Purchaser Contribution to Company. In full
consideration for the purchase by the Purchaser of the Shares, (i) the Purchaser
shall pay to the Sellers on the Closing Date (the "Purchase Price") (i)
$66,450,000 in cash minus 30.303% of the sum of (x) DLJ Takedown Fee and (y) the
DLJ Commitment Fee (up to a maximum reduction to the Purchase Price of $1.0
million) actually paid by the Purchaser in connection with the issuance of the
Bridge Notes, the proceeds of which are used to finance, in part, the
transactions contemplated by this Agreement plus any increase (up to a maximum
of $2.5 million) to be made to the cash portion of the Purchase Price pursuant
to Section 6.8 and (ii) the Company shall distribute to the Sellers on or prior
to the Closing Date, 60% of the capital stock of the Joint Venture owned by the
Company. The Purchaser shall also contribute to the Company on the Closing Date
an amount equal to the aggregate liquidation preference of the outstanding
shares of Preferred Stock in an amount not to exceed $688,860 plus all accrued
and unpaid dividends thereon (the "Purchaser Contribution"), in cash in
immediately available funds and the Company shall cause such shares of Preferred
Stock to be redeemed. The Purchase Price shall be reduced by the Downpayment and
by an amount equal to the product of (x) the number of shares of Common Stock
elected to be retained by the Management Sellers multiplied by (y) the quotient
obtained by dividing (I) the aggregate amount set forth in item (i) of the first
sentence of this Section 5.1(b) by (II) 17,684.214, which represents the total
number of shares of Common Stock outstanding on the date hereof. The Purchase
Price shall be paid to
-17-
<PAGE>
accounts specified by the Sellers in writing to the Purchaser. The Purchaser
Contribution shall be paid to accounts specified by the Company in writing to
the Purchaser.
(c) Closing. The sale referred to above in paragraph (a) (the
"Closing") shall take place at 10:00 A.M. at the offices of Pepper, Hamilton &
Scheetz, LLP, 3000 Two Logan Square, Eighteenth and Arch Streets, Philadelphia,
Pennsylvania, 19103-2799, on December 1, 1997, or such earlier date as may be
elected by the Purchaser, on at least 5 business days prior written notice, on
which the conditions set forth in Articles VII and VIII are satisfied or waived
or at such other time and date as the Purchaser and the Sellers may agree. Such
date is herein referred to as the "Closing Date".
(d) Downpayment. The Purchaser has previously deposited into escrow
$500,000 (the "Downpayment"), to be held pursuant to the terms and conditions of
the Escrow Agreement which is being amended on the date hereof to reflect the
terms of Section 9.4(a).
Section 5.2. Deliveries. At the Closing and as a condition to Closing:
(a) The Sellers will deliver to the Purchaser:
(1) Certificates evidencing the Shares, properly endorsed by the
Sellers and accompanied by such stock powers and other documents as may be
necessary to transfer record ownership of the Shares into the Purchaser's name
on the stock transfer books of the Company; and
(2) All other agreements, certificates, consents, approvals and
documentary evidence required to be delivered pursuant to the Sellers'
obligations hereunder.
(b) The Purchaser will deliver to the Sellers and the Company: the
consideration specified in Section 5.1(b) and such other agreements,
certificates, consents, approvals and documentary evidence required to be
delivered pursuant to the Purchaser's obligations hereunder.
(c) At the Closing, the Purchaser will contribute to the Company funds
sufficient to allow the Company to repay all indebtedness outstanding under the
agreements set forth on Schedule 2.4a (which in no event shall exceed
$55,066,000) minus the Remaining Debt (defined below). The amount to be
contributed to the Company by the Purchaser under this paragraph will be reduced
by the amount of any indebtedness to a creditor who consents to allowing its
indebtedness to remain
-18-
<PAGE>
outstanding following the Closing notwithstanding the sale of the Shares to the
Purchaser (the "Remaining Debt").
ARTICLE VI
CONDUCT OF BUSINESS, EXCLUSIVE DEALING: REVIEW
----------------------------------------------
Section 6.1. Conduct of Business of the Company and its Subsidiaries.
During the period from the date of this Agreement until the earlier of the
termination of this Agreement and the Closing Date, the Company and each of its
Subsidiaries shall conduct its operations in the ordinary course of business;
use its reasonable efforts to preserve intact its current business organization,
keep available the services of its current officers and employees, and maintain
satisfactory relationships with material suppliers, customers and others having
material business relationships with the Company and such Subsidiaries.
Notwithstanding the immediately preceding sentence, pending the Closing Date and
except as may be first approved by the Purchaser (such approval not to be
unreasonably withheld) or as is otherwise permitted, contemplated or required by
this Agreement, the Company agrees to and agrees to cause each of its
Subsidiaries to, (a) maintain its respective Certificate of Incorporation and
By-Laws in its respective form as in effect on the date of this Agreement, (b)
refrain from' increasing any bonuses, salaries, or other compensation to any
director, officer or employee being paid in excess of $50,000 or more per year
(except to directors, officers or employees in the ordinary course of business)
or entering into or amending any employment, severance, or similar agreement
with any director, officer, or employee which involves the payment obligation of
the Company or any of its Subsidiaries in excess of $50,000 per year, (c)
refrain from adopting or increasing of any profit sharing, bonus, deferred
compensation, savings, insurance, pension, retirement, or other employee benefit
plan for or with any employees of any Company, (d) refrain from entering into
any material contract or commitment except material contracts and commitments in
the ordinary course of business, (e) refrain from increasing its indebtedness
for borrowed money, except current borrowings in the ordinary course of
business, (f) refrain from cancelling or waiving any claim or right of
substantial value which is material to the Company and its Subsidiaries, taken
as a whole, (g) except as set forth in Section 6.9, refrain from declaring or
paying any dividends in respect of any capital stock of any Company or
redeeming, purchasing or otherwise acquiring any of the Company's capital stock,
(h) refrain from issuing or selling any shares of capital stock or any other
securities, or issuing any securities convertible into, or options, warrants or
rights to purchase or subscribe for, or entering into any arrangement or
contract with respect to the issue and sale of, any shares of its capital stock
or any other securities, or making any other material changes in its capital
structures, (i) refrain from selling, leasing or otherwise disposing of any
material
-19-
<PAGE>
amount of assets of any Company other than sales of inventory in the ordinary
course of business, (j) refrain from agreeing, whether or not in writing, to do
any of the foregoing, (k) not pay any material obligation or liability (whether
fixed or contingent) or discharge or satisfy any lien or encumbrance or settle
any claim, liability or suit pending or threatened against any of the Companies
or any of their respective properties, except in the ordinary course of business
and except for the payment of any obligations or liabilities which in the
aggregate are not material to the Company, (l) maintain the material assets of
the Companies used in the operation of their business (including all lancers
(other than the S.S. Carolina, which is currently "out of class"), equipment and
machinery of the Companies) consistent with past practice, ordinary wear and
tear excepted, (m) subject to Sections 6.8 and 6.9, not enter into any
transaction with any Seller, any of the Company's, or any of their respective
Affiliates, including, without limitation, the purchase, sale or exchange of
property with, the rendering of any service to, the borrowing of any money from,
or the making of any loans to, any such Seller, Company or Affiliate, (n)
maintain until the Closing Date (at which time certain of the Company's and its
Subsidiaries' insurance policies will be automatically cancelled) all material
insurance policies in full force and effect to the extent within the control of
the Company, (o) not merge or consolidate with any other Person, (p) not enter
into any collective bargaining agreement or amend or extend any existing
collective bargaining agreement and (q) except in connection with the
recapitalization of the capital stock of the Joint Venture to provide for
certain of the securities of the Joint Venture to be non-voting, not enter into
any joint venture or similar arrangement or amend any existing joint venture or
similar agreement.
Section 6.2. Exclusive Dealing. During the period from the date of this
Agreement until the earlier of the termination of this Agreement and the Closing
Date, neither the Company, any of its Subsidiaries nor any of the Sellers, shall
not take any action to, directly or indirectly, encourage, initiate or engage in
discussions or negotiations with, or provide any information to, any Person
other than the Purchaser or its agents or representatives, concerning any
purchase of the Shares or any merger, sale of substantial assets or similar
transaction involving the Company or any of its Subsidiaries.
Section 6.3. Review of the Company.
(a) The Purchaser may, prior to the Closing Date, through its
representatives, review the properties, books and records of the Company to
familiarize itself with such properties and the business of the Company and its
Subsidiaries. The Company and each of its Subsidiaries shall permit the
Purchaser and its representatives to have reasonable access to the premises,
properties, assets, vessels and books and records of the Company during normal
working hours upon reasonable notice and to furnish the Purchaser with such
financial and operating data and other information with
-20-
<PAGE>
respect to the business and properties of the Company and its Subsidiaries as
the Purchaser shall from time to time reasonably request; provided that nothing
contained in this Agreement shall require the Company, any of its Subsidiaries
or any of their respective officers, directors, employees or agents to
unreasonably disrupt the normal business activities of such Persons. The parties
hereto acknowledge that the Purchaser and the Company have entered into a
Confidentiality Agreement dated May 7, 1997 (the "Confidentiality Agreement")
and the Purchaser confirms that it will comply with its obligations thereunder
and that information obtained during any such review will be subject to the
terms of the Confidentiality Agreement and will use such information only for
the purpose of considering the transactions contemplated hereby, and if such
transactions are not consummated as contemplated herein, will promptly return
all such information and all information derived therefrom (including all copies
thereof) to the Company.
(b) Until the Closing, the Purchaser shall promptly inform the Company
in writing of any material variances discovered by the Purchaser or its
representatives in the representations and warranties of the Company or the
Sellers contained in this Agreement.
Section 6.4. Reasonable Best Efforts. Each of the parties agrees to use
its reasonable best efforts to take, or cause to be taken, all action to do, or
cause to be done, and to assist and cooperate with the other parties hereto in
doing, all things necessary, proper or advisable to consummate and make
effective, in the most expeditious manner practicable, the transactions
contemplated by this Agreement, including, but not limited to, (i) compliance
with the HSR Act in all respects (including the filing of a notification and
report form to the extent necessary), (ii) the obtaining of all necessary
waivers, consents and approvals (which shall include the consents described in
items 2 and 3 of Schedule 2.8 and Schedule 4.2 from governmental or regulatory
agencies or authorities and the making of all necessary registrations and
filings (including, but not limited to, filings with governmental or regulatory
agencies or authorities, if any) and the taking of all reasonable steps as may
be necessary to obtain any approval or waiver from, or to avoid any action or
proceeding by, any governmental agency or authority, (iii) the obtaining of all
necessary consents, approvals or waivers from third parties and (iv) the
defending of any lawsuits or any other legal proceedings whether judicial or
administrative, challenging this Agreement or the consummation of the
transactions contemplated hereby including, without limitation, seeking to have
any temporary restraining order entered by any court or administrative authority
vacated or reversed.
-21-
<PAGE>
Section 6.5. Financial Statements.
(a) The Company covenants and agrees to deliver to the Purchaser
interim financial statements for each month ending after the date hereof until
the Closing Date as soon as such information is available but in any event
within 30 days after the end of each such month.
(b) The Company covenants and agrees to use its reasonable best efforts
to obtain audited financial statements of the Company for the period of March
1995 to December 1996 and of the NPR business as owned and operated by the
Puerto Rico Maritime Shipping Authority for the period from January 1994 to
February 1995 (collectively, the "Audited Financial Statements") as soon as
reasonably practicable.
Section 6.6. PRMSA Consent. In the event the consent described in item
2 of Schedule 2.8 is not obtained prior to the Closing Date, then Pyramid
Ventures, Inc. ("Pyramid") shall retain a sufficient number of shares of the
Company so that such consent is not required to be obtained. The shares retained
by Pyramid shall be deposited into an escrow account pursuant to an escrow
agreement in form and substance reasonably satisfactory to Pyramid and the
Purchaser, provided that Pyramid shall retain all voting and dividend rights
with respect to such shares. The Purchase Price shall be reduced by an amount
equal to the product of (x) the quotient obtained by dividing (I) the aggregate
amount set forth in item (i) of Section 5.1 (b) by (II) 17,684.214, which
represents the total number of shares of Common Stock outstanding on the date
hereof, divided by (y) the number of shares deposited in such escrow (the
"Purchase Price Reduction") and an amount of cash equal to the Purchase Price
Reduction shall be deposited into a separate escrow account pursuant to an
escrow agreement in form and substance reasonably satisfactory to Pyramid and
the Purchaser which Escrow Agreement shall provide that interest on the Purchase
Price Reduction shall be for the account of Pyramid. On and after March 6, 1998,
either Purchaser or Pyramid shall have the right to cause the shares and
Purchase Price Reduction maintained in such escrow to be delivered to the
Purchaser, in the case of the shares, and to Pyramid, in the case of the cash.
Section 6.7. Rule 144A Private Debt Offering. In connection with the
consummation of the transactions contemplated by this Agreement, the Purchaser
intends to offer debt securities pursuant to an offering memorandum ("Offering
Memorandum") and subsequently to prepare and file with the Securities and
Exchange Commission a registration statement with respect to an exchange of such
debt securities for publicly registered debt securities. The Company agrees to
cooperate with the Purchaser in the preparation of the Offering Memorandum;
provided, however, in no event shall a breach of this provision by the Company
relieve the Purchaser of the obligations to effect the transactions contemplated
by this Agreement.
-22-
<PAGE>
Section 6.8. Additional Capital Contribution. On or prior to the
Closing Date, the shareholders of the Company may contribute up to $2.5 million
to the capital of the Company, the proceeds of which capital contribution shall
be utilized to repay indebtedness of the Company; provided, that the cash
portion of the Purchase Price described in Section 5.1(b)(i) shall be increased
by 100% of the amount (up to a maximum amount of $2.5 million) of such capital
contributions made by the shareholders of the Company prior to the Closing Date.
Section 6.9. Joint Venture. The Sellers and the Purchaser agree that
immediately prior to Closing, the Company shall distribute to the Sellers, 60%
of the capital stock of the Joint Venture owned by the Company and the remaining
40% to the Purchaser or its designee at the Purchaser's option; provided
however, that (i) with respect to any optional future capital contributions,
each of the Purchaser, on the one hand, and the Sellers, on the other, shall
have the option but not the obligation to contribute up to 50% of such
contribution; provided, however, to the extent the Purchaser, on the one hand,
or the Sellers, on the other, elect not to contribute up to 50% of such
contribution, their respective interest in the Joint Venture shall be diluted,
(ii) the Purchaser shall have a right of first offer (i.e., no sale to any buyer
on terms more favorable to the buyer than that offered to the Purchaser) with
respect to any sales of securities of the Joint Venture made by the Sellers and
(iii) the securities of the Joint Venture owned by Pyramid shall be non-voting
and the other Sellers shall enter into A voting trust arrangement which provides
that the Purchaser, in its sole discretion, may vote the shares of the Joint
Venture held by such other shareholders. In addition, the parties will enter
into a shareholders agreement mutually agreeable to the Sellers and the
Purchaser with respect to the shares of the Joint Venture providing for, among
other things, the matters provided above and providing that the Sellers shall be
entitled to benefits and protections comparable to those provided to minority
shareholders under Delaware law.
ARTICLE VII
CONDITIONS TO THE PURCHASER'S OBLIGATIONS
-----------------------------------------
The obligation of the Purchaser to effect the transactions contemplated
by this Agreement on the Closing Date are conditioned upon the satisfaction or
waiver, at or prior to the Closing, of the following conditions:
Section 7.1. Opinion of Sellers' Counsel. The Purchaser shall have
received an opinion, dated the Closing Date, of White & Case, substantially in
the form set forth in Exhibit A1 attached hereto and an opinion, dated the
Closing Date, of the
-23-
<PAGE>
Company's general counsel, substantially in the form set forth in Exhibit A2
attached hereto.
Section 7.2. Truth of Representations and Warranties. The
representations and warranties of the Company and the Sellers contained in this
Agreement shall be true and correct in all material respects on and as of the
Closing Date with the same effect as though such representations and warranties
had been made on and as of such date.
Section 7.3. Performance of Agreements. Each and all of the agreements
of the Company and the Sellers to be performed at or prior to the Closing
pursuant to the terms hereof shall have been duly performed in all material
respects.
Section 7.4. Absence of Litigation. There shall not be any legal,
administrative or other proceeding pending to restrain or invalidate the sale
and purchase of the Shares, except that with respect to the litigation set forth
in item 1 of Schedule 2.9, this condition shall be deemed satisfied unless there
is in effect on the Closing Date an injunction prohibiting the sale of the
Shares.
Section 7.5. Waiting Periods. All waiting periods under the HSR Act
shall have expired or have been terminated.
Section 7.6. Officers Certificate. The Purchaser shall have received
(a) copies of the articles of incorporation, including all amendments thereto,
certified by the Secretary of State or other appropriate official of the
respective State of incorporation of the Company, (b) a certificate from the
Secretary of State or other appropriate official of the State of incorporation
to the effect that the Company is in good standing and listing all charter
documents of such entity and (c) a copy of the Bylaws of the Company and the
resolutions authorizing this Agreement, certified by the Secretary of the
Company as being true and correct and in effect on the Closing Date.
Section 7.7. Termination of Stockholders Agreement. The Sellers and the
Company shall have the terminated Stockholders Agreement by and among the
Sellers and the Company, dated as of March 3, 1995.
Section 7.8. Audited Financial Statements. The Purchaser shall have
received either the Audited Financial Statements or assurances reasonably
satisfactory to the Purchaser that the Audited Financial Statements will be
available within one month after the Closing Date.
Section 7.9. DLJ Bridge Financing. DLJ Bridge Finance, Inc. shall not
have notified the Purchaser in writing that it will not purchase the Bridge
Notes
-24-
<PAGE>
solely as a result of (i) the existence of the "Urgent Motion Requesting Order
to Show Cause, Provisional Remedies and Leave to Amend Complaint" filed on
September 2, 1997 by Ocean Logistics Management, Inc. in the case of Ocean
Logistics Management, Inc., as Plaintiff, v. NPR, Inc., d/b/a Navieras, and XYZ
Insurance Co., as Defendants, No. 96-2388 (DRD) or any developments arising as a
result of the motion or (ii) the failure of the consent described in item 2 of
Schedule 2.8 to be obtained, notwithstanding the provisions of Section 6.6
hereof.
ARTICLE VIII
CONDITIONS TO THE COMPANY'S AND SELLERS' OBLIGATIONS
----------------------------------------------------
Section 8.0. Conditions to the Company's and Sellers' Obligations. The
obligations of the Company and the Sellers to effect the transactions
contemplated by this Agreement on the Closing Date is conditioned upon
satisfaction or waiver, at or prior to the Closing, of the following conditions:
Section 8.1. Opinions of the Purchaser's Counsel. The Purchaser shall
have furnished the Sellers with an opinion, dated the Closing Date, of Pepper,
Hamilton & Scheetz, LLP, substantially in the form set forth in Exhibit B1
attached hereto and an opinion, dated the Closing Date, of the Purchaser's
general counsel, substantially in the form set forth in Exhibit B2 attached
hereto.
Section 8.2. Truth of Representations and Warranties. The
representations and warranties of the Purchaser contained in this Agreement
shall be true and correct in all material respects on and as of the Closing Date
with the same effect as though such representations and warranties had been made
on and as of such date.
Section 8.3. Performance of Agreements. Each and all of the agreements
of the Purchaser to be performed at or prior to the Closing pursuant to the
terms hereof shall have been duly performed in all material respects.
Section 8.4. Absence of Litigation. There shall not be any legal,
administrative or other proceeding pending to restrain or invalidate the sale
and purchase of the Shares, except that with respect to the litigation set forth
in item 1 of Schedule 2.9, this condition shall be deemed satisfied unless there
is in effect on the Closing Date an injunction prohibiting the sale of the
Shares.
Section 8.5. Waiting Periods. All waiting periods under the HSR Act
shall have expired or have been terminated.
-25-
<PAGE>
Section 8.6. Officers Certificate. The Company shall have received (a)
copies of the articles of incorporation, including all amendments thereto,
certified by the Secretary of State or other appropriate official of the State
of incorporation of the Purchaser, (b) a certificate from the Secretary of State
or other appropriate official of the State of incorporation to the effect that
the Purchaser is in good standing and listing all charter documents of the
Purchaser and (c) a copy of the Bylaws of the Purchaser and resolutions
authorizing this Agreement certified by the Secretary of the Purchaser as being
true and correct and in effect on the Closing Date.
Section 8.7. Employee Arrangements. The Purchaser shall have offered to
cause the Company to enter into with each of the Management Sellers who is a
natural person, such employment agreements, stock purchase agreements, a
shareholders agreement, a registration rights agreement, and such other
agreements, in each case, as may be necessary to carry out the terms contained
in the term sheet attached hereto as Exhibit C.
ARTICLE IX
NO SURVIVAL OF REPRESENTATIONS: EVENTS OF TERMINATION
-----------------------------------------------------
Section 9.1. No Survival of Representations. Except for the
representations and warranties set forth in Section 3.1 which shall survive for
18 months, the representations and warranties of the Company, the Sellers and
the Purchaser contained in this Agreement shall not survive the purchase and
sale of the Shares contemplated hereby.
Section 9.2. Events of Termination. This Agreement may be terminated
(a) by mutual written agreement of the Purchaser and the Sellers or (b) by the
Purchaser by written notice to the Sellers, if the conditions set forth in
Article VII hereof shall not have been satisfied or waived on or prior to the
Closing Date in any material respect, or (c) by the Sellers by written notice to
the Purchaser, if the conditions set forth in Article VIII hereof shall not have
been satisfied or waived on or prior to the Closing Date in any material
respect, and, in the case of items (b) or (c) hereof, such shall not have been
satisfied or waived on or before December 30, 1997.
Section 9.3. Effect of Termination. In the event that this Agreement
shall be terminated pursuant to Section 9.2, all further obligations of the
parties hereto under this Agreement (other than pursuant to Sections 9.4 and
10.2) shall terminate without further liability or obligation of either party to
the other party hereunder.
-26-
<PAGE>
Section 9.4. Failure to Close.
(a) In the event the Purchaser fails to purchase the Shares on the
Closing Date for any reason other than (i) a material breach by the Sellers or
the Company of their obligations under this Agreement, (ii) the failure of any
condition in Section 7. 1, 7.3, 7.6 or 7.7 to be satisfied or waived, (iii) the
failure of the condition in Section 7.2 to be satisfied or waived (except if the
representations and warranties of the Company and the Sellers contained in this
Agreement were true and correct in all material respects when made), (iv) the
failure of the condition set forth in Section 7.4 (other than because of a legal
proceeding against the Purchaser) to be satisfied or waived or (v) the failure
of the condition set forth in Section 8.4 to be satisfied because of a legal
proceeding against any of the Sellers or the Companies, the Sellers shall be
entitled to retain the Downpayment.
(b) In addition, in the event the Purchaser fails to purchase the
Shares and the conditions of the Closing set forth in Article VII hereof have
been satisfied in all material respects or waived, the Purchaser shall be liable
to the Sellers for all damages at law or equity up to a maximum amount of
damages of $10 million.
(c) In the event the Sellers fail to sell the Shares and the conditions
of the Closing set forth in Article VIII hereof have been satisfied in all
material respects or waived, the Sellers and the Company shall be liable to the
Purchaser for all damages at law or equity up to a maximum amount of damages of
$10 million.
ARTICLE X
MISCELLANEOUS
-------------
Section 10.1. Knowledge of the Company. As used in this Agreement, the
all references to the "knowledge" of the Company shall be limited to the actual
knowledge of Ronald M. Katims, Paul J. Wittig, Mario F. Escudero, Edward W.
O'Donnell, Edward G. Cawthon, Martin McDonald, John S. Tirpak and Carl Robert
Fox.
Section 10.2. Expenses. (a) If the transactions contemplated by this
Agreement are consummated, the Company shall pay all of the expenses of the
Purchaser and the Sellers relating to the transactions contemplated by this
Agreement, other than the fees and expenses of their respective counsel and
financial advisors which shall be paid by the Purchaser and the Sellers,
respectively.
-27-
<PAGE>
(b) If the transactions contemplated by this Agreement are not
consummated under the circumstances described in Section 9.4(b), the Purchaser
shall pay all of the expenses of the Purchaser, the Sellers and the Company,
including, without limitation, the fees and expenses of their respective counsel
and financial advisors.
(c) If the transactions contemplated by this Agreement are not
consummated under the circumstances described in Section 9.4(c), the Company
shall pay all of the expenses of the Purchaser, the Sellers and the Company,
including, without limitation, the fees and expenses of their respective counsel
and financial advisors.
(d) If the transactions contemplated by this Agreement are not
consummated and this Agreement shall be terminated pursuant to Section 9.2 other
than in the circumstances described in Section 10.2(b) or (c), the Purchaser
shall pay all of its expenses, and the Company shall pay all of the expenses of
the Sellers relating to the transactions contemplated by this Agreement,
including, without limitation, the fees and expenses of their respective counsel
and financial advisors.
Section 10.3. Transfer Taxes. All stamp, transfer, documentary, sales,
use, registration and other such taxes and fees (including any penalties and
interest) incurred in connection with this Agreement and the transactions
contemplated hereby (other than those imposed on or measured by the income of
any Seller) (collectively, the "Transfer Taxes") shall be paid by the Purchaser,
and the Purchaser shall, at its own expense, procure any stock transfer stamps
required by, and properly file on a timely basis all necessary tax returns and
other documentation with respect to, any Transfer Tax and provide to the Sellers
evidence of payment of all Transfer Taxes.
Section 10.4. Governing Law. THE INTERPRETATION AND CONSTRUCTION OF
THIS AGREEMENT, AND ALL MATTERS RELATING HERETO, SHALL BE GOVERNED BY THE LAWS
OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE PERFORMED
ENTIRELY WITHIN THE STATE OF NEW YORK.
Section 10.5. Captions. The Article and Section captions used herein
are for reference purposes only, and shall not in any way affect the meaning or
interpretation of this Agreement.
Section 10.6. Publicity. Except as otherwise required by law or
regulation as advised by counsel, none of the parties hereto shall issue any
press release or make any other public statement, in each case relating to or
connected with or arising out of this Agreement or the matters contained herein,
without obtaining the
-28-
<PAGE>
prior approval of the Purchaser and the Company to the contents and the manner
of presentation and publication thereof.
Section 10.7. Disclaimer of Projections. Neither the Sellers nor the
Company makes any representation or warranty to the Purchaser except as
specifically made in this Agreement. In particular, neither the Sellers nor the
Company make any implied warranties to the Purchaser (whether of merchantability
or fitness for a particular purpose or otherwise) or any representation or
warranty to the Purchaser with respect to any financial projection, forecast
viability or likelihood of success, relating to the Company and its
Subsidiaries. With respect to any such projection or forecast delivered by or on
behalf of the Company, any of its Subsidiaries or the Sellers to the Purchaser,
the Purchaser acknowledges that (a) there are uncertainties inherent in
attempting to make such projections and forecasts, (b) it is familiar with such
uncertainties, (c) it is taking full responsibility for making its own
evaluation of the adequacy and accuracy of all such projections and forecasts so
furnished to it and (d) it shall have no claim against the Company, any of its
Subsidiaries or the Sellers with respect thereto.
Section 10.8. Notices. Any notice or other communications required or
permitted hereunder shall be sufficiently given if delivered in person or sent
by telecopy or by registered or certified mail, postage prepaid, addressed as
follows:
If to the Company:
NPR Holding Corporation
212 Fernwood Avenue
Edison, NJ 08818
Telecopy: (732) 225-1233
Attn: Mario Escudero
with a copy to White & Case as specified below
If to the Purchaser:
Holt Cargo Systems, Inc.
701 N. Broadway
King & Essex Street
Gloucester City, NJ 08030
Telecopy: (609) 742-3066
Attn: Thomas J. Holt, Sr. - CONFIDENTIAL
Attn: John A. Evans - CONFIDENTIAL
<PAGE>
with a copy to:
Pepper, Hamilton & Scheetz, LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103-2799
Telecopy: (215) 981-4750
Attn: Robert A. Friedel, Esq.
Attn: Lisa D. Kabnick, Esq.
If to any Seller, to its address set forth opposite the name of such Seller on
Schedule 10.8;
with a copy to:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attn: John M. Reiss, Esq.
or such other address or number as shall be furnished in writing by any such
party, and such notice or communication shall be deemed to have been given as of
the date so delivered, sent by telecopy or mailed.
Section 10.9. Assignability: Parties in Interest. This Agreement shall
not be transferred, assigned, pledged or hypothecated by any of the parties
hereto, except this Agreement shall be assignable in whole or in part by the
Purchaser to any Person controlling, controlled by or under common control with
the Purchaser, provided that no such assignment shall relieve the Purchaser of
its obligations hereunder. This Agreement shall inure to the benefit of and be
binding upon the parties hereto and their respective successors and permitted
assigns.
Section 10.10. Counterparts. This Agreement may be executed in two or
more counterparts, all of which taken together shall constitute one instrument.
Section 10.11. Entire Agreement. This Agreement, including the
Exhibits, Schedules and other documents referred to herein which form a part
hereof, and the Confidentiality Agreement, contain the entire understanding of
the parties hereto with respect to the subject matter contained herein and
therein. This Agreement supersedes all prior agreements and understandings
between the parties with respect to
-30-
<PAGE>
such subject matter (including the letters of intent relating to the
transactions contemplated hereby dated June 24, 1997 and September 5, 1997)
other than the Confidentiality Agreement.
Section 10.12. Amendments. This Agreement may not be changed orally,
but only by an agreement in writing signed by the parties hereto. Any provision
of this Agreement can be waived, amended, supplemented or modified by written
agreement of the parties hereto.
Section 10.13. Severability. In case any provision in this Agreement
shall be held invalid, illegal or unenforceable, the validity, legality and
enforceability of the remaining provisions hereof will not in any way be
affected or impaired thereby.
Section 10.14. Third Party Beneficiaries. Each party hereto intends
that this Agreement shall not benefit or create any right or cause of action in
or on behalf of any Person other than the parties hereto.
Section 10.15. Jurisdiction.
(a) Each of the parties hereto hereby irrevocably acknowledges and
consents that any legal action or proceeding brought with respect to any of the
obligations arising under or relating to this Agreement may be brought in the
courts of the State of New York or in the United States Southern District Court
of New York, as the party bringing such action or proceeding may elect, and each
of the parties hereto hereby irrevocably submits to and accepts with regard to
any such action or proceeding, for itself and in respect of its property,
generally and unconditionally, the jurisdiction of the aforesaid courts. Each
party hereby further irrevocably waives any claim that any such courts lack
jurisdiction over such party, and agrees not to plead or claim, in any legal
action or proceeding with respect to this Agreement brought in any of the
aforesaid courts, that any such court lacks jurisdiction over such party. Each
party irrevocably consents to the service of process in any such action or
proceeding by the mailing of copies thereof by registered or certified mail,
postage prepaid, to such party, at its address for notices set forth in Section
10.8, such service to become effective 10 days after such mailing. Each party
hereby irrevocably waives any objection to such service of process and further
irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced hereunder or under any other documents contemplated hereby that
service of process was in any way invalid or ineffective. Subject to Section 10.
15(b), the foregoing shall not limit the rights of any party to serve process in
any other manner permitted by law. The foregoing consents to jurisdiction shall
not constitute general consents to service of process for any purpose except as
provided above and shall not be deemed to confer rights on any Person other than
the respective parties to this Agreement.
-31-
<PAGE>
(b) Each of the parties hereto hereby waives any right it may have
under the laws of any jurisdiction to commence by publication any legal action
or proceeding with respect to this Agreement. To the fullest extent permitted by
applicable law, each of the parties hereto hereby irrevocably waives the
objection which it may now or hereafter have to the laying of the venue of any
suit, action or proceeding arising out of or relating to this Agreement in any
of the courts referred to in Section 10.15(a) and hereby further irrevocably
waives and agrees not to plead or claim that any such court is not a convenient
forum for any such suit, action or proceeding.
(c) The parties hereto agree that any judgment obtained by any party
hereto or its successors or assigns in any action, suit or proceeding referred
to above may, in the discretion of such party (or its successors or assigns), be
enforced in any jurisdiction, to the extent permitted by applicable law.
(d) The parties hereto agree that the remedy at law for any breach of
this Agreement may be inadequate and that should any dispute arise concerning
any matter hereunder, this Agreement shall be enforceable in a court of equity
by an injunction or a decree of specific performance. Such remedies shall,
however, be cumulative and nonexclusive, and shall be in addition to any other
remedies which the parties hereto may have, subject to the limitations set forth
in Section 9.4.
-32-
<PAGE>
STOCK PURCHASE AGREEMENT SIGNATURE TIME
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers hereunto duly authorized, as of the dam
first above written.
HOLT CARGO SYSTEMS, INC
By:/s/ Thomas J. Holt, Sr.
----------------------------
Name: Thomas J. Holt, Sr.
Title: President
NPR HOLDING CORPORATION
By:/s/ Ronald M. Katims
----------------------------
Name: Ronald M. Katims
Title: President
BERKSHIRE FUND III INVESTMENT CORP.
By:/s/ Kevin T. Callahan
----------------------------
Name: Kevin T. Callahan
Title: Managing Director
BERKSHIRE INVESTORS LLC
By: /s/ Kevin T. Callahan
-----------------------------
Name: Kevin T. Callahan
Title: Managing Director
-33-
<PAGE>
PYRAMID VENTURES, INC.
By:/s/ James M. Dinorkin
----------------------------
Name: James M. Dinorkin
Title: Vice President
/s/ Ronald M. Katims
----------------------------
Ronald M. Katims
/s/ Paul J. Wittig
----------------------------
Paul J. Wittig
/s/ Mario F. Escudero
----------------------------
Mario F. Escudero
DEAN WITTER REYNOLDS
CUSTODIAN FOR MARIO F. ESCUDERO
IRA ROLLOVER
By:/s/ Kenneth A. Porter
-----------------------------
Name: Kenneth A. Porter
Title: Vice President & Branch
Manager
____________________________
/s/ Edward W. O'Donnell
-----------------------------
Edward W. O'Donnell
/s/ Martin McDonald
-----------------------------
Martin McDonald
<PAGE>
/s/ Edward G. Cawthon
-------------------------------
Edward G. Cawthon
DEAN WITTER REYNOLDS
CUSTODIAN FOR JOHN S. TIRPAK
IRA ROLLOVER
By: /s/ Kenneth A. Porter
----------------------------
Name: Kenneth A. Porter
Title: Vice President and Branch Manager
/s/ Carl Robert Fox
-------------------------------
Carl Robert Fox
/s/ Thomas Power
-------------------------------
Thomas Power
/s/ Manuel Luis Del Valle
-------------------------------
Manuel Luis Del Valle
/s/ Russell T. Stern, Jr.
-------------------------------
Russell T. Stern, Jr.
/s/ John S. Tirpak
-------------------------------
John S. Tirpak
SECURITIES PURCHASE AGREEMENT
dated as of
November 18, 1997
between
THE HOLT GROUP, INC.
and
THE PERSONS LISTED ON
THE SIGNATURE PAGES HERETO
<PAGE>
TABLE OF CONTENTS
-----------------
Page
----
ARTICLE I DEFINITIONS
Section 1.1. Definitions...................................................1
Section 1.2. Accounting Terms and Determinations..........................16
ARTICLE II ISSUANCE OF SECURITIES, TERMS OF SECURITIES........................16
Section 2.1. Issuance.....................................................16
Section 2.3. Interest.....................................................17
Section 2.4. Maturity of Notes; Prepayment of Notes.......................19
Section 2.5. Taxes........................................................20
ARTICLE III REPRESENTATIONS AND WARRANTIES.................................23
Section 3.1. Corporate Existence and Power................................24
Section 3.2. Authorization, Execution and Enforceability..................24
Section 3.3. Governmental Authorization...................................24
Section 3.4. Contravention................................................25
Section 3.5. Financial Information........................................25
Section 3.6. Litigation...................................................26
Section 3.7. Environmental Matters........................................26
Section 3.8. Taxes........................................................28
Section 3.9. Subsidiaries.................................................28
Section 3.10. Not an Investment Company....................................28
Section 3.11. Full Disclosure..............................................28
Section 3.12. Capitalization...............................................29
Section 3.13. Solicitation; Access to Information..........................29
Section 3.14. Non-fungibility..............................................30
Section 3.15. Permits......................................................30
Section 3.16. Representations in Other Financing
Documents and in Material Acquisition
Documents.................................................30
Section 3.17. Compliance with ERISA........................................30
Section 3.18. Labor Matters................................................31
Section 3.19. Leases.......................................................31
(i)
<PAGE>
Section 3.20. Absence of Any Undisclosed Liabilities
or Capital Calls..........................................31
Section 3.21. Governmental Regulation......................................31
Section 3.22. Solvency.....................................................32
Section 3.23. Company Business.............................................32
ARTICLE IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS..................32
Section 4.1. Investment Intent; Authority; Binding Agreement..............32
ARTICLE V CLOSING DELIVERIES..................................................32
Section 5.1. Closing Deliveries...........................................32
ARTICLE VI COVENANTS..........................................................33
Section 6.1. Information..................................................33
Section 6.2. Payments of Obligations......................................36
Section 6.3. Insurance....................................................36
Section 6.4. Conduct of Business and Maintenance of
Existence.................................................36
Section 6.5. Compliance with Laws........................................37
Section 6.6. Inspection of Property, Books and
Records...................................................37
Section 6.7. Investment Company Act.......................................37
Section 6.8. Limitation on Debt...........................................37
Section 6.9. Restricted Payments; Voluntary
Prepayments...............................................38
Section 6.10. Investments..................................................40
Section 6.11. Negative Pledge..............................................40
Section 6.12. Transactions with Affiliates.................................41
Section 6.13. Consolidations, Mergers and Sales of
Assets; Ownership of Subsidiaries.........................41
Section 6.14. Restrictions on Additional Subordinated
Indebtedness..............................................42
Section 6.15. Permanent Financing..........................................42
Section 6.16. Business Activities..........................................43
Section 6.17. Tax Consolidation............................................43
Section 6.18. Maintenance of Corporate Separateness........................43
Section 6.19. Packer Avenue Proceeding.....................................44
Section 6.20. Financial Statements.........................................44
ARTICLE VII EVENTS OF DEFAULT.................................................44
Section 7.1. Events of Default Defined;
Acceleration of Maturity; Waiver
of Default................................................44
(ii)
<PAGE>
ARTICLE VIII LIMITATION ON TRANSFERS..........................................47
Section 8.1. Restrictions on Transfer.......................................47
Section 8.2. Restrictive Legends............................................47
Section 8.3. Notice of Proposed Transfers...................................48
ARTICLE IX SUBORDINATION......................................................49
Section 9.1. Notes Subordinate to Senior Notes..............................49
Section 9.2. Payment Over of Proceeds Upon Dissolution......................49
Section 9.3. Acceleration Rights; Remedies; No Payment
in Certain Circumstances....................................51
Section 9.4. Payment Otherwise Permitted....................................53
Section 9.5. Subrogation to Rights of Holders of
Senior Notes...............................................53
Section 9.6. Provisions Solely to Define Relative Rights....................53
Section 9.7. No Waiver of Subordination Provisions;
Amendment...................................................54
Section 9.8. Reliance on Judicial Order or
Certificate of Liquidating Agent............................55
ARTICLE X MISCELLANEOUS.......................................................55
Section 10.1. Notice........................................................55
Section 10.2. No Waivers; Amendments........................................55
Section 10.3. Indemnification...............................................56
Section 10.4. Expenses......................................................58
Section 10.5. Payment.......................................................58
Section 10.6. Successors and Assigns........................................59
Section 10.7. Brokers.......................................................59
Section 10.8. New York Law; Submission to
Jurisdiction; Waiver of Jury
Trial......................................................59
Section 10.9. Severability..................................................59
EXHIBIT A ...................................................................A-1
EXHIBIT B ...................................................................B-1
Annex I to Exhibit B ...................................................B-5
EXHIBIT C ...................................................................C-1
Annex A to Exhibit C ...................................................C-9
(iii)
<PAGE>
SECURITIES PURCHASE AGREEMENT
-----------------------------
This SECURITIES PURCHASE AGREEMENT dated as of NOVEMBER 18, 1997
between THE HOLT GROUP, INC. and the Persons listed on the signature pages
hereto.
The parties hereto agree as follows:
ARTICLE
I
DEFINITIONS
Section 1.1. Definitions. The following terms, as used herein, shall
have the following meanings:
"Acceptable Financial Statements" means audited consolidated balance
sheets of NPR Holding for the years ended December 31, 1995 and January 4, 1997
and the related statements of operations and cash flows for the years then
ended, prepared in accordance with GAAP by a nationally recognized accounting
firm (which may include BDO Seidman LLP) which are delivered on or prior to
February 28, 1998 which do not disclose results of operations or financial
position of NPR Holding and its Subsidiaries taken as a whole materially worse
from the results of operations or financial position of NPR Holding and its
Subsidiaries set forth in the Deloitte & Touche Financials (it being understood
that materially worse results of operations or financial position resulting from
different applications of GAAP or from the utilization of accounting principles,
practices or methods different from those utilized by Deloitte & Touche or NPR
Holding in preparation of the Deloitte & Touche Financials (so long as such
different accounting principles, practices or methods are in accordance with
GAAP) or events occurring on or after the date of the Acquisition shall not be
taken into account in determining whether the results of operations or financial
position are materially worse).
<PAGE>
"Acquisition" means the acquisition of 100% of the outstanding common
stock of NPR Holding all pursuant to and in accordance with the Stock Purchase
Agreement.
"Affiliate" means, with respect to any Person, any other Person that,
directly or indirectly, controls, is controlled by or is under common control
with such Person. For purposes of this definition, "control" including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with", as used with respect to any Person, means the possession,
directly or indirectly, of the power to direct or cause the direction of the
management and policies of that Person, whether through the ownership of voting
securities, by contract or otherwise.
"Agreement" means this Securities Purchase Agreement, as amended,
restated or otherwise modified from time to time in accordance with its terms.
"Asset Sale" means any sale, lease or other disposition (including any
such transaction effected by way of merger or consolidation) by any Credit Party
of any asset, including without limitation any sale-leaseback transaction, but
excluding (i) dispositions of inventory and used, surplus or worn out equipment
in the ordinary course of business, (ii) dispositions to a wholly-owned
Subsidiary of any Credit Party, (iii) operating and real property leases entered
into in the ordinary course of business and (iv) cash payments otherwise
permitted under this Agreement; provided that any disposition not excluded
pursuant to clauses (i) through (iv) shall constitute an Asset Sale only if, and
solely to the extent that, the Net Cash Proceeds therefrom, together with the
Net Cash Proceeds from all other such dispositions effected by any Credit Party
after the date hereof, exceed, in the aggregate, $1,000,000.
"Bankruptcy Events" has the meaning set forth in Section 9.2.
"Business Day" means any day except a Saturday, Sunday or other day on
which commercial banks in the Cities of New York or Philadelphia are authorized
or required by law or other government action to close.
-2-
<PAGE>
"Cash Equivalents" means (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof), (ii) time deposits and
certificates of deposit of any domestic commercial bank (including a domestic
branch of a foreign bank) whose outstanding senior long-term debt securities are
rated either A- or higher by Standard & Poor's Ratings Services or A3 or higher
by Moody's Investors Service, Inc., (iii) repurchase obligations with a term of
not more than 7 days for underlying securities of the types described in clause
(i) entered into with any bank meeting the qualifications specified in clause
(ii) above, (iv) commercial paper rated at least A-1 or the equivalent thereof
by Standard & Poor's Ratings Services or at least P-1 or the equivalent thereof
by Moody's Investors Service, Inc., maturing within one year after the date of
acquisition, and (v) investments in money market funds substantially all of
whose assets are comprised of securities of the types described in clauses (i)
through (iv) above.
"Change of Control" means such time as (a) Holt, his spouse, any lineal
descendent of Holt or any spouse of such lineal descendent (including without
limitation (i) any person whose relationship is by legal adoption and (ii)
trusts for the benefit of any of the foregoing) shall cease to own beneficially
and of record 51% of the capital stock of the Company; or (b) during any period
of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of any Credit Party (together with any new
directors whose election was approved by a vote of a majority of the directors
then still in office, who either were directors at the beginning of such period
or whose election or nomination for the election was previously so approved)
cease for any reason to constitute a majority of the directors of such Credit
Party then in office.
"Closing" means the date on which the Notes are initially issued.
"Commission" means the Securities and Exchange Commission.
-3-
<PAGE>
"Company" means The Holt Group, Inc., a Delaware corporation.
"Company Corporate Documents" means the articles of incorporation and
by-laws of each Credit Party.
"Consolidated Subsidiary" means, at any date with respect to any
Person, any Subsidiary or other entity, the accounts of which would be
consolidated with those of such Person in its consolidated financial statements
if such statements were prepared as of such date.
"Contribution Agreement" means the Contribution Agreement dated as of
October 31, 1997 between Holt and The Holt Group, Inc.
"Credit Party" means, individually, each one of (i) the Company, (ii)
the Holt Companies and (iii) the NPR Companies, and "Credit Parties" means all
of the foregoing, taken collectively.
"Debt" of any Person means, at any date, (a) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property or
services (other than current trade liabilities incurred in the ordinary course
of business) or which is evidenced by a note, bond, debenture or similar
instrument, (b) all obligations of such Person under Financing Leases, (c) all
obligations (contingent or otherwise) of such Person to reimburse any bank or
other Person in respect of amounts paid under a letter of credit or similar
instrument, (d) all Derivatives Obligations of such Person, (e) all Guarantee
Obligations of such Person in respect of Debt of any other Person and (f) all
liabilities of the types described in clauses (a) through (e) above secured by
any Lien on any property owned by such Person even though such person has not
assumed or otherwise become liable for the payment thereof.
"Debt Incurrence" means any incurrence by any Credit Party of any Debt
(including without limitation pursuant to the Permanent Financing), other than
Debt permitted under Section 6.8(a), 6.8(b), 6.8(c), 6.8(e) and 6.8(f).
-4-
<PAGE>
"Default" means any Event of Default or any event or condition which,
with the giving of notice or lapse of time or both, would, unless cured or
waived, become an Event of Default.
"Deloitte & Touche Financials" means the consolidated balance sheets of
NPR Holding for the years ended December 31, 1995 and January 4, 1997 and the
related statements of operations and cash flows for the years then ended
prepared in accordance with GAAP delivered at the Closing.
"Derivatives Obligations" of any Person means all obligations of such
Person in respect of any rate swap transaction, basis swap, forward rate
transaction, commodity swap, commodity option, equity or equity index swap,
equity or equity index option, bond option, interest rate option, foreign
exchange transaction, cap transaction, floor transaction, collar transaction,
currency swap transaction, cross-currency rate swap transaction, currency option
or any other similar transaction (including any option with respect to any of
the foregoing transactions) or any combination of the foregoing transactions.
"DLJSC" means Donaldson, Lufkin & Jenrette Securities Corporation, a
Delaware corporation, and its successors.
"dollars" or "$" mean lawful currency of the United States of America.
"Domestic Taxes" has the meaning set forth in Section 2.5 (a).
"Environmental Laws" means any and all statutes, laws, judicial
decisions, regulations, ordinances, rules, judgments, orders, decrees, codes,
plans, injunctions, permits, concessions, grants, franchises, licenses and
governmental restrictions, whether now or hereafter in effect, relating to human
health, the environment or to emissions, discharges or releases or pollutants,
contaminants, Hazardous Materials or wastes into the environment, including
ambient air, surface water, ground water or land, or otherwise relating to the
manufacture, processing,
-5-
<PAGE>
distribution, use, treatment, storage, disposal, transport or handling of
pollutants, contaminants, Hazardous Materials or wastes or the clean-up or other
remediation thereof.
"Equity Issuance" means the issuance of any equity securities by any
Credit Party (including without limitation any equity securities issued pursuant
to the exercise of stock options or warrants or the Permanent Financing), but
excluding equity securities issued to any other Credit Party.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, or any successor statute.
"ERISA Group" means the Company and each Subsidiary, and all members of
a controlled group of corporations and all trades or businesses (whether or not
incorporated) under common control which, together with the Company or any
Subsidiary, are treated as a single employer under Section 414 of the Internal
Revenue Code.
"Event of Default" has the meaning set forth in Section 7.1.
"Exchange Act" means the Securities Exchange Act of 1934, as amended.
"Financing Documents" means this Agreement, the Notes and the
Subsidiary Guaranty.
"Financing Lease" means any lease of property, real or personal, the
obligations or the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"First Anniversary" means the first anniversary of the date of Issuance
of the Notes.
"GAAP" means generally accepted accounting principles as in effect from
time to time in the United States of America.
"Guarantee Obligation" means as to any Person (the "guaranteeing
person"), without duplication, any obligation of (a) the guaranteeing person or
(b) another Person
-6-
<PAGE>
(including, without limitation, any bank under any letter of credit) to induce
the creation of which the guaranteeing person has issued a reimbursement,
counter-indemnity or similar obligation, in either case guaranteeing or in
effect guaranteeing any Debt, leases, dividends or other obligations (the
"primary obligations") of any other third Person (the "primary obligor") in any
manner, whether directly or indirectly, including, without limitation, any
obligation of the guaranteeing person whether or not contingent, (i) to purchase
any such primary obligation or any property constituting direct or indirect
security therefor, (ii) to advance or supply funds (1) for the purchase or
payment of any such primary obligation or (2) to maintain working capital or
equity capital or the primary obligor or otherwise to maintain the net worth or
solvency of the primary obligor, (iii) to purchase property, securities or
services primarily for the purpose of assuring the owner of any such primary
obligation of the ability of the primary obligor to make payment of such primary
obligation against loss in respect thereof; provided, however, that the term
Guarantee Obligation shall not include endorsements of instruments for deposit
or collection in the ordinary course of business or the guaranty obligation of
any primary obligation which does not constitute Debt. The amount of any
Guarantee Obligation of any guarantee person shall be deemed to be the lower of
(a) an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Guarantee Obligation is made and (b) the
maximum amount for which such guaranteeing person may be liable pursuant to the
terms of the instrument embodying such Guarantee Obligation, unless such primary
obligation and the maximum amount for which such guaranteeing person may be
liable are not stated or determinable, in which case the amount of such
Guarantee Obligation shall be such guaranteeing person's maximum reasonably
anticipated liability in respect thereof as determined by such Person in good
faith.
"Hazardous Materials" means (i) asbestos; (ii) polychlorinated
biphenyls; (iii) petroleum, its derivatives, by-products and other hydrocarbons;
and (iv) any other toxic, radioactive, caustic or otherwise hazardous substance
regulated under Environmental Laws.
-7-
<PAGE>
"Hazardous Materials Contamination" means contamination (whether now
existing or hereafter occurring) of the improvements, buildings, facilities,
personalty, soil, groundwater, air or other elements on or of the relevant
property by Hazardous Materials, or any derivatives thereof, or on or of any
other property as a result of Hazardous Materials, or any derivatives thereof,
generated on, emanating from or disposed of in connection with the relevant
property.
"Holder" means any holder of any Note.
"Holt" means Thomas J. Holt, Sr., an individual currently residing in
Philadelphia, Pennsylvania.
"Holt Companies" means, collectively, Holt Cargo, Holt Hauling and
Warehousing System, Inc., Wilmington Stevedores, Inc., Murphy Marine Services,
Inc. and The Riverfront Development Corporation.
"Holt Cargo" means Holt Cargo Systems, Inc., a Delaware corporation.
"Interest Payment Date" means each December 31, March 31, June 30 and
September 30 (or, if any such date is not a Business Day, the next succeeding
Business Day).
"Interest Period" shall mean the period from the date of this Agreement
to but excluding the 3Oth day thereafter, and thereafter each successive 30-day
period. If any Interest Period would begin or end on a date which is not a
Business Day, such Interest period shall begin or end, as the case may be, on
the next succeeding Business Day and any Interest Period that would extend
beyond the Maturity Date shall end on the Maturity Date. The Majority Holders
may, in their discretion, select Interest Periods of one day for any day on or
after the Notes shall have become due and payable in accordance with the terms
hereof.
"Investment" means, without duplication, any investment in any Person,
whether by means of share purchase, capital contribution, loan, time deposit or
otherwise.
-8-
<PAGE>
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Issuance" has the meaning set forth in Section 2.1.
"LIBOR Rate" with respect to each Interest Period, shall mean for any
day, as determined by Purchaser (as defined in the Senior Securities Purchase
Agreement) (unless Purchaser does not make such determination, in which case as
determined by the Majority Holders), the interest rate per annum offered for
deposits in dollars for the Interest Period in the London interbank market which
appears on Telerate Page 3750 or such other page as may replace Telerate Page
3750 on that service or such other service or services as may be nominated by
the British Bankers' Association for the purpose of displaying such rate
(collectively, "Telerate Page 3750") as of 11:00 A.M. London time on the second
Business Day prior to any such date. If the Interest Period is of a duration
falling between the Interest Periods for which such rates appear on Telerate
Page 3750, the LIBOR Rate shall be the rate determined by interpolation between
the rates for the next shorter and the next longer Interest Periods for which
such rate appears on Telerate Page 3750, as determined by Purchaser (unless
Purchaser does not make such determination, in which case as determined by the
Majority Holders), whose determination shall be conclusive in the absence of
manifest error. In the event that (i) more than one such LIBOR Rate is provided,
the average of such rates shall apply or (ii) no such LIBOR Rate is published,
then the LIBOR Rate shall be determined from such comparable financial reporting
company as Purchaser (unless Purchaser does not make such determination, in
which case as determined by the Majority Holders), in its discretion, shall
determine.
"Lien" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien (statutory or other), charge or other security
interest or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including, without limitation, any
conditional sale or other title retention agreement) and any other arrangement
having substantially the same economic effect as any of the foregoing.
-9-
<PAGE>
"Majority Holders" means the Holders of more than 50% in aggregate
principal outstanding amount of Notes at such time.
"Material Acquisition Documents" means the Stock Purchase Agreement and
the Contribution Agreement.
"Material Adverse Effect" means a material adverse affect on the
assets, business, financial position, results of operations or prospects of
(i) the Company, (ii) the Holt Companies (taken as a whole), (iii) the NPR
Companies (taken as a whole) or (iv) the Company and its Subsidiaries (taken as
a whole).
"Material Plan" means at any time a Plan or Plans having aggregate
Unfunded Liabilities in excess of $1,000,000.
"Maturity Date" means the date three Business Days following the date
on which the Company receives financial statements consisting of the audited
balance sheet of NPR Holding for the years ended December 31, 1995 and January
4, 1997 and the related statements of operations and cash flows for the years
then ended, prepared in accordance with GAAP (other than the Deloitte & Touche
Financials); provided, however, if such financial statements are not Acceptable
Financial Statements and the failure of such financial statements to be
Acceptable Financial Statements causes DLJSC to be unable to complete the sale
of debt securities to refinance the Senior Notes in accordance with Section 6.15
of this Agreement after DLJSC has used its commercially reasonable best efforts
to complete such sale, then the Maturity Date shall be extended to the First
Anniversary (it being understood that if DLJSC fails to sell such debt
securities for reasons other than the financial statements not being Acceptable
Financial Statements (e.g. negative performance of the Holt Companies or
negative performance of the NPR Companies (other than negative performance of
the NPR Companies for the periods covered by the December 31 and January
financial statements referred to above) then the Maturity Date shall not be
extended to the First Anniversary); provided, further, however, if the Maturity
Date has been extended to the First Anniversary in accordance with this
definition, it shall be further extended to the
-10-
<PAGE>
seventh anniversary of the Issuance if the maturity of the Senior Notes is
extended until six and one-half years after the Issuance, pursuant to the terms
of the Senior Securities Purchase Agreement, as in effect on the date hereof,
without giving effect to any waiver, consent or modification thereof.
"Multiemployer Plan" means at any time an employee pension benefit plan
within the meaning of Section 4001(a)(3) of ERISA to which any member of the
ERISA Group is then making or accruing an obligation to make contributions or
has within the preceding five plan years made contributions, including for these
purposes any Person which ceased to be a member of the ERISA Group during such
five year period.
"Net Cash Proceeds" means, with respect to any transaction, an amount
equal to the cash proceeds received by any Credit Party from or in respect of
such transaction (including any cash proceeds received as income or other
proceeds of any non-cash proceeds of such transaction), less (i) any expenses
(including commissions) reasonably incurred by any Credit Party in respect of
such transaction, (ii) the amount of any Debt secured by a Lien on a related
asset and discharged from the proceeds of such transaction; (iii) any taxes paid
or payable by any Credit Party with respect to such transaction (as reasonably
estimated by such Credit Party's chief financial officer in good faith) and (iv)
amounts thereof required to be paid by any Credit Party to the holders of other
senior secured indebtedness outstanding as of the date of this Agreement (or
refinancings thereof permitted hereunder).
"Notes" means the Subordinated Unsecured Increasing Rate Notes issued
by the Company substantially in the form set forth as Exhibit A hereto.
"NPR Companies" means, collectively, each of NPR Holding, NPR S.A.,
NPR, Inc. and NPR-Navieras.
"NPR Holding" means NPR Holding Corporation, a Delaware corporation.
"NPR, Inc." means NPR, Inc., a Delaware corporation.
-11-
<PAGE>
"NPR-Navieras" means NPR-Navieras Receivables, Inc., a Delaware
corporation.
"NPR S.A. " means NPR S.A., Inc., a Delaware corporation.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type of description, and at any time existing, owing to each
Holder pursuant to the terms of this Agreement including without limitation, all
principal, interest, penalties, expenses, indemnification, reimbursements,
damages and any other liabilities, together with and including any amounts
received upon the exercise of rights or recision or other rights of action
(including claims for damages) or otherwise.
"Other Taxes" has the meaning set forth in Section 2.5 (a).
"Packer Avenue Proceeding" means that certain action commenced by Holt
Cargo, Holt Hauling & Warehousing System, Inc. and Astro Holding, Inc. (the
"Plaintiffs") in the United States District Court for the Eastern District of
Pennsylvania against the Delaware River Port Authority (the "DRPA"), the
Philadelphia Regional Port Authority (the "PRPA") and the Ports of Philadelphia
and Camden (together with the DRPA and PPC the "Defendants"). The Plaintiffs
allege that the Defendants, along with other unnamed co-conspirators, acting
under the color of state law committed predatory acts under a conspiracy
designed to injure, harass and appropriate the property of the Plaintiffs.
Plaintiffs are seeking damage for Defendants' conduct which constitutes a
violation of Plaintiffs' substantive due process, equal protection and
procedural due process rights under 41 U.S.C. Section 1983.
"PBGC" means the Pension Benefit Guaranty Corporation or any entity
succeeding to any or all of its functions under ERISA.
"Permanent Financing" means any Debt Incurrence or Equity Issuance
following the date hereof for the purpose of refinancing, in the aggregate, the
outstanding principal
-12-
<PAGE>
amount of the Senior Notes and the Notes (including all additional Notes issued
as interest on any Notes).
"Permits" means all domestic and foreign licenses, permits and
approvals required for the full operation of the Company and its Subsidiaries,
taken as a whole, including, without limitation, provincial, state, federal,
city and county permits and approvals.
"Person" means an individual or a corporation, partnership, trust,
incorporated or unincorporated association, joint venture, joint stock company,
government (or any agency or political subdivision thereof) or other entity of
any kind.
"Plan" means at any time an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Internal Revenue Code and
either (i) is maintained, or contributed to, by any member of the ERISA Group
for employees of any member of the ERISA Group or (ii) has at any time within
the preceding five years been maintained, or contributed to, by any Person which
was at such time a member of the ERISA Group for employees of any Person which
was at such time a member of the ERISA Group.
"Prime Rate" means, for any day, a rate per annum equal to the rate of
interest publicly announced by The Bank of New York (or its successor) from time
to time in New York, New York as its prime, reference or base rate, it being
understood that such rate is one of such bank's base rates and serves as a basis
upon which effective rates of interest are calculated for those loans making
reference thereto and may not be the lowest of such bank's base rates.
"Purchaser" means each person listed on the signature pages hereto and
their respective successors and assigns.
"Restricted Payment" means, with respect to any Person (i) any dividend
or other distribution on any shares
-13-
<PAGE>
of the capital stock of such Person (except dividends payable solely in shares
of capital stock of the same class of such Person) or (ii) any payment on
account of the purchase, redemption, retirement or acquisition of (a) any shares
of the capital stock of such Person or (b) any option, warrant or other right to
acquire such Person's shares of the capital stock.
"Rule 144A" has the meaning set forth in Section 8.3.
"Securities Act" means the Securities Act of 1933, as amended.
"Senior Indebtedness" shall mean all payment obligations now or
hereafter incurred pursuant to and in accordance with the terms of the Senior
Securities Purchase Agreement and all payment obligations now or hereafter
incurred pursuant to and in accordance with the terms of indebtedness permitted
to be incurred pursuant to Section 6.8 (including without limitation, all
principal, interest (including interest after the commencement of a Bankruptcy
Event at the rate specified in the documentation therefore, whether or not
allowed), premium, penalties, fees, expenses, indemnification, reimbursements,
damages and other liabilities payable under the relevant documentation).
"Senior Notes" means the Senior Unsecured Increasing Rate Notes issued
by the Company in an aggregate principal amount not to exceed $125 million
pursuant to the Senior Securities Purchase Agreement plus additional notes
issued as pay-in-kind interest.
"Senior Securities Purchase Agreement" means the Securities Purchase
Agreement, dated as of November 18, 1997 between The Holt Group, Inc. and HS
Funding Inc., as such Agreement may be amended, modified or waived from time to
time.
"Selling Shareholders" means the "Sellers" as such term is defined in
the Stock Purchase Agreement.
-14-
<PAGE>
"Solvent" as to any Person shall mean that (i) the sum of the assets of
such Person, both at a fair valuation and at present fair salable value, will
exceed its liabilities, including contingent liabilities, (ii) such Person will
have sufficient capital with which to conduct its business as presently
conducted and as proposed to be conducted and (iii) such Person has not incurred
debts, and does not intend to incur debts, beyond its ability to pay such debts
as they mature. For purposes of this definition, "debt" means any liability on a
claim, and "claim" means (x) a right to payment, whether or not such right is
reduced to judgment, liquidated, unliquidated, fixed, contingent, matured,
unmatured, disputed, undisputed, legal, equitable, secured, or unsecured, or (y)
a right to an equitable remedy for breach of performance if such breach gives
rise to a payment, whether or not such right to an equitable remedy is reduced
to judgment, fixed, contingent, matured, unmatured, disputed, undisputed,
secured, or unsecured. With respect to any such contingent liabilities, such
liabilities shall be computed at the amount which, in light of all the facts and
circumstances existing at the time, represents the amount which can reasonably
be expected to become an actual or matured liability net of reasonably expected
reimbursements.
"Spread" has the meaning set forth in Section 2.3 (b).
"Stock Purchase Agreement" means the Stock Purchase Agreement dated
September 25, 1997 by and among NPR Holding, each of the Selling Shareholders
signatory thereto and Holt Cargo, as amended, supplemented or otherwise modified
from time to time in accordance with the terms thereof.
"Subordinated obligations" has the meaning set forth in Section 9.1.
"Subsidiary" means, with respect to any Person, any corporation or
other entity of which a majority of the capital stock or other ownership
interests having ordinary voting power to elect a majority of the board of
directors or other persons performing similar functions are at the time directly
or indirectly owned by such Person.
-15-
<PAGE>
"Subsidiary Guaranty" means the Subsidiary Guaranty in the form of
Exhibit C executed and delivered pursuant to this Agreement.
"Tax Amount" has the meaning set forth in Section 6.9 (a).
"Tax Percentage" has the meaning set forth in Section 6.9 (a)
"Taxes" has the meaning set forth in Section 2.5 (a).
"Transfer" means any disposition of Notes that would constitute a sale
thereof under the Securities Act.
"Treasury Rate" has the meaning set forth in Section 2.3 (b).
"Unfunded Liabilities" means, with respect to any Plan at any time, the
amount (if any) by which (i) the present value of all benefits under such Plan
exceeds (ii) the fair market value of all Plan assets allocable to such benefits
(excluding any accrued but unpaid contributions), all determined as of the then
most recent valuation date for such Plan, but only to the extent that such
excess represents a potential liability of a member of the ERISA Group to the
PBGC or any other Person under Title IV of ERISA.
Section 1.2. Accounting Terms and Determinations. Unless otherwise
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP
applied on a consistent basis (except for changes concurred in by the Company's
independent public accountants).
-16-
<PAGE>
ARTICLE 11
ISSUANCE OF SECURITIES, TERMS OF SECURITIES
Section 2.1. Issuance. Subject to the terms and conditions set forth
herein and in reliance on the representations and warranties contained herein
and in the other Financing Documents, the Company shall issue at the Closing
(the "Issuance") and deliver to the Purchasers as partial consideration for the
shares of capital stock of NPR Holding purchased by the Company from the
Purchasers pursuant to the terms of the Stock Purchase Agreement, Notes in an
aggregate outstanding principal amount of $25,000,000.
Section 2.2. Delivery of Notes: Fees. (a) The Company shall deliver to
the Purchasers separate Notes in such denominations and registered in such name
or names as set forth on Schedule 2.2.
(b) If the Notes are still outstanding on June 30, 1999, the Company
shall, at its option, distribute to the Holders, either (i) 5% of the
outstanding capital stock of Transroll Navieras Express, Inc. ("TNX") or (ii)
cash in lieu thereof equal to the Market Price (as defined in the shareholders
agreement which is being entered into on the date of the Acquisition by the
Selling Stockholders and NPR Holding, with respect to the shares of TNX (the
"TNX Shareholders Agreement") ) of 5% of the outstanding capital stock of TNX,
in the aggregate. The Company shall determine whether it will distribute the TNX
capital stock or the cash in lieu thereof, and shall notify the Purchasers of
such determination, by April 30, 1999. In the event the Company elects to
distribute the capital stock of TNX, the securities distributed to the Holders
shall be in the same form as the securities delivered to the Selling
Stockholders in connection with the Acquisition and shall be subject to the TNX
Shareholders Agreement. In the event the Company elects to distribute cash in
lieu of the TNX capital stock, the Company and the Purchasers shall begin the
Valuation Procedure (as defined in the TNX Shareholders Agreement) on April 30,
1999; provided, however, 100% of the fees and expenses of the Independent
Financial Expert shall be paid by the Company and references to the Minority
Shareholders and Minority Shareholder Shares in the definition of Valuation
-17-
<PAGE>
Procedure shall be deemed references to the Holders and the Notes held by the
Holders, respectively.
Section 2.3. Interest. (a) Payment Dates. Interest on each Note shall
be payable quarterly in arrears, on each Interest Payment Date of each year in
which such Note remains outstanding, commencing with the first Interest Payment
Date after the date of issuance thereof, on the principal sum of the Notes
outstanding (including Notes issued as additional interest). Interest on each
Note (including Notes issued as additional interest) shall be calculated at the
rate per annum set forth in subsection (b) below, and shall accrue from and
including the most recent Interest Payment Date to which interest has been paid
on such Note (or if no interest has been paid on such Note, from the date of
issuance thereof) to but excluding the date on which payment in full of the
principal sum of such Note has been made. At the election of the Company,
interest may be paid in the form of additional Notes with a principal amount
equal to the amount of interest payment due on each Interest Payment Date;
provided, however, if additional Notes are not issued and cash interest is not
paid, then interest shall accrue and compound quarterly on each Interest Payment
Date and provided, further, so long as any Senior Notes are outstanding,
interest must be paid in the form of additional Notes.
(b) Interest Rate. Interest shall be payable at the Prime Rate plus a
spread (the "Spread") or the LIBOR Rate plus the Spread, at the Company's
option. In the event that the Company elects the Prime Rate option, the Spread
will initially be 200 basis points. In the case of a LIBOR option, the Spread
will be 450 basis points. If the Notes are not retired in whole by the end of
the first six month period following the date of their issuance, the Spread will
increase by 100 basis points and shall continue to increase by an additional 50
basis points at the end of each subsequent three month period until the First
Anniversary.
Commencing on the First Anniversary, interest shall be payable at the
greater of the following as of the beginning of each quarterly period: (i) the
Prime Rate plus 400 basis points, increasing by an additional 50 basis points
-18-
<PAGE>
at the end of each subsequent three month period for so long as the Notes are
outstanding; (ii) the Treasury Rate (as defined below) plus 750 basis points,
increasing by an additional 50 basis points at the end of each subsequent three
month period for so long as the Notes are outstanding; (iii) the DLJ High Yield
Index Rate plus 150 basis points, increasing by an additional 50 basis points at
the end of each subsequent three month period for so long as the Notes are
outstanding; and (iv) the rate in effect on the day immediately preceding the
First Anniversary plus 50 basis points, increasing by an additional 50 basis
points at the end of each subsequent three month period for so long as the Notes
are outstanding. "Treasury Rate" means the rate applicable to the most recent
auction of direct obligations of the United States having a maturity closest to
the Notes, as published by the Board of Governors of the Federal Reserve System.
Notwithstanding anything to the contrary set forth above, at no time
shall the per annum interest rate on the Notes exceed seventeen percent (17%).
Interest on each Note will be calculated on the basis of a 365-day year and paid
for the actual number of days elapsed.
Section 2.4. Maturity of Notes, Prepayment of Notes. (a) Maturity
Date. The Notes shall mature on the Maturity Date.
(b) Ontional Redemption. The Notes may be redeemed, in whole or in
part, upon not less than 10 days written notice, at the option of the Company,
at any time at par plus accrued interest to the redemption date, without premium
or penalty.
(c) Intentionally omitted.
(d) Mandatory Prepayments. (i) The Company shall, within five days of
receipt by any Credit Party of the Net Cash Proceeds of any Asset Sale, Debt
Incurrence or Equity Issuance, prepay, (i) a principal amount of the Senior
Notes equal to the amount of such Net Cash Proceeds (less any amounts not
required to be paid as a result of the requirement in subsection (e) of this
Section 2.4 that all such prepayments be made in multiples of $1,000), at the
-19-
<PAGE>
redemption price set forth in the Senior Securities Purchase Agreement, as in
effect on the date hereof, and (ii) to the extent available funds remain after
the prepayment of all amounts owing with respect to the Senior Notes pursuant to
the terms of the Senior Securities Purchase Agreement, as in effect on the date
hereof, a principal amount of the Notes equal to the amount of such remaining
Net Cash Proceeds, at a redemption price equal to one hundred percent (100%) of
the principal amount of the Notes so prepaid together with accrued interest to
the date of prepayment; provided, however, the proceeds of the $25 Million
Takedown (as defined in the Senior Securities Purchase Agreement, as in effect
on the date hereof) shall be applied in accordance with clause (ii) above (and
not clause (i)).
(ii) The Company shall, within five (5) days of receipt by any Credit
Party of the proceeds (net of legal fees) of the Packer Avenue Proceeding,
prepay (i) a principal amount of the Senior Notes equal to the amount of such
proceeds, at a redemption price equal to one hundred percent (100%) of the
principal amount of the Senior Notes so prepaid together with accrued interest
to the date of prepayment and then (ii) to the extent available funds remain, a
principal amount of the Notes equal to the amount of such proceeds, at a
redemption price equal to one hundred percent (100%) of the principal amount of
the Notes so prepaid together with accrued interest to the date of prepayment.
(e) Minimum Amount. Any prepayment of the Notes pursuant to Section
2.4(b) shall be in a minimum amount of at least $1,000,000, unless less than
$1,000,000 of the Notes remain outstanding, in which case all of the Notes must
be prepaid. Any prepayment of the Senior Notes or Notes pursuant to Section
2.4(d) shall be in a minimum amount which is a multiple of $1,000 times the
number of holders of Senior Notes or Holders, as the case may be, at the time of
such prepayment.
(f) Partial Prepayments. Any partial prepayment shall be made so that
the Notes then held by each Holder shall be prepaid in a principal amount which
shall bear the same ratio, as nearly as may be, to the total principal
-20-
<PAGE>
amount being prepaid as the principal amount of such Notes held by such Holder
shall bear to the aggregate principal amount of all Notes then outstanding. In
the event of a partial prepayment, upon presentation of any Note the Company
shall execute and deliver to or on the order of the Holder, at the expense of
the Company, a new Note in principal amount equal to the remaining outstanding
portion of such Note.
Section 2.5. Taxes. (a) For the purposes of this Section, the following
terms have the following meanings:
"Taxes" means any and all present or future taxes, duties, levies,
imposts, deductions, charges or withholdings with respect to any payment by any
Credit Party pursuant to this Agreement or under any Note or any other Financing
Document, and all liabilities with respect thereto, excluding, in the case of a
Purchaser or any other Holder, taxes imposed on the net income of such Purchaser
or such Holder and franchise or similar taxes imposed on such Purchaser or such
Holder, by a jurisdiction under the laws of which such Purchaser or such Holder
is organized or in which its principal executive office, or the office which
holds the Notes or other Financing Document, is located (all such excluded taxes
being hereinafter referred to as "Domestic Taxes").
"Other Taxes" means any present or future stamp or documentary taxes
and any other excise or property taxes, or similar charges or levies, which
arise from any payment made pursuant to this Agreement or under any Note or any
other Financing Document or from the execution, delivery, registration,
recordation or enforcement of, or otherwise with respect to, this Agreement or
any Note or any other Financing Document.
(b) All payments by any Credit Party to or for the account of a
Purchaser or any other Holder under any Financing Document shall be made without
deduction for any Taxes or Other Taxes; provided that, if any Credit Party shall
be required by law to deduct any Taxes or Other Taxes from any such payment, the
sum payable shall be increased as necessary so that after making all required
deductions (including deductions applicable to additional sums payable under
this Section), such Purchaser or such Holder (as the
-21-
<PAGE>
case may be) receives an amount equal to the sum it would have received had no
such deductions been made, the Credit Party shall make such deductions, the
Credit Party shall pay the full amount deducted to the relevant taxation
authority or other authority in accordance with applicable law and the Company
shall promptly furnish to such Purchaser or such Holder (as the case may be) the
original or a certified copy of a receipt evidencing payment thereof.
(c) The Company agrees to indemnify each Purchaser and each other
Holder for the full amount of Taxes and Other Taxes (including, without
limitation, any Taxes or Other Taxes imposed or asserted by any jurisdiction on
amounts payable under this Section) paid by such Purchaser or such Holder (as
the case may be) and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto.
(d) The Company shall have no obligations for Taxes under Section
2.5(a) or Section 2.5 (b) for or on account of:
(i) any Taxes (other than Other Taxes) imposed by way of deduction
or withholding that would not have been so imposed but for the existence of any
present or former connection between such Holder and the jurisdiction imposing
the Tax other than merely holding such Note or any Financing Document, or the
receipt of payments in respect thereof, including, without limitation, such
Holder being or having been a citizen or resident thereof, or being or having
been engaged in a trade or business or having a permanent establishment or other
fixed base therein, or making or having made an election to the effect of which
is to subject such Holder to such Tax;
(ii) any Taxes (other than (A) Other Taxes or (B) any Taxes imposed
by way of deduction or withholding) that would not have been so imposed but for
the existence of any present or former connection between such Holder or the
beneficial owner (or between a fiduciary, settlor, beneficiary, member or
shareholder of, or possessor of a power over, such Holder or beneficial owner,
if such Holder
-22-
<PAGE>
or beneficial owner is an estate, a trust, a partnership or corporation) and the
jurisdiction imposing the Tax other than merely holding such Note or any
Financing Document, or the receipt of payments in respect thereof, including,
without limitation, such Holder or beneficial owner (or such fiduciary, settlor,
beneficiary, member, shareholder, or possessor) being or having been a citizen
or resident thereof, or being or having been engaged in a trade or business or
having a permanent establishment or other fixed base therein, or making or
having made an election to the effect of which is to subject such Holder or
beneficial owner (or such fiduciary, settlor, beneficiary, member, shareholder
or possessor) to such Tax;
(iii) any Taxes in the nature of estate, inheritance or gift taxes;
(iv) any Tax that is imposed or withheld by reason of the failure
of the Holder or beneficial owner of a Note to comply with a written request by
the Company addressed to such Holder or beneficial owner to provide (A)
information concerning the nationality, residence or identity of such Holder or
beneficial owner that is required under a statute, treaty, regulation or
administrative practice of the jurisdiction imposing such Tax as a precondition
to exemption from all or part of such Tax or (B) the applicable signed form
required to be received by the Credit Parties to qualify for an exemption or
reduction of such Tax;
(v) in the case of a Holder other than a Purchaser or a person
described in Section 8.3 (a) (ii) , any Taxes imposed on any payment on a Note
to a Holder that is a fiduciary or partnership or other than sole beneficial
owner of such payment to the extent a beneficiary or settlor with respect to
such fiduciary or a member of such partnership or a beneficial owner would not
have been entitled to the payment of taxes had such beneficiary, settlor, member
or beneficial owner directly received its beneficial or distributive share of
such payment;
(vi) any Tax that is imposed or withheld, to the extent that the
Holder would have been subject to such
-23-
<PAGE>
Tax at the time of the original purchase of the Notes upon their original
issuance if the Holder had purchased the Note at that time; and
(vii) any combination of items (i) through (vi) above.
(e) Notwithstanding anything in Section 2.5 (d) to the contrary, the
Company agrees to indemnify each Purchaser and each other Holder for all
Domestic Taxes of such Purchaser or such other Holder (calculated based on a
hypothetical basis at the maximum marginal rate for a corporation) and any
liability (including penalties, interest and expenses) arising therefrom or with
respect thereto, in each case to the extent that such Domestic Taxes result from
any payment or indemnification pursuant to this Section 2.5. This
indemnification shall be paid within 15 days after such Purchaser or such Holder
(as the case may be) makes demand therefor.
(f) The Company agrees that the provisions of this Section shall inure
to the benefit of any transferee of any Note.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
The Company represents and warrants to each Purchaser (both before and
after giving effect to the Acquisition) as set forth below; provided, however,
the Company shall not be deemed to be making any representations with respect to
the NPR Companies; and provided further however, any reference to Credit Parties
shall be deemed to be a reference to the Holt Companies (taken as a whole):
Section 3.1. Corporate Existence and Power. Each Credit Party is a
corporation duly incorporated, validly existing and in good standing under the
laws of the state of its incorporation, and has all corporate powers and all
governmental licenses, authorizations, consents and approvals required to carry
on its business as now conducted and as proposed to be conducted after the
Acquisition except for such governmental licenses, authorizations, consents and
-24-
<PAGE>
approvals as to which the failure to so maintain could not reasonably be
expected to have a Material Adverse Effect.
Section 3.2. Authorization. Execution and Enforceability. The
execution, delivery and performance by each Credit Party who is party to each of
the Financing Documents and the Material Acquisition Documents and the issuance
of the Notes by the Company have been duly and validly authorized and are within
each such Credit Party's corporate powers. Each of the Financing Documents and
Material Acquisition Documents has been duly executed and delivered by the
Credit Parties party thereto and constitutes their valid and binding agreement,
enforceable in accordance with its terms subject to applicable bankruptcy,
insolvency and other similar laws affecting creditors' rights generally and
equitable principles of general applicability. When executed and delivered by
the Company, the Notes issuable in connection with the interest payable pursuant
to the terms of this Agreement, will constitute valid and binding obligations of
the Company, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally and equitable principles of general applicability.
Section 3.3. Governmental Authorization. The execution and delivery by
the Credit Parties party to each of the Financing Documents and Material
Acquisition Documents did not and will not, the issuance and sale of the Notes
by the Company did not and will not, and the consummation of the transactions
contemplated hereby and thereby will not, require any action by or in respect
of, or filing with, any governmental body, agency or governmental official
except actions and filings which, if not taken or made, will not affect in any
manner the validity or enforceability of the Financing Documents or the Material
Acquisition Documents or could reasonably be expected to have a Material Adverse
Effect.
Section 3.4. Contravention. The execution and delivery by the Credit
Parties party to each of the Financing Documents and the Material Acquisition
Documents did not and will not, and the issuance and sale of the Notes by the
Company did not and will not, and the consummation of the transactions
contemplated hereby and thereby will not,
-25-
<PAGE>
contravene or constitute a default under or violation of any provision of
applicable law or regulation, any Company Corporate Documents or any agreement,
judgment, injunction, order, decree or other instrument binding upon any Credit
Party or any of its assets, or result in the creation or imposition of any Lien
on any asset of any Credit Party.
Section 3.5. Financial Information.
(a) The Holt Companies' (i) unaudited financial statements for the Holt
Companies for the three years ended December 31, 1994, 1995 and 1996 (to include
two balances sheets as of December 31, 1995 and 1996, and income statements and
cash flow statements for the three years); and (ii) unaudited financial
statements for the 9 months ended September 30, 1997 and 1996 (to include
balance sheets as of September 30, 1997 and September 30, 1996, and income
statements and cash flow statements for the two 9-month periods) fairly present
in conformity with GAAP, the consolidated financial position of such entities as
of each such date and their consolidated results of operations, changes in
stockholders' equity and cash flows for each period.
(b) The unaudited pro forma financial statements as of September 30,
1997 (to include 1 balance sheet as of September 30, 1997, and three income
statements for the year ended December 31, 1996, and the nine months ended
September 30, 1996 and 1997 as adjusted for the issuance and sale of the Notes
and Senior Notes and the consummation of the Acquisition, fairly present the pro
forma consolidated financial condition of the Company as of such date.
(c) There has occurred no material adverse change, or development that
could reasonably be expected to result in a material adverse change, in the
business, condition (financial or otherwise), operations, performance,
properties or prospects of the Company, the Holt Companies or the Company and
its Subsidiaries, in each case taken as a whole, since September 30, 1997 or in
the facts and information supplied to the Purchasers through November _, 1997
with respect thereto.
-26-
<PAGE>
Section 3.6. Litigation. Except as set forth on Schedule 3.6, there is
no action, suit or proceeding pending or, to the knowledge of any Credit Party,
threatened against any Credit Party before any court or arbitrator or any
governmental body, agency or official in which there is a reasonable possibility
of an adverse decision which could have a Material Adverse Effect or which
challenges the validity of any Financing Document or of the Acquisition;
provided however that except as noted on such Schedule 3.6, all matters listed
therein are covered by adequate insurance. One or more of the Credit Parties is
a named plaintiff to the Packer Avenue Proceeding and has a direct right to
receive any proceeds of the litigation or any settlement thereof.
Section 3.7. Environmental Matters. Except as provided on Schedule 3.7:
(a) Except to the extent the following would not result in a Material
Adverse Effect, other than the generation, use and storage of Hazardous
Materials in compliance with all applicable Environmental Laws: (i) no Hazardous
Materials are located on any properties owned, leased or operated by any Credit
Party; (ii) no Hazardous Materials have been released into the environment or
deposited, discharged, placed or disposed of, at, on, under or near any of such
properties; (iii) no portion of any such property is being used for the
disposal, storage, treatment, processing or other handling of Hazardous
Materials; (iv) no such property is affected by Hazardous Materials
Contamination; (v) to the best of any Credit Party's knowledge, no previous
owner or occupant of such properties has used any portion of the properties for
the treatment, storage, disposal, processing or other handling of Hazardous
Materials; (vi) with respect to properties previously owned, leased or operated
by any Credit Party, to the best of any Credit Party's knowledge, no Hazardous
Materials have been released into the environment, or deposited, discharged,
placed or disposed of, at, on, under or near any such properties during the time
of any Credit Party's ownership, lease or operation thereof.
(b) Except to the extent the following would not result in a Material
Adverse Effect, no asbestos or asbestos-
-27-
<PAGE>
containing materials are present on any of the properties now or previously
owned, leased or operated by any Credit Party.
(c) Except to the extent the following would not result in a Material
Adverse Effect no polychlorinated biphenyls are located on or in any properties
now or previously owned, leased or operated by any Credit Party, in the form of
electrical transformers, fluorescent light fixtures with ballasts, cooling oils
or any other device or form.
(d) Except to the extent the following would result in a Material
Adverse Effect, no underground storage tanks are located on any properties now
or previously owned, leased or operated by any Credit Party, or were located on
any such property and subsequently removed or filled.
(e) Except as to the extent the following (or the matters referred to
in any of the following) would not result in a Material Adverse Effect, no
notice, notification, demand, request for information, complaint, citation,
summons, investigation, administrative order, consent order and agreement,
litigation or settlement directed at any Credit Party or any property owned,
leased or operated by any Credit Party with respect to Hazardous Materials or
Hazardous Materials Contamination is in existence or, to any Credit Party's
knowledge, proposed, threatened or anticipated with respect to or in connection
with the operation of any properties now or previously owned, leased or operated
by any Credit Party. Except as to the extent the following would not result in a
Material Adverse Effect, all such properties and their existing and prior uses
comply and at all time have complied with any applicable governmental
requirements relating to environmental matters of Hazardous Materials and there
is no condition on any of such properties which is in violation of any
applicable governmental requirements relating to Hazardous Materials, and no
Credit Party has received any communication from or on behalf of any
governmental authority that any such condition exists.
(f) There has been no environmental investigation, study, audit, test,
review or other analysis conducted of which any Credit Party has knowledge in
relation to the current or prior business of any Credit Party or any property
-28-
<PAGE>
or facility now or previously owned, leased or operated by any Credit Party
which has not been delivered to the Purchaser at least five days prior to the
date hereof.
(g) For purposes of this Section 3.7, the term "Credit Party" shall
include any business or business entity (including a corporation) which is, in
whole or in part, a predecessor of any Credit Party.
Section 3.8. Taxes. (a) Except as set forth on Schedule 3.8, all income
tax returns and all other material tax returns which are required to be filed by
or on behalf of any Credit Party have been filed and all taxes shown as due on
such returns have been paid or adequate reserves have been established on the
books of the applicable Credit Party. The charges, accruals and reserves on the
books of the applicable Credit Party and in respect of taxes or other
governmental charges have been established in accordance with GAAP.
(b) There is no tax, levy, impost, deduction, charge or withholding
imposed by any governmental instrumentality either (i) on or by virtue of the
execution, delivery, performance, enforcement or admissibility into evidence of
any Financing Document or (ii) on any payment to be made by the Company pursuant
to any Financing Document. The Company is permitted under applicable laws to pay
any additional amounts payable by it under Section 2.8.
Section 3.9. Subsidiaries. The only Subsidiaries of the Company are the
Holt Companies and the NPR Companies.
Section 3.10. Not an Investment Company. No Credit Party is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
Section 3.11. Full Disclosure. The information heretofore furnished by
the Credit Parties to the Purchasers for purposes of or in connection with the
Financing Documents or any transaction contemplated hereby does not, and all
such information hereafter furnished by the Credit Parties to the Purchasers
will not (in each case taken together and on the date as of which such
information is furnished), contain any untrue statement of a material fact or
omit to state a material fact necessary in order to make the statements
-29-
<PAGE>
contained therein, in the light of the circumstances under which they are made,
not misleading. The Credit Parties have disclosed to the Purchasers any and all
facts which materially and adversely affect or may affect (to the extent the
Company can now reasonably foresee), the business, operations or financial
condition of the Company and its Subsidiaries, taken as a whole, or the ability
of the Company and its Subsidiaries, taken as a whole, to perform the
obligations under the Financing Documents or to complete the Permanent
Financing.
Section 3.12. Capitalization. At the date of the Issuance and after
giving effect to the Acquisition, the capitalization of each Credit Party will
be as set forth on Schedule 3,12. All of the issued and outstanding shares of
capital stock of each Credit Party are validly issued, fully paid and
nonassessable and free and clear of any Lien or other right or claim and the
holders thereof are not entitled to any preemptive or other similar rights.
Other than as set forth on Schedule 3,12, there are no subscriptions, options,
warrants, rights, convertible securities, exchangeable securities or other
agreements or commitments of any character pursuant to which any Credit Party is
required to issue any shares of its capital stock.
Section 3.13. Solicitation; Access to Information. No form of general
solicitation or general advertising was used by any Credit Party or, to the best
of its knowledge, any other Person acting on behalf of any Credit Party, in
connection with the offer and sale of the Notes. Neither any Credit Party nor
any Person acting on behalf of any Credit Party has, either directly or
indirectly, sold or offered for sale to any Person any of the Notes or any other
similar security of any Credit Party except as contemplated by this Agreement,
and the Company represents that neither it nor any Credit Party nor any person
acting on its behalf other than Purchaser and its Affiliates will sell or offer
for sale to any Person any such security to, or solicit any offers to buy any
such security from, or otherwise approach or negotiate in respect thereof with,
any Person or Persons so as thereby to bring the issuance or sale of any of the
Notes within the provisions of Section 5 of the Securities Act.
-30-
<PAGE>
Section 3.14. Non-fungibility. When the Notes are issued and delivered
pursuant to this Agreement, the Notes will not be of the same class (within the
meaning of Rule 144A) as securities which are (i) listed on a national
securities exchange registered under Section 6 of the Exchange Act or (ii)
quoted in a U.S. automated inter-dealer quotation system.
Section 3.15. Permits. Except to the extent any of the following would
not result in a Material Adverse Effect: (a) each Credit Party has all Permits
as are necessary for the conduct of their respective businesses as it has been
carried on; (b) all such Permits are in full force and effect, and each Credit
Party has fulfilled and performed all material obligations with respect to such
Permits; (c) no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination by the issuer thereof or which
results in any other impairment of the rights of the holder of any such Permit;
and (d) each Credit Party has no reason to believe that any governmental body or
agency is considering limiting, suspending or revoking any such Permit.
Section 3.16. Representations in Other Financial Documents and in
Material Acquisition Documents. (a) Each of the representations and warranties
of the Credit Parties set forth in any of the Financing Documents is true and
correct in all material respects.
(b) Each of the representations and warranties of the Credit Parties
set forth in any of the Material Acquisition Documents is true and correct in
all material respects.
Section 3.17. Compliance with ERISA. Except as set forth on Schedule
3.17, each member of the ERISA Group has fulfilled its obligations under the
minimum funding standards of ERISA and the Internal Revenue Code with respect to
each Plan and is in compliance in all material respects with the presently
applicable provisions of ERISA and the Internal Revenue Code with respect to
each Plan. No member of the ERISA Group has (i) sought a waiver of the minimum
funding standard under Section 412 of the Internal Revenue Code in respect of
any Plan, (ii) failed to make any contribution or
-31-
<PAGE>
payment to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement, or made any amendment to any Plan or Benefit Arrangement, which has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security under ERISA or the Internal Revenue Code or (iii) incurred any
liability under Title IV or ERISA other than a liability to the PBGC for
premiums under Section 4007 of ERISA.
Section 3.18. Labor Matters. Except as set forth on Schedule 3,18, (x)
there are no collective bargaining agreements or Multiemployer Plans covering
the employees of any Credit Party and (y) none of such Persons has suffered any
strikes, walkouts, work stoppages or other material labor difficulty within the
last five years and none of the foregoing is now threatened or imminent.
Section 3.19. Leases. Except as disclosed on Schedule 3.19 hereto, no
Credit Party is a party to any lease.
Section 3.20. Absence of Any Undisclosed Liabilities or Capital Calls.
There are no liabilities of any Credit Party of any kind whatsoever, whether
accrued, contingent, absolute, determined, determinable or otherwise, and there
is no existing condition, situation or set of circumstances which could
reasonably be expected to result in such a liability, other than (i) those
liabilities provided for in the financial statements delivered pursuant to
Section 3.5 hereof and (ii) other undisclosed liabilities which, individually or
in the aggregate, are not material to any Credit Party.
Section 3.21. Governmental Regulation. No Credit Party is, or will be
upon the issuance and sale of the Notes and the use of the proceeds described
herein, subject to regulation under the Public Utility Holding Company Act of
1935, the Federal Power Act (each, as amended) or to any federal or state
statute or regulation in a manner which would limit its ability to issue the
Notes and perform its obligations under any Financing Document.
Section 3.22. Solvency. On the date of the Closing and after giving
effect to the transactions under the Stock Purchase Agreement, each Credit Party
will be Solvent.
-32-
<PAGE>
Section 3.23. Company Business. The Company conducts no business other
than the direct or indirect ownership of 100% of the capital stock of the Holt
Companies and the NPR Companies and has no assets or liabilities other than
those reflected in the financial statements delivered pursuant to this
Agreement. At any time after Closing, the Company will conduct no business other
than that expressly permitted hereunder.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASERS
Section 4.1. Investment Intent; Authority; Binding Agreement. Each
Purchaser, jointly but not severally, represents and warrants to the Company
that:
(a) the execution, delivery and performance of this Agreement and the
holding of the Notes pursuant hereto are within each Purchaser's corporate
powers, if applicable, and have been duly and validly authorized by all
requisite corporate action, if applicable;
(b) this Agreement has been duly executed and delivered by each
Purchaser; and
(c) this Agreement constitutes a valid and binding agreement of each
Purchaser enforceable in accordance with its terms subject to applicable
bankruptcy, insolvency and other similar laws affecting creditors' rights
generally and equitable principles of general applicability.
ARTICLE V
CLOSING DELIVERIES
Section 5.1. Closing Deliveries. Simultaneously with the Issuance, the
Company shall deliver the following to the Purchasers:
(a) The Purchasers shall have received satisfactory opinions of counsel
to the Company as to the transactions contemplated hereby (including without
limitation the tax aspects thereof and compliance with all applicable securities
-33-
<PAGE>
laws), and such corporate resolutions, certificates and other documents as the
Purchasers shall reasonably request;
(b) The Purchasers shall have received a solvency certificate
substantially in the form of Exhibit B hereto executed by the Chief Financial
Officer of the Company dated as of the Closing; and
(c) The Purchasers shall have received a Subsidiary Guaranty in the
form of Exhibit C executed by each Credit Party other than the Company.
ARTICLE VI
COVENANTS
The Company agrees (and agrees that it shall cause each Credit Party to
agree) that, from and after the date of the Issuance and so long as any Notes
remain outstanding and unpaid or any other amount is owing to the Purchasers or
the Holders, and for the benefit of the Purchasers and the Holders:
Section 6.1. Information. The Company will deliver to each Purchaser
holding 10% or more of the Notes:
(a) as soon as available and in any event within 120 days after the end
of each fiscal year of the Company, a consolidated balance sheet of the Company
and its Consolidated Subsidiaries as of the end of such fiscal year and the
related statements of income and cash flows and stockholders' equity (deficit)
for such fiscal year, setting forth in each case in comparative form the figures
for the previous fiscal year, all reported on in a manner acceptable to the
Commission by BDO Seidman or other independent public accountants of nationally
recognized standing;
(b) as soon as available and in any event within 60 days after the end
of each of the first three quarters of each fiscal year of the Company, a
consolidated balance sheet of the Company and its Consolidated Subsidiaries as
of the end of such quarter and the related consolidated statements of income and
cash flows and stockholders' equity (deficit) for each quarter and for the
portion of the fiscal year ended
-34-
<PAGE>
at the end of such quarter, setting forth in each case in comparative form the
figures for the corresponding quarter and the corresponding portion of the
previous fiscal year, all certified (subject to footnote presentation and normal
year-end adjustments) as to fairness of presentation, GAAP and consistency by
the chief financial officer or the chief accounting officer of the Company;
(c) simultaneously with the delivery of each set of financial
statements referred to in clauses (a) and (b) above, a certificate of the chief
financial officer or the chief accounting officer of the Company (i) setting
forth in reasonable detail the calculations required to establish whether the
Company was in compliance with the requirements of Sections 6.8 through 6.11,
inclusive, on the date of such financial statements and (ii) stating whether any
Default exists on the date of such certificate and, if any Default then exists,
setting forth the details thereof and the action which the Company or any of the
Credit Parties are taking or propose to take with respect thereto;
(d) simultaneously with the delivery of each set of financial
statements referred to in clause (a) above, a statement of the firm of
independent public accountants which reported on such statements confirming the
calculations set forth in the officer's certificate delivered simultaneously
therewith pursuant to clause (c) above;
(e) within five days after any officer of any Credit Party obtains
knowledge of a Default or a default under the Securities Purchase Agreement, a
certificate of the chief financial officer or the chief accounting officer of
such Credit Party setting forth the details thereof and the action which such
Credit Party is taking or proposes to take with respect thereto;
(f) promptly upon the filing thereof, copies of all applications,
registration statements or reports which any Credit Party shall have filed with
the Commission or any other national stock exchange;
(g) promptly following the occurrence thereof, notice and a description
in reasonable detail of any material adverse change in the business, operations,
property,
-35-
<PAGE>
condition (financial or otherwise) or prospects of the Company and its
Subsidiaries, taken as a whole;
(h) to the extent material, if and when any member of the ERISA Group
(i) gives or is required to give notice to the PBGC of any "reportable event"
(as defined in Section 4043 of ERISA) with respect to any Plan which might
constitute grounds for a termination of such Plan under Title IV of ERISA, or
knows that the plan administrator of any Plan has given or is required to give
notice of any such reportable event, a copy of the notice of such reportable
event given or required to be given to the PBGC; (ii) receives notice of
complete or partial withdrawal liability under Title IV of ERISA or notice that
any Multiemployer Plan is in reorganization, is insolvent or has been
terminated, a copy of such notice; (iii) receives notice from the PBGC under
Title IV of ERISA of an intent to terminate, impose liability (other than for
premiums under Section 4007 of ERISA) in respect of, or appoint a trustee to
administer any Plan, a copy of such notice; (iv) applies for a waiver of the
minimum funding standard under Section 412 of the Internal Revenue Code, a copy
of such application; (v) gives notice of intent to terminate any Plan under
Section 4041(c) of ERISA, a copy of such notice and other information filed
with the PBGC; (vi) gives notice of withdrawal from any Plan pursuant to Section
4063 of ERISA, a copy of such notice; or (vii) fails to make any payment or
contribution to any Plan or Multiemployer Plan or in respect of any Benefit
Arrangement or makes any amendment to any Plan or Benefit Arrangement which has
resulted or could result in the imposition of a Lien or the posting of a bond or
other security, a certificate of the chief financial officer or the chief
accounting officer of the relevant Credit Party setting forth details as to such
occurrence and action, if any, which the relevant Credit Party or applicable
member of the ERISA Group is required or proposes to take;
(i) promptly following the commencement thereof, notice and a
description in reasonable detail of any litigation or proceeding to which any
Credit Party is a party in which the amount involved is $1,000,000 or more;
(j) as soon as available and in any event within 45 days after the date
of the Issuance, a combined pro forma
-36-
<PAGE>
balance sheet of the Company and its Subsidiaries, dated as of September 30,
1997, prepared by BDO Seidman LLP in conformity with GAAP, adjusted to give
effect to (i) the transactions contemplated by the Material Acquisition
Documents, (ii) the purchase of the Notes purchased on the date of the Issuance
and (iii) the payment of all legal, accounting and other fees related thereto;
and
(k) from time to time such additional information regarding the
financial position or business of any Credit Party, as the Majority Holders may
reasonably request.
Section 6.2. Payments of Oblgations. The Company will pay and
discharge, and will cause each Credit Party to pay and discharge, at or before
maturity, all their respective material obligations and liabilities, including,
without limitation, tax liabilities, except where the same may be contested in
good faith by appropriate proceedings, and will maintain, and will cause each
Credit Party to maintain, in accordance with GAAP, appropriate reserves for the
accrual of any of the same.
Section 6.3. Insurance. The Company shall, and shall cause each Credit
Party to, keep its insurable properties adequately insured at all times by
financially sound and reputable insurers, maintain such other insurance, to such
extent and against such risks, including fire and other risks insured against by
extended coverage, as is customary with companies in the same or similar
businesses operating in the same or similar locations, including (i) public
liability insurance against claims for personal injury or death or property
damage occurring upon, in, about in connection with the use of any properties
owned, occupied or controlled by it and (ii) business interruption insurance and
such other insurance as may be required by law.
Section 6.4. Conduct of Business and Maintenance of Existence. The
Company will continue, and will cause each Credit Party to continue, to engage
in business of the same general type as now conducted, and will preserve, renew
and keep in full force and effect, and will cause each Subsidiary to preserve,
renew and keep in full force and effect their respective corporate existence and
their respective rights, privileges and franchises necessary or desirable in the
-37-
<PAGE>
normal conduct of business, except that a Credit Party may discontinue any
immaterial line of business if the Board of Directors of such Credit Party
determines that such discontinuation is in the best interest of the Company and
its Subsidiaries, taken as a whole, and could not cause a Material Adverse
Effect.
Section 6.5. Compliance with Laws. The Company will comply, and cause
each Credit Party to comply, in all respects with all applicable laws,
ordinances, rules, regulations, and requirements of governmental authorities
(including, without limitations, Environmental Laws and ERISA and the rules and
regulations thereunder) except where the failure to so comply could not cause a
Material Adverse Effect.
Section 6.6. Inspection of Property, Books and Records. The Company
will keep, and will cause each Credit Party to keep, proper books of record and
account in which full, true and correct entries shall be made of all dealings
and transactions in relation to its business and activities, and will permit,
and will cause each Subsidiary to permit representatives of the Majority
Holders, at the expense of the Holders, to visit and inspect any of their
respective properties, to examine and make abstracts from any of their
respective books and records and to discuss their respective affairs, finances
and accounts with their respective executive officers and independent public
accountants at such reasonable times and as often as may reasonably be desired.
Section 6.7. Investment Company Act. No Credit Party is or will become
an open-end investment trust, unit investment trust or face-amount certificate
company that is or is required to be registered under Section 8 of the
Investment Company Act of 1940, as amended.
Section 6.8. Limitation on Debt. No Credit Party will create, incur,
assume or suffer to exist any Debt, except:
(a) Debt evidenced by the Notes;
-38-
<PAGE>
(b) the Debt described on Schedule 5.1(e) including refinancings
thereof effected within 30 days of the final maturity of the Debt being
refinanced;
(c) other Debt incurred after the date hereof, in an aggregate
principal amount not to exceed $11,000,000;
(d) other Debt the terms and conditions of which shall have been
approved by the Majority Holders and the Net Cash Proceeds of which are applied
in accordance with Section 2.4;
(e) Debt evidenced by the Senior Notes in an aggregate principal amount
not to exceed $100 million; and
(f) Debt evidenced by additional Senior Notes issued as pay-in-kind
interest on Senior Notes; and
(g) Additional Debt evidenced by the Senior Notes in an aggregate
principal amount not to exceed $25 million and refinancings of the Senior Notes
in aggregate principal amount not to exceed the amount of Senior Notes
outstanding immediately prior to such refinancing.
Section 6.9. Restricted Payments; Voluntary Prepayments. (a) No Credit
Party will (i) declare or make any Restricted Payment or (ii) make any capital
expenditures not contained on Schedule 6.9 other than with respect to each tax
year that a Credit Party qualifies as an S Corporation under the Internal
Revenue Code, or any similar provision of state or local law, distributions of
Tax Amounts (as defined below); provided however, that prior to any distribution
of Tax Amounts a knowledgeable and duly authorized officer of the Credit Party
making such distribution certifies, and counsel reasonably acceptable to the
Majority Holders opines, that such Credit Party qualifies as an S Corporation
for Federal income tax purposes and for the states in respect of which such
distributions are being made and that at the time of such distributions, the
most recent audited financial statements of such Credit Party provide that such
Credit Party was treated as an S Corporation for Federal income tax purposes for
the period of such financial statements.
-39-
<PAGE>
"Tax Amounts" with respect to any year means (a) an amount equal to the
higher of (i) the product of (A) the taxable income of the relevant Credit Party
for such year as determined in good faith by its Board of Directors; and (B) the
Tax Percentage (as defined below), and (ii) the product of (A) the alternative
minimum taxable income attributable to such Credit Party for such year as
determined in good faith by its Board of Directors; and (B) the Tax Percentage,
in either case, reduced by (b) to the extent not previously taken into account,
any income tax benefit attributable to such Credit Party solely as a result of
its investment in the Credit Parties (including without limitation, tax losses,
alternative minimum tax credits, other tax credits and carryforwards and
carrybacks thereof) (to the extent such benefit is realized in the year for
which the Tax Amount is being determined); provide, however, that in no event
shall such Tax Percentage exceed the greater of (1) the highest aggregate
applicable statutory marginal rate of Federal, state and local income tax or,
when applicable, alternative minimum tax, to which a corporation doing business
in New York City would be subject in the relevant year of determination (as
certified to the Purchasers by a nationally recognized tax accounting firm); and
(2) 50%. Any part of the Tax Amount not distributed in respect of a tax period
for which it is calculated shall be available for distribution in subsequent tax
periods. The term "Tax Percentage" is the highest aggregate applicable effective
marginal rate of Federal, state and local income tax or, when applicable,
alternative minimum tax, to which an individual shareholder of the Credit Party
would be subject in the relevant year of determination (calculated in good faith
by the Credit Party and certified to the Purchaser by a nationally recognized
tax accounting firm). Distributions of Tax Amounts may be made from time to time
with respect to a tax year based on reasonable estimates, with a reconciliation
within 40 days of the earlier of (i) the Credit Party's filing of the Internal
Revenue Service Form 1120S for the applicable taxable year; and (ii) the last
date such form is required to be filed (without regard to any extensions). The
stockholders of each Credit Party will enter into a binding agreement with each
Credit Party to reimburse the applicable Credit Party for certain positive
differences between the distributed amount and the Tax Amount, which difference
must be paid at the time of such reconciliation.
-40-
<PAGE>
(b) No Credit Party will directly or indirectly, optionally redeem,
retire, purchase, acquire, defease or otherwise make any payment other than
required interest payments in respect of any Debt other than (i) the Notes or
the Senior Notes, (ii) existing Debt described on Schedule 5.1(e) and (iii)
payments in respect of Debt owing to any other Credit Party.
Section 6.10. Investments. The Company will not, nor will it permit any
Credit Party to, make or acquire any Investment in any Person other than (i)
Investments in direct or indirect wholly-owned Subsidiaries and (ii) Investments
in Cash Equivalents.
Section 6.11. Negative Pledge. No Credit Party will create, assume or
suffer to exist any Lien on any asset now owned or hereafter acquired by it,
except:
(a) existing Liens listed on Schedule 6.11;
(b) (i) inchoate mechanics, workmen's and carriers' liens for charges
not delinquent, incident to current construction, (ii) mechanics,
warehousemen's, unpaid vendors' and carriers' liens incident to such
construction, (iii) statutory and common law Liens of landlords under leases to
which any Credit Party is party and (iv) Liens of carriers, warehousemen,
mechanics and materialmen or other similar statutory Liens, in each case
incurred in the ordinary course of business for sums the payment of which is not
delinquent or which are the subject of good faith proceedings by any Credit
Party;
(c) Liens incurred on deposits made in the ordinary course of business
in connection with workers, compensation, performance bonds, unemployment
insurance and other types of social security, other than any Lien imposed by or
under ERISA;
(d) Liens for taxes not yet due;
(e) easements, rights of way, permits, licenses, zoning ordinances,
covenants, restrictions, defects, minor irregularities of title and other
similar Liens on property which in the case of any particular parcel of real
property
-41-
<PAGE>
do not materially detract from the value or utilization of such real property;
(f) Liens incurred in connection with Debt permitted pursuant to
Section 6.8(c); and
(g) Liens arising in the ordinary course of its business which (i) do
not secure Debt, (ii) do not secure any obligation in an amount exceeding
$100,000 and (iii) do not in the aggregate materially detract from the value of
the assets of the Company and its Subsidiaries, taken as a whole, or materially
impair the use thereof in the operation of its business.
Section 6.12. Transactions with Affiliates. The Company will not, nor
will it permit any Credit Party to, directly or indirectly, pay any funds to or
for the account of, make any investment (whether by acquisition of stock or
indebtedness, by loan, advance, transfer of property, guarantee or other
agreement to pay, purchase or service, directly or indirectly, any Debt, or
otherwise) in, lease, sell, transfer or otherwise dispose of any assets,
tangible or intangible, to, or participate in, or effect any transaction in
connection with any joint enterprise or other joint arrangement with, any
Affiliate, except (a) on terms no less favorable than terms that could be
obtained from a Person that is not an Affiliate, as determined in good faith by
the Board of Directors of the relevant Credit Party; provided that no
determination of the Board of Directors shall be required with respect to any
such transactions entered into (i) in the ordinary course of business, (ii) if
such transaction, together with all related transactions, does not involve
property, funds, investments or services with a fair market value in excess of
$100,000 or (iii) in connection with the execution or performance of the
Company's obligations under the Engagement Letter; and (b) transactions with
Affiliates in effect on the date hereof and set forth on Schedule 6.12 hereof.
Section 6.13. Consolidations. Mergers and Sales of Assets; Ownership of
Subsidiaries. Except as set forth on Schedule 6.13 attached hereto:
-42-
<PAGE>
(a) No Credit Party will consolidate or merge with or into any other
Person unless the surviving entity is a Credit Party. No Credit Party will sell,
lease or otherwise transfer, directly or indirectly, any substantial part of the
assets of any Credit Party to any other Person which is not a Credit Party.
(b) Each Credit Party will at all times continue to own, directly or
indirectly, 100% of the capital stock of each Person which is currently, or
hereafter becomes a Subsidiary of such Credit Party. No new Subsidiaries will be
created after the Closing unless the same execute and deliver the Subsidiary
Guaranty and any other documents the Majority Holders reasonably request in
connection therewith; provided, however, if the holders of the Senior Notes do
not require a Subsidiary to guaranty the Senior Notes or if the holders of the
Senior Notes release a Subsidiary from its obligations under the guaranty then
the Subsidiary shall also not be required to enter into the Subsidiary Guaranty
or shall be released from its obligations under the Subsidiary Guaranty.
Section 6.14. Restrictions on Additional Subordinated Indebtedness. The
Company will not, nor will it permit any Credit Party to, create or suffer to
exist any Indebtedness for borrowed money which (i) provides that it is
subordinate in right of payment to any Senior Indebtedness and (ii) is senior in
right of payment to or pari passu with the Notes.
Section 6.15. Permanent Financing. (a) The Company will, and will cause
each Credit Party to, take all the actions which are necessary or desirable to
obtain Permanent Financing as soon as practicable through issuance of securities
at such interest rates and other terms as are prevailing for new issues of
securities of comparable size and credit rating in the capital markets at the
time such Permanent Financing is consummated and obtained in comparable
transactions made on an arm's length basis between unaffiliated parties. The
amount to be financed shall be in an amount at least sufficient to repay or
redeem, in the aggregate, the Senior Notes and the Notes (including all Notes
issued as interest on the Notes), in full in accordance with their terms. The
Company hereby covenants and agrees that the proceeds from the Permanent
Financing shall be used to redeem
-43-
<PAGE>
in full the Senior Notes and the Notes in accordance with their terms.
(b) The Company covenants that it will, and will cause each Credit
Party to, enter into such agreements as are customary in connection with the
Permanent Financing, make such filings under the Securities Act, the Exchange
Act, the Trust Indenture Act of 1939, as amended, and state securities laws as
shall be required to permit consummation of the Permanent Financing and take
such steps as are necessary or desirable to cause such filings to become
effective or are otherwise required to consummate the Permanent Financing.
Section 6.16. Business Activities. The Company will not, and it will
not permit any Credit Party to, enter into any business, either directly or
through any Subsidiary or joint venture, except for those businesses of the same
type as or related to those in which the Credit Parties are engaged on the date
of this Agreement.
Section 6.17. Tax Consolidation. The Company will not consent to or
permit the filing of or be a party to any consolidated income tax return on
behalf of itself or any of its Subsidiaries with any Person (other than a
consolidated return of the Company and its own Subsidiaries).
Section 6.18. Maintenance of Corporate Separateness. The Company will,
and will cause each of its Subsidiaries to, satisfy customary corporate
formalities, including the holding of regular board of directors' and
shareholders' meetings or action by directors or shareholders without a meeting
and the maintenance of corporate offices and records. Other than pursuant to any
Subsidiary Guaranty entered into pursuant to this Agreement or pursuant to any
subsidiary guarantee entered into pursuant to the Senior Securities Purchase
Agreement, neither the Company nor any of its Subsidiaries shall make any
payment to a creditor of any other Subsidiary in respect of any liability of any
such Subsidiary. Any financial statements distributed to any creditors of any
Subsidiary shall clearly establish or indicate the corporate separateness of
such Subsidiary from the Company and its other Subsidiaries. Neither the Company
nor any of its Subsidiaries shall take any action, or conduct its affairs in a
manner, which is likely to result in the
-44-
<PAGE>
corporate existence of the Company or any of its Subsidiaries being ignored, or
in the assets and liabilities of the Company or any of its Subsidiaries being
substantively consolidated with those of any other such Person in a bankruptcy,
reorganization or other insolvency proceeding.
Section 6.19. Packer Avenue Proceeding. Each of Holt Cargo and Holt
Hauling & Warehousing System, Inc. shall cause all Packer Avenue Proceeds to be
payable directly solely to them and not to Astro Holding, Inc.
Section 6.20. Financial Statements. The Company shall deliver audited
financial statements covering the items in Section 3.05(a) no later than fifteen
(15) Business Days after the date of Closing.
ARTICLE VII
EVENTS OF DEFAULT
Section 7.1. Events of Default Defined; Acceleration of Maturity;
Waiver of Default. In case one or more of the following (each, an "Event of
Default"), whatever the reason for such Event of Default and whether it shall be
voluntary or involuntary or be effected by operation of law or pursuant to any
judgment, decree or order of any court or any order, rule or regulation or any
administrative or governmental body, shall have occurred and be continuing:
(a) default in the payment of all or any part of the principal on any
of the Notes as and when the same shall become due and payable either at
maturity, upon any redemption, by declaration or otherwise; or
(b) default in the payment of any installment of interest upon any of
the Notes under this Agreement as and when the same shall become due and
payable, and continuance of such default for a period of 5 days; or
(c) failure on the part of the Company duly to observe or perform any
of the covenants contained in Sections 6.4 and 6.7 through 6.16 of the
Agreement; or
-45-
<PAGE>
(d) failure on the part of any Credit Party duly to observe or perform
any other of the covenants or agreements contained in the Financing Documents,
if such failure shall continue for a period of 30 days after the date on which
written notice thereof shall have been given to the Company at the option of and
by a holder of a Note; or
(e) any Credit Party shall commence a voluntary case or other
proceeding seeking liquidation, reorganization or other relief with respect to
itself or its debts under any bankruptcy, insolvency or other similar law now or
hereafter in effect in any jurisdiction or seeking the appointment of a trustee,
receiver, liquidator, custodian or other similar official of it or any
substantial part of its property, or shall consent to any such relief or to the
appointment of or taking possession by any such official in an involuntary case
or other proceeding commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its debts as they
become due, or shall take any corporate action to authorize any of the
foregoing; or
(f) an involuntary case or other proceeding shall be commenced against
any Credit Party seeking liquidation, reorganization or other relief with
respect to it or its debts under any bankruptcy, insolvency or other similar law
now or hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official of it or any substantial part of
its property, and such involuntary case or other proceeding shall remain
undismissed and unstayed for a period of 60 days; or an order for relief shall
be entered against any Credit Party under the bankruptcy laws as now or
hereafter in effect in any jurisdiction; or
(g) there shall be a default in respect of any Debt of any Credit Party
in an aggregate principal amount in excess of $1,000,000 whether such Debt now
exists or shall hereafter be created (excluding the Notes but including Debt
owing to any Credit Party) if such default results in acceleration of the
maturity of such Debt or enables the holder of such Debt to accelerate the
maturity thereof; or any Credit Party shall fail to pay at maturity any such
Debt whether such debt now exists or shall hereafter be created; or
-46-
<PAGE>
(h) final judgments for the payment of money which in the aggregate at
any one time exceed $1,000,000 shall be rendered against any Credit Party by a
court of competent jurisdiction and shall remain undischarged for a period
(during which execution shall not be effectively stayed) of 60 days after such
judgment becomes final; or
(i) any representation, warranty, certification or statement made or
deemed made by any Credit Party in any Financing Document or which is contained
in any certificate, document or financial or other statement furnished at any
time under or in connection with any Financing Document shall prove to have been
untrue in any material respect when made or deemed made; or
(j) any member of the ERISA Group has failed to pay when due an amount
or amounts aggregating in excess of $100,000 which it shall have become liable
to pay under Title IV of ERISA; or notice of intent to terminate a Material Plan
has been filed under Title IV of ERISA by any member of the ERISA Group, any
plan administrator or any combination of the foregoing; or the PBGC has
instituted proceedings under Title IV of ERISA to terminate, to impose liability
(other than for premiums under Section 4007 of ERISA) in respect of, or to cause
a trustee to be appointed to administer any Material Plan; or a condition has
existed by reason of which the PBGC is entitled to obtain a decree adjudicating
that any Material Plan must be terminated; or there has occurred a complete or
partial withdrawal from, or a default, within the meaning of Section 4219(c)(5)
of ERISA, with respect to, one or more Multiemployer Plans which could cause one
or more members of the ERISA Group to incur a current payment obligation in
excess of $100,000; or
(k) a Change of Control has occurred;
then, and in each and every such case (other than under clauses (e) and (f) with
respect to any Credit Party), unless the principal of all the Notes shall have
already become due and payable, the Majority Holders (or, if at such time the
Purchasers together with their respective Affiliates no longer hold at least 50%
of the aggregate outstanding principal amount of the Notes, Holders of at least
33 1/3% of the aggregate outstanding principal amount of the Notes), by
-47-
<PAGE>
notice in writing to the Company, may, subject to Section 9.3, declare the
entire principal amount of the Notes together with accrued interest thereon to
be, and upon the Company's receipt of such notice the entire principal amount of
the Notes together with accrued interest thereon shall become, immediately due
and payable. If an Event of Default specified in clauses (e) or (f) with respect
to any Credit Party occurs, the principal of and accrued interest on the Notes
will be immediately due and payable without any declaration or other act on the
part of the Holders. If an Event of Default shall occur and for as long as such
Event of Default shall be continuing, the majority Holders shall have the right
to appoint one representative to sit on the Board of Directors of the Company;
provided, however, that such right shall terminate if the Purchasers together
with their respective Affiliates no longer retain at least 50% of the
outstanding Notes.
ARTICLE VIII
LIMITATION ON TRANSFERS
Section 8.1. Restrictions on Transfer. From and after the date of the
Issuance, none of the Notes shall be transferable except upon the conditions
specified in Sections 8.2 and 8.3, which conditions are intended to ensure
compliance with the provisions of the Securities Act in respect of the Transfer
of any of such Notes or any interest therein. The Purchasers will cause any
proposed transferee of any Notes (or any interest therein) held by it to agree
to take and hold such Notes (or any interest therein) subject to the provisions
and upon the conditions specified in this Section 8.1 and in Sections 8.2 and
8.3.
Section 8.2. Restrictive Legends. (a) Each Note issued to the
Purchasers or to a subsequent transferee shall (unless otherwise permitted by
the provisions of Section 8.2(b) or Section 8.3) include a legend in
substantially the following form:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR ANY STATE SECURITIES LAWS AND MAY NOT BE OFFERED
OR SOLD, UNLESS IT HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE
STATE SECURITIES
-48-
<PAGE>
LAWS OR UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN
ONLY IN COMPLIANCE WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE
SECURITIES PURCHASE AGREEMENT DATED AS OF NOVEMBER -, 1997, A COPY OF
WHICH MAY BE OBTAINED FROM THE ISSUER OF THIS SECURITY AT ITS PRINCIPAL
EXECUTIVE OFFICE.
(b) Any Holders of Notes registered pursuant to the Securities Act and
qualified under applicable state securities laws may exchange such Notes on
transfer for new securities that shall not bear the legend set forth in
paragraph (a) of this Section 8.2.
Section 8.3. Notice of Proposed Transfers. (a) Five Business Days prior
to any proposed Transfer (other than Transfers of Notes (i) registered under the
Securities Act, (ii) to an Affiliate of a Purchaser or (iii) to be made in
reliance on Rule 144A) of any Notes, the holder thereof shall give written
notice to the Company of such holder's intention to effect such Transfer,
setting forth the manner and circumstances of the proposed Transfer, and shall
be accompanied by (i) an opinion of counsel reasonably satisfactory to the
Company addressed to the Company to the effect that the proposed Transfer of
such Notes may be effected without registration under the Securities Act, (ii)
such representation letters in form and substance reasonably satisfactory to the
Company to ensure compliance with the provisions of the Securities Act and (iii)
such letters in form and substance reasonably satisfactory to the Company from
each such transferee stating such transferee's agreement to be bound by the
terms of this Agreement. Such proposed Transfer may be effected only if the
Company shall have received such notice of transfer, opinion of counsel,
representation letters and other letters referred to in the immediately
preceding sentence, whereupon the holder of such Notes shall be entitled to
Transfer such Notes in accordance with the terms of the notice delivered by the
holder. Each Note transferred as above provided shall bear the legend set forth
in Section 8.2(a) except that such Note shall not bear such legend if the
opinion of counsel referred to above is to the further effect that neither such
legend nor the restrictions on Transfer in Sections 8.1 through 8.3 are required
in order to ensure compliance with the provisions of the Securities Act.
-49-
<PAGE>
Five Business Days prior to any proposed Transfer of any Notes to be
made in reliance on Rule 144A under the Securities Act ("Rule 144A"), the holder
thereof shall give written notice to the Company of such holder's intention to
effect such Transfer, setting forth the manner and circumstances of the proposed
Transfer and certifying that such Transfer will be made (i) in full compliance
with Rule 144A and (ii) to a transferee that (A) such holder reasonably believes
to be a "qualified institutional buyer" within the meaning of Rule 144A and (B)
is aware that such Transfer will be made in reliance on Rule 144A. Such proposed
Transfer may be effected only if the Company shall have received such notice of
transfer, whereupon the holder of such Notes shall be entitled to Transfer such
Notes in accordance with the terms of the notice delivered by the holder. Each
Note transferred as above provided shall bear the legend set forth in Section
8.2(a).
ARTICLE IX
SUBORDINATION
Section 9.1. Notes Subordinate to Senior Notes. The Company covenants
and agrees, and each Purchaser and each other Holder of any Note, if any,
likewise covenants and agrees, that, (a) to the extent and in the manner
hereinafter set forth in this Section 9, the payment of the Obligations,
including pursuant to any amendment, modification, restatement or renewal
thereof (the "Subordinated Obligations"), is hereby expressly made subordinated
and subject in right of payment to the prior payment in full of all Senior
Indebtedness and (b) the terms and conditions of such subordination is for the
benefit of the holders of the Senior Indebtedness and each such holder may
enforce such subordination; provided, however, on the Maturity Date (so long as
the Maturity Date is not extended in accordance with either of the provisos
contained in the definition thereof) the Obligations shall no longer be
subordinated to the Senior Indebtedness and this Article IX shall have no
further force or effect.
Section 9.2. Payment Over of Proceeds Upon Dissolution. In the event of
(i) any insolvency or bankruptcy case or proceeding, or any receivership,
-50-
<PAGE>
liquidation, reorganization or other similar case or proceeding in connection
therewith, relative to the Company or to its assets, or (ii) any liquidation,
dissolution or other winding up of the Company, whether voluntary or involuntary
and whether or not involving insolvency or bankruptcy, or (iii) any assignment
for the benefit of creditors or any other marshalling of assets and liabilities
of the Company (collectively, "Bankruptcy Events"), then and in any such event:
(a) the holders of Senior Indebtedness shall be entitled to receive
payment in full in cash or Cash Equivalents of all amounts due or to become due
on or in respect of all Senior Indebtedness (including interest after the
commencement of a Bankruptcy Event at the rate specified in the documentation
for such Senior Indebtedness, whether or not allowed), before any Holder is
entitled to receive any direct or indirect payment or distribution on account of
the Subordinated Obligations (other than in the form of securities permitted to
be paid in accordance with the first parenthetical in clause (b) below)
including, without limitation, by exercise of set-off and any payment which may
be payable or deliverable by reason of any other indebtedness being subordinated
in right of payment to the Subordinated Obligations;
(b) any payment or distribution of assets of the Company of any kind or
character, whether in cash, property or securities, by set-off or otherwise, to
which any Holder would be entitled but for the provisions of this Section 9,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Subordinated Obligations (except for any such
payment or distribution of securities which, if debt securities, are unsecured
and subordinated to at least the same extent as the Subordinated Obligations are
to (A) such Senior Indebtedness or (B) any securities issued in exchange for
Senior Indebtedness and mature no earlier than six months after such Senior
Indebtedness or securities issued in exchange) shall be paid by the liquidating
trustee or agent or other Person making such payment or distribution, whether a
trustee in bankruptcy, a receiver or liquidating trustee or otherwise, directly
to the holders of all Senior Indebtedness or their
-51-
<PAGE>
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior Indebtedness
may have been issued, ratably according to the aggregate amounts remaining
unpaid on account of the principal of, and interest on, such Senior Indebtedness
held or represented by each, to the extent necessary to make payment in full of
all such Senior Indebtedness remaining unpaid, after giving effect to any
concurrent payment or distribution to the holders of such Senior Indebtedness;
and
(c) in the event that, notwithstanding the foregoing provisions of this
Section 9, any Holder shall have received any such payment or distribution of
assets of the Company of any kind or character, whether property or securities,
including any such payment or distribution which may be payable or deliverable
by reason of the payment of any other indebtedness of the Company being
subordinated to the payment of the Subordinated Obligations (but excluding any
payment of the character described in the parenthetical clause in the foregoing
paragraph (b)) before all Senior Indebtedness is paid in full, then and in such
event such payment or distribution shall be paid over or delivered forthwith to
the trustee in bankruptcy, receiver, liquidating trustee, custodian, assignee,
agent or other Person making payment or distribution of assets of the Company
for application to the payment of all such Senior Indebtedness remaining unpaid,
to the extent necessary to pay such Senior Indebtedness in full, after giving
effect to any concurrent payment or distribution to or for the holders of such
Senior Indebtedness.
If, notwithstanding the provisions of this Agreement, there shall occur
any consolidation of the Company with, or any merger of the Company into,
another corporation or the liquidation or dissolution of the Company following
any conveyance, transfer or lease of its properties and assets substantially as
an entirety to another corporation, such consolidation, merger or liquidation
shall not be deemed a Bankruptcy Event; provided, that no other Bankruptcy Event
shall have occurred and be continuing at the time of such consolidation, merger
or liquidation. DLJSC is hereby authorized to file an appropriate claim on
behalf of the Holders if the Holders do not file such claim or there is not
filed on behalf of the Holders a proper proof of claim in the
-52-
<PAGE>
form required in any Bankruptcy Event prior to thirty (30) days before the
expiration of the time to file such claim or claims.
Section 9.3. Acceleration Rights; Remedies; No Payment in Certain
circumstances. (a) So long as at least $20 million of Senior Notes shall remain
outstanding, prior to the Maturity Date, no Holder shall take any action,
judicial or otherwise, to accelerate or collect payment on the Subordinated
Obligations or to pursue any other remedy with respect to the Subordinated
Obligations, prior to the earlier of (i) the occurrence or commencement of a
Bankruptcy Event or an Event of Default under Section 7.1(a) or 7.1(k),
(ii) acceleration of any Senior Indebtedness or (iii) the failure of the Company
or any Credit Party to comply with Sections 2.4(d), 6.9, 6.12, the second
sentence of Section 6.13(b), 6.14 or 6.15 and such failure to comply shall
continue unremedied for 10 Business Days after notice from any Holder to the
Company and DLJSC.
(b) In the event that (i) the Company shall fail to pay when due (after
giving effect to any applicable grace periods), upon acceleration or otherwise,
any amount or obligation with respect to Senior Indebtedness under the
Securities Purchase Agreement (a "Payment Default") which Payment Default shall
not have been cured or waived, or (ii) an Event of Default (other than a Payment
Default) under the Securities Purchase Agreement shall occur and be continuing,
which shall not have been cured or waived (a "Non-Payment Default"), and the
Company and the Majority Holders receive written notice of such Non-Payment
Default from a holder of Senior Notes (a "Non-Payment Blockage Notice"), no
payment pursuant to Section 2.4(b) or on the Maturity Date on account of the
Subordinated Obligations shall be made by the Company (x) in the case of any
Payment Default, unless and until such Senior Indebtedness shall have been paid
in full in cash or until such Payment Default shall have been cured or waived,
or (y) in the case of any Non-Payment Default, from the earlier of the date on
which the Company and Pyramid Ventures, Inc. (or such other person as may be
designated in writing by the Majority Holders) receive such Non-Payment Blockage
Notice until the earlier of (1) 179 days after such date and (2) the date, if
any, on which such Senior Indebtedness is paid in full or such Non-Payment
Default is
-53-
<PAGE>
waived by the holders of such Senior Indebtedness or otherwise cured (a
"Blockage Period"); provided, that (x) only one Non-Payment Blockage Notice may
be given in any 360-day period and (y) no Blockage Period may be imposed as a
result of a covenant default that served as the basis for, or was (to the
knowledge of the holder delivering such notice) continuing during any previous
Blockage Period unless such covenant default giving rise to such Blockage Period
was cured or waived in accordance with the applicable provisions of such Senior
Indebtedness for at least 90 consecutive days subsequent to the commencement of
such initial Blockage Period.
In the event that, notwithstanding the foregoing, the Company shall
make any payment to any Holder prohibited by the foregoing provisions of this
Section, then and in such event such payment shall be paid over and delivered
forthwith to the holders (or their agent or trustee) of the relevant Senior
Indebtedness.
Section 9.4. Payment Otherwise Permitted. Nothing contained in this
Section 9 or elsewhere in this Agreement or in the Notes shall prevent the
Company, at any time except as set forth in Section 9.2, from making payments at
any time of principal of and interest on the Notes or any other amount payable
by the Company under the Notes or this Agreement.
Section 9.5. Subrogation to Rights of Holders of Senior Notes. Subject
to, and solely effective following, the final payment in full of all Senior
Indebtedness, the Holders shall be subrogated to the rights of the holders of
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to such Senior Indebtedness to the extent of the payments
or distributions made to or otherwise applied to payment of, the Senior
Indebtedness pursuant to the provisions of this Section 9 until the obligations
shall be paid in full. For purposes of such subrogation, no payments or
distributions to the holders of Senior Indebtedness of any cash, property or
securities to which the Holders would be entitled except for the provisions of
this Section 9, and no payments pursuant to the provisions of this Section 9 to
the holders of Senior Indebtedness by the Holders shall, as among the Company,
its creditors (other than holders of Senior Indebtedness) and the Holders, be
-54-
<PAGE>
deemed to be a payment or distribution by the Company to or on account of the
Subordinated Obligations.
Section 9.6. Provisions Solely to Define Relative Riahts. The
provisions of this Section 9 are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Section 9 or elsewhere in this Agreement or in the Notes is intended to or shall
(i) impair, as among the Company, its creditors (other than holders of Senior
Indebtedness) and the Holders, the obligation of the Company, which is absolute
and unconditional, to pay to the Holders the principal of, and premium and
interest on, and any other amount payable by the Company under, the Notes or
this Agreement as and when the same shall become due and payable in accordance
with their terms; or (ii) affect the relative rights against the Company of the
Holders and its creditors (other than the holders of Senior Indebtedness); or
(iii) except as expressly provided in Section 9.3, prevent the Holders from
accelerating the Notes and exercising all other remedies otherwise permitted by
applicable law upon default under this Agreement, subject to the rights, if any,
under this Section 9 of the holders of Senior Indebtedness under and in
accordance with the provisions of this Section 9, to receive, cash, property and
securities otherwise payable or deliverable to the Holders.
Section 9.7. No Waiver of Subordination Provisions; Amendment. No right
of any present or future holder of any Senior Indebtedness to enforce
subordination or other terms and provisions as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Company or by any act or failure to act, in good faith, by any such holder,
or by any non-compliance by the Company with the terms, provisions, and
covenants of this Agreement, regardless of any knowledge thereof any such holder
may have or be otherwise charged with. Without in any way limiting the
generality of the foregoing, the holders of Senior Indebtedness may at any time
and from time to time, without the consent of or notice to the Purchasers or any
other Holder of the Notes, without incurring responsibility to the Holders and
without impairing or releasing the subordination provided in this Section 9 or
the obligations
-55-
<PAGE>
hereunder of such Holders to the holders of Senior Indebtedness, do any one or
more of the following: (i) change the manner, place or terms of payment or
extend the time of payment of, or renew or alter, Senior Indebtedness or any
instrument evidencing the same or any agreement under which Senior Indebtedness
is outstanding; (ii) sell, exchange, release or otherwise deal with any property
pledged, mortgaged or otherwise securing the Senior Indebtedness; (iii) release
any Person liable in any manner for the collection of the Senior Indebtedness;
and (iv) exercise or refrain from exercising any rights or remedies against the
Company and any other Person.
Section 9.8. Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Company referred to in
this Section 9, the Holders shall be entitled to rely upon any unstayed, final,
nonappealable order or decree entered by any court of competent jurisdiction in
which a Bankruptcy Event is pending (so long as such order appears on its face
to give effect to these subordination provisions), for the purpose of
ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness of the Company, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Section 9.
ARTICLE X
MISCELLANEOUS
Section 10.1. Notice. All notices, demands and other communications to
any party hereunder shall be in writing (including telecopier or similar
writing) and shall be given to such party at its address set forth on the
signature pages hereof, or such other address as such party may hereinafter
specify for the purpose. Each such notice, demand or other communication shall
be effective (i) if given by telecopy, when such telecopy is transmitted to the
telecopy number specified on the signature page hereof, or (ii) if given by
overnight courier, addressed as aforesaid or by any other means, when delivered
at the address specified in this Section.
-56-
<PAGE>
Section 10.2. No Waivers; Amendments. (a) No failure or delay on the
part of any party in exercising any right, power or remedy hereunder shall
operate as a waiver thereof, nor shall any single or partial exercise of any
such right, power or remedy preclude any other or further exercise thereof or
the exercise of any other right, power or remedy. The remedies provided for
herein are cumulative and are not exclusive of any remedies that may be
available to any party at law or in equity or otherwise.
(b) Any provision of this Agreement may be amended, supplemented or
waived if, but only if, such agreement, supplement or waiver is in writing and
is signed by the Company and the Majority Holders; provided, that without the
consent of each Holder of any Note affected thereby, an amendment, supplement or
waiver may not (a) reduce the aggregate principal amount of Notes whose Holders
must consent to an amendment, supplement or waiver, (b) reduce the rate or
extend the time for payment of interest on any Note, (c) reduce the principal
amount of or extend the stated maturity of any Note or alter the redemption
provisions with respect thereto or (d) make any Note payable in money or
property other than as stated in the Notes. In determining whether the Holders
of the requisite principal amount of Notes have concurred in any direction,
consent, or waiver as provided in this Agreement or in the Notes, Notes which
are owned by the Company or any other obligor on or guarantor of the Notes, or,
by any Person controlling, controlled by, or under common control with any of
the foregoing, shall be disregarded and deemed not to be outstanding for the
purpose of any such determination; and provided further that no such amendment,
supplement or waiver which affects the rights of each Purchaser and its
Affiliates otherwise than solely in their capacities as Holders of Notes shall
be effective with respect to them without their prior written consent.
Section 10.3. Indemnification. The Company (the "Indemnifying Party")
agrees to indemnify and hold harmless each Purchaser, its Affiliates, and each
Person, if any, who controls such Purchaser, or any of its affiliates, within
the meaning of the Securities Act or the Exchange Act (a "Controlling Person"),
and the respective partners, agents, employees, officers and directors of each
Purchaser, its Affiliates and any such Controlling Person (each an
-57-
<PAGE>
"Indemnified Party" and collectively, the "Indemnified Parties"), from and
against any and all losses, claims, damages, liabilities and expenses
(including, without limitation and as incurred, reasonable costs of
investigating, preparing or defending any such claim or action, whether or not
such Indemnified Party is a party thereto) arising out of, or in connection with
any activities contemplated by this Agreement, provided that the Indemnifying
Party will not be responsible for any claims, liabilities, losses, damages or
expenses that are determined by final judgment of court of competent
jurisdiction to result from such Indemnified Party's gross negligence, willful
misconduct or bad faith. The Indemnifying Party also agrees that each Purchaser
shall have no liability (except for breach of provisions of this Agreement) for
claims, liabilities, damages, losses or expenses, including legal fees, incurred
by the Indemnifying Party in connection with this Agreement unless they are
determined by final judgment of a court of competent jurisdiction to result from
such Purchaser's gross negligence, willful misconduct or bad faith.
If any action shall be brought against an Indemnified Party with
respect to which indemnity may be sought against the Indemnifying Party under
this Agreement, such Indemnified Party shall promptly notify the Indemnifying
Party in writing and the Indemnifying Party shall, if requested by such
Indemnified Party or if the Indemnifying Party desires to do so, assume the
defense thereof, including the employment of counsel reasonably satisfactory to
such Indemnified Party and payment of all reasonable fees and expenses. The
failure to so notify the Indemnifying Party shall not affect any obligations the
Indemnifying Party may have to such Indemnified Party under this Agreement or
otherwise unless the Indemnifying Party is materially adversely affected by such
failure. Such Indemnified Party shall have the right to employ separate counsel
in such action and participate in the defense thereof, but the fees and expenses
of such counsel shall be at the expense of such Indemnified Party, unless: (i)
the Indemnifying Party has failed to assume the defense and employ counsel or
(ii) the named parties to any such action (including any impleaded parties)
include such Indemnified Party and the Indemnifying Party, and such Indemnified
Party shall have been advised by counsel that
-58-
<PAGE>
there may be one or more legal defenses available to it which are different from
or additional to those available to the Indemnifying Party, in which case, if
such Indemnified Party notifies the Indemnifying Party in writing that it elects
to employ separate counsel at the expense of the Indemnifying Party, the
Indemnifying Party shall not have the right to assume the defense of such action
or proceeding on behalf of such Indemnified Party; provided, however, that the
Indemnifying Party shall not, in connection with any one such action or
proceeding or separate but substantially similar or related actions or
proceedings in the same jurisdiction arising out of the same general allegations
or circumstances, be responsible hereunder for the reasonable fees and expenses
of more than one such firm of separate counsel, in addition to any local
counsel, which counsel shall be designated by the Majority Holders. The
Indemnifying Party shall not be liable for any settlement of any such action
effected without the written consent of the Indemnifying Party (which shall not
be unreasonably withheld) and the Indemnifying Party agrees to indemnify and
hold harmless each Indemnified Party from and against any loss or liability by
reasons of settlement of any action effected with the consent of the
Indemnifying Party. In addition, the Indemnifying Party will not, without the
prior written consent of the Majority Holders, settle or compromise or consent
to the entry of any judgment in or otherwise seek to terminate any pending or
threatened action, claim, suit or proceeding in respect of which indemnification
or contribution may be sought hereunder (whether or not any Indemnified Party is
a party thereto) unless such settlement, compromise, consent, or termination
includes an express unconditional release of the Purchasers and the other
Indemnified Parties, reasonably satisfactory in form and substance to the
Purchasers, from all liability arising out of such action, claim, suit or
proceeding.
The indemnification and expense reimbursement obligations set forth in
this Section 10.3 (i) shall be in addition to any liability the Indemnifying
Party may have to any Indemnified Party at common law or otherwise, (ii) shall
survive the termination of this Agreement and the payment in full of the Notes
and (iii) shall remain operative and in full force and effect regardless of any
investigation made by
-59-
<PAGE>
or on behalf of the Purchasers or any other Indemnified Party.
Section 10.4. Expenses. The Company agrees to pay, if an Event of
Default occurs, all reasonable out-of-pocket expenses incurred by the Purchasers
and each holder of Notes, including reasonable fees and disbursements of a
single counsel (which counsel shall be selected by a majority in interest of the
Notes held by the Purchasers when such Event of Default occurs), in connection
with such Event of Default and collection, bankruptcy, insolvency and other
enforcement proceedings resulting therefrom.
Section 10.5. Payment. The Company agrees that, so long as any
Purchaser shall own any Notes issued to it from the Company hereunder, the
Company will make payments to each Purchaser of all amounts due thereon by wire
transfer by 1:00 PM (New York City time) on the date of payment to such account
as is specified beneath each Purchaser's name on the signature page hereof or to
such other account or in such other similar manner as each Purchaser may
designate to the Company in writing.
Section 10.6. Successors and Assigns. This Agreement shall be binding
upon and shall inure to the benefit of the Company and each Purchaser and their
respective successors and assigns; provided that the Company may not assign or
otherwise transfer its rights or obligations under this Agreement to any other
Person without the prior written consent of the Majority Holders.
Section 10.7. Brokers. The Company represents and warrants that neither
it nor any Credit Party has employed any broker, finder, financial advisor or
investment banker who might be entitled to any brokerage, finder's or other fee
or commission in connection with the Acquisition or the issuance of the Notes.
Section 10.8. New York Law; Submission to Jurisdiction; Waiver of
Jury Trial. THIS AGREEMENT SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY
THE LAWS OF THE STATE OF NEW YORK. EACH PARTY HERETO HEREBY SUBMITS TO THE
NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK AND OF ANY NEW YORK
-60-
<PAGE>
STATE COURT SITTING IN NEW YORK CITY FOR PURPOSES OF ALL LEGAL PROCEEDINGS
ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS CONTEMPLATED
HEREBY. EACH PARTY HERETO IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY
LAW, ANY OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE
OF ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY
IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
Section 10.9. Severability. If any term, provision, covenant or
restriction of the Agreement is held by a court of competent jurisdiction to be
invalid, void or unenforceable, the remainder of the terms, provisions,
covenants and restrictions of this Agreement shall remain in full force and
effect and shall in no way be affected, impaired or invalidated.
Section 10.10. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be an original with the same effect
as if the signatures thereto and hereto were upon the same instrument.
-61-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers, as of the date first
above written.
PYRAMID VENTURES, INC.
By /s/ Joseph Wood
-------------------------------------
Name:
Title:
Wiring Instructions: Address:
Bankers Trust Company c/o BT Capital Partners, Inc.
New York, New York 130 Liberty Street
ABA #021001033 New York, NY 10006
Pyramid Ventures, Inc. Attention: James Dworkin
Acct #00-138-325 Telephone: 212-250-2500
Attn: Heide Silverstein Facsimile: 212-250-7651
BERKSHIRE FUND III
By /s/ Kevin T. Callaghan
-------------------------------------
Name: Kevin T. Callaghan
Title: Managing Director
Wiring Instructions: Address
Fleet Bank of Massachusetts c/o Berkshire Partners LLC
One Federal Street One Boston Place
Boston, MA 02110 Suite 3300
Attn: Cheryl Wallace Boston, MA 02108
ABA #011-000-138 Attention: Kevin Callaghan
Acct #93630-48039 Telephone: 617-227-0050
Facsimile: 617-227-6105
<PAGE>
BERKSHIRE INVESTORS LLC
By: /s/ Kevin T. Callaghan
----------------------
Name: Kevin T. Callaghan
Title: Managing Director
Wiring Instructions: Address:
Boston Safe Deposit & Trust c/o Berkshire Partners LLC
One Boston Place One Boston Place
Boston, MA 02108 Suite 3300
Attn: Peter C. Pappas Boston, MA 02108
ABA #011-001-234 Attention: Kevin Callaghan
Acct #06-569-2 Telephone: 617-227-0050
Facsimile: 617-227-6105
EDWARD G. CAWTHON
/s/ Edward G. Cawthon
---------------------------------
Wiring Instructions: Address:
Bank of N.Y. c/o Hogan & Hartson
Raritan Ctr., Edison, NJ Columbia Square
ABA #02100018 555 13th Street, NW
Credit Edward G. Cawthon Washington, D.C. 20004-1109
Acct #6104824321 Attention: Benton Hammond, Esq.
Telephone: 202-637-5600
Facsimile: 202-637-5910
MANUEL LUIS DEL VALLE
/s/ Manuel Luis Del Valle
---------------------------------
Wiring Instructions: Address:
Federal Reserve Bank of N.Y. Calle Cerezo #6
Banco Popular Urbanization San Patricio
ABA #021502011 Guaynabo, PR 00968
Further Credit Telephone: 787-793-2912
Acct #030-016894 Facsimile: 787-740-2487
<PAGE>
CARL ROBERT FOX
/s/ Carl Robert Fox
-------------------------------
Wiring Instructions: Address:
Chase Manhattan Bank, NYC c/o Hogan & Hartson
ABA #021000021 Columbia Square
FBO Smith Barney Inc. 555 13th Street, NW
Acct #066-198038 Washington, D.C. 20004-1109
Further credit Carl R. Fox Attention: Benton Hammond, Esq.
& Delores Fox Telephone: 202-637-5600
Acct #579-81299-11-109 Facsimile: 202-637-5910
RONALD M. KATIMS
/s/ Ronald M. Katims
------------------------------
Wiring Instructions: Address:
Chase Manhattan Bank c/o Hogan & Hartson
ABA #021000021 Columbia Square
FBO Smith Barney Inc. 555 13th Street, NW
Acct #066-198038 Washington, D.C. 20004-1109
Further credit Ronald & Attention: Benton Hammond, Esq.
Margaret Katims Telephone: 202-637-5600
Acct #579-15852-18-109 Facsimile: 202-637-5910
<PAGE>
MARTIN MCDONALD
/s/ Martin McDonald
------------------------
Wiring Instructions: Address:
Sovereign Bank-Covered c/o Hogan & Hartson
Bridge Branch Columbia Square
ABA #231372691 555 13th Street, NW
Credit Martin McDonald Washington, D.C. 20O04-1109
Acct #118-301-7480 Attention; Benton Hammond, Esq.
Telephone: 202-637-5600
Facsimile: 202-637-5910
EDWARD W. O'DONNELL
/s/ Edward W. O'Donnell
------------------------------
Wiring Instructions: Address:
Chase Manhattan Bank c/o Hogan & Hartson
405 Lexington Avenue Columbia Square
New York, NY 10174 555 13th Street, NW
Bank Mgr - Wm. Capuwano Washington, D.C. 20004-1109
Branch #127 Attention: Benton Hammond, Esq.
ABA #021000128 Telephone: 202-637-5600
Edward W. O'Donnell and Facsimile: 202-637-5910
Sheila O'Donnell
Acct #127-060-595-501 (savings)
THOMAS POWER
/s/ Thomas Power
--------------------------------
Wiring Instructions: Address:
Northern Trust Co. Chicago Wisconsin Central Transportation
ABA #071-000-152 One O'Hare Centre
Thomas Power Rosemont, IL 60018
Acct #4262581 Telephone: 847-318-4602
Facsimile: 847-318-4628
<PAGE>
MARIO ESCUDERO
/s/ Mario Escudero
-----------------------------
Wiring Instructions: Address:
Northern Trust International c/o NPR, Inc.
Banking Corp. 700 14th Street, N.W., Suite 900
One World Trade Center Washington, D.C. 20005
STE 3941 Telephone: 202-508-1018
New York, NY Facsimile: 202-508-1036
ABA #026-001122
FBO Merrill Lynch
Acct #106-484-20010
Further Credit Acct #141-55879
By order Mario F. Escudero
DEAN WITTER REYNOLDS
CUSTODIAN FOR MARIO ESCUDERO
IRA ROLLOVER
By /s/ Kenneth A. Porter
---------------------------
Name: Kenneth A. Porter
Title: Vice President and
Branch Manager
Wiring Instructions: Address:
Citibank, New York Dean Witter Reynolds
ABA #021000089 250 W. Cocoa Beach Cswy
Dean Witter # 406-11172 Cocoa Beach, FL 32931
f/b/o Dean Witter Reynolds Attention: Robyn Buckingham
Cust. for Mario F. Escudero IRA RO Telephone: 800-347-4656
Acct #653-120805-105 Facsimile: 407-799-2628
<PAGE>
JOHN S. TIRPAK
/s/ John S. Tirpak
----------------------------
Wiring Instructions: Address:
The Bank of New York c/o Hogan & Hartson
ABA #021000018 Columbia Square
John S. Tirpak 555 13th Street, NW
Acct #610-534-1243 Washington, D.C. 20004-1109
Attention: Benton Hammond, Esq.
Telephone: 202-637-5600
Facsimile: 202-637-5910
DEAN WITTER REYNOLDS
CUSTODIAN FOR JOHN TIRPAK
IRA ROLLOVER
By /s/ Kenneth A. Porter
----------------------------
Name: Kenneth A. Porter
Title: Vice President and
Branch Manager
Wiring Instructions; Address:
Dean Witter Reynolds, Dean Witter Reynolds
Inc. C/F 250 W. Cocoa Beach Cswy
John Tirpak IRA Cocoa Beach, FL 32931
A/C 653-120805-105 Attention: Robyn Buckingham
Telephone: 800-347-4656
Facsimile: 407-799-2628
<PAGE>
PAUL J. WITTIG
/s/ Paul J. Wittig
--------------------------------
Wiring instructions: Address:
Chase Manhattan c/o Hogan Hartson
ABA #021000021 Columbia Square
Credit to Merrill Lynch 555 13th Street, NW
Acct #903-4-019012 Washington, D.C. 20004-1109
Further credit to Paul Wittig Attention: Benton Hammond, Esq.
Acct #825-42B32 Telephone: 202-637-5600
Facsimile: 202-637-5910
<PAGE>
RUSSELL T. STERN, JR.
/s/ Russell T. Stern, Jr.
--------------------------------
Wiring Instructions: Address:
Mills Capital Advisors, Inc.
190 South LaSalle Street
Suite #1710
Chicago, IL 60603
Telephone: 312-419-0077
Facsimile: 312-419-0172
THE HOLT GROUP, INC.
By /s/ Thomas J. Holt, Jr.
--------------------------------
Name: Thomas J. Holt, Jr.
Title:
Address:
P.O. Box 8268
Philadelphia, PA 19101-8268
Attention: Thomas J. Holt, Sr.
Facsimile: 609-742-3102
NPR HOLDING CORPORATION
By /s/ Ronald M. Katims
-----------------------------
Name: Ronald M. Katims
Title:
Address:
c/o Holt Cargo Systems, Inc.
701 N. Broadway
King & Essex Street
Gloucester City, NJ 08030
Facsimile: 609-742-3066
Attn: Thomas J. Holt-CONFIDENTIAL
Attn: John A. Evans-CONFIDENTIAL
<PAGE>
EXHIBIT A
FORM OF
NOTE
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR ANY STATE SECURITIES LAWS, AND MAY NOT BE OFFERED OR SOLD, UNLESS IT
HAS BEEN REGISTERED UNDER SUCH ACT AND APPLICABLE STATE SECURITIES LAWS OR
UNLESS AN EXEMPTION FROM REGISTRATION IS AVAILABLE AND THEN ONLY IN COMPLIANCE
WITH THE RESTRICTIONS ON TRANSFER SET FORTH IN THE SECURITIES PURCHASE AGREEMENT
DATED AS OF NOVEMBER __, 1997, A COPY OF WHICH MAY BE OBTAINED FROM THE HOLT
GROUP, INC. AT ITS PRINCIPAL EXECUTIVE OFFICE.
No. __________ $_________
THE HOLT GROUP, INC.
Subordinated Unsecured Increasing Rate Note
THE HOLT GROUP, INC. (the "Company"), for value received hereby
promises to pay to [List Purchasers] (the "Holder"), the principal sum of
[Amount in words] dollars ($[Amount in numbers]), in lawful money of the United
States of America and in immediately available funds, on the Maturity Date (as
defined in the Agreement referred to below), and to pay interest on the unpaid
principal amount, in kind, for the period commencing on the date of this Note
until payment in full of the principal sum hereof has been made, at the rates
per annum and on the dates provided in the Agreement (as defined below).
This Subordinated Unsecured Increasing Rate Note is one of a duly
authorized issue of Subordinated Unsecured Increasing Rate Notes of the Company
(the "Notes") referred to in the Securities Purchase Agreement dated as of
November _, 1997 between the Company and each of the Persons listed on the
signature pages thereto (as the same may be amended, restated or otherwise
modified from time to time in accordance with its terms, the "Agreement") and is
A-1
<PAGE>
subordinated to Senior Indebtedness to the extent and in the manner provided for
in the Agreement. Capitalized terms used in this Note have the respective
meanings assigned to them in the Agreement.
The Notes are transferable and assignable to one or more purchasers in
accordance with the limitations set forth in the Agreement. The Company agrees
to issue from time to time replacement Notes in the form hereof to facilitate
such transfers and assignments.
The Company shall keep at its principal office a register (the
"Register") in which shall be entered the names and addresses of the registered
holders of the Notes and particulars of the respective Notes held by them and of
all transfers of such Notes. References to the "Holder" or "Holders" shall mean
the Person listed in the Register as the payee of any Note. The ownership of the
Notes shall be proven by the Register.
Upon the occurrence of an Event of Default, the principal hereof and
accrued interest hereon shall become, or may be declared to be, forthwith due
and payable in the manner, upon the conditions and with the effect provided in
the Agreement.
THIS NOTE SHALL BE GOVERNED BY, AND INTERPRETED IN ACCORDANCE WITH, THE
LAWS OF THE STATE OF NEW YORK (WITHOUT GIVING EFFECT TO THE PRINCIPLES THEREOF
RELATING TO CONFLICTS OF LAW). THE COMPANY HEREBY IRREVOCABLY WAIVES ANY AND ALL
RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO
THIS NOTE.
IN WITNESS WHEREOF, the Company has caused this instrument to be duly
executed.
Dated: ________________, 199_
THE HOLT GROUP, INC.
By:
--------------------------------
Name:
A-2
<PAGE>
Title:
A-3
<PAGE>
EXHIBIT B
FORM OF
SOLVENCY CERTIFICATE
This Solvency Certificate (this "Certificate") is delivered to the
Persons listed on the signature pages (except the Company) (the "Purchasers")
pursuant to the Securities Purchase Agreement dated as of November __,1997 (the
"Agreement") between The Holt Group, Inc. and the Purchasers. Capitalized terms
used herein without definition have the meanings provided in the Agreement.
I hereby certify to the Purchasers, in good faith and to the best of my
knowledge and belief, as follows:
1. I am the duly qualified and acting Chief Financial officer of each
Credit Party and have been employed in positions involving responsibility for
the management of the financial affairs and the preparation of financial
statements of each Credit Party. I have, together with other officers of each
Credit Party, acted on behalf of each Credit Party in connection with the
transactions contemplated by the Agreement, the other Financing Documents and
the Material Acquisition Documents.
2. I have carefully reviewed the contents of this Certificate and have
conferred with legal counsel for each Credit Party for the purpose of discussing
the meaning of its contents.
3. In connection with preparing for the transactions contemplated by
the Agreement, the other Financing Documents and the Material Acquisition
Documents, I have assisted in the preparation of and I have reviewed the pro
forma combined balance sheet of the Company and its Subsidiaries as of June 30,
1997 (the "Pro Forma Balance Sheet"), a copy of which is attached hereto as
Annex I. The Pro Forma Balance Sheet was prepared on the basis of the historical
financial statements delivered pursuant to Section 3.5 of the Agreement.
B-1
<PAGE>
4. In connection with the issuance of this Certificate and the
preparation of the Pro Forma Balance Sheet, I have assisted in the preparation
of and have reviewed the historical financial statements described in Section
3.5 of the Agreement. I have no reason to believe that the Pro Forma Balance
Sheet is not a fair and reasonable presentation as of the date hereof of the
consolidated pro forma financial condition of the Company and its Subsidiaries,
after giving effect to the consummation of the transactions contemplated by the
Agreement, the other Financing Documents and the Material Acquisition Documents.
Based upon the foregoing, I have concluded, in good faith and to the
best of my knowledge and belief, that as of the date hereof and after giving
effect to the transactions contemplated by the Agreement, the other Financing
Documents and the Material Acquisition Documents:
(a) The fair saleable value (as defined below) of each Credit
Party's assets exceeds the total amount of liabilities (including
contingent (including full utilization of the Commitment under the
Agreement), subordinated, unmatured and unliquidated liabilities, in
each case valued at the probable liability of each such Credit Party
with respect thereto) of each Credit Party as they become absolute and
mature and, therefore, each Credit Party is not "insolvent".
(b) The present fair saleable value of the assets of each
Credit Party is not less than the amount that will be required to pay
its probable liabilities as they become absolute and matured.
(c) Each Credit Party will be able to realize upon its assets
and will have sufficient cash flow from operations to enable it to pay
its debts, other liabilities and contingent obligations as they mature
in the ordinary course of its business.
(d) Each Credit Party does not have unreasonably small capital
with which to engage in its anticipated businesses. In reaching this
conclusion, I understand
B-2
<PAGE>
that "unreasonably small capital" depends upon the nature of the
particular business or businesses conducted or to be conducted, and I
have reached my conclusion based on the needs and anticipated needs for
capital of the business conducted or anticipated to be conducted by
each Credit Party.
(e) Each Credit Party has not incurred any obligation under
the Agreement or any other Financing Document or made any conveyance
pursuant to or in connection therewith, with actual intent to hinder,
delay or defraud either present or future creditors of such Credit
Party.
For purposes of this Certificate, the "fair saleable value" of each
Credit Party's assets and investments has been determined on the basis of the
amount which I have concluded, in good faith and to the best of my knowledge and
belief, may be realized within a reasonable time, either through collection or
sale of such investments and other assets at the regular market value,
conceiving the latter as the amount which could be obtained for the property in
question within such period by a capable and diligent business person from an
interested buyer who is willing to purchase under ordinary selling conditions.
Because the sale of any business enterprise involves numerous assumptions and
uncertainties, not all of which can be quantified or ascertained prior to
engaging in an actual selling effort, I make no representation as to whether the
aggregate assets of each Credit Party would actually be sold for the amount I
believe to be their fair saleable value.
I understand that the Purchasers are relying on the truth and accuracy
of this Certificate and that the delivery of this Certificate is a material
inducement for the Purchasers to enter into the Agreement and consummate the
transactions contemplated thereby, and the undersigned hereby consents to such
reliance.
I am delivering this Certificate in my capacity as the Chief Financial
Officer of each Credit Party and not in any way in my individual capacity.
B-3
<PAGE>
I represent the foregoing information to be, in good faith and to the
best of my knowledge and belief, true and correct and have executed this
Certificate this ___ day of ______________, 1997.
------------------------------------
Name:
Title: Chief Financial Officer
B-4
<PAGE>
Annex I
to Exhibit B
Pro Forma
[to be attached]
B-5
<PAGE>
EXHIBIT C
FORM OF
SUBSIDIARY GUARANTY
SUBSIDIARY GUARANTY dated as of November _, 1997 made by each of the
corporations listed on Annex A attached hereto (each, a "Subsidiary Guarantor").
W I T N E S S E T H :
WHEREAS, The Holt Group, Inc. (the "Company") has entered into a
Securities Purchase Agreement (as amended from time to time, the "Subordinated
Securities Purchase Agreement") with the Persons listed on the signature pages
thereto (except the Company) pursuant to which the Company has agreed, subject
to the terms and conditions set forth therein, to issue $25,000,000 principal
amount of the Company's promissory notes;
WHEREAS, each Subsidiary Guarantor is a direct or indirect wholly-owned
Subsidiary of the Company and has received, and expects to continue to receive,
financial and other support from the Company;
WHEREAS, it is a condition to the issuance of Notes under the
Subordinated Securities Purchase Agreement that the Subsidiary Guarantors enter
into a Subsidiary Guaranty substantially in the form of this Subsidiary
Guaranty; and
WHEREAS, the Subsidiary Guarantors are willing to enter into this
Subsidiary Guaranty;
NOW, THEREFORE, the Subsidiary Guarantors jointly and severally agree
as follows:
C-1
<PAGE>
ARTICLE I
DEFINITIONS
SECTION 1.01. Definitions; References.
Terms used herein which are defined in the Subordinated Securities
Purchase Agreement and not otherwise defined herein are used herein as therein
defined. The following additional term, as used herein, has the following
meaning:
"Guaranteed Obligations" means (i) all obligations of the Company in
respect of principal of and interest on the Notes, (ii) all other sums payable
by the Company under the Subordinated Securities Purchase Agreement or the
Notes, (iii) all sums payable by the Company under any Financing Document and
(iv) all renewals or extensions of the foregoing, in each case whether now
outstanding or hereafter arising. The Guaranteed obligations shall include,
without limitation, any interest, costs, fees and expenses which accrue on or
with respect to any of the foregoing, whether before or after the commencement
of any case, proceeding or other action relating to the bankruptcy, insolvency
or reorganization of the Company, and any such interest, costs, fees and
expenses that would have accrued thereon or with respect thereto but for the
commencement of such case, proceeding or other action.
ARTICLE II
GUARANTIES
SECTION 2.01. The Guaranties. Subject to Section 2.03, the Subsidiary
Guarantors hereby jointly and severally unconditionally and irrevocably
guarantee to each Purchaser and each holder from time to time of any Note, and
to each of them, the due and punctual payment of all Guaranteed obligations as
and when the same shall become due and payable, whether at maturity, by
declaration or otherwise, according to the terms thereof. In case of failure by
the Company punctually to pay the obligations guaranteed hereby, the Subsidiary
Guarantors, subject to Section 2.03, hereby
C-2
<PAGE>
jointly and severally unconditionally agree to pay such obligations punctually
as and when the same shall become due and payable, whether at maturity or by
declaration or otherwise, at the place and in the manner specified in the
applicable Financing Document, and as if such payment were made by the Company.
SECTION 2.02. Guaranties unconditional. Subject to Section 2.03, the
obligations of the Subsidiary Guarantors under this Article II shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by, and the
Subsidiary Guarantors, to the extent permitted by law, hereby waive any defense
to any of the obligations hereunder that might otherwise be available on account
of:
(a) any extension, renewal, settlement, compromise, waiver or
release in respect of any obligation of the Company under any Financing
Document, by operation of law or otherwise;
(b) any modification or amendment of or supplement to any
Financing Document;
(c) any modification, amendment, waiver, release,
non-perfection or invalidity of any direct or indirect security, or of
any guarantee or other liability of any third party, for any obligation
of the Company under any Financing Document;
(d) any change in the corporate existence, structure or
ownership of the Company or any insolvency, bankruptcy, reorganization
or other similar proceeding affecting the Company or any of its assets
or any release or discharge of any obligation of the Company contained
in any Financing Document;
(e) the existence of any claim, set-off or other rights which
the Subsidiary Guarantors may have at any time against the Company, a
Purchaser, any holder of any Note or any other Person, whether or not
arising in connection with any Financing Document; provided that
C-3
<PAGE>
nothing herein shall prevent the assertion of any such claim by
separate suit or compulsory counterclaim;
(f) any invalidity or unenforceability relating to or against
the Company for any reason of any Financing Document or any provision
of applicable law or regulation purporting to prohibit the payment by
the Company of the principal or interest on any Note or other amount
payable by the Company under any Financing Document; or
(g) any other act or omission to act or delay of any kind by
the Company, a Purchaser, any holder from time to time of any Note or
any other Person or any other circumstance whatsoever that might, but
for the provisions of this paragraph, constitute a legal or equitable
discharge of the obligations of the Subsidiary Guarantors under this
Article II.
SECTION 2.03. Limit of Liability. The obligations of each Subsidiary
Guarantor hereunder shall be limited to an aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance
under Section 548 of the Bankruptcy Code of 1978, as amended, or any comparable
provisions of applicable state law.
SECTION 2.04. Discharge; Reinstatement in Certain Circumstances. (a)
Subject to Section 2.03, the Subsidiary Guarantors, obligations under this
Article II shall remain in full force and effect until the principal of and
interest on the Notes and other amounts payable by the Company under any
Financing Document shall have been paid in full. If at any time any payment of
the principal of or interest on any Note or any other amount payable by the
Company under any Financing Document is rescinded or must be otherwise restored
or returned upon the insolvency, bankruptcy or reorganization of the Company or
otherwise, the Subsidiary Guarantors' obligations under this Article II with
respect to such payment shall be reinstated at such time as though such payment
had become due but had not been made at such time.
SECTION 2.05. Waiver. The Subsidiary Guarantors irrevocably waive
acceptance hereof, presentment, demand,
C-4
<PAGE>
protest and any notice not provided for herein, as well as any requirement that
at any time any action be taken by any Person against the Company or any other
Person or any property subject to any Lien securing any obligations of the
Company or any of its Subsidiaries.
SECTION 2.06. Subrogation. Each Subsidiary Guarantor hereby irrevocably
agrees to subordinate any Subrogation Rights (as defined below) to the rights of
any Purchaser or any holder from time to time of any Note to recover from the
Company or any Credit Party with respect to such payment. "Subrogation Rights"
shall mean any and all rights of subrogation, reimbursement, exoneration,
contribution or indemnification, any right to participate in any claim or remedy
of payee now has or hereafter acquires in connection with the payment,
performance or enforcement of such Subsidiary Guarantor's obligations under this
Subsidiary Guaranty or any Financing Document, whether or not such claim, remedy
or right arises in equity, or under contract, statute or common law, including
the right to take or receive, directly or indirectly, in cash or other property
or by set-of or in any other manner, payment or security on account of such
claim or other rights. To effectuate such subordination, each Subsidiary
Guarantor hereby agrees that it shall not be entitled to any payment by the
Company or any Credit Party in respect of any Subrogation Right until all of the
Guaranteed Obligations have been indefeasibly paid in full. If any amount shall
be paid to any Subsidiary Guarantor in violation of the preceding sentence and
the Guaranteed Obligations shall not have been paid in full, such amount shall
be deemed to have been paid to such Subsidiary Guarantor for the benefit of, and
held in trust for, the Purchasers or any holder from time to time of any Note,
and shall forthwith be paid to such Purchasers or any holder from time to time
of any Note to be credited and applied to the Guaranteed Obligations, whether
matured or unmatured. Each Subsidiary Guarantor acknowledges that it will
receive direct and indirect benefits from the financing arrangements
contemplated by the Securities Purchase Agreement and that the subordination set
forth in this Section is knowingly made in contemplation of such benefits.
C-5
<PAGE>
SECTION 2.07. Stay of Acceleration. If acceleration of the time for
payment of any Guaranteed Obligation payable by the Company under any Financing
Document is stayed upon the insolvency, bankruptcy or reorganization of the
Company, all such Guaranteed Obligations otherwise subject to acceleration under
the terms of the Financing Documents shall nonetheless be payable by the
Subsidiary Guarantor hereunder forthwith on demand by the Agent.
Section 2.08 Right of Contribution. Each Subsidiary Guarantor hereby
agrees that to the extent that a Subsidiary Guarantor shall have paid more than
its proportionate share of any payment made hereunder, such Subsidiary Guarantor
shall be entitled to seek and receive contribution from and against any other
Subsidiary Guarantor hereunder which has not paid its proportionate share of
such payment. Each Guarantor's right of contribution shall be subject to the
terms and conditions of Section 2.06. The provisions of this Section 2.08 shall
in no respect limit the obligations and liabilities of any Subsidiary Guarantor
and each Subsidiary Guarantor shall remain liable for the full amount guaranteed
by such Subsidiary Guarantor hereunder.
Section 2.09. Guarantee Subordinate to Senior Indebtedness. Each
Subsidiary Guarantor hereby covenants and agrees, and the Purchasers, by
acceptance of this Subsidiary Guarantee likewise covenant and agree, that, (a)
to the extent and in the manner hereinafter set forth in this Section 2.09,
this Subsidiary Guarantee, including pursuant to any amendment, modification,
restatement or renewal hereof, is hereby expressly made subordinated and subject
in right of payment to the prior payment in full of all Senior Indebtedness and
(b) the terms and conditions of such subordination is for the benefit of the
holders of the Senior Indebtedness (including the beneficiaries of any guaranty
of the Senior Indebtedness) and each such holder may enforce such subordination;
provided, however, on the Maturity Date (so long as the Maturity Date is not
extended in accordance with either of the provisos contained in the definition
thereof) the obligations (which for all purposes of this Section 2.09 shall
include the Obligations under this guaranty) shall no longer be subordinated to
the Senior
C-6
<PAGE>
Indebtedness and this Section 2.09 shall have no further force or effect.
Section 2.09.1 Payment Over of Proceeds Upon Dissolution. In the
event of a Bankruptcy Event, then and in any such event:
(a) the holders of Senior Indebtedness (which for all purposes of this
Section 2.09 shall include the beneficiaries of any guaranty of the Senior
Indebtedness which guaranty shall also constitute Senior Indebtedness) shall be
entitled to receive payment in full in cash or Cash Equivalents of all amounts
due or to become due on or in respect of all Senior Indebtedness (including
interest after the commencement of a Bankruptcy Event at the rate specified in
the documentation for such Senior Indebtedness, whether or not allowed), before
any Holder is entitled to receive any direct or indirect payment or distribution
on account of the Subordinated Obligations (other than in the form of securities
permitted to be paid in accordance with the first parenthetical in clause (b)
below) including, without limitation, by exercise of set-off and any payment
which may be payable or deliverable by reason of any other indebtedness being
subordinated in right of payment to the Subordinated Obligations (which for all
purposes of this Section 2.09 include the Obligations under this guaranty);
(b) any payment or distribution of assets of the Subsidiary Guarantor
of any kind or character, whether in cash, property or securities, by set-off or
otherwise, to which any Holder would be entitled but for the provisions of this
Section 2.09, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Subsidiary
Guarantor being subordinated to the payment of the Subordinated Obligations
(except for any such payment or distribution of securities which, if debt
securities, are unsecured and subordinated to at least the same extent as the
Subordinated Obligations are to (A) such Senior Indebtedness or (B) any
securities issued in exchange for Senior Indebtedness and mature no earlier than
six months after such Senior Indebtedness or securities issued in exchange)
shall be paid by the liquidating trustee or agent or other Person making such
payment or distribution,
C-7
<PAGE>
whether a trustee in bankruptcy, a receiver or liquidating trustee or
otherwise, directly to the holders of all Senior Indebtedness or their
representative or representatives or to the trustee or trustees under any
indenture under which any instruments evidencing any of such Senior
Indebtedness may have been issued, ratably according to the aggregate amounts
remaining unpaid on account of the principal of, and interest on, such Senior
Indebtedness held or represented by each, to the extent necessary to make
payment in full of all such Senior Indebtedness remaining unpaid, after giving
effect to any concurrent payment or distribution to the holders of such Senior
Indebtedness; and
(c) in the event that, notwithstanding the foregoing provisions of this
Section 2.09, any Holder shall have received any such payment or distribution of
assets of the Subsidiary Guarantor of any kind or character, whether property or
securities, including any such payment or distribution which may be payable or
deliverable by reason of the payment of any other indebtedness of the Subsidiary
Guarantor being subordinated to the payment of the Subordinated Obligations (but
excluding any payment of the character described in the parenthetical clause in
the foregoing paragraph (b)) before all Senior Indebtedness is paid in full,
then and in such event such payment or distribution shall be paid over or
delivered forthwith to the trustee in bankruptcy, receiver, liquidating trustee,
custodian, assignee, agent or other Person making payment or distribution of
assets of the Subsidiary Guarantor for application to the payment of all such
Senior Indebtedness remaining unpaid, to the extent necessary to pay such Senior
Indebtedness in full, after giving effect to any concurrent payment or
distribution to or for the holders of such Senior Indebtedness.
If, notwithstanding the provisions of this Agreement, there shall occur
any consolidation of the Subsidiary Guarantor with, or any merger of the
Subsidiary Guarantor into, another corporation or the liquidation or dissolution
of the Subsidiary Guarantor following any conveyance, transfer or lease of its
properties and assets substantially as an entirety to another corporation, such
consolidation, merger or liquidation shall not be deemed a
C-8
<PAGE>
Bankruptcy Event; provided, that no other Bankruptcy Event shall have occurred
and be continuing at the time of such consolidation, merger or liquidation.
DLJSC is hereby authorized to file an appropriate claim on behalf of the
Holders if the Holders do not file such claim or there is not filed on behalf
of the Holders a proper proof of claim in the form required in any Bankruptcy
Event prior to thirty (30) days before the expiration of the time to file such
claim or claims.
Section 2.09.2 Acceleration Rights: Remedies; No Payment in Certain
Circumstances.
(a) So long as at least $25 million of Senior Notes shall remain
outstanding, prior to the Maturity Date, no Holder shall take any action,
judicial or otherwise, to accelerate or collect payment on the Subordinated
Obligations or to pursue any other remedy with respect to the Subordinated
Obligations, prior to the earlier of (i) the occurrence or commencement of a
Bankruptcy Event or an Event of Default under Section 7.1(a) or 7.1(k) of the
Securities Purchase Agreement, (ii) acceleration of any Senior Indebtedness or
(iii) the failure of the Company or any Credit Party to comply with Sections
2.4(d), 6.9, 6.12, the second sentence of Section 6.13(b), 6.14 or 6.15 of the
Subordinated Securities Purchase Agreement and such failure to comply shall
continue unremedied for 10 Business Days after notice from any Holder to the
Subsidiary Guarantor and DLJSC.
(b) In the event that (i) the Subsidiary Guarantor shall fail to pay
when due (after giving effect to any applicable grace periods), upon
acceleration or otherwise, any amount or obligation with respect to Senior
Indebtedness under the Securities Purchase Agreement (a "Payment Default") which
Payment Default shall not have been cured or waived, or (ii) an Event of Default
(other than a Payment Default) under the Securities Purchase Agreement shall
occur and be continuing, which shall not have been cured or waived (a
"Non-Payment Default"), and the Subsidiary Guarantor and the Majority Holders
receive written notice of such Non-Payment Default from a holder of Senior
Notes (a "Non-Payment Blockage Notice"), then no payment pursuant to Section
2.4(b) or on the Maturity Date on account of the Subordinated
C-9
<PAGE>
Obligations shall be made by the Subsidiary Guarantor (x) in the case of any
Payment Default, unless and until such Senior Indebtedness shall have been paid
in full in cash or until such Payment Default shall have been cured or waived,
or (y) in the case of any Non-Payment Default, from the earlier of the date on
which the Subsidiary Guarantor and Pyramid Ventures, Inc. (or such other person
as may be designated in writing by the majority Holders) receive such
Non-Payment Blockage Notice until the earlier of (1) 179 days after such date
and (2) the date, if any, on which such Senior Indebtedness is paid in full or
such Non-Payment Default is waived by the holders of such Senior Indebtedness or
otherwise cured (a "Blockage Period"); provided, that (x) only one Non-Payment
Blockage Notice may be given in any 360-day period and (y) no Blockage Period
may be imposed as a result of a covenant default that served as the basis for,
or was (to the knowledge of the holder delivering such notice) continuing during
any previous Blockage Period unless such covenant default giving rise to such
Blockage Period was cured or waived in accordance with the applicable provisions
of such Senior Indebtedness for at least 90 consecutive days subsequent to the
commencement of such initial Blockage Period.
In the event that, notwithstanding the foregoing, the Subsidiary
Guarantor shall make any payment to any Holder prohibited by the foregoing
provisions of this Section, then and in such event such payment shall be paid
over and delivered forthwith to the holders (or their agent or trustee) of the
relevant Senior Indebtedness.
Section 2.09.3 Payment Otherwise Permitted. Nothing contained in this
Section 2.09 or elsewhere in this Agreement or in the Notes shall prevent the
Subsidiary Guarantor, at any time except as set forth in Section 2.09.2, from
making payments at any time of principal of and interest on the Notes or any
other amount payable by the Subsidiary Guarantor under the Notes or this
Guaranty.
Section 2.09.4 Subrogation to Rights of Holders of Senior Notes.
Subject to, and solely effective following, the final payment in full of all
Senior Indebtedness, the Holders shall be subrogated to the rights of the
holders of
C-10
<PAGE>
Senior Indebtedness to receive payments and distributions of cash, property and
securities applicable to such Senior Indebtedness to the extent of the payments
or distributions made to or otherwise applied to payment of, the Senior
Indebtedness pursuant to the provisions of this Section 2.09 until the
Obligations shall be paid in full. For purposes of such subrogation, no payments
or distributions to the holders of Senior Indebtedness of any cash, property or
securities to which the Holders would be entitled except for the provisions of
this Section 2.09, and no payments pursuant to the provisions of this Section
2.09 to the holders of Senior Indebtedness by the Holders shall, as among the
Subsidiary Guarantor, its creditors (other than holders of Senior Indebtedness)
and the Holders, be deemed to be a payment or distribution by the Subsidiary
Guarantor to or on account of the Subordinated Obligations.
Section 2.09.5 Provisions Solely to Define Relative Rights. The
provisions of this Section 2.09 are and are intended solely for the purpose of
defining the relative rights of the Holders of the Notes on the one hand and the
holders of Senior Indebtedness on the other hand. Nothing contained in this
Section 2.09 or elsewhere in this Agreement or in the Notes is intended to or
shall (i) impair, as among the Subsidiary Guarantor, its creditors (other than
holders of Senior Indebtedness) and the Holders, the obligation of the
Subsidiary Guarantor, which is absolute and unconditional, to pay to the Holders
the principal of, and premium and interest on, and any other amount payable by
the Subsidiary Guarantor under, the Notes or this Agreement as and when the same
shall become due and payable in accordance with their terms; or (ii) affect the
relative rights against the Subsidiary Guarantor of the Holders and its
creditors (other than the holders of Senior Indebtedness); or (iii) except as
expressly provided in Section 2.09.2, prevent the Holders from accelerating the
Notes and exercising all other remedies otherwise permitted by applicable law
upon default under this Agreement, subject to the rights, if any, under this
Section 2.09 of the holders of Senior Indebtedness under and in accordance with
the provisions of this Section 2.09.1, to receive, cash, property and securities
otherwise payable or deliverable to the Holders.
C-11
<PAGE>
Section 2.09.6 No Waiver of Subordination Provisions; Amendment. No
right of any present or future holder of any Senior Indebtedness to enforce
subordination or other terms and provisions as herein provided shall at any time
in any way be prejudiced or impaired by any act or failure to act on the part of
the Subsidiary Guarantor or by any act or failure to act, in good faith, by any
such holder, or by any non-compliance by the Subsidiary Guarantor with the
terms, provisions, and covenants of this Agreement, regardless of any knowledge
thereof any such holder may have or be otherwise charged with. Without in any
way limiting the generality of the foregoing, the holders of Senior Indebtedness
may at any time and from time to time, without the consent of or notice to the
Purchasers or any other Holder of the Notes, without incurring responsibility to
the Holders and without impairing or releasing the subordination provided in
this Section 2.09 or the obligations hereunder of such Holders to the holders of
Senior Indebtedness, do any one or more of the following: (i) change the manner,
place or terms of payment or extend the time of payment of, or renew or alter,
Senior Indebtedness or any instrument evidencing the same or any agreement under
which Senior Indebtedness is outstanding; (ii) sell, exchange, release or
otherwise deal with any property pledged, mortgaged or otherwise securing the
Senior Indebtedness; (iii) release any Person liable in any manner for the
collection of the Senior Indebtedness; and (iv) exercise or refrain from
exercising any rights or remedies against the Subsidiary Guarantor and any other
Person.
Section 2.09.7 Reliance on Judicial Order or Certificate of Liquidating
Agent. Upon any payment or distribution of assets of the Subsidiary Guarantor
referred to in this Section 2.09, the Holders shall be entitled to rely upon any
unstayed, final, nonappealable order or decree entered by any court of competent
jurisdiction in which a Bankruptcy Event is pending (so long as such order
appears on its face to give effect to these subordination provisions), for the
purpose of ascertaining the Persons entitled to participate in such payment or
distribution, the holders of Senior Indebtedness of the Subsidiary Guarantor,
the amount thereof or payable thereon, the amount or amounts paid or
C-12
<PAGE>
distributed thereon and all other facts pertinent thereto or to this
Section 2.09.
ARTICLE III
MISCELLANEOUS
SECTION 3.01. Notices. Unless otherwise specified herein, all notices,
requests and other communications to any party hereunder shall be in writing
(including bank wire, telex, facsimile transmission or similar writing) and
shall be given in care of the Company at the Company's address or telex or
facsimile transmission number specified in or pursuant to Section 10.1 of the
Securities Purchase Agreement. Each such notice, request or other communication
shall be effective (i) if given by telex, when such telex is transmitted to the
telex number specified in or pursuant to this Section 3.01 and the appropriate
answerback is received, (ii) if given by mail, 72 hours after such communication
is deposited in the mail with first class postage prepaid, addressed as
aforesaid, or (iii) if given by any other means, when delivered at the address
specified in or pursuant to this Section 3.01.
SECTION 3.02. No Waiver. No failure or delay by any Purchaser or any
holder of any Note in exercising any right, power or privilege under any
Financing Document shall operate as a waiver thereof nor shall any single or
partial exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. The rights and remedies herein
provided shall be cumulative and not exclusive of any rights or remedies
provided by law.
SECTION 3.03. Amendments and Waivers. Any provision of this Subsidiary
Guaranty may be amended or waived if, and only if, such amendment or waiver is
in writing and is signed by the Subsidiary Guarantors and is consented to in
writing by the Majority Holders.
SECTION 3.04. Successors and Assigns. This Subsidiary Guaranty is for
the benefit of the Purchaser, the holders from time to time of the Notes and
their respective successors and assigns and in the event of an assignment of
C-13
<PAGE>
the Notes or other amounts payable under the Financing Documents, the rights
hereunder, to the extent applicable to the indebtedness so assigned, shall be
transferred with such indebtedness. All of the provisions of this Subsidiary
Guaranty shall be binding upon the parties hereto and their respective
successors and assigns except that the Subsidiary Guarantors may not assign or
transfer any of their rights or obligations under this Subsidiary Guaranty.
SECTION 3.05. Governing Law: Submission to Jurisdiction; Waiver of Jury
Trial. THIS SUBSIDIARY GUARANTY SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK. THE SUBSIDIARY GUARANTORS HEREBY SUBMIT
TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT COURT FOR THE
SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT SITTING IN NEW
YORK CITY FOR THE PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING
TO THIS SUBSIDIARY GUARANTY OR THE TRANSACTIONS CONTEMPLATED HEREBY. THE
SUBSIDIARY GUARANTORS IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW,
ANY OBJECTION WHICH THEY MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF
ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH
PROCEEDING HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. THE SUBSIDIARY GUARANTORS
HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS SUBSIDIARY GUARANTY OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
C-14
<PAGE>
IN WITNESS WHEREOF, the Subsidiary Guarantors have caused this
Subsidiary Guaranty to be duly executed as of the date first above written.
[SUBSIDIARY GUARANTORS]
By:
-----------------------------------
Name:
Title:
C-15
<PAGE>
Annex A
to Exhibit C
ADDITIONAL SUBSIDIARY GUARANTOR
The undersigned hereby acknowledges that it has read this Subsidiary
Guaranty and agrees to be liable pursuant to Section 1 of this Subsidiary
Guaranty and to be bound by the terms and provisions thereof.
IN WITNESS WHEREOF, the undersigned has caused this Subsidiary Guaranty
to be duly executed and delivered by its officer thereunto duly authorized as of
the ___ day of _________, 19__.
Notice Address: [Name of Subsidiary Guarantor], a
[State of Incorporation]
corporation
By:
-------------------------
Name:
Title:
C-16
--------------------------------
SHAREHOLDERS AGREEMENT
Dated as of November 20, 1997
By and Among
THE SHAREHOLDERS SIGNATORY HERETO
--------------------------------
<PAGE>
TABLE OF CONTENTS
Page
----
ARTICLE I - CERTAIN DEFINITIONS .............................................3
ss.1.1 Certain Definitions .............................................3
ARTICLE II - TRANSFER OF SECURITIES .........................................7
ss.2.1 Restrictions ....................................................7
ss.2.2 Permitted Transfers .............................................8
ss.2.3 Sales by NPR Subject to Tag-Along Rights .......................10
ss.2.4 Grant of Drag-Along Rights .....................................11
ss.2.5 Grant of Preemptive Rights .....................................12
ss.2.6 Right of First Offer ...........................................12
ARTICLE III - PUT RIGHTS ...................................................14
ss.3.1 Granting of Put, Put Option Purchase Price .....................14
ss.3.2 Put Notice .....................................................14
ss.3.3 Party Actions ..................................................14
ss.3.4 Obligation to Purchase Shares ..................................14
ARTICLE IV - SPECIAL RIGHT OF REPURCHASE ...................................15
ss.4.1 Granting of Call, Call Option Purchase Price ...................15
ss.4.2 Repurchase Notice ..............................................15
ss.4.3 Party Actions ..................................................15
ss.4.4 Obligation to Purchase Shares ..................................15
ARTICLE V - OTHER AGREEMENTS ...............................................15
ss.5.1 Voting Agreement ...............................................15
ss.5.2 Information ....................................................16
ss.5.3 NPR Purchase Requirement .......................................16
ss.5.4 Amendment to Joint Venture Agreement ...........................16
ARTICLE VI - MISCELLANEOUS .................................................16
ss.6.1 Entire Agreement ...............................................16
ss.6.2 Captions .......................................................16
ss.6.3 Counterparts ...................................................16
ss.6.4 Information Rights and Access Rights ...........................16
ss.6.5 Notices ........................................................17
ss.6.6 Successors and Assigns .........................................18
ss.6.7 Governing Law ..................................................18
ss.6.8 Submission to Jurisdiction .....................................18
ss.6.9 Benefits Only to Parties .......................................19
ss.6.10 Termination ...................................................19
ss.6.11 Amendments; Waivers ...........................................19
ss.6.12 Specific Performance ..........................................19
(i)
<PAGE>
SHAREHOLDERS AGREEMENT
SHAREHOLDERS AGREEMENT, dated as of November 20, 1997, by and among each
of the individuals and entities listed on Schedule 1.0 attached hereto (each
such Person and each Permitted Transferee, individually, a "Shareholder", and
collectively, the "Shareholders") as Shareholders of Transroll Navieras Express,
Inc., a corporation organized under the laws of Liberia (the "Company").
WITNESSETH:
WHEREAS, NPR and the Minority Shareholders each desire to enter into
this Agreement, inter alia, to regulate and limit certain rights in connection
with the shares of the capital stock of the Company now or hereafter owned by
the Shareholders (the "Shares") and to limit the sale, assignment, transfer,
encumbrance or other disposition of the Shares and to provide for the consistent
and uniform management of the Company as set forth herein;
NOW, THEREFORE, in consideration of the mutual covenants herein set
forth and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto hereby agree as follows:
ARTICLE I
CERTAIN DEFINITIONS
ss.1.1 Certain Definitions. For purposes of this Agreement, the
following terms shall have the following meanings:
"Affiliate" shall mean, with respect to any Person, any other Person
directly or indirectly controlling (including but not limited to all directors
and officers of such Person), controlled by, or under direct or indirect common
control with, such Person; provided, however, that, an Affiliate shall include
any entity that directly or indirectly (including through limited partner or
general partner interests) owns more than five percent (5%) of any class of the
capital stock of any other entity.
"Agreement" shall mean this Agreement, as it may be amended, supplemented
or modified in accordance with the terms hereof, from time to time.
"Board" shall mean the Board of Directors of the Company.
"Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in the City of New York
are authorized or obligated by law or executive order to close.
2
<PAGE>
"Call Option Purchase Price" shall mean, with respect to the right of NPR
to purchase the Minority Shareholder Shares pursuant to any Repurchase Notice
delivered in accordance with Article IV hereof, the Market Price of a share of
Common Stock as of the Repurchase Date, multiplied by the number of Minority
Shareholder Shares subject to the Repurchase Notice.
"Closing Date" shall have the meaning set forth in the Stock Purchase
Agreement.
"Commission" shall mean, at any time, the Securities and Exchange
Commission or any other federal agency then administering the Securities Act
and other Federal securities laws.
"Common Stock" shall mean the common stock, no par value per share, of the
Company.
"Common Stock Per Share Market Value" shall mean the price per share of
Common Stock obtained by dividing (A) the Market Value by (B) the number of
shares of Common Stock outstanding at the time of determination.
"Company" shall have the meaning set forth in the first paragraph of this
Agreement.
"Drag-Along Notice" shall have the meaning set forth in Section 2.4(a) of
this Agreement.
"Effective Date" shall mean the date which is the fourth anniversary of the
Closing Date.
"First Offer Notice" shall have the meaning set forth in Section 2.6 of
this Agreement.
"Independent Financial Expert" shall mean a nationally recognized
investment banking firm (a) that does not (and whose directors, officers,
employees and Affiliates do not) have a direct or indirect material financial
interest in the Company, (b) that has not been, and, at the time it is called
upon to serve as an Independent Financial Expert under this Agreement is not
(and none of whose directors, officers, employees or Affiliates is) a promoter,
director or officer of the Company or any of the Shareholders, (c) that has not
been retained during the preceding two years by the Company or any of the
Shareholders for any purpose, and (d) that is otherwise qualified to serve as an
independent financial advisor. Any such Person may receive customary
compensation for opinions or services it provides as an Independent Financial
Expert.
"Market Price" shall mean, with respect to a share of Common Stock on any
Business Day:
(a) if the Common Stock is Publicly Traded at the time of
determination, the average of the closing prices on such day of the Common
Stock on all domestic securities exchanges on which the Common Stock is
then listed, or, if there have been no sales on any such exchange on such
day, the average of the highest bid and lowest asked prices on all such
exchanges at the end of such day or, if on any such day the Common Stock is
not so listed, the average of the representative bid and asked prices
quoted on NASDAQ as of 4:00 P.M., New York time, on such day, or if on any
day such security is not quoted on NASDAQ, the average of the highest bid
and lowest asked prices on such day in the domestic over-the-counter market
as reported by the National Quotation Bureau, Incorporated, or any similar
successor organization, in each such case averaged over a
3
<PAGE>
period of twenty (20) days consisting of the day as of which "Market Price"
is being determined and the nineteen consecutive Business Days prior to
such day, or
(b) if the Common Stock is not Publicly Traded at the time of
determination, the Common Stock Per Share Market Value.
"Market Value" shall mean the highest price that would be paid for the
outstanding Common Stock of the Company on a going-concern basis in an
arm's-length transaction between a willing buyer and a willing seller (neither
acting under compulsion), using valuation techniques then prevailing in the
securities industry (but without giving effect to any discount in respect of a
minority interest or lack of liquidity) and determined in accordance with the
Valuation Procedure, and assuming full disclosure and understanding of all
relevant information and a reasonable period of time for effectuating such sale.
For the purposes of determining the Market Value, any contractual limitation in
respect of the shares of Common Stock relating to voting rights, shall be deemed
to have been eliminated or cancelled.
"Minimum Terms" shall have the meaning set forth in Section 2.6 of this
Agreement.
"Minority Shareholder" shall mean each Shareholder other than NPR and NPR's
Permitted Transferees.
"Minority Shareholder Shares" shall mean and include, at any time, (i) all
Shares held by the Minority Shareholders and (ii) all Shares held by Permitted
Transferees of Minority Shareholders (it being understood that any Minority
Shareholder Shares transferred by a Minority Shareholder to a Permitted
Transferee in a Permitted Transfer described in Section 2.2(a)(i) or Section
2.2(a)(ii) shall remain Minority Shareholder Shares and such Permitted
Transferee shall thereafter be a Minority Shareholder hereunder).
"NASDAQ" means the Nasdaq Stock Market, Inc.
"New Securities" shall mean (i) shares of Common Stock, (ii) any other
equity security of the Company, (iii) any debt security of the Company which by
its terms is convertible into or exchangeable for any equity security of the
Company or has any other equity feature, (iv) any security of the Company that
is a combination of debt and equity or (v) any option, warrant or other right to
subscribe for, purchase or otherwise acquire any equity security or any such
debt security of the Company; provided that "New Securities" shall not include
shares of Common Stock sold in an initial public offering of Common Stock which
yields at least five million dollars ($5,000,000) of net proceeds to the
Company.
"NPR" shall mean NPR Holding Corporation, a Delaware corporation.
"NPR Stock" shall have the meaning set forth in Section 2.3(a) of this
Agreement.
"Option Period" shall have the meaning set forth in Section 2.6 of this
Agreement.
"Participant" shall have the meaning set forth in Section 2.3(b) of this
Agreement.
4
<PAGE>
"Permitted Transfer" shall have the meaning set forth in Section 2.2(a) of
this Agreement.
"Permitted Transferee" shall have the meaning set forth in Section 2.2(a)
of this Agreement.
"Person" shall mean and include natural persons, corporations, limited
partnerships, general partnerships, joint stock companies, joint ventures,
associations, companies, trusts, banks, trust companies, land trusts, business
trusts or other organizations, whether or not legal entities, and governments
and agencies and political subdivisions thereof.
"Preemptive Notice" shall have the meaning provided in Section 2.5 of this
Agreement.
"Publicly Traded" shall mean, with respect to any security, that such
security is (a) listed on a domestic securities exchange, (b) quoted on NASDAQ
or (c) traded in the domestic over-the-counter market, which trades are reported
by the National Quotation Bureau, Incorporated.
"Put/Call Expiration Date" shall have the meaning set forth in Section 3.1
of this Agreement.
"Put Notice" shall have the meaning provided in Section 3.1 of this
Agreement.
"Put Option Purchase Price" shall mean, with respect to the right of any
Minority Shareholder to require NPR to purchase the Minority Shareholder Shares
pursuant to a Put Notice delivered in accordance with Article III hereof by any
Minority Shareholder, the Market Price of a share of Common Stock as of the Put
Repurchase Date, multiplied by the number of Minority Shareholders Shares
subject to the Put Notice.
"Put Repurchase Date" shall have the meaning set forth in Section 3.4 of
this Agreement.
"Pyramid" shall mean Pyramid Ventures, Inc.
"Regulation Y" shall mean Regulation Y promulgated by the Board of
Governors of the Federal Reserve, pursuant to the Bank Holding Company Act of
1956, as amended, or any successor regulation thereto.
"Repurchase Date" shall have the meaning set forth in Section 4.4 of this
Agreement.
"Repurchase Notice" shall have the meaning set forth in Section 4.1 of this
Agreement.
"SBIA" shall mean the Small Business Investment Company Act of 1958, as
amended, and the rules and regulations promulgated thereunder.
"Securities Act" shall have the meaning set forth in Section 2.1(c) of
this Agreement.
"Shareholder" shall have the meaning set forth in the first paragraph of
this Agreement.
"Shares" shall have the meaning set forth in the recitals of this
Agreement.
5
<PAGE>
"Stock Purchase Agreement" shall mean that certain Stock Purchase Agreement
by and among NPR Holding Corporation, the shareholders of Holt Cargo Systems,
Inc. and NPR, dated September 25, 1997, as amended from time to time, and in
effect on the date hereof.
"Tag-Along Notice" shall have the meaning set forth in Section 2.3(a) of
this Agreement.
"Third Party Offeror" shall have the meaning set forth in Section 2.6 of
this Agreement.
"Transfer" shall have the meaning set forth in Section 2.1(a) of this
Agreement.
"Transferring Shareholder" shall have the meaning set forth in Section 2.7
of this Agreement.
"Valuation Procedure" shall mean, with respect to the determination of any
amount or value required to be determined in accordance with such procedure, a
determination (which shall be final and binding on NPR and the Minority
Shareholders) made (i) by agreement among NPR and the Minority Shareholders
holding a majority of the Minority Shareholder Shares within twenty (20) days
following the event requiring such determination; or (ii) in the event the
Minority Shareholders and NPR cannot reach an agreement with respect to such
amount or value, by an Independent Financial Expert selected by the mutual
agreement of NPR and the Minority Shareholders holding a majority of the
Minority Shareholder Shares within 10 days following the expiration of the
twenty (20) day period set forth in item (i) above; and (iii) in the event the
Minority Shareholders and NPR cannot agree on an Independent Financial Expert,
then each of NPR and the Minority Shareholders holding a majority of the
Minority Shareholder Shares shall select an Independent Financial Expert, which
two Independent Financial Experts shall select a third Independent Financial
Expert to perform the valuation within ten (10) days following the expiration of
the ten (10) day period set forth in item (ii) above. The Independent Financial
Expert shall be retained pursuant to an engagement letter mutually acceptable to
NPR and the Minority Shareholders holding a majority of the Minority Shareholder
Shares and shall be instructed by NPR and the Minority Shareholders holding a
majority of the Minority Shareholder Shares to make its determination within
twenty (20) days of its selection. The fees and expenses of an Independent
Financial Expert selected hereunder shall be paid fifty percent (50%) by NPR and
fifty percent (50%) by the Minority Shareholders.
ARTICLE II
TRANSFER OF SECURITIES
ss.2.1 Restrictions. (a) No Shareholder shall sell, assign, pledge, or
in any manner, transfer any Shares or any right or interest therein, to any
Person (each such action, a "Transfer") except for Permitted Transfers.
(b) From and after the date hereof, all share certificates representing
Shares held by any of the Shareholders shall bear a legend which shall state as
follows:
6
<PAGE>
The shares represented by this certificate are subject to certain
restrictions against transfer set forth in a Shareholders Agreement, dated
as of November 20, 1997, as may be amended from time to time.
(c) In addition to the legend required by Section 2.1(b) above, all share
certificates representing Shares held by any of the Shareholders shall bear a
legend which shall state as follows:
The shares represented by this certificate have not been registered under
the Securities Act of 1933, as amended (the "Securities Act"), and such
shares may not be offered, sold, pledged or otherwise transferred except
(1) pursuant to an exemption from, or in a transaction not subject to, the
registration requirements under the Securities Act or (2) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of any State of the United
States.
(d) In addition to the legends required by Sections 2.1(b) and (c) above,
all share certificates representing Minority Shareholder Shares shall bear a
legend which shall state as follows:
The shares represented by this certificate are also subject to a right to
purchase by NPR Holding Corporation as described in Article IV of the
Shareholders Agreement referred to above.
Any Minority Shareholder Shares transferred by a Minority Shareholder in a
Permitted Transfer described in Section 2.2(a)(i), (ii), (iii) or (v) shall bear
the legends required by this Section 2.1(d).
ss.2.2 Permitted Transfers. (a) Notwithstanding anything to the contrary
contained herein, a Shareholder may at any time effect any of the following
Transfers (each a "Permitted Transfer", and each transferee of such Shareholder
in respect of such Transfer, a "Permitted Transferee"):
(i) A Transfer of any or all Shares owned by a Shareholder who is a
natural person following such Shareholder's death by will or intestacy to
such Shareholder's legal representative, heir or legatee;
(ii) A Transfer of any or all Shares owned by a Shareholder who is a
natural person as a gift or gifts during such Shareholder's lifetime to
such Shareholder's spouse, children, grandchildren or a trust or other
legal entity for the benefit of such Shareholder or any of the foregoing;
(iii) A Transfer of any or all Shares owned by a Minority Shareholder
who is not a natural person to any Affiliate of such Minority Shareholder
or pursuant to Section 2.2(b);
(iv) A Transfer of any or all Shares owned by NPR to any Affiliate
(without giving effect to the proviso contained in the definition of
"Affiliate") of NPR; and
7
<PAGE>
(v) A Transfer of any or all Shares by a Shareholder which is made
pursuant to the terms set forth in Sections 2.3, 2.4 or 2.6.
(b) Anything herein to the contrary notwithstanding, in the event that
Pyramid or any of its Affiliates shall deliver to NPR an opinion of counsel to
Pyramid or such Affiliate, to the effect that if Pyramid or such Affiliate,
shall continue to hold some or all of the Shares of the Company held by it,
there is a material risk that such ownership will result in the violation of any
statute, regulation or rule of any governmental authority (including, without
limitation, Regulation Y and the SBIA), Pyramid or such Affiliate, may sell,
exchange or otherwise dispose of some or all of such Shares, in as prompt and
orderly a manner as is reasonably necessary to a third party or third parties,
subject to the right of first offer contained in Section 2.6 hereof. In such
event, NPR shall, and shall use its reasonable best efforts to cause the Company
to, cooperate with Pyramid in, (i) disposing of such Shares or (ii) to the
extent Pyramid holds voting Shares, exchanging all or any portion of the voting
Shares owned by Pyramid on a share-for-share basis for shares of a non-voting
security of the Company (such non-voting security being identical in all
respects to such voting Shares, except that such securities shall be non-voting
and shall be convertible or exercisable into voting securities on such
conditions as are requested by Pyramid or such Affiliate in light of the
regulatory considerations prevailing). Without limiting the foregoing, at the
request of Pyramid or such Affiliate, NPR shall, to the extent within its
control, and shall use its reasonable best efforts to cause the Company to, (i)
provide (and authorize Pyramid or such Affiliate, to provide) financial and
other information concerning the Company to any prospective purchaser of such
Shares owned by Pyramid or such Affiliate, (ii) amend this Agreement, the
certificate of incorporation of the Company, the by-laws of the Company, and any
related agreements and instruments and (iii) take such additional actions, in
each case to the extent necessary, in order to effectuate and reflect the
foregoing. The provisions of this Section 2.2(b) shall inure solely to the
benefit of Pyramid and its Affiliates which are subject to the provisions of the
Bank Holding Company Act of 1956, as amended (including Regulation Y) or the
SBIA.
(c) In any such Transfer referred to above in Section 2.2(a) and as a
condition to such Transfer (other than with respect to a Transfer referred to
above in 2.2(a)(i)), the Permitted Transferee shall agree in writing to be bound
by all the provisions of this Agreement and shall execute and deliver to the
other Shareholders a counterpart to this Agreement. Each Permitted Transferee of
a Minority Shareholder shall hold such Minority Shareholder Shares subject to
the provisions of this Agreement as a "Minority Shareholder" hereunder as if
such Permitted Transferee were an original signatory hereto and shall be deemed
to be a party to this Agreement. In the event any Permitted Transferee of a
Permitted Transfer effected other than in accordance with Section 2.2(a)(i)
hereof does not execute and deliver a counterpart to this Agreement as required
above, such Transfer shall be void and of no force or effect, and the
Shareholder who attempted to effect such Transfer shall continue to be the
record and beneficial owner of the Shares which were the subject of such
purported Permitted Transfer. Any Permitted Transferee of a Permitted Transfer
effected pursuant to Section 2.2(a)(i) (including, without limitation, any legal
representative, heir, legatee, estate, personal representative and executor)
shall, automatically without any further action of any Person, be entitled to
the benefits of this Agreement and shall be subject to the obligations and
restrictions contained in this Agreement, with respect to the Shares held by
such Person.
8
<PAGE>
ss.2.3 Sales by NPR Subject to Tag-Along Rights. (a) In the event that
NPR proposes to effect a Transfer (other than a Permitted Transfer effected
pursuant to Section 2.2(iv) above) of a number of Shares owned by NPR, which
when aggregated with all other Shares transferred by NPR after the date hereof,
equals or exceeds ten percent (10%) of the Shares owned by NPR on the date
hereof (the "NPR Stock"), then NPR shall promptly give written notice (the
"Tag-Along Notice") to the Minority Shareholders at least thirty (30) days prior
to the closing of such Transfer. The Tag-Along Notice shall describe in
reasonable detail the proposed sale including, without limitation, the number of
shares of NPR Stock to be purchased, the name of the transferee, the purchase
price of each share of NPR Stock to be sold, any other significant terms of such
sale and the date such proposed sale is expected to be consummated.
(b) Each Minority Shareholder shall have the right, exercisable upon
written notice to NPR within twenty (20) Business Days after receipt of the
Tag-Along Notice, to participate in such sale of NPR Stock on the same terms and
conditions as are set forth in the Tag-Along Notice and to sell that number of
the Shares owned by it as determined in accordance with the calculation set
forth below. Each Minority Shareholder electing to participate in the sale
described in the Tag-Along Notice (each a "Participant") shall indicate in its
notice of election to NPR the maximum number of its Shares it desires to sell in
such sale. Each such Participant shall be entitled to sell a "pro rata portion"
of such maximum number. To the extent one or more of the Minority Shareholders
exercise such right of participation in accordance with the terms and conditions
set forth in this Section 2.3, the number of shares of NPR Stock that NPR may
sell in the transaction shall be correspondingly reduced by the aggregate amount
to be sold by all Participants. For purposes of this Section 2.3, "pro rata
portion" shall mean for each Participant a fraction the numerator of which is
the total number of Shares actually sold by NPR pursuant to the sale proposed in
the Tag-Along Notice and the denominator of which is the total number of Shares
owned by NPR immediately prior to the sale proposed in the Tag-Along Notice.
(c) Any Participant shall effect its participation in the sale by
delivering on the date scheduled for such sale to NPR for delivery to the
prospective transferee one or more certificates, in proper form for transfer,
which represent the number of Shares which such Participant is entitled to sell
in accordance with this Section 2.3. NPR shall concurrently therewith remit to
each such Participant that portion of the sale proceeds to which such
Participant is entitled by reason of its participation in such sale. The sale of
Shares owned by any Participant pursuant to this Section 2.3 shall be effected
on substantially the terms and conditions set forth in such Tag-Along Notice;
provided, however, no Minority Shareholder shall be required to make any
representations, warranties, or covenants in connection with such sale, other
than with respect to title of such Minority Shareholder to such Shares and the
ability of such Minority Shareholder to transfer such Shares and shall not be
obligated to agree to any contractual indemnifications in respect of such
representations or otherwise with respect to any sale contemplated by this
Section 2.3 in excess of the lower of (i) such Minority Shareholder's pro rata
portion (based upon the total consideration received by such Minority
Shareholder divided by the total consideration received in such sale) of any
indemnification payments made by NPR and the Minority Shareholders to the
transferees of the Shares and (ii) the net proceeds actually received by such
Minority Shareholder in connection with such sale.
(d) Subject to the next sentence, each Participant shall receive the same
amount and type of consideration on a share-for-share basis as each other
Shareholder participating in any sale
9
<PAGE>
effected pursuant to the terms of this Section 2.3 (including, without
limitation, NPR) and, in each case, on the same terms and conditions. In
connection with a sale effected pursuant to this Section 2.3, if NPR or any of
its Affiliates receive any consideration or benefits of any type which are not
shared pro rata with each Participant then NPR or such Affiliate shall pay to
each other Shareholder, in cash or in kind at NPR's or such Affiliate's option,
each such Shareholder's pro rata portion of the present fair market value of
such consideration or benefits, determined pursuant to the Valuation Procedure.
(e) The exercise or non-exercise of the rights of the Minority Shareholders
hereunder to participate in one or more sales of Shares made by NPR shall not
adversely affect their rights to participate in subsequent sales of Shares
subject to this Section 2.3.
(f) In the event that no Minority Shareholder participates in a proposed
sale on the terms set forth in the Tag-Along Notice, NPR shall be entitled to
make such a sale within ninety (90) days of the delivery of the Tag-Along Notice
at a price per Share no higher, on terms no more favorable to NPR than those
contained in the Tag-Along Notice and only to the transferee set forth in the
Tag-Along Notice. NPR shall be required to deliver another Tag-Along Notice with
respect to any sale (i) after such 90-day period, or (ii) before such 90-day
period with respect to any sale that includes more favorable terms, a higher
price per Share or other transferee.
ss.2.4 Grant of Drag-Along Rights. (a) For so long as NPR owns at least
fifty percent (50%) of the Shares owned by NPR on the date hereof, in the event
that NPR determines to sell all of the Shares owned by NPR in a single
arms-length transaction to any non-Affiliated (both before and after giving
effect to the transaction) Person pursuant to a bona fide written offer to
acquire all of the outstanding Shares owned by NPR, NPR may send written notice
(the "Drag-Along Notice") to each of the Minority Shareholders at least twenty
(20) Business Days prior to the closing of such sale. The Drag-Along Notice
shall describe in reasonable detail the proposed sale including, without
limitation, the number of Shares to be purchased, the name of the transferee,
the purchase price of each Share to be sold by NPR and the date such proposed
sale is expected to be consummated.
(b) In the event that NPR shall provide each Minority Shareholder with a
Drag-Along Notice, NPR shall have the right to require each of the Minority
Shareholders to sell all of its Shares for cash at a price equal to the greater
of (i) the purchase price per share of the Shares to be sold by NPR and (ii) the
Market Price per Share determined in accordance with the Valuation Procedure. No
Minority Shareholder shall be required to make any representations, warranties,
or covenants in connection with such sale, other than with respect to title of
such Minority Shareholder to such Shares and the ability of such Minority
Shareholder to transfer such Shares and shall not be obligated to agree to any
contractual indemnifications in respect of such representations or otherwise
with respect to any sale contemplated by this Section 2.4 in excess of the lower
of (i) such Minority Shareholder's pro rata portion (based upon the total
consideration received by such Minority Shareholder divided by the total
consideration received in such sale) of any indemnification payments made by NPR
and the Minority Shareholders to the transferees of the Shares and (ii) the net
proceeds actually received by such Minority Shareholder in connection with such
sale.
(c) At the closing of such sale pursuant to this Section 2.4, each such
Minority Shareholder shall deliver to the prospective transferee one or more
certificates evidencing the
10
<PAGE>
number of Shares being sold in proper form for transfer with appropriate
duly executed assignments, stock powers or endorsements, free and clear of any
and all claims, liens and encumbrances.
(d) No Minority Shareholder shall be obligated to make any out-of-pocket
expenditure prior to the consummation of such sale (excluding modest
expenditures for its postage, copies, etc., and the fees and expenses of its own
counsel retained by it), and no Minority Shareholder shall be obligated to pay
more than its pro rata share (based upon the amount of consideration received
for or with respect to their Shares) of reasonable expenses incurred in
connection with such sale to the extent such costs are incurred for the benefit
of all Shareholders and are not otherwise paid for by NPR or the proposed
transferee.
(e) In connection with a sale effected pursuant to this Section 2.4,
neither NPR nor any of its Affiliates shall be entitled to receive any
consideration or benefits of any type which are not shared pro rata with each
Participant. In addition, no Minority Shareholder shall be required in any
circumstance to accept consideration for their Shares in a form other than cash.
ss.2.5 Grant of Preemptive Rights. (a) Each of the Shareholders agrees
that it will use its reasonable best efforts to cause the Company to
provide the Minority Shareholders with a preemptive right to purchase a portion
of any New Securities that the Company may from time to time after the date
hereof propose to issue such that the Shareholders shall have the right to
purchase a number of New Securities that will result in each such Shareholder
maintaining its percentage ownership interest in the Company, on terms and
conditions substantially similar to those set forth in Section 2.5(b) hereof.
(b) In the event and on each occasion that the Company issues New
Securities to NPR and not to the Minority Shareholders where the Minority
Shareholders were not provided with the right (including, reasonable notice
thereof) to purchase such New Securities on a pro rata basis with, and on the
same terms and conditions, as NPR, then NPR hereby agrees to offer to the
Minority Shareholders the right to purchase a number of any such New Securities
such that, with respect to each Minority Shareholder, the total percentage of
Shares owned by such Minority Shareholder shall remain unchanged. In each such
event, NPR will give to each Minority Shareholder written notice (a "Preemptive
Notice"), describing the type of New Securities, the price per unit of the New
Security paid by NPR, and the general terms upon which the Company issued the
New Securities. Each Minority Shareholder shall have ten (10) Business Days from
the date on which such Minority Shareholder receives the Preemptive Notice to
agree to purchase the number of such New Securities set forth above on the terms
specified in the Preemptive Notice by giving written notice to NPR and stating
therein the quantity of New Securities to be purchased by such Minority
Shareholder. If, in connection with such a proposed issuance of New Securities,
such Minority Shareholder shall for any reason fail or refuse to give such
written notice to NPR within such 10-day period, such Minority Shareholder
shall, for all purposes of this Section 2.5, be deemed to have refused (in that
particular instance only) to purchase any of such New Securities and to have
waived (in that particular instance only) all of its rights under this Section
2.5 to purchase any of such New Securities.
ss.2.6 Right of First Offer. (a) Prior to any sale by Pyramid of Shares
in accordance with Section 2.2(b) hereof, Pyramid must first offer to sell
such Shares (the "Offered Shares") to NPR in writing, specifying all material
terms of the proposed sale ("First Offer Notice") and comply
11
<PAGE>
with this Section 2.6 before offering the Offered Shares to any other
Person. The First Offer Notice shall specify a purchase price to be payable in
cash or a promissory note and, if a promissory note is specified, the First
Offer Notice shall specify the terms of such promissory note. The First Offer
Notice shall not require any consideration to be provided by NPR for the
purchase of the Offered Shares other than the specified cash or promissory note.
(b) For a period of up to thirty (30) days (or such lesser time as is
required to avoid violation of any statute, rule or regulation) after receipt of
the First Offer Notice ("Option Period"), NPR shall have the right to elect to
purchase all, and not less than all, of the Offered Shares on the terms
specified in the First Offer Notice. NPR shall notify Pyramid in writing within
the Option Period whether NPR will exercise such right (such notice being herein
referred to as the "Purchase Notice").
(c) If NPR shall have provided a Purchase Notice to Pyramid within the
Option Period, all certificates for the Offered Shares shall be delivered to NPR
or any Affiliate of NPR designated by NPR, duly endorsed for transfer, at a
closing held on a date specified by NPR to be within not more than thirty (30)
days (or such lesser time as is required to avoid violation of any statue, rule
or regulation) nor less than twenty (20) days (or such lesser time as is
required to avoid violation of any statute, rule or regulation) after the date
of the Purchase Notice at the principal office of NPR.
(d) If NPR shall not have provided a Purchase Notice to Pyramid within the
Option Period, Pyramid shall be entitled to sell all or any portion of the
Offered Shares to a third party pursuant to this paragraph (d). For a period of
ninety (90) days after the expiration of the Offer Period, Pyramid may sell all
or any portion of the Offered Shares to one or more third persons ("Third Party
Offeror") for the same type and form of consideration as contained in, and at a
price per share not less than the per Share offer price contained in, the First
Offer Notice and otherwise upon terms no more favorable to the Third Party
Offeror than those contained in the First Offer Notice (the "Minimum Terms"),
provided that such Third Party Offeror executes a counterpart to this Agreement.
If Pyramid wishes to sell all or any part of the Offered Shares on terms more
favorable to the Third Party Offeror than the Minimum Terms or does not sell
such Offered Shares on the Minimum Terms within the aforementioned ninety (90)
day period, Pyramid shall be obligated to make a new offer to NPR, in accordance
with this Section 2.6, before it shall be permitted to Transfer its Shares, or
any part thereof, to any Person.
ss.2.7 Failure to Deliver Shares. If a Shareholder (the "Transferring
Shareholder") becomes obligated to Transfer any Stock to any transferee pursuant
to this Agreement (including a Transfer to another Shareholder for purposes of
Transfer to another purchaser pursuant to Section 2.4 and Article IV or
otherwise) and fails to deliver such Stock in accordance with the terms of this
Agreement, the transferee may, at its or his option, in addition to all other
remedies it or he may have, either (i) send to the Transferring Shareholder the
purchase price for such Stock as is herein specified, or (ii) deposit such
amount with a trustee or escrow agent for the benefit of the Transferring
Shareholder for release upon delivery of such Stock to the trustee or escrow
agent in accordance with the terms of this Agreement. Thereupon, the Company
shall be permitted, upon written notice to the Transferring Shareholder, (a) to
cancel on its books the certificate or certificates representing the Stock so
required to be transferred by the Transferring Shareholder and (b) to issue, in
lieu thereof, in the name of the transferee, a new certificate or certificates
representing such Stock;
12
<PAGE>
provided, however, the Company shall be entitled to require, as a condition
to such cancellation and issuance of Stock, the transferee to deliver to the
Company an agreement to (1) indemnify, defend and hold harmless the Company, its
officers and employees, successors and assigns, from any and all losses, claims,
damages or liabilities (or actions in respect thereof) to which any such
indemnified party may become subject as a result of, arising out of, or based
upon such cancellation and issuance of Stock, and (2) reimburse each such
indemnified party for any legal or other expenses reasonably incurred in
connection therewith. All of the Transferring Shareholder's rights in and to
such Stock shall terminate as of the date of the Company's notice referred to in
the preceding sentence. Notwithstanding the foregoing, the transferee shall not
have the rights and powers provided by this Section 2.7 if it has failed to
fulfill any covenant in this Agreement.
ARTICLE III
PUT RIGHTS
ss.3.1 Granting of Put, Put Option Purchase Price. At any time within
the period beginning on the Effective Date and ending sixty (60) days thereafter
(the "Put/Call Expiration Date"), any Minority Shareholder, upon written notice
to NPR (a "Put Notice"), shall be entitled to sell, and NPR shall be obligated
to purchase from such Minority Shareholder, all or any portion of the Minority
Shareholder Shares held by such Minority Shareholder at the Put Option Purchase
Price.
ss.3.2 Put Notice. Each Put Notice delivered pursuant to Section 3.1
shall specify:
(a) the name of the Minority Shareholder delivering such Put Notice;
(b) that such Minority Shareholder is exercising its option, pursuant to
this Article III, to sell the Minority Shareholder Shares held by such Minority
Shareholder; and
(c) the number of, and a description of, the Minority Shareholder Shares
being tendered.
ss.3.3 Party Actions. In the event the Shares of the Company are
Publicly Traded on the date a Put Notice is delivered to NPR, NPR shall deliver
to each Minority Shareholder exercising its put option pursuant to this Article
III, a notice specifying the Put Option Purchase Price, within five (5) days of
receipt of such Put Notice. In the event the Shares of the Company are not
Publicly Traded on the date a Put Notice is delivered to NPR, NPR and the
Minority Shareholders shall immediately begin the Valuation Procedures to
determine the Market Price of the Minority Shareholder Shares.
ss.3.4 Obligation to Purchase Shares. NPR, not more than five (5) days
after a final determination of the Market Price of the Minority Shareholder
Shares, shall purchase all of the Minority Shareholder Shares which are the
subject of such Put Notice or Put Notices (the "Put Repurchase Date"), and shall
pay the Put Option Purchase Price with respect to such Minority Shareholder
Shares payable to such Minority Shareholder in immediately available funds,
against delivery by such Minority Shareholder of any and all certificates or
other instruments evidencing the
13
<PAGE>
Minority Shareholder Shares which are the subject of such Put Notice, together
with appropriate stock powers or other instruments of transfer or assignment
duly endorsed in blank.
ARTICLE IV
SPECIAL RIGHT OF REPURCHASE
ss.4.1 Granting of Call, Call Option Purchase Price. At any time within
the period beginning on the Effective Date and ending on the Put/Call Expiration
Date, upon written notice to all but not less than all of the Minority
Shareholders (a "Repurchase Notice"), NPR shall be entitled to purchase, and the
Minority Shareholders shall be obligated to sell, all but not less than all
(other than Minority Shareholder Shares subject to a Put Notice) of the Minority
Shareholder Shares held by the Minority Shareholders at the Call Option Purchase
Price.
ss.4.2 Repurchase Notice. Each Repurchase Notice delivered pursuant to
Section 4.1 shall specify that NPR is exercising its option, pursuant to this
Article IV, to purchase all Minority Shareholder Shares held by the Minority
Shareholders (other than Minority Shareholder Shares subject to a Put Notice).
ss.4.3 Party Actions. In the event the Shares of the Company are
Publicly Traded on the date NPR delivers a Repurchase Notice, NPR shall deliver
to each Minority Shareholder, a notice specifying the Call Option Purchase
Price, within five (5) days of delivery of the Repurchase Notice. In the event
the Shares of the Company are not Publicly Traded on the date NPR delivers a
Repurchase Notice, NPR and the Minority Shareholders shall immediately begin the
Valuation Procedures to determine the Market Price of the Minority Shareholder
Shares.
ss.4.4 Obligation to Purchase Shares. NPR, not more than five (5) days
after a final determination of the Market Price of the Minority Shareholder
Shares, shall purchase all of the Minority Shareholder Shares (the "Repurchase
Date"), and shall pay the Call Option Purchase Price with respect to such
Minority Shareholder Shares payable to the Minority Shareholders in immediately
available funds, against delivery by the Minority Shareholders of any and all
certificates or other instruments evidencing the Minority Shareholder Shares
which are the subject of such Repurchase Notice, together with appropriate stock
powers or other instruments of transfer or assignment duly endorsed in blank.
ARTICLE V
OTHER AGREEMENTS
ss.5.1 Voting Agreement. To the extent any Minority Shareholder holds
Shares which entitle such Minority Shareholder to a vote on any matter to be
voted on by the shareholders of the Company, each Minority Shareholder agrees to
vote all of the voting Shares held by such Minority Shareholder and all other
Shares over which he or it has voting control and will take all other necessary
or desirable action within his or its control, in the manner designated by NPR
and
14
<PAGE>
to fully give effect to the foregoing, each Minority Shareholder shall
execute and deliver an irrevocable proxy in the form of Annex I attached hereto.
ss.5.2 Information. NPR shall, or shall cause the Company to, deliver to
each of the Minority Shareholders, all financial statements (which in any event
shall include, without limitation, any report or statement prepared in
accordance with the annual audit of the Company), reports and other general
written information relating to the Company which the Company sends to NPR.
ss.5.3 NPR Purchase Requirement. In the event that any Minority
Shareholder engages in any activity described in Section 17.1 of the joint
venture agreement, dated as of August 6, 1997 by and among the Shareholders'
party hereto, Transroll Navegacao S.A. ("TRNSA") and certain other entities
whose shareholders are also shareholders of TRNSA, or subsidiaries or affiliates
of TRNSA shareholders, as amended (the "Joint Venture Agreement"), and such
Minority Shareholder is therefore required to sell the Shares owned by such
Minority Shareholder to NPR pursuant to the terms of Section 17.1 of the Joint
Venture Agreement, then NPR shall purchase such Shares at the Market Price per
Share determined in accordance with the Valuation Procedure (and for purposes of
the definition of "Valuation Procedure", any reference to "Minority
Shareholders" or a "Majority of the Minority Shareholders" shall instead refer
to the Minority Shareholder whose Shares are to be sold pursuant to this Section
5.3).
ss.5.4 Amendment to Joint Venture Agreement. NPR agrees that it shall
not consent to or approve (i) any amendment, modification or waiver of the last
sentence of Section 5.1 of the Joint Venture Agreement or any of the provisions
of Articles 6 through 21 of the Joint Venture Agreement or (ii) the inclusion of
any additional provision to the Joint Venture Agreement (other than provisions
relating to any of the matters set forth in Articles 1 through 5 of the Joint
Venture Agreement); in each case which have a material adverse effect with
respect to the rights or obligations of any Minority Shareholder, without the
prior written consent of Minority Shareholders holding at least 60% of the
Shares held by all Minority Shareholders at such time.
ARTICLE VI
MISCELLANEOUS
ss.6.1 Entire Agreement. This Agreement contains the entire agreement
between the parties hereto with respect to the subject matter hereof and
supersedes all prior arrangements or understandings (whether written or oral)
with respect thereto.
ss.6.2 Captions. The Article and Section captions used herein are for
reference purposes only and shall not in any way affect the meaning or
interpretation of this Agreement.
ss. 6.3 Counterparts. For the convenience of the parties, any number of
counterparts of this Agreement may be executed by the parties hereto and each
such executed counterpart shall be deemed to be an original instrument.
ss.6.4 Information Rights and Access Rights. In connection with the
determination of any amount or value required to be determined in accordance
with the Valuation Procedure, each
15
<PAGE>
Shareholder agrees to use its reasonable best efforts to ensure that each
Independent Financial Expert shall have the right, upon such Independent
Financial Expert's reasonable request, to receive lists of stockholders or other
information respecting the Company, to inspect the books and records of the
Company and to visit the properties of the Company.
ss.6.5 Notices. All notices, consents, requests, instructions, approvals
and other communications provided for herein and all legal process in regard
hereto shall be validly given, made or served, if in writing and delivered by
personal delivery, overnight courier, telecopier or registered or certified
mail, return-receipt requested and postage prepaid addressed as follows:
If to NPR, to:
NPR Holding Corporation
c/o Holt Cargo Systems, Inc.
701 N. Broadway
King & Essex Street
Gloucester City, NJ 08030
Telecopy: (609) 742-3066
Attn: Thomas J. Holt, Sr. - CONFIDENTIAL
Attn: John A. Evans - CONFIDENTIAL
with a copy to:
Pepper, Hamilton & Scheetz, LLP
3000 Two Logan Square
18th and Arch Streets
Philadelphia, PA 19103-2799
Telecopy: (215) 981-4750
Attn: Robert A. Friedel, Esq.
Attn: Lisa D. Kabnick, Esq.
and if to any of the Minority Shareholders, to the addresses set forth
below each of their names on Schedule 1.0 attached hereto,
with a copy to its counsel:
White & Case
1155 Avenue of the Americas
New York, New York 10036
Telecopy: (212) 354-8113
Attention: John M. Reiss, Esq.
or to such other address as any such party hereto may, from time to
time, designate in writing to all other parties hereto, and any such
communication shall be deemed to be given, made or served as of the date so
delivered or, in the case of any communication delivered by mail, as of the date
so received.
16
<PAGE>
ss.6.6 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the Company, the Shareholders and their respective
successors, assigns and Permitted Transferees. The rights of a Shareholder under
this Agreement may not be assigned or otherwise conveyed by any Shareholder
except in connection with a Transfer of Shares which is in compliance with this
Agreement.
ss.6.7 Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF THE STATE OF DELAWARE, WITHOUT
REGARD TO SUCH STATE'S CHOICE OF LAW PROVISIONS.
ss.6.8 Submission to Jurisdiction. (a) Each Shareholder hereby
irrevocably acknowledges and consents that any legal action or proceeding
brought with respect to any of the obligations arising under or relating to this
Agreement may be brought in the courts of the State of Delaware, as the party
bringing such action or proceeding may elect, and each Shareholder hereby
irrevocably submits to and accepts with regard to any such action or proceeding,
for itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each Shareholder hereby further
irrevocably waives any claim that any such courts lack jurisdiction over such
party, and agrees not to plead or claim, in any legal action or proceeding with
respect to this Agreement or the transactions contemplated hereby brought in any
of the aforesaid courts, that any such court lacks jurisdiction over such party.
Each Shareholder irrevocably consents to the service of process in any such
action or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to such party, at its address for notices set forth in
Section 6.5, such service to become effective ten (10) days after such mailing.
Each Shareholder hereby irrevocably waives any objection to such service of
process and further irrevocably waives and agrees not to plead or claim in any
action or proceeding commenced hereunder or under any other documents
contemplated hereby that service of process was in any way invalid or
ineffective. Subject to Section 6.8(b), the foregoing shall not limit the rights
of any party to serve process in any other manner permitted by law. The
foregoing consents to jurisdiction shall not constitute general consents to
service of process for any purpose except as provided above and shall not be
deemed to confer rights on any Person other than the respective Shareholders to
this Agreement.
(b) Each Shareholder hereby waives any right it may have under the laws
of any jurisdiction to commence by publication any legal action or proceeding
with respect to this Agreement. To the fullest extent permitted by applicable
law, each Shareholder hereby irrevocably waives the objection which it may now
or hereafter have to the laying of the venue of any suit, action or proceeding
arising out of or relating to this Agreement in any of the courts referred to in
Section 6.8(a) and hereby further irrevocably waives any claim that any such
court is not a convenient forum for any such suit, action or proceeding.
(c) Each Shareholder agrees that any judgment obtained by any
Shareholder or its successors or assigns or Permitted Transferees in any action,
suit or proceeding referred to above may, in the discretion of such party (or
its successors or assigns or Permitted Transferees), be enforced in any
jurisdiction, to the extent permitted by applicable law.
(d) Each Shareholder agrees that the prevailing party or parties, as the
case may be, in any action, suit, arbitration or other proceeding arising out of
or with respect to this Agreement or
17
<PAGE>
the transactions contemplated hereby shall be entitled to reimbursement
of all costs of litigation, including reasonable attorneys' fees, from the
non-prevailing party. For purposes of this Section 6.8(d), each of the
"prevailing party" and the "non-prevailing party" in any action, suit,
arbitration or other proceeding shall be the party designated as such by the
court, arbitrator or other appropriate official presiding over such action,
suit, arbitration or other proceeding, such determination to be made as a part
of the judgment rendered thereby.
ss.6.9 Benefits Only to Parties. Nothing expressed by or mentioned in
this Agreement is intended or shall be construed to give any Person, other than
the parties hereto and their respective successors or assigns and Permitted
Transferees and with respect to Section 2.7 hereof, the Company, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained, this Agreement and all conditions and provisions
hereof being intended to be and being for the sole and exclusive benefit of the
parties hereto and their respective successors and assigns and Permitted
Transferees, and for the benefit of no other Person.
ss.6.10 Termination. This Agreement shall terminate on the later of (a)
sixty days following the Put/Call Expiration Date and (b) the earlier to occur
of (i) the date on which the Company has completed an offering of shares of
Common Stock pursuant to a registration statement filed with the Securities and
Exchange Commission and (ii) the date on which NPR and its Affiliates own
collectively less than 5% of the outstanding Common Stock.
ss.6.11 Amendments; Waivers; No provision of this Agreement may be
amended, modified or waived without the prior written consent of the holders of
ninety percent (90%) of the Shares owned by the Shareholders; provided that no
such amendment, modification or waiver which adversely affects the rights of any
Shareholder may be made without such Shareholder's prior written consent.
ss.6.12 Specific Performance. The parties hereto agree that the remedy
at law for any breach of this Agreement may be inadequate and that should any
dispute arise concerning any matter hereunder, this Agreement shall be
enforceable in a court of equity by an injunction or a decree of specific
performance. Such remedies shall, however, be cumulative and nonexclusive, and
shall be in addition to any other remedies which the parties hereto may have.
[SIGNATURE PAGE FOLLOWS]
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as
of the date first set forth above.
NPR HOLDING CORPORATION
By /s/ Ronald M. Katins
--------------------------------
Name:
Title:
BERKSHIRE FUND III INVESTMENT CORP.
By /s/ Kevin T. Callaghan
--------------------------------
Name: Kevin T. Callaghan
Title: Managing Director
BERKSHIRE INVESTORS LLC
By /s/ Kevin T. Callaghan
--------------------------------
Name: Kevin T. Callaghan
Title: Managing Director
PYRAMID VENTURES, INC.
By /s/ Joseph Wood
--------------------------------
Name: Joseph Wood
Title:
/s/ Ronald M. Katims
--------------------------------
Ronald M. Katims
/s/ Paul J. Wittig
--------------------------------
Paul J. Wittig
<PAGE>
/s/ Mario F. Escudero
-------------------------------
Mario F. Escudero
DEAN WITTER REYNOLDS
CUSTODIAN FOR MARIO F. ESCUDERO
IRA ROLLOVER
By
--------------------------------
Name:
Title:
-----------------------------------
Edward W. O'Donnell
-----------------------------------
Martin McDonald
-----------------------------------
Edward G. Cawthon
DEAN WITTER REYNOLDS
CUSTODIAN FOR JOHN S. TIRPAK
IRA ROLLOVER
By
--------------------------------
Name:
Title:
-----------------------------------
Carl Robert Fox
<PAGE>
/s/ Mario F. Escudero
-------------------------------
Mario F. Escudero
DEAN WITTER REYNOLDS
CUSTODIAN FOR MARIO F. ESCUDERO
IRA ROLLOVER
By /s/ Kenneth A. Porter
--------------------------------
Name: Kenneth A. Porter
Title: Vice President and
Branch Manager
/s/ Edward W. O'Donnell
-------------------------------
Edward W. O'Donnell
/s/ Martin McDonald
-------------------------------
Martin McDonald
/s/ Edward G. Cawthon
-----------------------------------
Edward G. Cawthon
DEAN WITTER REYNOLDS
CUSTODIAN FOR JOHN S. TIRPAK
IRA ROLLOVER
By /s/ Kenneth A. Porter
--------------------------------
Name: Kenneth A. Porter
Title: Vice President and
Branch Manager
/s/ Carl Robert Fox
-------------------------------
Carl Robert Fox
<PAGE>
/s/ Thomas Power
-----------------------------------------
Thomas Power
/s/ Manuel Luis Del Valle
-----------------------------------------
Manuel Luis Del Valle
/s/ Russell T. Stern, Jr.
-----------------------------------------
Russell T. Stern, Jr.
/s/ John S. Tirpak
-----------------------------------------
John S. Tirpak
<PAGE>
SCHEDULE 1.0
Ronald M. Katims Pyramid Ventures, Inc.
- ---------------- ----------------------
c/o Hogan & Hartson c/o BT Capital Partners, Inc.
Columbia Square 130 Liberty Street
555 l3th Street, NW New York, NY 10006
Washington D.C. 20004-1109 Attention: James Dworkin
Attention: Benton Hammond, Esq. Telephone: 212-250-2500
Telephone: 202-637-5600 Facsimile: 212-250-7651
Facsimile: 202-637-5910
Paul J. Wittig Berkshire Fund III
- -------------- ------------------
c/o Hogan & Hartson c/o Berkshire Partners LLC
Columbia Square One Boston Place
555 13th Street, NW Suite 3300
Washington D.C. 20004-1109 Boston, MA 02108
Attention: Benton Hammond, Esq. Attention: Kevin Callaghan
Telephone: 202-637-5600 Telephone: 617-227-0050
Facsimile: 202-637-5910 Facsimile: 617-227-6105
Mario F. Escudero Berkshire Investors LLC
- ----------------- -----------------------
NPR, Inc. c/o Berkshire Partners LLC
700 14th Street, NW, Suite 900 One Boston Place
Washington, D.C. 20005 Suite 3300
Telephone: 202-508-1018 Boston, MA 02108
Facsimile: 202-508-1036 Attention: Kevin Callaghan
Telephone: 617-227-0050
with a copy to: Facsimile: 617-227-6105
Hogan & Hartson
Columbia Square NPR Holding Corporation
555 13th Street, NW -----------------------
Washington D.C. 20004-1109 c/o Holt Cargo Systems, Inc.
Attention: Benton Hammond, Esq. 701 N. Broadway
Telephone: 202-637-5600 King & Essex Street
Facsimile: 202-637-5910 Gloucester City, NJ 08030
Telecopy: (609) 742-3066
Attn: Thomas J. Holt, Sr. - CONFIDENTIAL
Attn: John A. Evans - CONFIDENTIAL
<PAGE>
SCHEDULE 1.0
Page 2
Edward W. O'Donnell Carl Robert Fox
- ------------------- ---------------
c/o Hogan & Hartson c/o Hogan & Hartson
Columbia Square Columbia Square
555 13th Street, NW 555 13th Street, NW
Washington D.C. 20004-1109 Washington D.C. 20004-1109
Attention: Benton Hammond, Esq. Attention: Benton Hammond, Esq.
Telephone: 202-637-5600 Telephone: 202-637-5600
Facsimile: 202-637-5910 Facsimile: 202-637-5910
Martin McDonald Russell T. Stern, Jr.
- --------------- ---------------------
c/o Hogan & Hartson Mills Capital Advisors, Inc.
Columbia Square 135 South LaSalle Street
555 13th Street, NW Suite #1025
Washington D.C. 20004-1109 Chicago, IL 60603
Attention: Benton Hammond, Esq. Telephone: 312-419-0077
Telephone: 202-637-5600 Facsimile: 312-419-0172
Facsimile: 202-637-5910
Edward G. Cawthon Thomas Power
- ----------------- ------------
c/o Hogan & Hartson Wisconsin Central Transportation
Columbia Square One O'Hare Centre
555 13th Street, NW Rosemont, IL 60018
Washington D.C. 20004-1109 Telephone: 847-318-4602
Attention: Benton Hammond, Esq. Facsimile: 847-318-4628
Telephone: 202-637-5600
Facsimile: 202-637-5910
John S. Tirpak Manuel Luis Del Valle
- -------------- ---------------------
c/o Hogan & Hartson Calle Cerezo #6
Columbia Square Urbanization San Patricio
555 13th Street, NW Guaynabo, PR 00968
Washington D.C. 20004-1109 Telephone: 787-793-2912
Attention: Benton Hammond, Esq. Facsimile: 787-740-2487
Telephone: 202-637-5600
Facsimile: 202-637-5910
AGREEMENT
This agreement (the "Agreement") is made as of the 6th day of August 1997
by and between Transroll Navegacao S.A., a Brazilian corporation ("TRN") and NPR
Holding Corporation, a Delaware corporation ("NPR", TRN and NPR sometimes
individually entitled a "Party," or collectively, the "Parties").
W I T N E S S E T H :
WHEREAS, the Parties are desirous of forming a joint venture (the "Joint
Venture") to provide common carrier services in the Trade as hereinafter defined
and of forming a joint venture company (the "Company") to manage and operate the
Joint Venture and to provide containerships to transport cargoes in the Trade,
and
WHEREAS, TRN is a corporation equipped with infrastructure and port
facilities suitable for supporting common carrier services in the Trade and has
owned, chartered or operated vessels in common carrier services to and from
ports and points in South America, and
WHEREAS, NPR is a corporation equipped with infrastructure and port
facilities suitable for supporting common carrier services in the Trade and has
owned, chartered or operated vessels in common carrier services to and from
ports and points in North America, Puerto Rico and the Caribbean Islands.
NOW, THEREFORE, the Parties agree as follows:
ARTICLE I
OBJECTIVE OF THE AGREEMENT
1.1 The objective of the Parties is to provide, through the Company, a
regular, complete and efficient common carrier service to the Trade.
<PAGE>
1.2 A further objective of the Parties shall be steady growth in the volume
of cargoes carried in the Trade such that vessels of increasing capacity shall
be required. This growth is intended to lead, within three (3) to four (4) years
from commencement of service in the Trade, to utilization of vessels of three
thousand (3,000) to four thousand (4,000) TEU capacity. As is more further
detailed in Article 5.3 hereof, to the extent that the Company has not acquired
its own vessels, each Party shall have the right to provide up to one-half of
the vessel capacity as is deemed suitable by the Board of Directors, which the
Company shall require in order to service the Trade, and, in the event that one
Party chooses not to exercise this right, the other Party shall have the right
to provide all of the Company's vessel capacity requirement; provided, however,
that such vessels shall be container vessels capable of servicing the needs of
the Trade.
1.3 The Company shall use in the Trade the port facilities in South America
owned, operated or managed by TRN and shall use in the Trade the port facilities
in North America and the Caribbean Islands owned, operated or managed by NPR, at
rates and levels of service as set forth in Article 3.2(c) hereof.
ARTICLE 2
THE TRADE
2.1 This Agreement shall cover the carriage of cargo between any port or
point in North America, Central America and the Caribbean Islands (the "Northern
Points"), on the one hand, and any port or point within Brazil, Argentina,
Uruguay and Paraguay (the "Southern Points") on the other hand (the "Core
Trade"), as well as such other ports or points agreed to by the Parties from
time to time (the "Non-Core Trade," and collectively with the Core Trade, the
"Trade"). The Trade shall not include Brazilian or United States coastwise trade
or Mercosur common carrier services in South America.
-2-
<PAGE>
ARTICLE 3
COMMITMENT OF THE PARTIES
3.1 Neither Party or its affiliates, directly or indirectly, shall operate
or enter into any other agreement, venture, space or slot charter arrangement,
rationalization or other cooperative arrangement relating to carriage of cargo
in the Trade without the prior written agreement of the Parties.
3.2 The Parties shall cause agreements as set forth below to be finalized
and executed within thirty (30) calendar days of the date hereof; provided,
however, that no disagreement over the terms thereof shall constitute grounds to
void or otherwise render unenforceable this Agreement.
(a) General Agency Agreement. TRN shall provide to the Company in the
Southern Points, and NPR shall provide to the Company in the Northern
Points, general agency services, including, without limitation, marketing,
freight bookings, cargo documentation, third party connecting carrier
services and account handling. Fees for such agency services shall be paid
upon an agreed percentage. Such percentage shall apply both to the services
rendered by TRN and by NPR. The Parties agree that before the appointment
of any new sub-agents to service the Trade in Central America or the
Caribbean Islands, the identity of such sub-agents and the terms of their
agency contract shall be submitted to the Board of Directors of the Company
for prior approval.
(b) Connecting Carrier Services, TRN and NPR shall render ocean
connecting carrier services to the Company at rates to be calculated and
established annually on or prior to December 1 of the year immediately
preceding the year for which such rates will be effective and which shall
be based upon the lower of (i) the lowest net rates that they charge their
most
-3-
<PAGE>
favored clients and (ii) market rates (e.g. in the event a vessel which is
operating in a protected trade is providing connecting carriage to a
non-restricted cargo, market rates shall apply).
(c) Terminal Serviccs. Any terminal or other cargo facility located in
a port serviced by the Trade which is owned or operated, either wholly or
partly, by a Party or one of its affiliates, shall be utilized by the
Company. Such owning or operating Party shall provide the highest level of
service at the lowest net rates that it charges its most favored clients;
provided, however, that such services and costs are not materially worse
than those available from the principal competitors at the relevant port.
To the extent a Party's terminal does not provide services to third
parties, the rate charged to the Company shall be an amount equal to such
Party's direct costs plus a portion of that terminal's administrative
expenses to be agreed, excluding corporate overhead.
(d) Container Interchange Agreement. TRN, NPR and the Company shall
enter into a Container Interchange Agreement to optimize utilization of the
serviceable equipment, subject to the best interest of the Parties and the
Company. The Parties shall calculate and establish semi-annually in advance
the equipment interchange rates. Such rates shall, for the first year, be
established in August and December 1997; thereafter semi-annually in June
and December. The rates shall be based upon the lower of (i) the aggregate
average cost of each Party's respective equipment category or (ii) the
market rate for such equipment. Equipment positioning costs shall be based
upon the actual pro-rata costs of each Party as calculated and
established semi-annually in advance. The direct, actual cost of equipment
maintenance shall be passed through to the Company, whether the maintenance
is performed by a Party or a third party. In addition, the Party performing
the maintenance shall be entitled
-4-
<PAGE>
to receive from the Company compensation at a rate to be agreed. Both
Parties shall be so compensated at the same rate. As an alternative, but
only if agreed by both Parties, a maintenance allocation for each piece of
equipment may be established and charged to the Company by the Party
responsible for maintenance.
(e) Intermodal Agreement. TRN shall provide to the Company in South
America, and NPR shall provide to the Company in North America, Central
America and the Caribbean Islands intermodal and other operating services
relating to inland transportation and delivery of cargo. Such services,
when obtained from a third party, shall be passed through at the best net
rate achievable. When the services are provided by a Party, they shall be
provided at the lowest net rate that such Party charges its most favored
clients.
3.3 With respect to the services identified in Article 3.2, (with the
exception of the equipment positioning and maintenance costs referenced in
Article 3.2(d)), as well as any other services which either Party may arrange or
provide in connection with activities in the Trade, the following principles
shall govern:
- Services, when obtained from a third party, shall be passed through
to the Company at the best net rate achievable by the providing Party,
based upon both Parties' total aggregate purchasing capability from the
provider.
- Services, when provided directly by a Party or its shareholders,
shall be passed to the Company at the lowest cost or net rate that it
charges its most favored clients.
- Any rebates, commissions, bonuses or similar benefits obtained by a
Party in connection with services or equipment provided to the Company
shall be passed by such Party to the Company.
-5-
<PAGE>
3.4 The Parties agree that it is in their mutual interest, as well as in
the interest of the Company, to work with the current information systems of
each Party in order to facilitate and enhance performance under this Agreement.
To that end, both Parties shall make available to each other and to the Company
their own respective non-proprietary information systems software at no charge,
and shall provide access to and utilization of their respective systems at
marginal cost. With respect to proprietary systems software, neither Party shall
object to the other Party's purchase at its own cost of such software from the
provider. The Parties shall each designate one individual who shall be available
to work with the other Party's designee so that each Party may become familiar
with and fully understand the other's systems and so that a common system may be
achieved at the earliest possible date. Any knowledge of a Party's non-Joint
Venture related business gained from access to such systems shall be treated by
the other Party as Confidential Information within the meaning of Article 13
hereof.
3.5 Upon the request of an officer(s) of a Party, representatives of such
Party including its duly appointed accountants, shall have such access to the
books and records of the other Party as is necessary to verify compliance with
this Agreement, including, without limitation, that amounts charged hereunder
comply with the provisions of this Agreement. Such access shall be upon
reasonable notice and conducted in a manner that shall cause as little
disruption as possible to the activities and affairs of the other Party.
ARTICLE 4
THE COMPANY
4.1 The name of the Company shall be Transroll Navieras Express, Inc.
(doing business as "TNX").
-6-
<PAGE>
4.2 The Company will be a Liberian corporation having its registered
address at 80 Broad Street, Monrovia, Liberia.
4.3 The Company will be authorized to issue one hundred (100) registered no
par shares.
4.4 The initial capital of the Company will be one million U.S. Dollars
(U.S.$1,000,000), which shall be subscribed 50.01% by TRN and 49.99% by NPR.
Promptly upon funding, which shall occur within ten (10) business days of the
issuance by the Republic of Liberia of the Company's Certificate of
Incorporation, fully paid shares shall be issued to the subscribers. A quorum
for any vote taken at a shareholder's meeting shall be seventy-five percent
(75%). When a quorum is present or represented at a shareholder meeting, the
vote of the holders of at least seventy-five percent (75%) of the issued and
outstanding capital stock of the Company shall decide any question brought
before such meeting.
4.5 The initial working capital of the Company shall be five million U.S.
Dollars (U.S.S5,000,000), one million ($1,000,000) of which shall be contributed
as stated in Article 4.4, and the balance of which shall be the subject of loans
in equal amounts from TRN and NPR on terms as appear in the form of Promissory
Note to be mutually agreed.
4.6 The By-Laws of the Company shall provide that at the first meeting of
the shareholders (which shall occur during August, 1997) and at each annual
meeting thereafter, the shareholders shall elect a Board of Directors consisting
of four (4) members. Two (2) of the Directors shall be nominated by TRN and two
(2) by NPR. Each Party agrees to vote its shares in favor of the nominees of the
other Party. The By-Laws will provide that a majority of the Directors must be
present in person, by proxy, or by conference telephone or video conferencing
for a quorum to exist and every decision or action of the Board shall require
the affirmative vote of a majority of all of the Directors. The By-Laws shall
provide for the election of a President, a Vice President, a Treasurer and a
Secretary at the initial meeting of the shareholders, the President to be the
nominee of one Party and the Vice President the
-7-
<PAGE>
nominee of the other Party. At each annual meeting of the shareholders
thereafter, the Party which did not nominate the then-presiding President shall
have the right, but not the obligation, to nominate a new President, and the
Board of Directors shall vote to have such nominee assume the role of President
upon conclusion of the meeting. Upon such event, the other Party shall have the
right to nominate the Vice President.
4.7 The Directors of the Company shall serve without compensation, but
shall be reimbursed for their reasonable transportation, subsistence and out of
pocket expenses directly related to attendance at Board meetings. Officers and
employees of the Company shall be compensated as determined from time to time by
the Board of Directors.
4.8 In the event that the Board of Directors fail to resolve an issue
designated by a Party in writing as critical, such Party shall thereafter have
the right to provide a written notice of termination. The Company will continue
to operate the Joint Venture and Trade in due course for at least three (3)
years from the date of receipt by the other Party of such termination notice in
order to enable the Parties to develop other services individually or with
others.
ARTICLE 5
VESSELS
5.1 Initially, the Company will time charter from independent third parties
five (5) vessels to be used exclusively to maintain the common carrier services
in the Trade. Such vessels will be operationally suitable for service in the
Trade. The time charters will each be for periods not in excess of one (1) year,
unless the Parties otherwise agree. It is recognized by the Parties that, as a
start-up operation, the Company may require guaranties or other forms of
financial security established in favor of the vessel providers in order to
successfully obtain the above-referenced charters. It is agreed that in the
event such security is requested, each Party shall provide corporate guaranties
or other security in equal amounts up to one million five
-8-
<PAGE>
hundred thousand dollars (U.S.$1,500,000). The Company shall remunerate each
Party by paying an annual fee equal to one and one-half percent (1.5%) of its
portion of the total amount of security outstanding.
5.2 As cargo volume in the Trade expands and the Company otherwise decides
to replace and/or vary the size and number of vessels in the service, such
replacement and/or additional tonnage shall be acquired pursuant to Board
approval, and according to the following alternatives:
(a) By the Company's acquisition of its own vessels.
(b) By chartering-in, at market rates, vessels owned or
controlled by a Party, provided such vessels are container vessels capable
of servicing the needs of the Trade.
(c) By chartering-in tonnage from third-party vessel providers only in
the event that neither Party is prepared to provide container vessels in
accordance with sub-paragraph (b) above.
5.3 (a) The Parties agree that, as a primary objective, the Company
shall seek to acquire its own vessels for service in the Trade. To that
end, the Company promptly shall conduct a review and study of its likely
tonnage requirements in future years and the possible benefits of
establishing a newbuilding program.
(b) At any time after commencement of service in the Trade, a Party may
submit a proposal for a newbuilding program to the Board of Directors of
the Company. Within thirty (30) days of receipt of such proposal, the Board
of Directors shall determine whether the Company (i) is interested in
pursuing the proposed newbuilding program and (ii) whether the Company is
capable of meeting the financial requirements of such program, and shall
provide written notice of its determination to the Parties. If the Board of
Directors does not affirmatively vote in favor of the newbuilding program,
the program shall not be pursued by the Company; however, it
-9-
<PAGE>
is agreed that such vote shall not constitute a critical issue within the
meaning of Article 4.8 hereof. Rather, the Party proposing the newbuilding
program shall have rights as hereafter set forward in this Article.
(c) In the event that the Company is not interested in pursuing the
program, the Party which had submitted the proposal is thereafter entitled
to pursue such program on its own, and shall have the option to proceed as
follows:
(i) Such Party may provide written notice to the Board of
Directors of the Company of its intention to construct newbuilding(s)
which notice shall include the specific characteristics of the
vessel(s) to be built, the identity of the shipyard and the estimated
date of delivery of the new vessel(s).
(ii) Within thirty (30) days of receipt of such notice, the
Company shall advise the providing-Party whether it shall utilize any
or all of the capacity of the new vessel(s) Any commitment to acquire
capacity shall be for a minimum period of five (5) years from the date
of delivery of the new vessel(s), and shall be set forth on a year by
year basis (e.g. 1,500 TEU slots for year one, 2,000 TEU slots for year
two, the entire vessel for year three, etc.).
(iii) Acquisition of capacity on the new vessel(s) may be by
demise, time or space charter, or any other means mutually agreed;
provided, however, that the rates charged shall always be at prevailing
market rates as determined annually in advance. Determination of market
rates in the case of time and space charters shall be based upon the
full systems costs (i.e. charter hire, bunkers and port costs divided
by total vessel TEU capacity) for vessels with a capacity equivalent to
that which the Company requires and has agreed to acquire from the
providing-Party (e.g. in the event the Company requires two thousand
(2,000) TEU slots, and, in order to fulfill that requirement, a
providing-Party makes available two thousand (2,000) slots on a three
thousand
-10-
<PAGE>
(3,000) TEU vessel, the rate that the Company shall pay for the slots
shall be based upon the fall systems costs of a two thousand (2,000)
TEU vessel).
(iv) Acquisition by the Company of capacity from a
providing-Party shall be consistent with Article 1.2 hereof.
Specifically, a providing-Party has the right to provide one-half of
the tonnage required by the Company, and the right to provide all of
the tonnage in the event the other Party chooses not to exercise its
right. Failure to exercise this right does not preclude a Party from
future exercise of the right, however, it can only do so consistent
with the Company's commitments to the first providing-Party and any
third-party vessel providers.
(v) Any capacity on the new vessel(s) which the Company declines
to acquire is available to be marketed by the providing-Party to other
carriers in the Trade or otherwise ("Excess Capacity"); provided,
however, that such Party shall not violate its obligations under
Article 17 hereof. The Parties agree that the providing-Party shall
provide notice to the Company of its intention to make Excess Capacity
available to a third-party. The notice shall set forth the net rate and
term to which such third-party has agreed. The Company shall have an
option to acquire such Excess Capacity at the same rate and for the
same term as agreed by the third-party; provided, however, such option
must be exercised in writing within seven (7) days of receipt by the
Company of the aforesaid notice.
ARTICLE 6
FISCAL MATTERS
6.1 The President of the Company shall be responsible for the submission to
the Parties of annual capital and operating budgets and an annual operating and
capital plan at
-11-
<PAGE>
least thirty (30) days before the commencement of the Company's fiscal year as
determined by the Board of Directors.
6.2 The profits of the Company, determined by United States Generally
Accepted Accounting Principles, shall be distributed to the Parties quarterly,
but the Board of Directors may withhold from such distributions a reasonable
amount as determined by the Board for reinvestment in the Joint Venture and to
provide against contingencies. The Company shall be audited annually by such
internationally recognized accounting firm as the Parties may agree. In addition
to its other auditing functions, the auditor shall certify whether there has
been material compliance with the terms of this Agreement.
ARTICLE 7
START-UP EXPENSES
7.1 Each Party shall bear its own legal, accounting and other fees and
expenses related to initiating the Joint Venture. Whether or not the Agreement
shall be consummated, the Parties will share on a 50/50 basis the charges of the
Republic of Liberia in relation to the formation of the Company.
ARTICLE 8
RESTRICTIONS ON TRANSFER OF SHARES
8.1 Except as to affiliates and except in accordance with Article 15.6,
neither TRN nor NPR shall, directly or indirectly, sell, assign, transfer,
charge or otherwise encumber any part or all of their shares or voting interest
in the Company, without offering to the other Party and any of its affiliates
(i) a right of first refusal to acquire such shares at the price actually
offered by a bona fide offeror; and (ii) the right to put all of its share in
the Company to the bona fide offeror at that same price. Any attempted transfer
without such offers having been
-12-
<PAGE>
made shall be void. Shares issued by the Company shall bear a legend that any
transfer thereof is subject to this provision.
ARTICLE 9
COVENANTS
9.1 Subject to the provisions of this Agreement, TRN and NPR hereby
covenant with each other as follows.
9.2 Each Party shall use its best efforts to further the purposes of the
Joint Venture and of the Trade.
9.3 Each Party shall take all actions that are necessary to cause the
formation of the Company as provided herein and such other actions as required
of such Party by the provisions of this Agreement.
9.4 The Parties shall cooperate with each other in preparing, filing and
taking any other actions necessary with respect to any application, request or
actions which are or may be necessary to obtain the consent of any government
or third party to the transactions contemplated by this Agreement or which are
or may be necessary or helpful in order to accomplish said transactions,
including required filings with the Federal Maritime Commission.
9.5 In recognition of the continuing problem of the unwitting carriage of
illicit narcotics ("Contraband") aboard commercial ocean-going vessels, the
Parties agree to exercise the highest degree of care and diligence to prevent or
detect the smuggling of Contraband on board the vessels, in cargo or equipment
carried on board the vessels.
-13-
<PAGE>
ARTICLE 10
REPRESENTATIONS OF TRN
10.1 TRN is a corporation duly organized, validly existing, and in good
standing under the laws of Brazil, with the requisite power to enter into and
perform its obligations under this Agreement in accordance with its terms.
10.2 TRN has the full right, power, and authority to execute and deliver
this Agreement and to perform its terms. TRN has taken all required corporate
actions to approve and adopt this Agreement. This Agreement is a duly
authorized, valid and binding agreement of TRN enforceable against it in
accordance with its terms, subject as to enforcement to bankruptcy, insolvency
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
10.3 Neither the execution, delivery or performance by TRN of this
Agreement, nor compliance by TRN with the terms and provisions thereof will (i)
contravene any provision of any law, statute, rule or regulation or any order,
writ, injunction or decree of any court or governmental instrumentality
applicable to it, (ii) conflict with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any lien upon any of the property or assets of TRN pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which TRN is a party or by which it
or any of its property or assets is bound or to which it may be subject or
(iii) violate any provision of the Articles of Incorporation or By-Laws or
partnership agreements (or analogous organizational documents) or any amendments
thereto of TRN.
10.4 No authorizations, consents or approvals of or filings with any
governmental agencies or authorities are required in connection with the
execution, delivery and performance of this Agreement by TRN.
-14-
<PAGE>
ARTICLE 11
REPRESENTATIONS OF NPR
11.1 NPR is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, with the requisite power to
enter into and perform its obligations under this Agreement in accordance with
its terms.
11.2 NPR has the full right, power and authority to execute and deliver
this Agreement and to perform its terms. NPR has taken all required corporate
actions to approve and adopt this Agreement. This Agreement is a duly
authorized, valid and binding agreement of NPR enforceable against it in
accordance with its terms, subject as to enforcement to bankruptcy, insolvency,
and other laws of general applicability relating to or affecting creditors'
rights and to general equity principles.
11.3 Neither the execution, delivery or performance by NPR of this
Agreement, nor compliance by NPR with the terms and provisions thereof will (i)
contravene any provision of any law, statute, rule or regulation or any order,
writ, injunction or decree of any court or governmental instrumentality
applicable to it, (ii) conflict with or result in any breach of any of the
terms, covenants, conditions or provisions of, or constitute a default under, or
result in the creation or imposition of (or the obligation to create or impose)
any lien upon any of the property or assets of NPR pursuant to the terms of any
indenture, mortgage, deed of trust, credit agreement, loan agreement or any
other agreement, contract or instrument to which NPR is a party or by which it
or any of its property or assets is bound or to which it may be subject or (iii)
violate any provision of the Articles of Incorporation or By-Laws or partnership
agreements (or analogous organizational documents) or any amendments thereto of
NPR. The Parties recognize that NPR requires certain waivers from one or more
lenders in connection with execution of this Agreement. Obtaining such waivers
is not a condition to the validity or
-15-
<PAGE>
enforceability of this Agreement. NPR warrants that it shall obtain such waivers
by April 1, 1998.
11.4 No authorizations, consents or approvals of or filings with any
governmental agencies or authorities are required in connection with the
execution, delivery and performance of this Agreement by NPR.
ARTICLE 12
CONDITIONS
12.1 The obligations of the Parties hereunder are subject to the
fulfillment or waiver of the following conditions.
12.2 Each of the representations set forth herein shall have been true and
correct in all material respects as of the date when made, and shall be deemed
to be made again on and as of the date any obligations are required to be
performed and shall be true and correct in all material respects on such date;
and the Parties each shall have performed and complied in all material respects
with all covenants and agreements required by this Agreement to be performed or
complied with by it.
12.3 Neither of the Parties (a) shall be subject to any restraining order
or injunction restraining or prohibiting any of the transactions contemplated
hereby or (b) shall have received written notice from any governmental authority
of its intention to institute any action or proceeding to restrain or enjoin or
nullify this Agreement or the transactions contemplated hereby.
12.4 All approvals, orders and consents under any federal, state, local or
foreign statute, ordinance, law or regulation necessary to consummate the
transactions contemplated hereby shall have been obtained and be in full force
and effect.
-16-
<PAGE>
ARTICLE 13
ADDITIONAL COVENANTS
13.1 The Parties shall use any and all information relating to the Joint
Venture or the Trade otherwise not available to the general public
("Confidential Information") only for purposes of the Joint Venture formed
hereby and (i) shall, and shall cause its and their respective officers,
directors, employees, attorneys, accountants and Agents (collectively, "Agents")
to keep secret and retain in strictest confidence any and all Confidential
Information, and shall not disclose such Confidential Information; and (ii)
shall cause its Agents not to disclose such Confidential Information to any
other person, firm or entity, except for such disclosures as may be required by
law or legal process. Any press release (excluding routine discussions with the
press) concerning the formation or operation of the Joint Venture must be
approved by each of the Parties prior to release.
ARTICLE 14
TERMINATION
14.1 This Agreement may be terminated under the following circumstances:
(a) by the mutual written agreement of the Parties; or
(b) in accordance with the provisions of Article 4.8 hereof, or
(c) by a Party not in default upon the failure by the other Party
hereto to perform any material obligation required to be performed by such Party
pursuant to the terms of this Agreement, which failure shall continue for a
period of 30 days following written notice of such failure from the Party
seeking to terminate this Agreement, or
(d) by TRN or NPR if any court of competent jurisdiction or other
governmental body shall have issued an order, decree or ruling or taken any
other action permanently restraining, enjoining or otherwise prohibiting the
Company from acting as
-17-
<PAGE>
contemplated herein and such order, decree, ruling or other action shall have
become final and non-appealable; or
(e) by TRN in the event of (i) the filing by NPR of a voluntary
petition or answer seeking reorganization, arrangement, liquidation, appointment
of a receiver or custodian, or any other relief under the relevant bankruptcy
laws or under any other act or law pertaining to insolvency or debtor relief; or
(ii) the filing of an involuntary petition against NPR or NPR seeking
reorganization, arrangement, liquidation, appointment of a receiver or
custodian, or any other relief under relevant bankruptcy laws or any other act
or law pertaining to insolvency or debtor relief, and either the continuance of
any of the foregoing for 60 days undismissed, unbonded or undischarged, or
within such 60-day period, the entry of an order for relief under relevant
bankruptcy laws or any other act or law pertaining to insolvency or debtor
relief, or
(f) by NPR in the event of: (i) the filing by TRN of a voluntary
petition or answer seeking reorganization, arrangement, liquidation, appointment
of a receiver or custodian, or any other relief under the relevant bankruptcy
laws, or under any other act or law pertaining to insolvency or debtor relief,
or (ii) the filing of an involuntary petition against TRN seeking
reorganization, arrangement, liquidation, appointment of a receiver or
custodian, or any other relief under the relevant bankruptcy laws or any other
act or law pertaining to insolvency or debtor relief, and either the continuance
of any of the foregoing for 60 days undismissed, unbonded or undischarged, or
within such 60-day period, the entry of an order relief under the relevant
bankruptcy laws or any other act or law pertaining to insolvency or debtor
relief.
14.2 Upon the termination of this Agreement, the Company shall be
liquidated and all assets of the Company and of the Joint Venture, determined by
independent audit, shall be distributed proportionally to TRN and NPR.
-18-
<PAGE>
ARTICLE 15
GENERAL PROVISIONS
15.1 This Agreement is set forth in the English language, which text
shall be official. This Agreement shall be signed and delivered by the Parties
in one or more copies of the official text. Each such copy signed and delivered
by the Parties shall be in an official original having equal force and effect
with each other such copy duly signed and delivered by the Parties.
15.2 Any dispute arising out of or in connection with this Agreement
shall be settled by arbitration in accordance with the rules of the New York
Society of Maritime Arbitrators, Inc. Such arbitration shall be entrusted to a
panel of three (3) arbitrators, one of whom shall be appointed by TRN, another
by NPR, and the third shall be appointed by the arbitrators nominated by the
Parties. The arbitrators shall state the reasons for their award. They shall
determine the costs of the proceedings and their allocation between the Parties.
The arbitrators shall make an award of attorneys' fees.
15.3 This Agreement will be governed by and construed in accordance
with the laws of the State of New York (without giving effect to conflict of law
principles thereof). The Parties agree to submit to the jurisdiction and venue
of the United States District Court for the Southern District of New York for
matters relating to compelling arbitration and confirming or vacating
arbitration awards issued pursuant to Article 15.2 hereof.
15.4 Neither Party shall be liable for special, consequential or
punitive damages, including, but not limited to, loss of profit or business
opportunity, provided such damages were not caused by intentional or willful
breach and/or misconduct of a Party.
15.5 This Agreement may only be amended in whole or in part by an
agreement in writing duly signed and delivered by both TRN and NPR. This
Agreement constitutes the entire Agreement between the Parties and shall
supersede all prior agreements and expressions of intention between the Parties.
On and after the effective date of this Agreement, neither Party
-19-
<PAGE>
shall be bound by any preliminary correspondence or expression of intention or
by anything not in a writing signed by the Party to be bound thereby.
15.6 Except as provided in Article 21, this Agreement may not be
assigned by either Party, whether voluntarily, involuntarily or by operation or
law without the prior written consent of the other Party given as an amendment
of this Agreement. A sale of all or a majority of the shares of NPR shall not
constitute a violation of this provision, provided that, in connection with such
sale, the provisions of Article 15.9 shall govern.
15.7 The Parties intend that the Company's business will be conducted
so as not to subject the profits of the Joint Venture to taxation in the United
States. Each Party shall be solely responsible for, and shall indemnify the
Company from and against, any taxes (and any related interest, penalties and
additions to tax) imposed upon a Party in connection with any dividends or other
distributions paid to it by the Company.
15.8 All notices, requests, demands and other communications to be
given or delivered under or by reason of the provisions of this Agreement shall
be in writing (which shall include notice by telecopy or like transmission) and
shall be deemed given (i) on the day it is delivered when delivered personally
against receipt (or if that day is a Saturday or a Sunday or is not a day on
which commercial banks are open for business in the city specified in the
address for notice provided by the recipient (a "Local Business Day"), or if
delivered after the close of business on a Local Business Day, on the first
following day that is a Local Business Day), (ii) on the day it is received when
sent by internationally recognized air courier, or (iii) on the day when
transmittal confirmation is received if sent by telecopy (or if that day is not
a Local Business Day, or if after the close of business on a Local Business
Day, on the first following day that is a Local Business Day), to the recipient
Party at the address indicated for such Party below (or to such other address as
the recipient Party may have specified by notice given to the other Party hereto
pursuant to this provision):
-20-
<PAGE>
<TABLE>
<S> <C> <C>
If to the Company: Care of:
Av. Almirante Barrosso
139 Grupos 201/201 Castelo
Rio de Janeiro, RJ Brazil
55.21.532.1196
55.21.262.9618 (fax)
Attn: Executive Vice President
If to TRN: Av, Almirante Barrosso and Curtis, Mallet-Prevost, Colt & Mosle
139 Grupos 201/201 Castelo 101 Park Avenue
Rio de Janeiro, RJ Brazil New York, NY 10178
55.21.532.1196 212.696.6161
55.21.262.9618 (fax) 212.697.1559 (fax)
Attn: Executive Vice President
If to NPR: P.O. Box 3170 and White & Case
212 Fernwood Avenue 1155 Avenue of the Americas
Edison, NJ 08818 New York, NY 10036
908.225.2121 212.819.8200
Attn: President 212.354.8113 (fax)
</TABLE>
15.9 It is agreed that if, in connection with any sale of all or a
majority of the shares of NPR on or prior to the 12 month anniversary of the
date hereof, Ronald Katims and Edward O'Donnell do not enter into employment
arrangements with the buyer of such shares pursuant to which each of such
persons' employment arrangements are at least as favorable to such persons as
such persons' current arrangements with NPR with respect to term, incentive
compensation and level of management responsibilities then TRN may object to
such new employment arrangements within ten (10) days of the closing of the
acquisition of such shares. NPR shall be obligated to notify TRN in writing
prior to the closing of the current terms of Mr. Katims' and Mr. O'Donnell's
employment as well as the arrangements between the buyer and Mr. Katims and Mr.
O'Donnell. In the event that TRN objects to such new arrangements, the Company
shall continue to operate the Joint Venture and Trade for at least thirty (30)
days following the buyer's acquisition of such shares. In the event that after
such 30-day period, TRN determines, in its discretion, that Mr. Katims or Mr.
O'Donnell do not have employment arrangements with the buyer at least as
favorable with respect to term incentive compensation
-21-
<PAGE>
and level of management responsibilities as their prior arrangements with NPR,
then TRN shall have six (6) months to find a new joint venture partner with whom
to operate the Joint Venture and Trade or to decide whether to operate in the
Trade on its own. In either case, TRN shall have the right to purchase all of
NPR's interest in the Joint Venture at a purchase price equal to NPR's aggregate
investment plus interest on such investment at a rate of fifteen percent (15%)
compounded annually. All other amounts owed to NPR by the Company shall be
repaid at the time of such purchase. For purposes of this article, "aggregate
investment" shall mean the original price paid by NPR for its shares in the
Company, plus any outstanding loans made by NPR to the Company.
ARTICLE 16
SUBSIDIARIES AND AFFILIATES
16.1 Whenever in this Agreement, TRN or NPR is used, the terms shall
include the affiliates and subsidiaries of both. For the purposes of this
Agreement, neither BT Capital Partners, Inc. nor any of its affiliates
(excluding NPR and any entity in which NPR has a direct or indirect ownership
interest or any entity which is under its direct or indirect common control)
shall be considered an affiliate of NPR.
16.2 For the purposes of this Agreement, the, term "Affiliate" shall
mean an entity that is directly or indirectly controlling or controlled by or
under direct or indirect common control of such Party.
-22-
<PAGE>
ARTICLE 17
NON-COMPETITION
17.1 Each of the Parties shall covenant and agree that during the term
of the Agreement, other than as contemplated in the Agreement or with the prior
consent of the other Party, they shall not directly or indirectly:
(a) at any time wholly own, have a material ownership interest in,
manage, operate, join or control, or participate in, alone or with any other
person, the ownership, management, operation or control of any business, firm,
corporation or other entity which engages in any common carrier liner service
which directly competes with the Trade. For purposes of this provision,
"material ownership" shall mean ownership, directly or indirectly, of more than
one (1) percent of the total equity of a publicly traded company (including
voting and non-voting participation) and any interest in a privately held
company;
(b) disclose any nonpublic information with respect to the Company,
except as required by law or legal process;
(c) solicit any customer (actual or potential) of the Company to
conduct its business with a competing business or otherwise interfere with such
customer relationship; and
(d) solicit any employee of the Company to work directly or indirectly
in direct competition with the Trade.
ARTICLE 18
FORCE MAJEURE
18.1 Neither Party shall be deemed responsible with respect to its
failure to perform any term (except the payment of amounts due) or condition of
this Agreement if such failure, wholly or partly, is due to an event of Force
Majeure, such as, but not limited to, war (whether declared or not), civil
commotion, invasion, rebellion, sabotage, hostilities, strikes, labor disputes,
other work stoppages, governmental (national, state, prefectural, municipal or
other),
-23-
<PAGE>
regulations or controls taken or issued in sovereign capacity, or actions of
God. Any Party claiming an event of Force Majeure shall exercise all reasonable
endeavors to remedy the consequences of such event. Upon termination of such
Force Majeure event causing a Party's failure to perform its obligations under
this Agreement, such Party shall as soon as possible resume its performance of
its obligations according to the terms and conditions of this Agreement. When an
event of Force Majeure is of such a nature that (i) the objectives of this
Agreement are substantially impaired, and (ii) the affected Party's performance
is substantially impaired for more than 180 consecutive days, the Party whose
performance has not been impaired shall have the right to issue a Notice of
Termination.
ARTICLE 19
NO WAIVER
19.1 Except as specifically provided in this Agreement, no failure or
delay on the part of either Party in exercising any right, power or remedy
hereunder and no course of dealing between the Parties shall operate as a waiver
by either party of any such right, power or remedy; nor shall any single or
partial exercise of any such right, power or remedy preclude any other or
further exercise thereof or the exercise of any other right, power or remedy.
Except to the extent otherwise expressly provided in this Agreement, all
rights, powers and remedies provided hereunder are cumulative and not exclusive
of any rights, powers or remedies provided by law or otherwise. Except as
required by this Agreement, no notice or demand upon either Party in any case
shall entitle such Party to any other or future notice or demand in similar or
other circumstances or constitute a waiver of the right of either Party to take
any other or further action in any such circumstances without notice or demand.
-24-
<PAGE>
ARTICLE 20
SEVERABILITY OF PROVISIONS
20.1 The invalidity, illegality or unenforceability of any one or more
of the provisions of this Agreement shall in no way affect or impair the
validity and enforceability of the remaining provisions thereof.
ARTICLE 21
ASSIGNMENT AND GUARANTEES
21.1 The Parties agree that each may assign, at any time after the
date hereof, its rights and obligations under this Agreement to a designated
company which shall be a wholly-owned subsidiary of the respective Party. In
addition, the Parties agree that NPR may obligate TRN to assign its rights and
obligations under this Agreement to a designated company, the direct and
indirect shareholders of which are all (a) non-U.S. citizens and (b)
shareholders of TRN, or subsidiaries or affiliates of TRN shareholders.
21.2 In consideration of this Agreement, NPR Holding Corporation
hereby unconditionally and irrevocably guarantees, as primary obligor, in the
event of default by its designated company ("NPR's Designee") hereunder, to
discharge, on demand, all obligations and liabilities of NPR's Designee pursuant
to this Agreement and to indemnify the Company and TRN against all losses,
damages, costs and expenses that may be incurred by the Company by reason of any
default on the part of NPR's Designee in performing and observing the agreements
and provisions on NPR's part contained herein.
21.3 In consideration of this Agreement, TRN hereby unconditionally
and irrevocably guarantees, as primary obligor, in the event of default by its
designee ("TRN's Designee") hereunder, to discharge, on demand, all obligations
and liabilities of TRN's Designee pursuant to this Agreement and to indemnify
the Company and NPR against all losses, damages, costs
-25-
<PAGE>
and expenses that may be incurred by the Company by reason of any default on the
part of TRN's Designee in performing and observing the agreements and
provisions on TRN's part contained herein.
IN WITNESS WHEREOF, this Agreement has been signed on behalf of
Transroll Navegacao S.A. and on behalf of NPR Holding Corporation by their duly
authorized representatives as of the date first above written.
TRANSROLL NAVEGACAO S.A.
By: /s/ Richard Klien
-------------------------------------
Title: Vice President
NPR HOLDING CORPORATION
By: /s/ Edward W. O'Donnell
-------------------------------------
Title: Exec VP
-26-
FIRST AMENDMENT TO
JOINT VENTURE AGREEMENT
This First Amendment to Joint Venture Agreement (the "Amendment") is made
as of the 20th day of November, 1997 by and between Transroll Navegacao S.A., a
Brazilian corporation ("TRNSA"), Transroll Maritime Services, Ltd., a Liberian
corporation ("TRN" and all references to TRN in the Agreement referred to below,
shall be references to Transroll Maritime Services, Ltd.), NPR Holding
Corporation, a Delaware corporation ("NPR", TRN and NPR sometimes individually
entitled a "Party," or collectively, the "Parties") and each of the Persons
listed on Schedule 1 attached hereto (together with NPR, the "NPR Group"). All
capitalized terms used herein and not otherwise defined shall have the meanings
specified in the Agreement referred to below.
W I T N E S S E T H :
WHEREAS, NPR and TRNSA are parties to a joint venture agreement made as of
the 6th day of August, 1997 (the "Agreement");
WHEREAS, TRNSA has assigned its interest in the Company to TRN; and
WHEREAS, the parties hereto wish to amend the Agreement as herein provided;
NOW, THEREFORE, it is agreed:
1. Section 8.1 of the Agreement is hereby deleted in its entirety and the
following new Section 8.1 shall be inserted in lieu thereof:
"8.1 Except as to (i) affiliates, (ii) transfers by members of the NPR
Group to NPR or its affiliates, (iii) transfers of not more than 10% of the
total outstanding shares of the Company, by NPR to other members of the NPR
Group on or about the date of this Agreement, as reflected in the attached
Schedule I , (iv) transfers of not more than 5% of the total outstanding shares
of the Company, by NPR to other members of the NPR Group, pursuant to the terms
of the Securities Purchase Agreement, dated on or about the date of this
Agreement, by and between certain of the members of the NPR Group and The Holt
Group, Inc. as in effect on the date hereof, (v) transfers to certain members of
management of the Company which in any event shall not be more than 2% of the
total outstanding shares of the Company and (vi) except in accordance with
Article 15.6, neither TRN nor any member of the NPR Group shall, directly or
indirectly, sell, assign, transfer, charge or otherwise encumber any part or all
of their shares or voting interest in the Company, without offering to the other
Party and any of its affiliates (i) a right of first refusal to acquire such
shares at the price actually offered by a bona fide offeror; and (ii) the right
to put all of its share in the Company to the bona fide offeror at that same
price. Any attempted transfer without such offers having been made shall be
void. Shares issued by the
-1-
<PAGE>
Company shall bear a legend that any transfer thereof is subject to this
provision. The transfers of shares of the Company described in Sections
8.1(iii), (iv) and (v) above shall not vest voting rights in the transferee(s);
rather, voting rights in respect of such shares shall be exercised exclusively
by NPR."
2. Section 10.1 of the Agreement is hereby amended by (a) deleting the
reference to "Brazil" contained therein and (b) inserting in lieu thereof a
reference to "Liberia."
3. Section 13.1 of the Agreement is hereby amended by (a) deleting the
reference to "The Parties" in the first sentence thereof and (b) inserting in
lieu thereof a reference to "Each of TRN and each member of the NPR Group".
4. Section 15.1 of the Agreement is hereby amended by (a) deleting the
reference to "the Parties" in each instance in the second and third sentences
thereof and (b) inserting in lieu thereof a reference to "TRN and each member of
the NPR Group".
5. Section 15.2 of the Agreement is hereby amended by (a) deleting each of
the references to the "Parties" contained therein and (b) inserting in lieu
thereof a reference to "parties to the arbitration."
6. Section 15.3 of the Agreement is hereby amended by (a) deleting the
reference to "The Parties" in the second sentence thereof and (b) inserting in
lieu thereof a reference to "TRN and each member of the NPR Group".
7. Section 15.4 of the Agreement is hereby deleted in its entirety and the
following new Section 15.4 shall be inserted in lieu thereof:
"15.4 Neither TRN nor any member of the NPR Group shall be liable for
special, consequential or punitive damages, including, but not limited to, loss
of profit or business opportunity, provided such damages were not caused by
intentional or willful breach and/or misconduct of a Party."
8. Section 15.5 of the Agreement is hereby deleted in its entirety and the
following new Section 15.5 shall be inserted in lieu thereof:
"15.5 This Agreement may only be amended in whole or in part by an
agreement in writing duly signed and delivered by both TRN and NPR. This
Agreement constitutes the entire Agreement between TRN and each of the members
of the NPR Group and shall supersede all prior agreements and expressions of
intention between TRN and each of the members of the NPR Group. On and after the
effective date of this Agreement, neither TRN nor any member of the NPR Group
shall be bound by any preliminary correspondence or expression of intention or
by anything not in a writing signed by the party to be bound thereby."
-2-
<PAGE>
9. Section 15.6 of the Agreement is hereby deleted in its entirety and the
following new Section 15.6 shall be inserted in lieu thereof:
"15.6 Except as provided in Article 21, this Agreement may not be assigned
by either Party, other than to affiliates, whether voluntarily, involuntarily or
by operation or law without the prior written consent of the other Party given
as an amendment of this Agreement. A sale of all or a majority of the shares of
NPR, other than to an affiliate of NPR, shall constitute a violation of this
provision."
10. Section 15.8 of the Agreement is hereby amended by (a) inserting the
following new language, "or as set forth on Schedule 1 attached hereto",
immediately preceding the parenthetical "(or to such other address as the
recipient Party may have specified by notice given to the other Party pursuant
to this provision)," (b) by (i) deleting:
"If to NPR: P.O. Box 3170 White & Case
212 Fernwood Ave. 1155 Avenue of the Americas
Edison, NJ 08818 New York, New York 10036
908.225.2121 212.819.8200
Attn: President 212.354.8113 (fax)"
and (ii) inserting in lieu thereof:
"If to NPR: P.O. Box 3170 Pepper, Hamilton & Scheetz LLP
212 Fernwood Ave. 3000 Two Logan Square
Edison, NJ 08818 Philadelphia, PA 19103
908.225.2121 215.981.4000
Attn: President 215.981.4750 (fax)".
and (c) by (i) deleting:
"Av. Almirante Barrosso
139 Grupos 201/201 Castelo
Rio de Janeiro, RJ Brazil"
and inserting in lieu thereof:
"Transroll Navegacao S.A.
AV. Almirante Barrosso 139
20.031 Rio de Janeiro, RJ, Brasil"
11. Section 15.9 is of the Agreement is hereby deleted in its entirety and
is hereby no longer of any force and effect.
-3-
<PAGE>
12. The Agreement is hereby amended by adding the following new Section
16.3:
"16.3 TNX shall have the authority to create a Brazilian subsidiary company
("TNX Transportes Ltda" or "TNX Brazil"), of which TNX shall own 99% or more of
this capital, to act as common carrier in the Trade. TNX shall have the
authority to enter into vessel sharing agreements, cross slot charter agreements
and slot charter agreements with TNX Brazil and/or with third parties."
13. The Agreement is hereby amended by adding the following new Section
17.2:
"17.2 In addition to the foregoing, prior to Ronald M. Katims, Paul J.
Wittig, Mario Escudero, Edward W. O'Donnell, Martin McDonald, Edward G. Cawthon,
Carl Robert Fox or John S. Tirpak undertaking any of the activities set forth in
Section 17.1(a) of this Agreement resulting in participation in a common carrier
liner service which competes with the Trade or any of the other activities set
forth in Section 17.1(b) through (d) of this Agreement, he must divest himself
of his shares in the Company by selling such shares to NPR."
14. TRNSA hereby represents to each of the members of the NPR Group that
TRNSA has assigned its interest to TRN pursuant to the terms of the second
sentence of Section 21.1 of the Agreement and that TRN is a company, the direct
and indirect shareholders of which are all (a) non-U.S. citizens and (b)
shareholders of TRNSA, or subsidiaries or affiliates of TRNSA shareholders.
15. This Amendment shall become effective on the date on which all of the
parties hereto shall have executed and delivered a counterpart of this Amendment
(including by way of facsimile).
16. Except as expressly amended hereby, the terms and conditions of the
Agreement shall remain unchanged and in full force and effect.
17. This Amendment may be executed in any number of counterparts and by the
different parties hereto on separate counterparts, each of which when so
executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument.
18. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED AND INTERPRETED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
* * * * *
-4-
<PAGE>
IN WITNESS WHEREOF, this Agreement has been signed on behalf of by each of
the parties hereto or by their duly authorized representatives as of the date
first above written.
TRANSROLL NAVEGACAO S.A.
By /s/ Thomas Klien
--------------------------
Name:
Title:
TRANSROLL MARITIME
SERVICES, LTD.
By /s/ Thomas Klien
--------------------------
Name:
Title:
NPR HOLDING CORPORATION
By /s/ Ronald M. Katims
--------------------------
Name:
Title:
BERKSHIRE FUND III INVESTMENT
CORP.
By /s/ Kevin T. Callaghan
----------------------------
Name: Kevin T. Callaghan
Title: Managing Director
BERKSHIRE INVESTORS LLC
By /s/ Kevin T. Callaghan
----------------------------
Name: Kevin T. Callaghan
Title: Managing Director
<PAGE>
PYRAMID VENTURES, INC.
By /s/ Joseph Wood
------------------------
Name:
Title:
/s/ Ronald M. Katims
--------------------------
Ronald M. Katims
/s/ Paul J. Wittig
-------------------------
Paul J. Wittig
/s/ Mario F. Escudero
-------------------------
Mario F. Escudero
DEAN WITTER REYNOLDS
CUSTODIAN FOR MARIO
ESCUDERO IRA ROLLOVER
By /s/ Kenneth A. Porter
-----------------------
Name: Kenneth A. Porter
Title: Vice President and Branch Manager
/s/ Edward W. O'Donnell
--------------------------
Edward W. O'Donnell
/s/ Martin McDonald
--------------------------
Martin McDonald
/s/ Edward G. Cawthon
--------------------------
Edward G. Cawthon
<PAGE>
DEAN WITTER REYNOLDS
CUSTODIAN FOR JOHN S. TIRPAK
IRA ROLLOVER
By /s/ Kenneth A. Porter
------------------------
Name: Kenneth A. Porter
Title: Vice President & Branch Manager
/s/ Carl Robert Fox
--------------------------
Carl Robert Fox
/s/ Thomas Power
--------------------------
Thomas Power
/s/ Manuel Luis Del Valle
--------------------------
Manuel Luis Del Valle
/s/ Russel T. Stern, Jr.
--------------------------
Russell T. Stern, Jr.
/s/ John S. Tirpak
--------------------------
John S. Tirpak
NPR HOLDING CORPORATION
1997 PHANTOM STOCK PLAN
1. Purpose of Plan
The purpose of the Plan is to permit the management group of NPR Holding
Corporation (the "Company") to share in the value of the Company, subject to the
performance vesting conditions described herein.
2. Definitions
(a) "Affiliate" means, with respect to any Person, any other Person
which, directly or indirectly, is in control of or is controlled by such Person.
For purposes of this definition, the term "control," including its correlative
term "controlled by" means, with respect to any Person, the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of such Person, whether through the ownership of voting securities,
by contract or otherwise.
(b) "Award" means each grant of PSUs to a Participant.
(c) "Board" means the board of directors of the Company.
(d) "Capital Gain Tax" means the product of (i) the amount determined
pursuant to Paragraph 2(gg)(i) times (ii) the Capital Gain Tax Rate.
(e) "Capital Gain Tax Rate" means the highest statutory federal income
tax rate applicable to gain recognized by an individual taxpayer on the sale or
exchange of a capital asset with a holding period of more than 18 months.
(f) "Cause" means "cause" as defined by the Participant's Employment
Agreement.
(g) "Change of Control" means any transaction or series of transactions
as a result of which any Third Party (together with its Affiliates) owns,
directly or indirectly, in excess of 50 percent of the then outstanding
securities of the Company having the power to vote in the election of directors
of the Company.
(h) "Common Stock" means the common stock of the Company.
-1-
<PAGE>
(i) "Company" means NPR Holding Corporation, a Delaware corporation,
including any successor thereto by merger, consolidation, acquisition of
substantially all the assets thereof, or otherwise.
(j) "Date of Grant" means the date as of which PSUs are granted.
(k) "Disability" means "Disability" as defined in the Participant's
Employment Agreement.
(l) "EBITDA" means "EBITDA" as defined in the Participant's Employment
Agreement.
(m) "EBITDA Target" means an EBITDA target as specified in Paragraph
5(a)(ii), and based on the Company's Five Year Plan dated October 14, 1997
attached hereto as Exhibit B.
(n) "Effective Date" means November ___, 1997.
(o) "Employment Agreement" means the Amended and Restated Employment
Agreement between the Company and a Participant, dated as of November ___, 1997.
(p) "Fair Market Value" as of any date shall be the product of (i)
EBITDA for the 12-consecutive month period ending on the last day of the
preceding month times (ii) five (5); provided, however, that if the
12-consecutive month period includes a period prior to the Effective Date, the
EBITDA shall be determined for the shorter period commencing on the Effective
Date, and the resulting EBITDA shall be annualized.
(q) "Good Reason" means "Good Reason" as defined in the Participant's
Employment Agreement.
(r) "IPO Price" means the price per share at which equity securities of
the Issuer are initially offered to the public in a Public Offering.
(s) "Issuer" means the entity that issues the equity securities in a
Public Offering.
(t) "Ordinary Income Tax" means the product of (i) the amount determined
pursuant to Paragraph 2(gg)(i) times (ii) the Ordinary Income Tax Rate.
(u) "Ordinary Income Tax Rate" means the highest statutory federal
income tax rate applicable to ordinary compensation income recognized by an
individual taxpayer.
-2-
<PAGE>
(v) "Option Spread" means the excess of (i) the IPO Price over (ii) the
option exercise price for stock options issuable pursuant to Paragraph 5(b)(ii),
measured as of the effective date of a Public Offering.
(w) "Parent Company" means The Holt Group, Inc.
(x) "Participant" means a member of the management group to whom a PSU
has been granted under the Plan.
(y) "Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization.
(z) "Plan" means the NPR Holding Corporation 1997 Phantom Stock Plan.
(aa) "PSU" means a phantom stock unit granted under the Plan and
described in Paragraph 4, which gives the Participant the right, without payment
to the Company, to receive the Value of such PSU, to be paid in cash.
(bb) "Public Offering" shall mean the consummation of an underwritten
public offering of equity securities of the Parent Company, the Company, or an
Affiliate of either (or a non-underwritten offering meeting such criteria if the
primary purpose of the public offering is to raise capital for the Issuer).
(cc) "Share" or "Shares" means a share or shares of Common Stock, or
such other securities issued by the Company as may be the subject of an
adjustment under Paragraph 12.
(dd) "Tax Adjustment" means the product of
(i) 50%, times
(ii) the quotient of "x" divided by "y," where "x" is the excess, if
any, of (A) the Ordinary Income Tax over (B) the Capital Gain Tax, and where "y"
is the difference between 1 and the Ordinary Income Tax Rate.
(ee) "Terminating Event" means any of the following events:
(i) the liquidation of the Company;
(ii) a merger of the Company;
(iii) a Change of Control; or
-3-
<PAGE>
(iv) the sale of substantially all of the assets of the Company in
one transaction or a series of related transactions.
(ff) "Third Party" means any Person other than The Holt Group, Inc. or
any of its Affiliates.
(gg) "Value" of a PSU on any date means the sum of:
(i) the quotient of (A) the Fair Market Value divided by (B) the
sum of (x) the number of outstanding Shares and (y) the total number of
PSUs granted and outstanding under the Plan, excluding PSUs that have been
forfeited pursuant to Paragraph 5; plus
(ii) the Tax Adjustment.
(hh) "Vesting Period" means the period commencing on the Date of Grant
and ending on December 31, 2002.
(ii) "Vesting Year" means each calendar year in the period beginning on
January 1, 1998 and ending on December 31, 2002.
3. Eligibility to Participate
Members of the management group of the Company, as identified by the Board,
shall be eligible to receive PSUs pursuant to the Plan. The name of each initial
Participant and the initial number of PSUs granted to such Participant on the
date of adoption of the Plan are set forth on Exhibit A attached hereto and
incorporated by reference herein.
4. Rights To Be Granted
Rights that may be granted under the Plan are PSUs which give Participants
the right, without payment to the Company, to receive the Value of the PSUs in
cash.
5. Vesting and Forfeiture
(a) Annual Vesting. Except as otherwise provided in Paragraph 5(b), PSUs
shall vest at the following times if the following conditions are satisfied.
Except as otherwise provided in Paragraph 5(b), PSUs that do not vest shall be
forfeited.
(i) The applicable percentage(s) of the Award, as determined under
Paragraph 5(a)(ii), Column B below, shall vest as of the last day of each
Vesting Year in which the Company achieves one or more of the applicable EBITDA
Targets, as determined under Paragraph 5(a)(ii), Column A below, provided that
the Participant is actively employed by the Company on the last day of the
Vesting Year, or terminated employment with the Company
-4-
<PAGE>
after June 30 of the Vesting Year due to (w) Disability, (x) death (y)
resignation with Good Reason or (z) termination by the Company without Cause.
Once an applicable EBITDA Target has been met with respect to a Vesting Year,
the applicable percentage of the Award shall be permanently vested hereunder,
and the meeting (or failure to meet) such EBITDA Target with respect to
subsequent Vesting Years shall not result in any additional vesting (or loss of
the prior vesting) hereunder.
(ii) For purposes of Paragraph 5(a)(i):
Column A Column B
EBITDA Target Vesting Percentage
------------- ------------------
$19,760,000 20%
$28,960,000 40%
$29,440,000 60%
$40,560,000 80%
$44,080,000 100%
(b) Acceleration of Vesting. Notwithstanding Paragraph 5(a), 100% of the
Award shall vest:
(i) As of the effective date of any Terminating Event during the
Vesting Period, provided that the Participant is actively employed by the
Company immediately preceding such effective date, or terminated employment with
the Company within six months of such effective date due to (w) Disability, (x)
death (y) resignation with Good Reason or (z) termination by the Company without
Cause.
(ii) As of the effective date of a Public Offering, provided that the
Participant is actively employed by the Company on such effective date, or
terminated employment with the Company within six months of such effective date,
due to (w) Disability, (x) death (y) resignation with Good Reason or (z)
termination by the Company without Cause. In addition, if there is a Public
Offering during the Vesting Period, as of the effective date of such Public
Offering, the Issuer shall grant non-qualified stock options to each Participant
for equity securities of the same type and class issued in the Public Offering,
such that (A) the Option Spread of Options granted to each Participant equals
the Value of the such Participant's vested PSUs and (B) the option exercise
price for such stock options, payable in cash, is 25% of the IPO Price. Upon
issuance of such stock options in accordance with this Paragraph 5(b)(ii) and
the applicable option plan, the vested PSUs subject to outstanding Awards shall
be canceled. Such stock options shall be granted under a stock option plan which
complies with the requirements of Rule 16b-3, promulgated under the Securities
Exchange Act of 1934, as amended, which contains customary terms and which meets
all requirements for the shares issued pursuant to such plan to be eligible for
registration on Form S-8, shall be for an unlimited period (terminable only
within an agreed period of time following termination of employment) and shall
be immediately exercisable by their terms, subject to any restrictions that may
apply under
-5-
<PAGE>
applicable federal and state securities laws. The shares issuable pursuant
to such stock options shall be registered as soon as reasonably practicable
after the effective date of the Public Offering, on a registration statement on
Form S-8, and the Company shall use its best efforts to maintain the
effectiveness of such registration statement until all shares issuable or issued
pursuant to such stock options have been sold thereunder or become eligible for
sale without registration under Rule 144(k) without being subject to any volume
limitations.
6. Dividends and Distributions
To the extent that any dividends or distributions are paid with respect to
Shares (other than dividends declared or paid for the purpose of (and not
greater in amount than necessary for) paying shareholder taxes on the earnings
of the Company, as determined by the Board in its sole discretion), dividend or
distribution equivalents shall be paid at the same time and at the same rate per
PSU as are actually paid per Share; provided, however, that no dividend or
distribution equivalents shall be paid with respect to any distribution of
Transroll Navieras Express.
7. Payment
(a) Form of Payment. At the time of payment, as determined under
Paragraph 7(b), the Value of PSUs shall be paid in the form of a cash lump sum.
(b) Time of Payment. Except as otherwise provided in Paragraph 7(c), the
Value of PSUs shall be payable as follows:
(i) If a Participant continues as an active employee of the Company
through the last day of the Vesting Period, the Participant shall be entitled to
payment of the Value of the vested PSUs. The Value of the vested PSUs shall be
determined as of the date of the Participant's termination of employment. Such
payment shall be made within 60 days following the date of the Participant's
termination of employment.
(ii) If a Participant's employment with the Company terminates during
the Vesting Period because of death or Disability, the Participant shall be
entitled to payment of the Value of the vested PSUs. Payment shall be made
within 60 days following the date of the Participant's termination of
employment, and the Value of the vested PSUs shall be determined as of the end
of the preceding Vesting Year, provided that if the Participant's termination of
employment occurs after June 30 of a Vesting Year, payment shall be made within
60 days following the last day of such Vesting Year, and the Value of the vested
PSUs shall be determined as of the end of such Vesting Year.
(iii) If a Participant's employment with the Company terminates
during the Vesting Period because of resignation with Good Reason or termination
by the Company without Cause, the Participant shall be entitled to payment of
the Value of the vested PSUs. Payment shall be made within 60 days following the
date of the Participant's termination
-6-
<PAGE>
of employment, and the Value of the vested PSUs shall be determined as of the
end of the preceding Vesting Year, provided that the Participant may elect, by
irrevocable written notice, to defer the payment, in which case the Payment
shall be made within 60 days following the Vesting Period, and the value of
the vested PSUs shall be determined as of the last day of the Vesting Period.
(iv) If a Participant's employment with the Company terminates during
the Vesting Period because of resignation without Good Reason or termination by
the Company with Cause, the Participant shall be entitled to payment of the
Value of the vested PSUs. Payment shall be made within 60 days following the end
of the Vesting Period, and the Value of the vested PSUs shall be determined as
the lesser of (A) the Value as of the end of the Vesting Year preceding the date
of the Participant's termination of employment or (B) the Value as of the end of
the Vesting Period.
(v) Notwithstanding Paragraphs 7(b)(i), (ii), (iii) and (iv), if a
Terminating Event occurs during the Vesting Period, the Participant shall be
entitled to payment of the Value of the vested PSUs, as determined as of the
date of the Terminating Event. Payment shall be made as soon as reasonably
practicable after the date of a Terminating Event.
(c) Debt Limitations. If a cash lump sum payment of any amount to a
Participant under Paragraph 7(b) would, if made, be prohibited pursuant to any
agreement to which the Company or NPR, Inc. is a party, evidencing or governing
indebtedness for borrowed money (and which agreement was effective as of the
Effective Date of the Plan, or which is a refinancing or replacement, in whole
or in part, of such an agreement) (each, a "Debt Agreement") the Company shall
provide written notice to the Participant at least 10 days before the applicable
payment date (the "Payment Date"), which shall identify the part, if any, of the
amount determined pursuant to Paragraph 7(b) which the Company is permitted to
pay in cash under the Debt Agreements (the "Permitted Cash Amount"). If any
amount is payable pursuant to Paragraph 7(b) in excess of the Permitted Cash
Amount (the "Shortfall"), on the applicable payment date, the Company shall pay
the Permitted Cash Amount, and shall pay the Shortfall as follows. The Company
shall pay the principal balance of the Shortfall in equal periodic installments,
not less frequently than quarterly, over the period commencing on the Payment
Date, and continuing (i) for Participants who continue in service to the Company
through the last day of the Vesting Period, until the third anniversary of the
Payment Date and (ii) for Participants whose employment terminates for any
reason before the last day of the Vesting Period, until the later of (A) the
third anniversary of the Payment Date or (B) the date that is the same period of
time later than the Payment Date as the period of time commencing on the
Participants termination of employment and ending on the last day of the Vesting
Period. Simple interest shall accrue with respect to the unpaid Shortfall
balance at an annual rate equal to the sum of (x) the prime rate of interest, as
published in The Wall Street Journal for the business day immediately preceding
the Payment Date, plus (y) three percent. Interest accrued with respect to the
unpaid Shortfall balance shall be paid with each periodic installment referred
to above in this Paragraph 7(c).
-7-
<PAGE>
(d) Termination of Employment. For purposes of this Paragraph 7, a
Participant's termination of employment shall be deemed to occur on the date of
termination of employment as determined in accordance with the Participant's
Employment Agreement.
8. PSUs Subject to Plan
Subject to adjustment as provided in Paragraph 12, PSUs representing ten
percent (10%) of the Company's outstanding Shares on the Effective Date on a
fully diluted basis, giving effect to the issuance of the PSUs and calculated as
if each PSU were a Share (the "10% Interest"), may be issued pursuant to the
Plan. The PSUs granted to the initial Participants on the date of adoption of
the Plan shall be equal to the 10% Interest; provided, however, that if PSUs
terminate or expire without having been paid in full, other PSUs may be granted
covering the Shares with respect to which such PSUs were granted.
9. Administration of Plan
The Plan has been approved by the Board. The Plan shall be administered by
the Board, which shall have the discretionary authority to interpret the Plan
and make relevant factual determinations as required under the Plan. The
determination of the Board shall be final and binding, provided that in making
such determinations, the Board shall deal fairly with the Participants. The
Board (or other applicable governing body) shall take such further actions as
may be necessary to fully implement the Plan, including, without limitation,
approval of the stock options referred to in Paragraph 5.
10. Restrictions on Transferability
No PSU shall be transferable otherwise than by will or the laws of descent
and distribution and, during the lifetime of the Participant, only the
Participant or his attorney-in-fact or guardian may receive payment in respect
of any PSUs. Upon the death of a Participant, the person to whom the PSUs have
been transferred shall receive payment in accordance with the provisions of
Paragraph 7.
11. Rights as Stockholder
Neither Participant nor his personal representative, heir or legatee shall
have any of the rights of a stockholder with respect to any PSUs, provided that
the Company shall, from time to time, make such information about the Company's
operations available to the Participants as may be necessary for the
Participants to determine the value of their rights under the Plan.
12. Changes in Capitalization
In the event that Shares are changed into or exchanged for a
different number or kind of shares of stock or other securities of the Company,
whether through merger,
-8-
<PAGE>
consolidation, reorganization, recapitalization, stock dividend, stock
split-up or other substitution of securities of the Company, or in the event
that Shares are issued for consideration below the fair market value thereof or
other assets of the Company are sold for consideration below the fair market
value thereof, other than a distribution subject to Paragraph 6 hereof, the
Board shall make appropriate equitable anti-dilution adjustments to the number
and class of shares of stock available for issuance under the Plan, and the
number of PSUs subject to outstanding awards. Any reference to the term "Shares"
in the Plan shall be a reference to the appropriate number and class of shares
of stock available for issuance under the Plan, as adjusted pursuant to this
Paragraph 12. The Board's adjustment shall be effective and binding for all
purposes of this Plan. The adjustment provided for in this Paragraph 12 may
require the Company to issue fractional shares, and the total adjustment with
respect to the Plan shall be determined accordingly.
13. Adjustments
If the Company or NPR, Inc. takes any action (including, without
limitation, any acquisition, disposition, or merger), or fails to take any
action (which action was contemplated in the business plan upon which the EBITDA
Targets set forth in Paragraph 5(b)(ii) are based) that could, in the reasonable
judgment of Senior Management (as defined in the Employment Agreements), make it
more difficult for Senior Management to achieve the applicable EBITDA Targets,
Senior Management shall advise the board of directors of NPR, Inc. of such
judgment and shall provide such board of directors with a proposal to revise the
EBITDA Targets to take into account such actions or failures, for the review and
approval by such board or directors, which shall not be unreasonably withheld.
If such board of directors does not approve the revised EBITDA Targets, the
revised EBITDA Targets shall be determined in accord with the procedure
described in Section 8(l) of the Employment Agreements.
14. Amendment and Termination; Incorporation
The Plan may be amended or terminated by the Board. No outstanding PSUs
shall be affected by any such amendment or termination without the written
consent of the Participant or other person then entitled to payment with respect
to such PSUs. The Plan is or shall be incorporated by reference into the
Employment Agreements of each of the Participants.
-9-
<PAGE>
15. Withholding of Taxes
Any tax liabilities incurred in connection with payment in respect of a PSU
under the Plan shall be satisfied by the withholding of a portion of the cash
payment due in an amount equal to the minimum amount of taxes required to be
withheld under applicable law.
[CORPORATE SEAL] NPR HOLDING CORPORATION
Attest: /s/ Mario F. Escudero By: /s/ Ronald M. Katims
-------------------------------- ------------------------------
-10-
<PAGE>
EXHIBIT A
PHANTOM STOCK UNITS
[Specific number of units reflected on each participant's copy of the Plan.]
LOAN AGREEMENT
Made this 3rd day of January 1984 by and between the City of Gloucester
City; New Jersey ("Lender") and Holt Hauling and Warehousing System, Inc. a
corporation having its principal place of business in Gloucester City
("Borrower").
W I T N E S S E T H :
Background
On December 28, 1983, the Lender entered into A Grant Agreement, Grant
Number B-82-AB-34-0223 ("Grant Agreement") with the United States Department of
Housing and Urban Development ("HUD") for an Urban Development Action Grant
("UDAG") to finance a low cost loan ("Loan") to Borrower, to in turn finance
certain port development improvements at the Borrower's facility in Gloucester
City. Included in said port development improvements are the purchase of
capital equipment, real estate improvements and legal and other associated
costs, all of which constitute the "Project".
-1-
<PAGE>
The Equipment purchases in the form of two (2) rail supported container
cranes are being financed by a conventional loan of $5,333,000 (equivalent in
Deutshmarks) from Solzgitter Kocks GmbH of Bremen, West Germany. The mortgage
lender is National Acceptance Company of America, a Delaware Corporation located
in Chicago, Illinois, with a loan of $2,500,000 for the construction of a
marginal pier,
Specifically, the Project consists of the following application and
sources of funds:
-2-
<PAGE>
<TABLE>
<CAPTION>
USE OF FUNDS SOURCES OF FUNDS
Line Item Activity UDAG Private Funds TOTAL
(Construction Pro Forma) Funds (see below) COSTS
- ---------------------------------------------------------------------------------------------------
<S> <C> <C> <C>
a. Land/Riparian Rights $ 293,200 $ 293,200
Acquisition Riparian Land rights
from State of New Jersey; Property and
riparian rights at 100 Monmouth Street
b. Wetlands recreational $ 250,000 $ 250,000
park development bordering
Newton Creek in Camden, N.J.
c. Construction of marginal $2,702,113 $ 2,747,887 $ 5,450,000
dock facility for container-
ized cargo
d. Conversion of Building #1 $ 713,623 $ 713,623
into refrigerated warehousing
e. Development of parking/ $ 764,040 $ 764,040
cargo loading at Collins
Avenue
f. Engineering Fees for $ 125,000 $ 125,000
marginal dock facility
g. Legal fee of New Jersey $ 9,000 $ 9,000
Corporate Counsel of Record
h. Legal fee of Corporation $ 35,000 $ 35,000
Counsel for Project
i. Construction Period Interest $ 350,000 $ 350,000
j. Real Estate Taxes during $ 2,250 $ 2,250
construction
k. Capital Equipment $ 893,420 $ 5,233,000 $ 6,126,420
(two (2) container cranes)
1. Operating losses (working $ 100,000 $ 100,000
capital) not counted in
leverage ratio
TOTAL PROJECT COSTS $3,595,533 $ 10,623,000 $14,218,533
</TABLE>
-3-
<PAGE>
Sources of Funds (Private)
(1) National Acceptance Company shall make a mortgage loan to the
Borrower of $2,500,000 for development of the marginal pier facility.
(2) Solzgitter Kocks GmbH shall make a seller financed loan to the
Borrower of $5,333,000 (equivalent in Deutshmarks) for the two
container cranes.
(3) The Borrower shall expend not less than $2,790,000 in cash equity
for acquisition of property and riparian rights, development of
marginal pier facility, conversion of approximately 34,000 s.f. of
Building #1 into refrigerated warehousing, parking development, wetland
recreational park development, construction interest and taxes and any
professional fees related to this project.
TOTAL $10,623,000
-4-
<PAGE>
Thus, there is a financing gap of $3,595,533 to be filled by this loan
agreement. The source of funds for this is a Grant Agreement executed between
the HUD and the City of Gloucester City, New Jersey as identified above. The
terms of this Loan Agreement is based upon this Grant Agreement. These terms
itinerate that the Borrower provide to the Lender sufficient documented
evidence with respect to the following items:
PRECONDITIONS.
(a) All governmental approvals and permits, including but not limited
to the following:
(1) U.S. Corps of Engineers approvals and permits for dredging,
silting and other work within the navigable waters involved.
(2) All environmental clearances and approvals necessary to
accomplish the proposed Project.
-5-
<PAGE>
(3) All approvals and permits necessary for the establishment of
a wetland recreational parkland.
(4) Any and all other clearances, approvals and permits issued by
the proper Federal, State, County or municipal entities necessary
to initiate construction and completion of the proposed Project.
(b) Title (leasehold or fee simple as appropriate) to all land
necessary for the Project, shall be held by the Borrower. These
documents shall be accompanied by a legal opinion of counsel to the
Borrower certifying that on a specified date, either an original ALTA
policy of land or mortgage title insurance, or other records
identified in the opinion, were examined by Borrower's counsel; and
that said policy or other records identify the Borrower, or a
wholly-owned subsidiary of the Borrower,
-6-
<PAGE>
as the owner or lessee of record, in fee simple or leasehold of said
property. The opinion shall further state that on the date specified
by Borrower's counsel, the record fee simple or leasehold title to
said real property was vested, in the Borrower, or such subsidiary
thereof.
(c) Loan from Kocks to the Borrower for $5,333,000 for financing, in
part, the purchase and installation of two (2) rail supported
container cranes. This loan contract is accompanied by opinion of
Borrower's legal counsel that same is legally valid and enforceable
under the laws of the State of New Jersey, and that all persons
executing these documents on behalf of the Borrower were authorized to
do so.
(d) Loan from "NAC" to the Borrower for $2,500,000 for development of
the marginal pier facility. This loan contract is accompanied by
opinion of Borrower's legal counsel that same is legally valid and
enforceable under the laws of the State of New Jersey, and that all
persons executing these documents on behalf of the Borrower were
authorized to do so.
(e) Borrower shall provide not less than $2,790,000
-7-
<PAGE>
in equity funds. for the acquisition of real property and riparian
rights, the development, in part, of the marginal pier facility, the
parking facility on Collins Avenue, the development of a wetlands park
in Camden City immediately north of Newton Creek, local property taxes
and construction period interest and professional fees related to this
project. Evidence shall be on the letterhead of the Borrower and/or
the lending institution (by way of an irrevocable and unconditional
letter of credit) identifying the amount of liquid assets on hand or
immediately available and applicable to the project or which have been
expended by Borrower subsequent to HUD's preliminary approval of the
UDAG and in furtherance of project activities identified above. The
document shall be executed by an authorized officer of the Borrower
and/or the lending institution, and shall have attached an opinion of
the Borrower's legal counsel or certified public accountant that the
document is properly authorized and reflects an accurate appraisal of
the equity funds, on hand, immediately available, irrevocably
committed or which have been expended by Borrower subsequent to HUD's
preliminary approval of the UDAG in furtherance of project activities
identified above.
All of the above evidentiary materials (a) through (3) must be
provided to the Lender on or before January 31, 1984.
-8-
<PAGE>
LOAN TERMS
(1) Lender is obliged to carry out the project activities
identified above at a cost of not less than $14,218,533.
(2) Lender shall loan $3,595,533 to Borrower for the partial
financing of the construction of a marginal dock facility and the
acquisition and installation of two (2) rail supported container
cranes. The terms and conditions of the loan shall be consistent
with the following:
(i) Construction Loan
(A) Interest - No Interest.
(B) Construction Period - The construction period shall
commence upon the initial disbursement of Grant Funds and
shall continue for a period of 14 months from said initial
disbursement, but in no event later than April 30, 1985.
(C) Disbursement/Ratio - Loan disbursements shall be
based on vouchers submitted by the Borrower and certified by
the architect, construction manager, or other certifying
official as shall be acceptable to the Lender. All
submissions by contractors of monthly requisitions shall be
on AIA Forms 702 and 703 or their equivalent.
-9-
<PAGE>
No disbursement of loan funds shall be made until the Borrower has
certified that it has expended $2,790,000 in cash equity.
No loan disbursements shall be made in an amount which together with
previous disbursements would exceed the ratio of $1.00 of UDAG Funds for every
$2.90 of private funds expended by the Borrower for the Project. Expenditure
documentation shall be properly presented to the Lender by the Borrower.
(ii) Permanent Loan
(A) Term 12 years commencing upon the completion of
construction, but in no event later than April 30, 1985.
(B) Interest - Five percent (5%) during years one through
four. Seven percent (7%) during years five through twelve.
(C) Repayment
(aa) Years one through four, interest shall accrue at
five percent (5%) per annum and shall be added to the loan
principal in year five (5) to form a new enlarged principal
balance. Principal
-10-
<PAGE>
payments during years one through four shall be deferred.
(bb) Years five through twelve interest at seven
percent (7%) on the new enlarged loan principal together
with a principal repayment is to be made in monthly
installments in accordance with a 25-year amortization
schedule. A balloon payment of the outstanding principal
balance together with all interest and accrued interest
shall be made at the end of year 12.
(D) Security - The loan shall be secured by a security
interest, deed of trust or mortgage in favor of the Lender upon
all assets of the Borrower comprising the Project. The security
position of the Lender may be subordinated to the security
interest of the Mortgage Lender (NAC) and the Equipment Lender
(Kocks) provided that the aggregate principal amount of Mortgage
Lender's loan and the Equipment Lender's loan does not exceed
$7,833,000. The security interest, deed of trust or mortgage
shall also contain standard provisions to protect the interest of
the second mortgagee, including, for example, a provision that a
default under the first mortgage which could permit a foreclosure
by the first mortgagee shall constitute a default under the
second mortgage and the unpaid principal balance and interest
shall be due and payable. NOTWITHSTANDING the foregoing provision
of this paragraph (D), it is understood that the security
interest referred to herein in all cases is junior and
subordinate to existing security interests granted by borrower to
third party lenders prior to the date of the execution of this
agreement and other than that as specified above.
-11-
<PAGE>
(E) Sale/Refinancing - The entire balance of the
outstanding principal of this UDAGloan and all accrued unpaid
interest thereon, shall become immediately due and payable upon
the bankruptcy, reorganization, syndication, dissolution or
liquidation of the Borrower, or upon the sale, partial sale,
refinancing, exchange, transfer, sale under foreclosure, or other
disposition of the Project Site, improvements and/or capital
equipment situated thereon, except for a one time refinancing of
the Mortgage Lender's outstanding loan balance any time during
the first year following completion of construction for this
Project and except for the one time refinancing of the Equipment
Lender's outstanding loan balance any time during five years
following completion of construction for this Project provided
such refinancing does not exceed the original amount of each
respective loan. Lender does agree to request permission from HUD
permitting Borrower to extend the eligible period during which
Borrower can refinance, if so requested by Borrower.
(iii) Prepayment - Prepayment may occur at any time without
penalty.
(iv) Guarantee - Borrower shall unconditionally and irrevocably
guarantee repayment of the Loan and completion of the Project.
(3) The timeframe to be conformed to by the Borrower for the beginning
and completion of project activities is as follows:
-12-
<PAGE>
<TABLE>
<CAPTION>
Commencement Completion
Activity Date Date
-------- ------------ ----------
<S> <C> <C>
Acqusition of nine acres of On or before
riparian land rights from March 1, 1984 March 30, 1984
the State of New Jersey
Acquisition of property On or before
and riparian rights March 1, 1984 March 30, 1984
at 100 Monmouth Street
Development and construction On or before
of marginal dock facility March 1, 1984 April 30, 1985
Development of Wetlands On or before
Recreational Park at the March 1, 1984 April 30, 1985
Camden City/Newton Creek
site
Development of approximately On or before April 30, 1985
15 acres of parking/cargo March 1, 1984
loading space on Collins
Avenue
Acqusition and installation On or before April 30, 1985
of two (2) rail supported March 1, 1984
container cranes
Conversion of approximately On or before April 30, 1985
34,000 square feet of Building March 1, 1984
#1 into refrigerated ware-
housing
</TABLE>
In the event Borrower cannot complete any activity by this timetable,
then Borrower must notify the Lender in writing at least ten (10) days prior to
a deadline and request an extension for a specific date and state its reasons.
-13
<PAGE>
(4) The Borrower shall provide Lender documented evidence in the form
of employment or payroll records as certified by an authorized officer of
the Borrower as to conformance with the following employment goals as set
for the project:
(a) Total permanent jobs generated by the project (i.e. additions
to Borrower's work force): 335
(b) Total permanent jobs filled by persons of low/moderate income
as defined under Section 570.3 of 24 C.F.R., Part 570 as may be from
time to time amended: 331
(c) Total permanent jobs filled by "CETA -Eligible" persons (i.e.
"chronically unemployed"): 8
(d) Total permanent jobs filled by minority persons: 149
The above job goals shall be met within 36 months from November 3,
1983, or by November 2, 1986. The Borrower agrees to use its best efforts to
create or cause to be created within this time period those jobs identified
above.
(5) Borrower will include in all contract relating to any and all
construction activities financed in part or
-14-
<PAGE>
in whole by the UDAG loan the language of Exhibit A relating to Federally
required general bid conditions. Borrower will cooperate with Lender's on
site inspection and review of contractors records to insure compliance with
these conditions. Particular attention is addressed to Federal requirements
on the payment of prevailing wages for all labor.
(6) Borrower and Lender will individually comply with the relevant
provisions set forth in Exhibit B as they pertain to
(a) Program Income as applied to costs and for its use for Title
I eligible activities;
(b) Maintaining Records and right to inspect;
(c) Access to Project by HUD;
(d) No Assignment of Succession;
(e) HUD Approval of Loan Agreement Amendments;
(f) Disclaimer of Relationship and Conflict of Interest;
(g) Limitation of Lender's Liability; and
(h) Sign Display at Project Site.
-15-
<PAGE>
(7) Borrower will be reimbursed (a grant, not a loan) for up to
$15,000 in costs incurred by the Borrower in the preparation of the UDAG
application, and for any and all other costs incurred by the Borrower that
are reimbursable as UDAG Administration, per Borrower's contract for
consulting services with D'Anastasio/Frankel, Joint Venture Development
Consultants. The reimbursement grant will be made upon the occasion of the
initial drawdown of the Lender under the UDAG. Such drawdown may occur
after all evidentiary documents, including this Loan Agreement and other
documents referred to in this Loan Agreement have been reviewed and
approved by HUD leading to the issuance of a Letter of Credit, and upon the
removal of all grant conditions imposed by HUD.
(8) Borrower hereby agrees that the happening or occurrence of any of
the following will, at the sole option of Lender, will constitute a default
hereunder:
(a) Failure by Borrower to make any payment of principal and
interest within thirty (30) days after due date hereunder:
-16-
<PAGE>
(b) Failure by Borrower to perform any covenant or warranty
hereunder within thirty (30) days after receipt of written notice from
Lender to perform or carry out the same.
(9) Borrower hereby covenants, warranty and represents as follows:
(a) That all financial statements, profit and loss statements,
statements as to ownership, and other statements given to Lender are
true and correct and that Borrower has full and complete title to any
and all property which may be pledged or in which a security interest
has been created for this Loan;
(b) That Borrower will inform Lender of any litigation involving
Borrower, the adverse determination of which might substantially
prejudice payment of the Loan; and
(c) That Borrower will maintain adequate fire, theft, general and
public liability insurance and will deliver upon Lender's request,
copies of said policies evidencing such insurance.
(d) That Borrower has full corporate authority from its
respective shareholders and directors to enter into this Loan
Agreement; and
(e) That the proceeds of the Loan will be used only in connection
with the Project.
(f) That Borrower will participate in Lender's "job bank" program
and that both parties agree to the following obligations:
-17-
<PAGE>
(i) Borrower acknowledges and reaffirms unconditionally Borrower's
obligation and commitment to generate 16 additional permanent full-time
non-union jobs as set forth in the UDAG application. Borrower understands,
covenants and agrees that the Lender (City of Gloucester) will be given the
first opportunity to fill these additional employment positions with the
Borrower, through the Job Bank Program established by the Lender.
(ii) Borrower, in implementing its commitment to generate such
employment positions, shall contact the Job Bank representative of the Lender
with a written notification of the position available together with all
pertinent data relating to the employment. Such notification will be sent
directly to the Gloucester City Community Development Office, Attn: Community
Development Program Administrator.
(iii) Thereafter, the Lender shall have a fourteen (14) day period of
time within which to provide candidate(s) who are qualified and eligible for
such employment:
(iv) In the event the Lender fails to provide such candidate(s) or that
candidate proves to be unsuited to the positions available, the Borrower shall
at that time be free to make its own decision respecting the placement of the
additional employees.
-18-
<PAGE>
(10) The provisions of paragraph 8 and 9 notwithstanding, Borrower will
have thirty (30) days from receipt of written notice of default or breach, under
this agreement, to cure such default or breach.
(11) Borrower agrees to lease to the Lender the warehouse at 100
Monmouth Street for a term of ninety-nine (99) years at an annual rent of One
($1.00) Dollar commencing the date this agreement is fully executed. The Lender
agrees to support Borrower in the acquisition, implementation and utilization of
riparian grants from the State of New Jersey to Borrower with regard, and
adjacent to, 100 Monmouth Street as well as the riparian right adjacent to the
city street known as Monmouth Street.
(12) No provisions of this Loan Agreement can be deemed to have been
waived by Lender, except if in writing duly executed by Lender. Furthermore, no
waiver of any breach of default will be deemed a waiver of a breach or default
thereafter occurring.
(13) This is the entire agreement between the parties, and there is no
outside condition, warrant, agreement or understanding.
(14) This Agreement shall reference the Grant Agreement which shall
control in all instances where this Agreement is silent.
(15) Severability - If any provision of this Agreement, or the
application of such provision to any persons
-19-
<PAGE>
or circumstances, is held invalid or unenforceable, the remainder of this
Agreement, or the application of such provision to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby.
IT WITNESS WHEREOF, the parties have executed this Loan Agreement, the
day and year first above written.
HOLT HAULING & WAREHOUSING SYSTEMS, INC.
BY:/s/ Bernard Gelman
---------------------------------
CORPORATE SEAL ATTEST:/s/ John A. Evans
-------------------------------
CITY OF GLOUCESTER, NEW JERSEY
BY:/s/ Robert [illegible]
---------------------------------
ATTEST:/s/ Thomas J. [illegible]
-----------------------------
MUNICIPAL SEAL
-20-
FIRST AMENDMENT TO LOAN AGREEMENT DATED JANUARY 3. 1984
THIS First Amendment to Loan Agreement dated January 3, 1984 ("First
Amendment") between HOLT HAULING AND WAREHOUSING SYSTEM, INC. ("Holt") and THE
CITY OF GLOUCESTER CITY, NEW JERSEY ("City") is made this 31st day of March,
1991.
WHEREAS, Holt and the City entered into a Loan Agreement dated January
3, 1984 (the "Loan Agreement") which provided that City lend to Holt the sum of
Three Million Five Hundred Ninety-Five Thousand, Five Hundred Thirty-Three
($3,595,533.00) Dollars (the "Loan") for the partial financing of the
construction of a marginal dock facility and the acquisition and installation of
two (2) rail supported container cranes ("Kochs Cranes"); and
WHEREAS, as evidence of its indebtedness to the City, Holt delivered a
Promissory Note dated March 15, 1984 for the sum of Three Million Three Hundred
Forty-Five Thousand, Five Hundred Thirty-Three ($3,345,533.00) Dollars and a
Promissory Note dated April 18, 1984 for the sum of Two Hundred Fifty Thousand
($250,000.00) Dollars (collectively the "Notes"); and
WHEREAS, the principal sum of the Loan as evidenced by the Notes
attributable to the partial financing of the acquisition and installation of the
Kochs Cranes is Eight Hundred Ninety-Three Thousand Four Hundred Twenty
($893,420.00) Dollars; and
<PAGE>
WHEREAS, the repayment terms of the Loan Agreement provide that
principal repayment is to commence at the beginning of year five (5) and is to
be made in monthly installments in accordance with a twenty-five (25) year
amortization schedule, with a balloon payment of the outstanding principal
balance, together with all interest and accrued interest at the end of year
twelve (12) (i.e. April 30, 1997); and
WHEREAS, the Loan Agreement provides that interest on the Loan from
years five (5) through twelve (12) shall be computed at seven (7%) percent; and
WHEREAS, Holt's current monthly repayments to the City for the Loan as
computed under the Loan Agreement are Twenty-Nine Thousand Two Hundred
Twenty-Four ($29,224.00) Dollars; and
WHEREAS, as a condition to the Loan being made to Holt, Oregon Avenue
Enterprises, Inc. ("OAE") executed a Surety Agreement on March 15, 1984 and a
Supplemental Surety Agreement on April 18, 1984 (collectively the "Sureties") in
favor of the City, whereby OAE unconditionally guaranteed repayment of Holt's
Loan to the City; and
WHEREAS, OAE delivered to the City as security for the prompt repayment
of OAE's obligations under the Sureties, a Security Agreement dated March 15,
1984 and recorded in Mortgage Book 2785 at page 562 and a Supplemental Security
Agreement dated April 18, 1984 and recorded in Mortgage Book 2793 at page 940,
(collectively the "Security Agreements") granting to the City a security
interest in OAE's two (2) Kochs Cranes; and
2
<PAGE>
WHEREAS, Holt has requested the City to release its lien on the Kochs
Cranes as created under the Security Agreements and to relinquish any and all
rights the City has or may have in the Kochs Cranes.
WHEREAS, it is the express intention of Holt to relocate the Kochs
Cranes and its container business from Gloucester City to Packer Avenue
Terminal, Philadelphia, Pennsylvania; and
WHEREAS, the City is concerned that its release of lien, and subsequent
removal of the Kochs Cranes, will lead to Holt's cessation of business
activities other than its container business within the City of Gloucester City
and that such cessation of business activities other than its container business
will cause serious and substantial detriment to the City;
NOW, THEREFORE, in consideration of the mutual terms, covenants,
provisions and conditions herein set forth, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. The City hereby releases its lien on the Kochs Cranes as created
under the Security Agreements and any and all other documents executed in
conjunction with the Loan Agreement or which may have been created in any other
manner whatsoever.
2. The City hereby relinquishes any and all rights and interests it has
or may have in the Kochs Cranes arising out of the Loan Agreement and the
transactions effected thereunder, and which have been or may be created in law
or in equity.
3
<PAGE>
3. For purposes of the repayment terms of the Notes, the principal
balance of the Loan is hereby recalculated by a reduction of Eight Hundred
Ninety-Three Thousand Four Hundred Twenty ($893,420.00) Dollars, and the new
principal (including interest accrued to date) of the Notes, due by Holt to the
City as of March 31, 1991 is Three Million Three Hundred Twenty Thousand Seven
Hundred Ninety-Nine ($3,320,799.00) Dollars.
4. The Notes shall be marked "cancelled" and returned to Holt in
exchange for the delivery by Holt of two (2) new Promissory Notes in the
respective amounts of $3,320,799.00 and $893,420.00.
5. Holt shall execute a Promissory Note whereby Holt promises to pay
the sum of Eight Hundred Ninety-Three Thousand Four Hundred Twenty ($893,420.00)
Dollars, without interest, to the City in twenty-two (22) equal monthly
installments commencing March 31, 1991.
6. Holt shall execute a Promissory Note whereby Holt promises to pay
the sum of Three Million Three Hundred Twenty Thousand Seven Hundred Ninety-Nine
($3,320,799.00) Dollars in monthly installments of Twenty-Three Thousand Nine
Hundred Fifty-Three Dollars and Twenty Six ($23,953.26) Cents commencing March
31, 1991, with a final balloon payment on April 30, 1997 of Two Million Nine
Hundred Twenty-One Thousand Eight Hundred Forty-Six ($2,921,846.00) Dollars.
4
<PAGE>
7. Holt shall make a presentation to the Mayor and Council, to its
satisfaction, with regard to future business operations of Holt at its
Gloucester City location.
8. Holt shall execute an Agreement that a cessation of business
activities, as defined in the Agreement, in Gloucester City constitutes a
default under the Loan Agreement dated January 3, 1984 (UDAG I) between the
parties, as amended March 31, 1991 and the Loan Agreement dated August 3, 1984
(UDAG II) between the parties, as amended March 31, 1991.
9. The City shall deliver to Holt a properly executed Form UCC-3, a
Satisfaction of Security Agreement, and any and all other documents which may be
necessary of record which shall serve as evidence that the City has relinquished
any and all of its rights and interest in the Kochs Cranes and which may be
further necessary to give effect to the reduction of the principal of the Loan.
10. Except as otherwise stated herein, all other terms and conditions
of the Loan Agreement shall remain in full force and effect.
5
<PAGE>
IN WITNESS WHEREOF, the parties have executed this First Amendment
the day and year first above written.
HOLT HAULING AND WAREHOUSING SYSTEM, INC.
BY: /s/ Bernard Gelman
------------------------------------
BERNARD GELMAN, Vice President
ATTEST:
/s/ John Evans
- -----------------------------------
John Evans, Secretary
(Corporate Seal)
CITY OF GLOUCESTER CITY
BY: /s/ Walter W. Jost
-----------------------------------
WALTER W. JOST, MAYOR
ATTEST:
/s/ Mary A. Moran
- -----------------------------------
(Municipal Seal)
6
<PAGE>
application and sources of funds:
USE OF FUNDS SOURCE OF FUNDS TOTAL
Line Item Activity ------------------------ COSTS
------------------ UDAG Private -----
Funds Funds
--------- ---------
a. Dredging planting and
other mitigation activities
for wetland park in
Pennsauken Township. 956,000 956,000
b. Completion of marginal
dock facility. 2,000,000 4,114,900 6,114,900
c. Replace roof at building
#8. 140,000 140,000
d. Transit shed expansion
at Pier #8. 744,000 744,000
e. Engineering Fees. 100,000 100,000
f. Legal Fees. 24,000 24,000
g. Construction Period
Interest. 615,700 615,700
h. Real Estate Taxes. 2,400 2,400
i. Equipment not counted in
leverage ratio. 458,000 458,000
---------- ---------- ----------
j. TOTAL PROJECT COST $2,000,000 $7,155,000 $9,155,000
Sources of Funds (Private)
1. Bankers* shall make a mortgage loan to the Borrower of Five Million
Five Hundred Thousand Dollars ($5,500,000.00) for development of the
marginal pier facility.
2. AEL or equivalent shall make a loan to the Borrower of Three
Hundred Fifty-five Thousand Dollars ($355,000.00) for the capital
equipment as previously mentioned.
3. The Borrower shall expend not less than One
*also referred to herein as Private Mortgage Lender and/or Underwriters.
<PAGE>
7
Million Three Hundred Thousand Dollars ($1,300,000.00) in cash equity
for offsite wetland park improvements in Pennsauken Township,
development of marginal pier facility, building construction
improvements, capital equipment, construction interest and taxes and
any professional fees related to this project.
TOTAL $7,155,000.00
Thus, there is a financing gap of Two Million Dollars ($2,000,000.00)
to be filled by this Loan Agreement. The source of funds for this is a Grant
Agreement executed between the HUD and the City of Gloucester City, New Jersey
as identified above. The terms of the Loan Agreement is based upon that Grant
Agreement. These terms specify that the Borrower provide to the Lender
sufficient documented evidence with respect to the following items:
PRECONDITIONS
(a) All governmental approvals and permits, including but not
limited to the following:
1. U.S. Corps of Engineers approvals and permits for
dredging, silting and other work within the navigable water
involved.
2. All environmental clearances and approvals necessary to
accomplish the proposed Project.
3. All approvals and permits necessary for the establishment
of a wetland
8
<PAGE>
recreational parkland.
4. Any and all other clearances, approvals and permits
issued by the proper Federal, State, County or municipal entities
necessary to initiate construction and completion of the proposed
Project.
(b) Title (leasehold or fee simple as appropriate) to all land
necessary for the Project, shall be held by the Borrower. These
documents shall be accompanied by a legal opinion of counsel to the
Borrower certifying that on a specified date, either an original ALTA
policy of land or mortgage title insurance, or other records
identified in the opinion, were examined by Borrower's counsel; and
that said policy or other records identify the Borrower, or a wholly-
owned subsidiary of the Borrower, as the owner or lessee of record, in
fee simple or leasehold of said property. The opinion shall further
state that on the date specified by Borrower's counsel, the record fee
simple or leasehold title to said real property was vested, in the
Borrower, or such subsidiary thereof.
(c) Loan from AEL, or equivalent, to the Borrower, or Borrower's
wholly owned subsidiary, for Three Hundred Fifty-five Thousand Dollars
($355,000.00) for financing, in part, the purchase of twelve (12)
forklift trucks and one bulldozer. This
9
<PAGE>
loan contract is accompanied by opinion of Borrower's legal counsel
that same is legally valid and enforceable under the laws of the State
of New Jersey, and that all persons executing these documents on
behalf of the Borrower were authorized to do so.
(d) Loan from Bankers to the Borrower for Five Million Five
Hundred Thousand Dollars ($5,500,000.00) for development of the
marginal pier facility. This loan contract is accompanied by opinion
of Borrower's legal counsel that same is legally valid and enforceable
under the laws of the State of New Jersey, and that all persons
executing these documents on behalf of the Borrower were authorized to
do so.
(e) Borrower shall provide not less than One Million Three
Hundred Thousand Dollars ($1,300,000.00) in equity funds for the
aforementioned Project activities. Evidence of Borrower's equity
contribution shall be on the letterhead of the Borrower or the lending
institution identifying the amount of liquid assets on hand or
immediately available and applicable to the project or which have been
expended by Borrower (for acquisition and construction activities
only, this must have been expended subsequent to HUD's preliminary
approval of the UDAG) in furtherance of project activities identified
above. The document
10
<PAGE>
shall be executed by an authorized officer of the Borrower or the
lending institution, and shall have attached an opinion of the
Borrower's legal counsel that the document is properly authorized and
reflects an accurate appraisal of the equity funds, on hand,
immediately available, irrevocably committed or which have been
expended by Borrower (and where applicable, subsequent to HUD's
preliminary approval of the UDAG) in furtherance of project activities
identified above.
All of the above evidentiary materials (a) through (e) must be provided
to the Lender on or before August 3, 1984.
LOAN TERMS
1. Borrower is obliged to carry out the privately financed project
activities identified above at a cost of not less than Seven Million one Hundred
Fifty-five Thousand Dollars ($7,155,000.00).
2. Lender shall loan Two Million Dollars ($2,000,000.00) to Borrower
for the partial financing of the construction of a marginal dock facility as
extended by approximately 6.53 acres from the UDAG Phase 1 facility. The terms
and conditions of the loan shall be consistent with the following:
I. UDAG Interim Loan:
(a) Principal: The principal amount of the Interim Loan shall be
no more than Two Million Dollars ($2,000,000.00).
(b) Interest: The interest rate shall be six
11
<PAGE>
percent (6%) per annum. Interest shall be forgiven during the term of the
Interim Loan.
(c) Disbursement/Ratio: Loan disbursements shall be based on
vouchers submitted by Borrower, verified by Lender, and certified by the
architect, construction manager, or other certifying official as shall be
acceptable to Lender. All submissions by contractors of monthly requisitions
shall be on AIA forms 702 and 703 or their equivalent.
No loans shall be disbursed until Borrower has first expended not less
than One Million Three Hundred Thousand Dollars ($1,300,000.00) of private funds
for the Project.
After Borrower has expended equity funds in the amount of One Million
Three Hundred Thousand Dollars ($1,300,000.00), UDAG funds may be disbursed for
Project activities in a ratio of not more than One Dollar ($1.00) of UDAG funds
to Three Dollars Fifty Cents ($3.50) of countable private funds; thus, for every
Four Dollars Fifty Cents ($4.50) of funds expended on the Project (after any
required equity contribution) not more than One Dollar ($1.00) will be UDAG
funds and not less than Three Dollars Fifty Cents ($3.50) will be countable
private funds.
II. UDAG Permanent Loan:
(a) Term: Term of the UDAG Permanent Loan shall be eleven and one
half (11 1/2) years commencing upon completion of construction, but in
no event later than April 30, 1985.
(b) Principal: The principal of the UDAG Permanent Loan shall be
the amount disbursed under the UDAG Interim Loan.
12
<PAGE>
(c) Interest: The interest rate shall be six percent (6%) per
annum during years one (1) through two and one half (2 1/2); and seven
and one half percent (7 1/2%) per annum during the remaining years of
the UDAG Permanent Loan Term.
(d) Repayment: Interest payments shall be deferred and accrued
for thirty (30) months and shall be added to the principal balance of
the UDAG Permanent Loan to form a new enlarged. principal balance.
Thereafter repayment of principal and interest shall be made in
quarterly installments in accordance with a 22.5 year amortization
schedule during the Term of the UDAG Permanent Loan, with a balloon
payment sufficient to pay off the entire outstanding indebtedness at
maturity of the UDAG Permanent Loan.
REQUIRED ADDITIONAL PROVISIONS APPLICABLE TO UDAG INTERIM AND PERMANENT LOANS:
III. Security: The UDAG Loan shall be secured by a deed of trust or
mortgage in favor of Lender upon all land, buildings, fixtures, equipment
and other assets of the Borrower comprising the Project, as defined by this
Loan Agreement and UDAG Grant Agreement #B-82-AB-34-0223. The security
position of the Lender may be subordinated to the Private Mortgage Lender's
loan or Underwriter's bond purchase and the security interests of AEL's or
equivalent's loan in an aggregate amount not to exceed Five Million Eight
Hundred Fifty-five Thousand Dollars ($5,855,000.00).
The deed of trust or mortgage shall also contain standard provisions to
protect the interest of the second
13
<PAGE>
mortgagee, including, for example, a provision that a default under the first
mortgage which could permit a foreclosure by the first mortgagee shall
constitute a default under the second mortgage and the unpaid principal
balance and interest of the UDAG Loan shall become immediately due and
payable.
To the extent permitted by law, all of the personal property described
in the mortgage shall be deemed to be fixtures and part of the real property. As
to any part of such personal property not deemed or permitted by law to be
fixtures, the mortgage shall constitute a security agreement under the Uniform
Commercial Code.
IV. Sale/Refinancing: The entire balance of the outstanding principal
of the UDAG loan and all accrued unpaid interest thereon, shall become
immediately due and payable upon the bankruptcy, reorganization, syndication,
dissolution or liquidation of the Borrower, or upon the sale, partial sale,
refinancing, exchange, transfer, sale under foreclosure, or other disposition of
the Project Site, improvements and/or capital equipment situated thereon, except
for a one time refinancing of the Private Mortgage Lender's outstanding loan
balance any time during the first year following completion of construction for
this Project. Thus the security position of the Lender will be subordinated to a
security position of the Private Mortgage Lender of such refinancing for the
full amount thereof, provided that the total amount of the refinancing shall
not be greater than the sum of (a) Five Million Five Hundred Thousand
Dollars ($5,500,000.00) (of the Private Mortgage Lender's funds for
this Project), (b)
14
<PAGE>
Two Million Five Hundred Thousand Dollars ($2,500,000.00) of the Mortgage
Lender's funds in the Project identified in the UDAG Grant Agreement
#B-82-AB-34-0223, and (c) Seven Million Seven Hundred Thirty-eight Thousand Nine
Hundred Eighty Nine Dollars ($7,738,989.00) which represents the outstanding
balance on non-UDAG mortgage financing to the mortgage lender, National
Acceptance Company. This provision supercedes Paragraph 2 (II) E (on page 12) of
the existing Loan Agreement on the first phase of this project (refer to Grant
Number B-84-AB-34-0223) except that the permission for one time refinancing of
the Equipment Lender's (Kocks Crane of Bremen, West Germany) outstanding loan
balance is still effective any time during five (5) years following completion
of construction for this first phase UDAG Project.
(aa) Prepayment: Prepayment may occur at any time without penalty.
(bb) Guarantee: Guarantor shall unconditionally and irrevocably
guarantee repayment of the Interim/Permanent Loan and completion of the
Project within the time frame set forth in (3) below. The Guarantor shall
be Thomas J. Holt, President of the Borrower. The Guarantor shall also
irrevocably and unconditionally guarantee the repayment of the UDAG
Interim/Permanent Loan, identified in the first phase of this project and
by UDAG Grant Agreement #B-82-AB-34-0223.
3. The timeframe to be conformed to by the Borrower for the beginning
and completion of project activities is as follows:
15
<PAGE>
Activity Commencement Date Completion Date
-------- ----------------- ---------------
a. Dredging, planting
and other mitigation
activities for Wetland
Park. October 1, 1984 April 30, 1985
b. Completion of con-
struction of marginal
dock facility October 1, 1984 April 30, 1985
c. Replace roof on
Building #8 and expand
transient shed October 1, 1984 April 30, 1985
d. Purchase of cargo
handling equipment October 1, 1984 April 30, 1985
In the event Borrower cannot complete any activity by this timetable,
then Borrower must notify the Lender in writing at least ten (10) days prior to
a deadline and request an extension for a specific date and state its reasons.
4. The Borrower shall provide Lender documented evidence in the form of
employment or payroll records as certified by an authorized officer of the
Borrower as to conformance with the following employment goals as set for the
project:
(a) Total permanent jobs generated by the project (i.e. additions to
Borrower's work force): 178
(b) Total permanent jobs filled by persons of low/moderate income as
defined under Section 570.3 of 24 C.F.R., Part 570 as may be from time to
time amended: 176
(c) Total permanent jobs filled by "CETA-Eligible" persons (i.e.
"chronically unemployed") 3
(d) Total permanent jobs filled by minority persons: 75
The above job goals shall be met within thirty (30) months from May 4,
1984, or by November 3, 1986. The Borrower
16
<PAGE>
agrees to use its best efforts to create or cause to be created within this time
period those jobs identified above.
5. Borrower will include in all contracts relating to any and all
construction activities financed in part or in whole by the UDAG Loan language
relating to Federally required general bid conditions. Borrower will cooperate
with Lender's on-site inspection and review of contractors records to insure
compliance with these conditions. Particular attention is addressed to Federal
requirements on the payment of prevailing wages for all construction labor,
which wages must be paid for all construction activities comprising this
Project.
6. Borrower and Lender will individually comply with the relevant
provisions set forth in Exhibit A as they pertain to:
(a) Program Income as applied to costs and for its use for Title I
eligible activities;
(b) Maintaining Records and right to inspect;
(c) Access to Project by HUD;
(d) No Assignment of Succession;
(e) HUD Approval of Loan Agreement Amendments;
(f) Disclaimer of Relationship and Conflict of Interest;
(g) Limitation of Lender's Liability; and
(h) Sign Display at Project Site.
7. Borrower hereby agrees that the happening or occurrence of any of
the following will constitute, at the sole option of Lender, a default
hereunder:
17
<PAGE>
(a) Failure by Borrower to make any payment of principal and
interest within thirty (30) days after due date hereunder:
(b) Failure by Borrower to perform any covenant or warranty
hereunder within thirty (30) days after receipt of written notice from Lender to
perform or carry out the same.
8. Borrower hereby covenants, warrants and represents as follows:
(a) That all financial statements, profit and loss statements,
statements as to ownership, and other statements given to Lender
are true and correct and that Borrower has full and complete
title to any and all property which may be pledged or in which a
security interest may be created by this Loan;
(b) That Borrower will inform Lender of any litigation involving
Borrower, the adverse determination of which might substantially prejudice
payment of the Loan;
(c) That Borrower will maintain adequate fire, theft, general and
public liability insurance and will deliver upon Lender's request, copies of
said policies evidencing such insurance.
(d) That Borrower has full corporate authority from its respective
shareholders and directors to enter into this Loan Agreement;
(e) That the proceeds of the Loan will be used only in connection
with the Project.
(f) That Borrower will participate in Lender's "job bank" program
and that both parties agree to the following obligations:
18
<PAGE>
(i) Borrower acknowledges and reaffirms unconditionally
Borrower's obligation and commitment to generate six (6) additional permanent
full-time non-union jobs as set forth in the UDAG application. Borrower
understands, covenants and agrees that the Lender (City of Gloucester) will be
given the first opportunity to fill these additional employment positions with
the Borrowerr through the Job Bank Program established by the Lender.
(ii) Borrower, in implementing its commitment to generate such
employment positions, shall contact the Job Bank representative of the Lender
with a written notification of the position available together with all
pertinent data relating to the employment. Such notification will be sent
directly to the Gloucester City Community Development Office, Attention:
Community Development Program Administrator.
(iii) Thereafter, the Lender shall have a fourteen (14) day
period of time within which to provide candidate(s) who are qualified and
eligible for such employment:
(iv) In the event the Lender fails to provide such candidate(s)
or that candidate proves to be unsuited to the positions available, the Borrower
shall at that time be free to make its own decision respecting the placement of
the additional employee(s).
9. The provisions of paragraph 7 and 8 notwithstanding, Borrower will
have thirty (30) days from receipt of written notice of default or breach, under
this agreement, to cure such default or breach.
19
<PAGE>
10. No provisions of this Loan Agreement can be deemed to have been
waived by Lender, except if in writting duly executed by Lender.
11. This is the entire agreement between the parties, and there is no
outside condition, warrant, agreement or understanding.
12. This Agreement shall reference the Grant Agreement which shall
control in all instances where this Agreement is silent.
13. Severability - If any provision of this Agreement, or the
application of such provision of any persons or circumstances, is held invalid
or unenforceable, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby.
IN WITNESS WHEREOF, the parties have executed this Loan Agreement, the
day and year first above written.
HOLT HAULING AND WAREHOUSING
SYSTEM, INC.
By: /s/ Bernard Gelman
-------------------------------
CORPORATE SEAL ATTEST: John A. Evans
----------------------------
CITY OF GLOUCESTER, NEW JERSEY
By: /s/ Robert
-------------------------------
ATTEST: /s/ Thomas
---------------------------
MUNICIPAL SEAL
20
<PAGE>
Exhibit A
Obligations of Both Parties
Program Income Applied to Costs:
(a) All Program Income received by the Lender prior to the completion
of all UDAG Activities, shall be transmitted to the Borrower for payment of
costs incurred to complete UDAG activities; in effect, this would reduce the
UDAG funds received by the Lender from HUD but would not diminish the UDAG loan
amount by the Borrower.
Program Income Use of "Eligible Activities":
(b) All Program Income received by the Lender after the completion of
all UDAG Activities shall, at the option of the Lender, either be transmitted to
the Borrower with Lender approval, for community and economic development
activities which would be eligible for assistance under Title I of the Federal
Housing and Community Development Act, unless otherwise provided in the
close-out agreement between Lender and HUD.
Maintaining Records and Right to Inspect:
(c) Each Participating Party shall keep and maintain books, records and
other documents relating directly to the receipt and disbursement of such grant
funds; and any duly authorized representative of the Secretary of HUD, or
Comptroller General of the United States shall, at all reasonable times, have
access to and the right to inspect, copy, audit and examine all such books,
records and other documents of such Participating Party until the completion of
all closeout procedures respecting this grant and the final settlement and
conclusion of all
21
<PAGE>
issues arising out of this grant.
(d) Each Participating Party agrees that any duly authorized
representative of the Secretary of HUD shall, at all reasonable times, have
access to any portion of the Project in which such Participating Party is
involved until the completion of all close-out procedures respecting this grant.
No Assignment of Succession:
(e) No transfer of grant funds by the Lender to the Borrower shall be
or be deemed an assignment of grant funds, and that the Borrower shall neither
succeed to any rights, benefits or advantages of the Lender under the UDAG Grant
Agreement, nor attain any rights, privileges, authorities or interests in or
under the Grant Agreement.
HUD Approvalof Amendments:
(f) During the term of the Lender's Grant Agreement this Loan Agreement
or other relevant contracts shall not be amended in any material respect without
the prior written approval of the Secretary of HUD. "Material" shall be defined
as anything which cancels or reduces any developmental, construction, job
creating, or financial obligation of any Participating Party by more than ten
percent (10%), changes the sites or character of any development activity, or
increases any time for performance by a party by more than thirty (30) days.
Disclaimer of Relationship:
(g) Nothing contained in the Lender's Grant Agreement, or in the
contract between these parties, nor any act of the Secretary of HUD, the Lender,
or any of the parties, shall be deemed or construed by any of the parties, or by
the third
22
<PAGE>
persons, to create any relationship of third-party beneficiary, principal and
agent, limited or general partnership, or joint venture, or of any association
or relationship involving the Secretary.
Conflict of Interest:
(h) Except for approved eligible administrative and personnel costs, no
member, officer, or employee of the Lender, or its designees, or agents, no
consultant, no member of the governing body of the Lender or the locality in
which the program is situated and no other public official of the Lender or such
locality or localities, who exercises or has exercised any functions or
responsibilities with respect to the Project during his or her tenure, or who is
in a position to participate in a decision making process or gain insider
information with regard to the project, shall have any interest, direct or
indirect, in any contract or subcontract, or the proceeds thereof, for work to
be performed in connection with the Project or in any activity, or benefit
therefrom, which is part of the Project at any time during or after such
person's tenure. Rules governing the behavior of both parties shall be
consistent with 24 CFR Sec. 570.611. This provision shall be in addition to the
requirements in Attachments O of OMB Circular A-102 and A-110.
(However, upon written request of the Lender, the Secretary of HUD may
agree in writing to waive a conflict otherwise prohibited by this provision
whenever there has been full public disclosure of the conflict of interest, and
the Secretary of HUD determines that undue hardship will result
23
<PAGE>
either to the Lender or the person affected by applying the prohibition and that
the granting of a waiver is in the public interest. No such request for a waiver
shall be made by Lender which would, in any way, permit a violation of State or
local law or any charter provision of the Lender).
Limitation of Lender's Liability:
(i) The Lender shall not be liable to any Participating Party, or to
any party except HUD, for completion of, or the failure to complete, any
activities which are a part of the Project, except those specified below:
1. Lender shall lend to Borrower Grant Funds in an amount not to exceed
Two Million Dollars ($2,000,000.00) to partially finance projects costs.
2. Lender shall be responsible for administering the Project a UDAG
cost not to exceed Twenty Thousand Dollars ($20,000.00).
3. Lender may reimburse itself and the Borrower for actual
administrative cost incurred in preparation of the application pursuant to 24
CFR 570 in an amount not to exceed Twenty-six Thousand Dollars ($26,000.00).
Sign Display:
(j) Borrower will produce and display a sign on the project site as per
the specifications of the Lender for the duration of the project. The costs of
such sign may be payable from the UDAG loan.
24
Loan Agreement
Made this 3rd day of August, 1984 by and between the City of
Gloucester City, New Jersey ("Lender") and Holt Hauling & Warehousing System,
Inc., a corporation having its principal place of business in Gloucester City
("Borrower").
W I T N E S S E T H :
Background
On August 3, 1984, the Lender entered into a Grant Agreement, Grant
Number B-84-AB-34-0239 ("Grant Agreement") with the United States Department of
Housing and Urban Development ("HUD") for an Urban Development Action Grant
("UDAG") to finance a low cost loan ("Loan") to Borrower, to in turn finance
certain port development improvements at the Borrower's facility in Gloucester
City. Included in said port development improvements are the purchase of
capital equipment, real estate improvements and legal and other associated
costs, all of which constitute the "Project".
The Equipment purchases in the form of one bulldozer and twelve (12)
forklift trucks, are being financed, in part, by a conventional loan of Three
Hundred Fifty-five Thousand Dollars ($355,000.00) from American Equipment
Leasing Company ("AEL"), or equivalent. The mortgage lender, providing a loan
of Five Million Five Hundred Thousand Dollars ($5,500,000.00) on the marginal
pier extension of approximately 6.53 acres from Pier 9 to Monmouth Street, is
Bankers Trust Company ("Bankers").
Specifically, the Project consists of the following application and
sources of funds:
<PAGE>
<TABLE>
<CAPTION>
TOTAL
USE OF FUNDS SOURCE OF FUNDS COSTS
- ------------ --------------- -----
Line Item Activity UDAG Private
Funds Funds
- -----------------------------------------------------------------------------------------
<S> <C> <C>
a. Dredging planting and
other mitigation activities
for wetland park in
Pennsauken Township. 956,000 956,000
b. Completion of marginal
dock facility. 2,000,000 4,114,900 6,114,900
c. Replace roof at building #8. 140,000 140,000
d. Transit shed expansion
at Pier #8. 744,000 744,000
e. Engineering Fees. 100,000 100,000
f. Legal Fees. 24,000 24,000
g. Construction Period
Interest. 615,700 615,700
h. Real Estate Taxes. 2,400 2,400
i. Equipment not counted in
leverage ratio. 458,000 458,000
---------- ---------- ----------
j. TOTAL PROJECT COST $2,000,O00 $7,155,000 $9,155,000
</TABLE>
Sources of Funds (Private)
1. Bankers*, shall make a mortgage loan to the Borrower of Five
Million Five Hundred Thousand Dollars ($5,500,000.00) for
development of the marginal pier facility.
2. AEL or equivalent shall make a loan to the Borrower of Three
Hundred Fifty-five Thousand Dollars ($355,000.00) for the capital
equipment as previously mentioned.
3. The Borrower shall expend not less than One
*also referred to herein as Private Mortgage Lender and/or Underwriters.
-2-
<PAGE>
Million Three Hundred Thousand Dollars ($1,300,000.00) in cash
equity for offsite wetland park improvements in Pennsauken
Township, development of marginal pier facility, building
construction improvements, capital equipment, construction
interest and taxes and any professional fees related to this
project.
TOTAL $7,155,000.00
Thus, there is a financing gap of Two Million Dollars ($2,000,000.00)
to be filled by this Loan Agreement. The source of funds for this is a Grant
Agreement executed between the HUD and the City of Gloucester City, New Jersey
as identified above. The terms of the Loan Agreement is based upon that Grant
Agreement. These terms specify that the Borrower provide to the Lender
sufficient documented evidence with respect to the following items:
PRECONDITIONS
(a) All governmental approvals and permits, including but not limited
to the following:
1. U.S. Corps of Engineers approvals and permits for dredging,
silting and other work within the navigable water involved.
2. All environmental clearances and approvals necessary to
accomplish the proposed Project.
3. All approvals and permits necessary for the establishment of
a wetland
-3-
<PAGE>
recreational parkland.
4. Any and all other clearances, approvals and permits issued
by the proper Federal, State, County or municipal entities
necessary to initiate construction and completion of the
proposed Project.
(b) Title (leasehold) or fee simple as appropriate) to all land
necessary for the Project, shall be held by the Borrower. These
documents shall be accompanied by a legal opinion of counsel to
the Borrower certifying that on a specified date, either an
original ALTA policy of land or mortgage title insurance, or other
records identified in the opinion, were examined by Borrower's
counsel; and that said policy or other records identify the
Borrower, or a wholly-owned subsidiary of the Borrower, as the
owner or lessee of record, in fee simple or leasehold of said
property. The opinion shall further state that on the date
specified by Borrower's counsel, the record fee simple or
leasehold title to said real property was vested, in the Borrower,
or such subsidiary thereof.
(c) Loan from AEL, or equivalent, to the Borrower, or Borrower's
wholly owned subsidiary, for Three Hundred Fifty-five Thousand
Dollars ($355,000.OO) for financing, in part, the purchase of
twelve (12) forklift trucks and one bulldozer. This
-4-
<PAGE>
loan contract is accompanied by opinion of Borrower's legal
counsel that same is legally valid and enforceable under the laws
of the State of New Jersey, and that all persons executing these
documents on behalf of the Borrower were authorized to do so.
(d) Loan from Bankers to the Borrower for Five Million Five Hundred
Thousand Dollars ($5,500,000.00) for development of the marginal
pier facility. This loan contract is accompanied by opinion of
Borrower's legal counsel that same is legally valid and
enforceable under the laws of the State of New Jersey, and that
all persons executing these documents on behalf of the Borrower
were authorized to do so.
(e) Borrower shall provide not less than One Million Three Hundred
Thousand Dollars ($1,300,000.00) in equity funds for the
aforementioned Project activities. Evidence of Borrower's equity
contribution shall be on the letterhead of the Borrower or the
lending institution identifying the amount of liquid assets on
hand or immediately available and applicable to the project or
which have been expended by Borrower (for acquisition and
construction activities only, this must have been expended
subsequent to HUD's preliminary approval of the UDAG) in
furtherance of project activities identified above. The document
-5-
<PAGE>
shall be executed by an authorized officer of the Borrower or the
lending institution, and shall have attached an opinion of the
Borrower's legal counsel that the document is properly authorized
and reflects an accurate appraisal of the equity funds, on hand,
immediately available, irrevocably committed or which have been
expended by Borrower (and where applicable, subsequent to HUD's
preliminary approval of the UDAG) in furtherance of project
activities identified above.
All of the above evidentiary materials (a) through (e) must be
provided to the Lender on or before August 3, 1984.
LOAN TERMS
1. Borrower is obliged to carry out the privately financed project
activities identified above at a cost of not less than Seven Million One
Hundred Fifty-five Thousand Dollars ($7,155,000.00).
2. Lender shall loan Two Million Dollars ($2,000,000.00) to Borrower
for the partial financing of the construction of a marginal dock facility as
extended by approximately 6.53 acres from the UDAG Phase 1 facility. The terms
and conditions of the loan shall be consistent with the following:
I. UDAG Interim Loan:
(a) Principal: The principal amount of the Interim Loan shall be
no more than Two Million Dollars ($2,000,000.00).
(b) Interest: The interest rate shall be six
-6-
<PAGE>
percent (6%) per annum. Interest shall be forgiven during the term of the
Interim Loan.
(c) Disbursement/Ratio: Loan disbursements shall be based on
vouchers submitted by Borrower, verified by Lender, and certified by the
architect, construction manager, or other certifying official as shall be
acceptable to Lender. All submissions by contractors of monthly requisitions
shall be on AIA forms 702 and 703 or their equivalent.
No loans shall be disbursed until Borrower has first expended not less
than One Million Three Hundred Thousand Dollars ($1,300,000.00) of private funds
for the Project.
After Borrower has expended equity funds in the amount of One Million
Three Hundred Thousand Dollars ($1,300,000.00), UDAG funds may be disbursed for
Project activities in a ratio of not more than One Dollar ($1.00) of UDAG funds
to Three Dollars Fifty Cents ($3.50) of countable private funds; thus, for every
Four Dollars Fifty Cents ($4.50) of funds expended on the Project (after any
required equity contribution) not more than One Dollar ($1.00) will be UDAG
funds and not less than Three Dollars Fifty Cents ($3.50) will be countable
private funds.
II. UDAG Permanent Loan:
(a) Term: Term of the UDAG Permanent Loan shall be eleven and one
half (11 1/2) years commencing upon completion of construction, but in no event
later than April 30, 1985.
(b) Principal: The principal of the UDAG Permanent Loan shall be
the amount disbursed under the UDAG Interim Loan.
-7-
<PAGE>
(c) Interest: The interest rate shall be six percent (6%) per
annum during years one (1) through two and one half (2 1/2); and seven and one
half percent (7 1/2%) per annum during the remaining years of the UDAG
Permanent Loan Term.
(d) Repayment: Interest payments shall be deferred and accrued for
thirty (30) months and shall be added to the principal balance of the UDAG
Permanent Loan to form a new enlarged principal balance. Thereafter repayment of
principal and interest shall be made in quarterly installments in accordance
with a 22.5 year amortization schedule during the Term of the UDAG Permanent
Loan, with a balloon payment sufficient to pay off the entire outstanding
indebtedness at maturity of the UDAG Permanent Loan.
REQUIRED ADDITIONAL PROVISIONS APPLICABLE TO UDAG INTERIM AND PERMANENT LOANS:
III. Security: The UDAG Loan shall be secured by a deed of trust or
mortgage in favor of Lender upon all land, buildings, fixtures, equipment and
other assets of the Borrower comprising the Project, as defined by this Loan
Agreement and UDAG Grant Agreement #B-82-AB-34-0223. The security position of
the Lender may be subordinated to the Private Mortgage Lender's loan or
Underwriter's bond purchase and the security interests of AEL's or equivalent's
loan in an aggregate amount not to exceed Five Million Eight Hundred Fifty-five
Thousand Dollars ($5,855,000.00).
The deed of trust or mortgage shall also contain standard provisions
to protect the interest of the second
-8-
<PAGE>
mortgagee, including, for example, a provision that a default under the first
mortgage which could permit a foreclosure by the first mortgagee shall
constitute a default under the second mortgage and the unpaid principal balance
and interest of the UDAG Loan shall become immediately due and payable.
To the extent permitted by law, all of the personal property described
in the mortgage shall be deemed to be fixtures and part of the real property. As
to any part of such personal property not deemed or permitted by law to be
fixtures, the mortgage shall constitute a security agreement under the Uniform
Commercial Code.
IV. Sale/Refinancing: The entire balance of the outstanding principal
of the UDAG loan and all accrued unpaid interest thereon, shall become
immediately due and payable upon the bankruptcy, reorganization, syndication,
dissolution or liquidation of the Borrower, or upon the sale, partial sale,
refinancing, exchange, transfer, sale under foreclosure, or other disposition of
the Project Site, improvements and/or capital equipment situated thereon, except
for a one time refinancing of the Private Mortgage Lender's outstanding loan
balance any time during the first year following completion of construction for
this Project. Thus the security position of the Lender will be subordinated to a
security position of the Private Mortgage Lender of such refinancing for the
full amount thereof, provided that the total amount of the refinancing shall not
be greater than the sum of (a) Five Million Five Hundred Thousand Dollars
($5,500,000.00) (of the Private Mortgage Lender's funds for this Project), (b)
-9-
<PAGE>
Two Million Five Hundred Thousand Dollars ($2,500,000.00) of the Mortgage
Lender's funds in the Project identified in the UDAG Grant Agreement
#B-82-AB-34-0223, and (c) Seven Million Seven Hundred Thirty-eight Thousand Nine
Hundred Eighty Dollars ($7,738,980.00) which represents the outstanding balance
on non-UDAG mortgage financing to the mortgage lender, National Acceptance
Company. This provision supercedes Paragraph 2 (II) E (on page 12) of the
existing Loan Agreement on the first phase of this project (refer to Grant
Number B-84-AB-34-0223) except that the permission for one time refinancing of
the Equipment Lender's (Kocks Crane of Bremen, West Germany) outstanding loan
balance is still effective any time during five (5) years following completion
of construction for this first phase UDAG Project.
(aa) Prepayment: Prepayment may occur at any time without penalty.
(bb) Guarantee: Guarantor shall unconditionally and irrevocably
guarantee repayment of the Interim/Permanent Loan and completion of the Project
within the time frame set forth in (3) below. The Guarantor shall be Thomas J.
Holt, President of the Borrower. The Guarantor shall also irrevocably and
unconditionally guarantee the repayment of the UDAG Interim/Permanent Loan,
identified in the first phase of this project and by UDAG Grant Agreement
#B-82-AB-34-0223.
3. The timeframe to be conformed to by the Borrower for the beginning
and completion of project activities is as follows:
-10-
<PAGE>
<TABLE>
<CAPTION>
Activity Commencement Date Completion Date
-------- ----------------- ---------------
<S> <C> <C>
a. Dredging, planting
and other mitigation
activities for Wetland
Park. October 1, 1984 April 30, 1985
b. Completion of con-
struction of marginal
dock facility October 1, 1984 April 30, 1985
c. Replace roof on
Building #8 and expand
transient shed October 1, 1984 April 30, 1985
d. Purchase of cargo
handling equipment October 1, 1984 April 30, 1985
</TABLE>
In the event Borrower cannot complete any activity by this timetable,
then Borrower must notify the Lender in writing at least ten (10) days prior to
a deadline and request an extension for a specific date and state its reasons.
4. The Borrower shall provide Lender documented evidence in the form
of employment or payroll records as certified by an authorized officer of the
Borrower as to conformance with the following employment goals as set for the
project:
(a) Total permanent jobs generated by the project (i.e. additions
to Borrower's work force): 178
(b) Total permanent jobs filled by persons of low/moderate income
as defined under Section 570.3 of 24 C.F.R., Part 570 as may be from time to
time amended: 176
(c) Total permanent jobs filled by "CETA- Eligible" persons
(i.e."chronically unemployed"): 3
(d) Total permanent jobs filled by minority persons: 75
The above job goals shall be met within thirty (30) months from May 4,
1984, or by November 3, 1986. The Borrower
-11-
<PAGE>
agrees to use its best efforts to create or cause to be created within this time
period those jobs identified above.
5. Borrower will include in all contracts relating to any and all
construction activities financed in part or in whole by the UDAG Loan language
relating to Federally required general bid conditions. Borrower will cooperate
with Lender's on-site inspection and review of contractors records to insure
compliance with these conditions. Particular attention is addressed to Federal
requirements on the payment of prevailing wages for all construction labor,
which wages must be paid for all construction activities comprising this
Project.
6. Borrower and Lender will individually comply with the relevant
provisions set forth in Exhibit A as they pertain to:
(a) Program Income as applied to costs and for its use for Title I
eligible activities;
(b) Maintaining Records and right to inspect;
(c) Access to Project by HUD;
(d) No Assignment of Succession;
(e) HUD Approval of Loan Agreement Amendments;
(f) Disclaimer of Relationship and Conflict of Interest;
(g) Limitation of Lender's Liability; and
(h) Sign Display at Project Site.
7. Borrower hereby agrees that the happening or occurrence of any of
the following will constitute, at the sole option of Lender, a default
hereunder:
(a) Failure by Borrower to make any payment
-12-
<PAGE>
of principal and interest within thirty (30) days after due date hereunder:
(b) Failure by Borrower to perform any covenant or warranty
hereunder within thirty (30) days after receipt of written notice from Lender to
perform or carry out the same.
8. Borrower hereby covenants, warrants and represents as follows:
(a) That all financial statements, profit and loss statements,
statements as to ownership, and other statements given to Lender are true and
correct and that Borrower has full and complete title to any and all property
which may be pledged or in which a security interest may be created by this
Loan;
(b) That Borrower will inform Lender of any litigation involving
Borrower, the adverse determination of which might substantially prejudice
payment of the Loan;
(c) That Borrower will maintain adequate fire, theft, general and
public liability insurance and will deliver upon Lender's request, copies of
said policies evidencing such insurance.
(d) That Borrower has full corporate authority from its respective
shareholders and directors to enter into this Loan Agreement;
(e) That the proceeds of the Loan will be used only in connection
with the Project.
(f) That Borrower will participate in Lender's "job bank" program
and that both parties agree to the following
-13-
<PAGE>
obligations:
(i) Borrower acknowledges and reaffirms unconditionally
Borrower's obligation and commitment to generate six (6) additional permanent
full-time non-union jobs as set forth in the UDAG application. Borrower
understands, covenants and agrees that the Lender (City of Gloucester) will be
given the first opportunity to fill these additional employment positions with
the Borrower, through the Job Bank Program established by the Lender.
(ii) Borrower, in implementing its commitment to generate such
employment positions, shall contact the Job Bank representative of the Lender
with a written notification of the position available together with all
pertinent data relating to the employment. Such notification will be sent
directly to the Gloucester City Community Development Office, Attention:
Community Development Program Administrator.
(iii) Thereafter, the Lender shall have a fourteen (14) day
period of time within which to provide candidate(s) who are qualified and
eligible for such employment:
(iv) In the event the Lender fails to provide such
candidate(s) or that candidate proves to be unsuited to the positions available,
the Borrower shall at that time be free to make its own decision respecting the
placement of the additional employee(s).
9. The provisions of paragraph 7 and 8 notwithstanding, Borrower will
have thirty (30) days from receipt of written notice of default or breach, under
this agreement, to cure such default or breach.
-14-
<PAGE>
10. No provisions of this Loan Agreement can be deemed to have been
waived by Lender, except if in writing duly executed by Lender.
11. This is the entire agreement between the parties, and there is no
outside condition, warrant, agreement or understanding.
12. This Agreement shall reference the Grant Agreement which shall
control in all instances where this Agreement is silent.
13. Severability - If any provision of this Agreement, or the
application of such provision of any persons or circumstances, is held invalid
or unenforceable, the remainder of this Agreement, or the application of such
provision to persons or circumstances other than those as to which it is held
invalid or unenforceable, shall not be affected thereby.
IN WITNESS WHEREOF, the parties have executed this Loan Agreement, the
day and year first above written.
HOLT HAULING AND WAREHOUSING
SYSTEM, INC.
By: /s/ Bernard Gelman
-----------------------------------
ATTEST /s/ John Evans
-------------------------------
CORPORATE SEAL
CITY OF GLOUCESTER, NEW JERSEY
By: /s/ Robert [illegible]
-----------------------------------
ATTEST /s/ Thomas [illegible]
-------------------------------
MUNICIPAL SEAL
-15-
<PAGE>
Exhibit A
Obligations of Both Parties
Program Income Applied to Costs:
(a) All Program Income received by the Lender prior to the completion
of all UDAG Activities, shall be transmitted to the Borrower for payment of
costs incurred to complete UDAG activities; in effect, this would reduce the
UDAG funds received by the Lender from HUD but would not diminish the UDAG loan
amount by the Borrower.
Program Income Use of "Eligible Activities":
(b) All Program Income received by the Lender after the completion of
all UDAG Activities shall, at the option of the Lender, either be transmitted
to the Borrower with Lender approval, for community and economic development
activities which would be eligible for assistance under Title I of the Federal
Housing and Community Development Act, unless otherwise provided in the
close-out agreement between Lender and HUD.
Maintaining Records and Right to Inspect:
(c) Each Participating Party shall keep and maintain books, records
and other documents relating directly to the receipt and disbursement of such
grant funds; and any duly authorized representative of the Secretary of HUD, or
Comptroller General of the United States shall, at all reasonable times, have
access to and the right to inspect, copy, audit and examine all such books,
records and other documents of such Participating Party until the completion of
all closeout procedures respecting this grant and the final settlement and
conclusion of all
-16-
<PAGE>
issues arising out of this grant.
(d) Each Participating Party agrees that any duly authorized
representative of the Secretary of HUD shall, at all reasonable times, have
access to any portion of the Project in which such Participating Party is
involved until the completion of all close-out procedures respecting this grant.
No Assignment of Succession:
(e) No transfer of grant funds by the Lender to the Borrower shall be
or be deemed an assignment of grant funds, and that the Borrower shall neither
succeed to any rights, benefits or advantages of the Lender under the UDAG Grant
Agreement, nor attain any rights, privileges, authorities or interests in or
under the Grant Agreement.
HUD Approval of Amendments:
(f) During the term of the Lender's Grant Agreement this Loan
Agreement or other relevant contracts shall not be amended in any material
respect without the prior written approval of the Secretary of HUD. "Material"
shall be defined as anything which cancels or reduces any developmental,
construction, job creating, or financial obligation of any Participating Party
by more than ten percent (10%), changes the sites or character of any
development activity, or increases any time for performance by a party by more
than thirty (30) days.
Disclaimer of Relationship:
(g) Nothing contained in the Lender's Grant Agreement, or in the
contract between these parties, nor any act of the Secretary of HUD, the Lender,
or any of the parties, shall be deemed or construed by any of the parties, or by
the third
-17-
<PAGE>
persons, to create any relationship of third-party beneficiary, principal and
agent, limited or general partnership, or joint venture, or of any association
or relationship involving the Secretary.
Conflict of Interest:
(h) Except for approved eligible administrative and personnel costs,
no member, officer, or employee of the Lender, or its designees, or agents, no
consultant, no member of the governing body of the Lender or the locality in
which the program is situated and no other public official of the Lender or such
locality or localities, who exercises or has exercised any functions or
responsibilities with respect to the Project during his or her tenure, or who is
in a position to participate in a decision making process or gain insider
information with regard to the project, shall have any interest, direct or
indirect, in any contract or subcontract, or the proceeds thereof, for work to
be performed in connection with the Project or in any activity, or benefit
therefrom, which is part of the Project at any time during or after such
person's tenure. Rules governing the behavior of both parties shall be
consistent with 24 CFR Sec. 570.611. This provision shall be in addition to the
requirements in Attachments O of OMB Circular A-102 and A-110.
(However, upon written request of the Lender, the Secretary of HUD
may agree in writing to waive a conflict otherwise prohibited by this provision
whenever there has been full public disclosure of the conflict of interest, and
the Secretary of HUD determines that undue hardship will result
-18-
<PAGE>
either to the Lender or the person affected by applying the prohibition and that
the granting of a waiver is in the public interest. No such request for a waiver
shall be made by Lender which would, in any way, permit a violation of State or
local law or any charter provision of the Lender).
Limitation of Lender's Liability:
(i) The Lender shall not be liable to any Participating Party, or to
any party except HUD, for completion of, or the failure to complete, any
activities which are a part of the Project, except those specified below:
1. Lender shall lend to Borrower Grant Funds in an amount not to
exceed Two Million Dollars ($2,000,000.00) to partially finance projects costs.
2. Lender shall be responsible for administering the Project a UDAG
cost not to exceed Twenty Thousand Dollars ($20,000.00).
3. Lender may reimburse itself and the Borrower for actual
administrative cost incurred in preparation of the application pursuant to 24
CFR 570 in an amount not to exceed Twenty-six Thousand Dollars ($26,000.00).
Sign Display:
(j) Borrower will produce and display a sign on the project site as
per the specifications of the Lender for the duration of the project. The costs
of such sign may be payable from the UDAG loan.
-19-
FIRST AMENDMENT TO LOAN AGREEMENT DATED AUGUST 3, 1984
THIS First Amendment to Loan Agreement dated August 3, 1984 ("First
Amendment") between HOLT HAULING AND WAREHOUSING SYSTEX, INC. ("Holt") and THE
CITY OF GLOUCESTER CITY, NEW JERSEY ("City") is made this 31st day of March,
1991.
WHEREAS, Holt and the City entered into a Loan Agreement dated January
3, 1984 (the "Loan Agreement I") which provided that City lend to Holt the sum
of Three Million Five Hundred Ninety-Five Thousand, Five Hundred Thirty-Three
($3,595,533.00) Dollars (the "Loan") for the partial financing of the
construction of a marginal dock facility and the acquisition and installation of
two (2) rail supported container cranes ("Kochs Cranes"); and
WHEREAS, Holt and the City entered into a Loan Agreement dated August
3, 1984 (the "Loan Agreement II") which provided that City lend to Holt the sum
of Two Million ($2,000,000.00) Dollars (the "Loan") for the partial financing of
the construction of a marginal dock facility;
WHEREAS, Loan Agreements I and II involved "Project" activities defined
under Urban Development Action Grant (UDAG) Nos. B-84-AB-34-0239 and
B-82-AB-34-0223, comprised primarily of the construction of a marginal dock
facility and the acquisition of capital equipment for Holt's facilities in the
City; and
WHEREAS, as a condition to Loan I and II being made to Holt, Oregon
Avenue Enterprises, Inc. ("OAE") executed a Surety Agreement on March 15, 1984
and a Supplemental Surety Agreement on April 18,
1
1984 (collectively the "Sureties") in favor of the City, whereby OAE
unconditionally guaranteed repayment by Holt of Loan I and II to the City; and
WHEREAS, OAE delivered to the City as security for the prompt repayment
of OAE's obligations under the Sureties, a Security Agreement dated March 15,
1984 and recorded in Mortgage Book 2785 at page 562, and a Supplemental Surety
Agreement dated April 18, 1984 and recorded in Mortgage Book 2793 at page 940,
and a Security Modification Agreement dated August 22, 1984 (collectively the
"Security Agreements") granting to the City a security interest in OAE's two (2)
Kochs Cranes; and
WHEREAS, Holt has requested the City to release its lien on the Kochs
Cranes as created under the Security Agreements and to relinquish any and all
rights the City has or may have in the Kochs Cranes.
WHEREAS, Holt and the City entered into a First Amendment to Loan
Agreement I; and
NOW, THEREFORE, in consideration of the mutual terms, covenants,
provisions and conditions herein set forth, and intending to be legally bound
hereby, the parties hereto agree as follows:
1. An Event of Default under the Loan Agreement I, as amended March 31,
1991 or under any and all Promissory Notes, Mortgages or any other Agreements
executed pursuant to Loan
2
<PAGE>
Agreement I, and the First Amendment thereto, shall constitute a default under
the Loan Agreement II dated August 3, 1984 and the Promissory Notes, Mortgages
or any other Agreements executed pursuant to Loan Agreement II.
2. Holt shall have thirty (30) days from receipt of written notice of
default or breach, under this Agreement, to cure such default or breach.
3. Except as otherwise stated herein, all other terms and conditions of
the Loan Agreement dated August 3, 1984 shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have executed this First Amendment the
day and year first above written.
HOLT HAULING AND WAREHOUSING SYSTEM, INC.
BY: /s/ Bernard Gelman
-------------------------------------
BERNARD GELMAN, Vice President
ATTEST
/s/ John Evans
- -----------------------------
JOHN EVANS, Secretary
(Corporate Seal)
CITY OF GLOUCESTER CITY
BY: /s/ Walter W. Jost
-------------------------------------
WALTER W. JOST, Mayor
ATTEST:
/s/ Mary A. Moran
- -----------------------------
(Municipal Seal)
3
SECOND AMENDMENT TO LOAN AGREEMENTS
DATED JANUARY 3, 1984 AND AUGUST 3, 1984
THIS Second Amendment to Loan Agreements dated January 3, 1984 and
August 3, 1984 ("Second Amendment") between HOLT HAULING AND WAREHOUSING SYSTEM,
INC. ("Holt") and THE CITY OF GLOUCESTER CITY, NEW JERSEY ("City") is made this
1st day of August, 1996.
WHEREAS, Holt and the City entered into a Loan Agreement dated January
3, 1984 ("UDAG I Loan Agreement") which provided that the City lend to Holt the
sum of Three Million, Five Hundred Ninety-Five Thousand, Five Hundred
Thirty-Three ($3,595,533.00) Dollars ("UDAG I Loan") for the partial financing
of the construction of a marginal dock facility and the acquisition and
installation of two (2) rail supported container cranes ("Kochs Cranes"); and
WHEREAS, as evidence of its indebtedness to the City, Holt delivered a
Promissory Note dated March 15, 1984 for the sum of Three Million, Three Hundred
Forty-Five Thousand, Five Hundred Thirty-Three ($3,345,533.00) Dollars and a
Promissory Note dated April 18, 1984 for the sum of Two Hundred Fifty Thousand
($250,000.00) Dollars (collectively "UDAG I Notes"); and
WHEREAS, to secure the indebtedness of UDAG I Loan, Holt delivered the
City a Mortgage on March 15, 1984 recorded at Mortgage Book _ Page __ in the
Camden County Register of Deeds in the amount of Three Million Three Hundred
Forty-Five
<PAGE>
Thousand, Five Hundred Thirty-Three ($3,345,533.00) Dollars and a Supplemental
Mortgage on April 18, 1984 recorded at Mortgage Book _ Page _ in the Camden
County Register of Deeds in the amount of Two Hundred Fifty Thousand
($250,000.00) Dollars, both Mortgages being recorded against a tract of land
located at Block __, Lot _ (Tract 1) in the City of Gloucester City; and
WHEREAS, to secure the indebtedness of UDAG I Loan, Broadway Equipment
Leasing Corp. delivered the City a Mortgage on March 15, 1984 recorded at
Mortgage Book___ Page _ in the Camden County Register of Deeds in the amount of
Three Million, Three Hundred Forty-Five Thousand, Five Hundred Thirty-Three
($3,345,533.00) Dollars and a Supplemental Mortgage on April 18, 1984 recorded
at Mortgage Book _ Page __ in the Camden County Register of Deeds in the amount
of Two Hundred Fifty Thousand ($250,000.00) Dollars, both Mortgages being
recorded against a tract of land located at Block __ Lot _ (Tract 2) in the City
of Gloucester City; and
WHEREAS, Broadway Equipment Leasing Corp. executed a Surety Agreement
dated March 15, 1984 and a Supplemental Surety Agreement dated April 18, 1984
guaranteeing repayment of UDAG I Loan by Holt; and
WHEREAS, Oregon Avenue Enterprises, Inc. executed a Surety Agreement
dated March 15, 1984 and a Supplemental Surety Agreement dated April 18, 1984
guaranteeing repayment of UDAG I Loan by Holt; and
2
<PAGE>
WHEREAS, Holt and the City entered into a second Loan Agreement dated
August 3, 1984 ("UDAG II Loan Agreement") which provided that City lend to Holt
the sum of Two Million ($2,000,000.00) Dollars ("UDAG II Loan") for the partial
financing of the construction of a marginal dock facility; and
WHEREAS, as evidence of its indebtedness to the City, Holt delivered a
Promissory Note dated August 22,1984 for the sum of Two Million ($2,000,000.00)
Dollars ("UDAG II Note"); and
WHEREAS, to secure the indebtedness of UDAG II Loan, Holt delivered the
City a Mortgage on ____________, 1984 recorded at Mortgage Book _ Page __ in the
Camden County Register of Deeds in the amount of Two Million ($2,000,000.00)
Dollars, said Mortgage being recorded against a tract of land located at Block
_______, Lot _ (Tract 1) in the City of Gloucester City; and
WHEREAS, to secure the indebtedness of UDAG II Loan, Broadway Equipment
Leasing Corp. delivered the City a Mortgage on _, 1984 recorded at Mortgage Book
__ Page _ in the Camden County Register of Deeds in the amount of Two Million
($2,000,000.00) Dollars, said Mortgage being recorded against a tract of land
located at Block __ Lot _ (Tract 2) in the City of Gloucester City; and
WHEREAS, on August 24, 1984 Thomas J. Holt executed a Guaranty in favor
of the City, guaranteeing repayment by Holt of the sums of Three Million Three
Hundred Forty-
3
<PAGE>
Five Thousand, Five Hundred Thirty-Three ($3,345,533.00) Dollars, and Two
Hundred Fifty Thousand ($250,000.00) Dollars pursuant to UDAG I Loan and Two
Million ($2,000,000.00) Dollars pursuant to UDAG II Loan; and
WHEREAS, on March 31, 1991 Holt and the City executed a First Amendment
to the Loan Agreement dated January 3, 1984, pursuant to which certain Security
Agreements were released by the City, the principal of UDAG I Loan was
recalculated to an amount of Three Million, Three Hundred Twenty Thousand, Seven
Hundred Ninety-Nine ($3,320,799.00) Dollars, and UDAG I Notes were canceled and
returned to Holt in exchange for the delivery of two (2) new Promissory Notes
("Amended UDAG I Notes") in the respective amounts of $3,320,799.00 and
$893,420.00; and
WHEREAS, on March 31, 1991 Holt and the City executed a First Amendment
to the Loan Agreement dated August 3, 1984, pursuant to which an event of
Default under UDAG I Loan Agreement, as amended March 31, 1991 or under any and
all Promissory Notes, Mortgages or any other Agreements executed pursuant to
UDAG I Loan Agreement and the First Amendment thereto, shall constitute a
default under UDAG II Loan Agreement and the Promissory Notes, Mortgages or any
other Agreements executed pursuant to UDAG II Loan Agreement; and
NOW, THEREFORE, in consideration of the mutual terms, covenants,
provisions and conditions herein set forth, and intending to be legally bound
hereby, the parties hereto agree as follows:
4
<PAGE>
1. The City and Holt agreed to enter into this Second Amendment under
which the current outstanding balances due to the City under UDAG I Loan and
UDAG II Loan including principal and accrued interest will be combined into one
principal amount subject to the terms and conditions of UDAG I Loan Agreement
and UDAG II Loan Agreement. Holt agrees to execute a Promissory Note to the City
for the combined principal amount on the terms set forth herein and other
non-contradictory provisions of the UDAG I Loan Agreement and UDAG II Loan
Agreement.
2. The City and Holt agree that the Mortgages executed by Holt and
Broadway Equipment Leasing Corp. securing repayment of UDAG I Loan and UDAG II
Loan by Holt shall remain in full force and effect under the terms of this
Second Amendment.
3. The City and Holt agree that the Surety Agreements executed by
Broadway Equipment Leasing Corp. and Oregon Avenue Enterprises, Inc.
guaranteeing repayment of UDAG I Loan and UDAG II Loan by Holt shall remain in
full force and effect under the terms of this Second Amendment.
4. The City and Holt agree that the Guaranty executed by Thomas J. Holt
guaranteeing repayment of UDAG I Loan and UDAG II Loan by Holt shall remain in
full force and effect under the terms of this Second Amendment.
5. The City and Holt agree that the UDAG I and UDAG II Loan Agreements
(the "Combined Principal") shall be refinanced through execution of a Promissory
Note in the amount of Five Million, Fifty-Seven Thousand, Eight Hundred
Thirty-Six Dollars ($5,057,836.00), accruing interest at the rate of six percent
(6%) per annum commencing on
5
<PAGE>
March 30, 1997, payable in one hundred eighty (180) equal monthly payments based
on a twenty-five (25) year amortization schedule, with interest thereon. A final
balloon payment will be made on March 31, 2012 for all outstanding Combined
Principal and accrued interest and late fees, if any, as of that date.
6. The City and Holt agree that for the purposes of the repayment terms
of UDAG I Loan Agreement and UDAG 11 Loan Agreement, the combined principal
balance of both UDAG I Loan and LTDAG II Loan [including the amounts of payment
due from August 1, 1996 through March 31, 1997 at an interest rate of seven
percent (70%)] shall be $5,057,836.00 as of March 31, 1997.
7. The City and Holt agree that monthly payments under this Second
Amendment will be subject to a two percent (2%) late charge for each thirty
(30) day deliquency for amounts paid more than fifteen (15) days after their due
date.
8. The City and Holt agree that the Amended UDAG I Notes and UDAG II
Note shall be marked "canceled" and returned to Holt in exchange for the
delivery by Holt of the new Promissory Note in the amount of $5,057,836.00
9. The City and Holt agree that at the time of the execution of this
Second Amendment, Holt shall pay the City a one-half percent (1/2%) financing
fee in the amount of $25,289.00 to cover the City's administrative costs in
connection with the refinancing of UDAG I Loan and UDAG II Loan.
6
<PAGE>
10. Except as otherwise stated herein, all other terms and conditions
of the UDAG I Loan Agreement and UDAG II Loan Agreement, including the
Mortgages, Surety Agreements and Guaranty related thereto shall remain in full
force and effect.
IN WITNESS WHEREOF, the parties have executed this Second Amendment the
day and year first above written.
HOLT HAULING AND
WAREHOUSING SYSTEM, INC.
BY: Bernard Gelman
------------------------------------
ATTEST:
/s/ John Evans
- ------------------------------
JOHN EVANS, Secretary
(Corporate Seal)
CITY OF GLOUCESTER CITY
BY: /s/ Robert T. Gorman
-----------------------------------
ROBERT T. GORMAN, Mayor
ATTEST:
/s/ Mary A. Moran RMC
- ------------------------------
MARY MORAN, City Clerk
(Municipal Seal)
7
Dated 16 April 1997
MULTI CURRENCY
SECURED REVOLVING CREDIT FACILITY
between
THE RIVERFRONT DEVELOPMENT CORPORATION
as Borrower
and
FINANSBANKEN ASA
as Bank
--------------------
NOK 60,000,000
--------------------
Wikborg, Rein & Co.
Olav V's gate 6
P.O. Box 1513 Vika
M-0117 Oslo - Norway
Tel: +47 2282 7500
Fax: +47 2282 7501
<PAGE>
2/45
TABLE OF CONTENTS
Clause Page No.
- ------ --------
1. Interpretation 3
2. The Commitments 8
3. Purpose 8
4. Conditions Precedent 9
5. Drawdown 10
6. Repayment 11
7. Prepayment and Cancellation 11
8. Interest Periods 12
9. Interest 12
10. Payments 13
11. Optional Currency 14
12. Taxes 15
13. Market Disruption 15
14. Increased Costs 16
15. Illegality 17
16. Force Majeure 17
17. Security 17
18. Representations and Warranties 18
19. Covenants 21
20. Default 23
21. Fees and Expenses 26
22. Indemnities 27
23. Amendments and Waivers 28
24. Changes to the Parties 29
25. Severability 29
26. Notices 29
27. Language 30
28. Service of Process 30
29. Governing Law 31
30. Jurisdiction 31
SCHEDULES
- ---------
1 Form of Drawdown Notice 32
2 Condition Precedent Documents 33
3 Form of Pledge of Accounts 34
4 Form of Guarantee 37
2
<PAGE>
THIS AGREEMENT is dated 16 April, 1997 and made between:
(1) THE RIVERFRONT DEVELOPMENT CORPORATION, a New Jersey corporation, c/o Holt
Cargo System, Inc., King and Essex Streets, Gloucester City, NJ 08030,
U.S.A. as borrower (the "Borrower") and
(2) FINANSBANKEN ASA, Stortingsgt. 8, P.O. Box 817, Sentrum 0104 Oslo, Norway
as lender (the "Bank")
IT IS AGREED as follows
1. INTERPRETATION
1.1 Definitions
In this Agreement, the following terms shall have the meanings set opposite
to them below:
"ACL" Atlantic Container Line Aktiebolag, with
Swedish organization No. 556000-7006.
"ACL Shares" the shares in ACL owned by the Borrower from
time to time.
"Banking Day" a day on which banks are open for business
of the nature required by this Agreement
in Oslo, New York, and any other jurisdiction
relevant to this Agreement or any Drawing
hereunder.
"Commitment" the amount of NOK 60,000,000 to the extent
not cancelled, reduced or transferred under
this Agreement.
"Commitment Period" the period from the date of this Agreement
until the Final Maturity Date.
"Drawdown Date" the date of the advance of a Drawing pursuant
to this Agreement.
3
<PAGE>
"Drawdown Notice" a request made by the Borrower for a Drawing,
substantially in the form of Schedule 1.
"Drawing" each borrowing by the Borrower under this
Agreement or the principal amount outstanding
of that borrowing from time to time.
"Event of Default" an event specified as such in Clause 20
(Events of Default).
"Exchange Rate" the Bank's costs for the purchase of USD with
NOK at or about 10:00 am. (Oslo time) on the
Quotation Date.
"Facility" this revolving credit facility, the terms of
which are set out herein.
"Final Maturity Date" the first anniversary of the first Drawdown
Date.
"Financial Indebtedness" any indebtedness (whether actual or
contingent) incurred in respect of borrowed
moneys or any other payment obligations, and
commitments of any nature that may expose any
person to payment of moneys.
"Functioning Market" trading on the Oslo Stock Exchange of at
least 100 ACL shares by bona fides third
parties for a period 14 days.
"Guarantee" a joint and several guarantee for the
Outstanding Indebtedness of the Borrower, to
be issued by the Guarantors in favour of the
Bank as security for the Borrower's
obligations under this Agreement,
substantially in the form of Schedule 4
hereto.
"Guarantors" jointly and severally, each of Holt Hauling
and Warehousing System, Inc., a Pennsylvania
corporation, and Holt Cargo Systems, Inc., a
Delaware corporation.
4
<PAGE>
"Interest Accounts" Borrower's NOK-account No. 9680.05.56888
and/or USD-account No. 9680.55.10185 with the
Bank.
"Interest Period" each successive period in the Borrower's
option of (i) one, two, three or six months
or (ii) such other period as may be requested
by the Borrower (e.g. in connection with
merging of Drawings) and agreed by the Bank
(subject to the availability of such funds to
the Bank) commencing on the Drawdown Date,
provided that if an Interest Period would end
on a day which is not a Banking Day it shall
end on the following Banking Day, unless such
day falls in the next calendar month, in
which case the Interest Period shall end on a
preceding Banking Day.
"Interest Payment Date" the last Banking Day of each Interest Period
for that Drawing, and if the Interest Period
is longer than three months, at tri-monthly
intervals during that Interest Period.
"LIBOR" the annual rate of interest (rounded upwards
if necessary to the nearest whole multiple of
1/16 per cent) which at or about 11.00 a.m.
(Oslo time) on a Quotation Date appears on
the Reuter Screen LIBO Page or such other
page as may replace that service for the
purpose of displaying the offer of USD
deposits for a period equal to the relevant
Interest Period.
"Loan" at any time, the aggregate Original NOK
Amount of all Drawings outstanding under this
Agreement.
"Margin" 2% (two per cent) per annum.
"Market Value" the value of the ACL Shares calculated on the
basis of the trading price listed on the Oslo
Stock Exchange for shares in ACL as of the
final trade on the relevant day, but if there
is no Functioning Market immediately prior
5
<PAGE>
to such day, the value of the ACL Shares as
reasonably determined by the Bank.
"NIDR" the annual rate of interest (rounded upwards
if necessary to the nearest whole multiple of
1/16 per cent) which at or about 11.00 am.
(Oslo time) on a Quotation Date appears on
the Reuter Screen NIDR Page or such other
page as may replace that service for the
purpose of displaying the offer of NOK
deposits for a period equal to the relevant
Interest Period and in an amount similar to
the relevant Drawing.
"NOK" the lawful currency of the Kingdom of Norway
from time to time.
"Original NOK
Amount" in relation to a Drawing, means:
(a) if that Drawing is denominated in NOK,
the amount of that Drawing; or
(b) if that Drawing is denominated in USD,
the equivalent in NOK of the amount of
that Drawing calculated on the basis of
the Exchange Rate.
"Offered Rate" NIDR or LIBOR, as the case may be.
"Outstanding
Indebtedness" all sums of any kind at any time owing
actually or contingently by the Borrower to
the Bank in relation to this Agreement and
the Security Documents or any of them,
including, but without limitation, by way of
repayment of principal, payment of interest
and default interest, payment upon any
indemnity or counter indemnity, reimbursement
for costs or otherwise whatsoever.
6
<PAGE>
"Pledge of
Accounts" the Pledge of Accounts agreement between the
Bank and the Borrower whereby the Borrower
pledges to the Bank the VPS Account, the VPC
Account, and the ACL Shares therein
registered from time to time as security for
the obligations of the Borrower under this
Agreement, substantially in the form attached
hereto as Schedule 3.
"Quotation Date" the second Banking Day before the first day
of an Interest Period.
"Repayment Date" in respect of each Drawing, the last day of
the Interest Period for the Drawing.
"Security Documents" together, the Pledge of Accounts and the
Guarantee.
"Security Interest" any mortgage, pledge, lien, charge (whether
fixed or floating), assignment by way of
security, finance lease, sale and repurchase
or sale and lease back arrangement, sale of
receivables on a recourse basis or security
interest or any other agreement or
arrangement having the effect of confering
security, except for liens arising solely by
operation of law and/or the ordinary course
of business securing amounts not more 45 days
overdue.
"USD" means the lawful currency of the United
States of America from time to time.
"VPS Account" the Borrower's VPS account No. 09680004580 in
Norway which is administered by the Bank and
wherein the ACL Shares are electronically
registered in Norway.
"VPC Account" the Borrower's VPC No. 000070670455, which is
administrated by SE-Banken, and wherein the
ACL Shares are electronically registered in
Sweden.
7
<PAGE>
1.2 Construction
1.2.1 Words importing the singular shall (unless the contrary intention
appears) include the plural and vice versa;
1.2.2 A Clause or a Schedule is respectively a reference to a clause of
or schedule to this Agreement; and
1.2.3 A provision of law is a reference to that provision as amended or
re-enacted, and to any regulation made by the appropriate authority
pursuant to such law.
2. THE COMMITMENTS
2.1 Statement of Commitments and Maximum Amount
2.1.1 Subject to the terms of this Agreement, the Bank agrees to make
available to the Borrower funds in NOK and/or USD up to an
aggregate Original NOK Amount not exceeding the Commitment.
2.1.2 Notwithstanding any other provision of this Agreement, the
aggregate principal amount of all Drawings including any requested
Drawing may not on any requested Drawdown Date, when applying the
Exchange Rate, exceed the Commitment.
2.2 Revolving Credit Facility
During the Commitment Period the Borrower may utilise the Facility
on a revolving basis so that any amounts repaid prior to or at the
end of the Commitment Period may be redrawn by the Borrower subject
to the terms and conditions of this Agreement.
3. PURPOSE
The Borrower shall apply the Drawings for its general corporate
purposes, including to finance its acquisition of the ACL Shares.
8
<PAGE>
4. CONDITIONS PRECEDENT
4.1 Documentary Conditions Precedent
The obligations of the Bank to the Borrower under this Agreement
are subject to the condition precedent of the Bank having received
all of the documents set out in Schedule 2 in form and substance
satisfactory to the Bank.
4.2 Further Conditions Precedent
4.2.1 The obligations of the Bank to advance or make available or
re-advance any amount under Clauses 5.2 (Drawdown Notice) and 5.3
(Participation in Drawings), are subject to the further conditions
precedent that on both the date of the Drawdown Notice and the date
on which the relevant amount is to be advanced:
(a) the representations and warranties in Clause 18
(Representations and Warranties), all which are deemed to be
repeated on those dates, are correct and will be correct
immediately after the advance with reference to the facts and
circumstances then prevailing, unless otherwise informed to
and agreed by the Bank in writing prior to such dates;
(b) no Default is outstanding or would result from the advance;
(c) no more than four (4) Drawings will be outstanding at the
relevant Drawdown Date; and
(d) the ACL Shares pledged to the Bank under the Pledge of
Accounts including any shares to be pledged to the Bank on the
Drawdown Date, have a Market Value of not less than 285% of
the Loan (corresponding to a Loan to Market Value ratio of
35%), provided, however, that this Clause 4.2.1 (d) shall only
apply if the Loan outstanding on the first day of an Interest
Period exceeds the Loan outstanding on the last day of the
preceding Interest Period.
9
<PAGE>
5. DRAWDOWN
5.1 Commitment Period
Subject to the terms of this Agreement, Drawings will be made
available to the Borrower at any time during the Commitment Period
when requested by the Borrower. Any amount of the Commitment not
drawn down and outstanding on the last day of the Commitment Period
shall automatically be cancelled on that day. The first Drawdown
Date shall not be later than on 15 May 1997.
5.2 Drawdown Notice
Whenever the Borrower desires a Drawing to be made available to it
hereunder, it shall give a Drawdown Notice to the Bank,
appropriately completed, to be received not later than 09:00 a.m.
(Oslo time) two Banking Days prior to the requested Drawdown Date
of such Drawing specifying in respect of such Drawing:
(a) the requested Drawdown Date, being a Banking Day during the
Commitment Period;
(b) the amount of such Drawing, in one currency only, which:
(i) if the currency is NOK, shall be either (a) a minimum,
of NOK 5,000,0000 or (b) the balance of the Commitment
undrawn on the requested Drawdown Date; or
(ii) if the currency is USD, shall be the equivalent of (a)
a minimum of USD 750,000 or (b) the balance of the
Commitment undrawn on the requested Drawdown Date.
(c) the Interest Period for such Drawing determined in accordance
with Clause 8 (Interest Periods); and
(d) the payment instructions in compliance with Clause 10
(Payments).
10
<PAGE>
Each Drawdown Notice shall be irrevocable and, subject to the terms
of this Agreement, the Borrower shall be bound to accept the
Drawing in accordance with the Drawdown Notice.
6. REPAYMENT
6.1 Repayment
The Borrower shall, subject to Clause 7, repay each Drawing on the
Repayment Date for the Drawing and shall repay all Drawings
outstanding under this Agreement in full on the Final Maturity
Date. No transfer of funds shall be required if the Repayment Date
of one Drawing falls on the same date as the Drawdown Date of a new
Drawing in the same amount and currency.
7. PREPAYMENT AND CANCELLATION
7.1 Voluntary cancellation
The Borrower may (without penalty or premium), by giving not less
than two Banking Days prior written notice to the Bank, cancel in
whole or in part the amount of the Commitment undrawn at the date
on which such cancellation is to be effective (but, if in part, in
an integral multiple of NOK 5,000,000 in each case).
7.2 Voluntary prepayment
The Borrower may, subject to Clause 7.3, by giving not less than
two Banking Days prior written notice to the Bank, prepay in whole
or in part, any Drawing made hereunder.
7.3 Miscellaneous provisions
7.3.1 Any notice of prepayment and/or cancellation under this Agreement
is irrevocable and shall specify the date on which the prepayment
or cancellation is to become effective and the amount to be prepaid
or cancelled.
11
<PAGE>
7.3.2 All prepayments under this Agreement shall be made together with
accrued interest on the amount prepaid and any amounts due in
respect of such prepayment under Clause 22.2 (Other indemnities)
but otherwise without premium or penalty.
7.3.3 No amount of the Commitment cancelled under this Agreement may
subsequently be reinstated unless agreed to in writing by the Bank.
8. INTEREST PERIODS
8.1 Selection
The Borrower shall select the first Interest Period for a Drawing
in the Drawdown Notice for that Drawing. Each Interest Period for a
Drawing will commence on its Drawdown Date and each Drawing shall
have one Interest Period only.
8.2 No overrunning
If an Interest Period in respect of a Drawing would otherwise
overrun the Final Maturity Date, it shall be shortened so that it
ends on the Final Maturity Date.
9. INTEREST
9.1 Interest rate
The rate of interest on each Drawing is the rate per annum
determined by the Bank to be the aggregate of the applicable:
(a) Margin; and
(b) (i) (in the case of a Drawing denominated in NOK) NIDR;
or
(ii) (in the case of a Drawing denominated in USD)
LIBOR.
9.2 Interest Due
Except as otherwise provided in this Agreement, accrued interest on
each Drawing is payable by the Borrower on the Interest Payment
Date in respect of such Drawing.
12
<PAGE>
9.3 Default interest
9.3.1 If the Borrower fails to pay on the due date any amount payable
by it under this Agreement, it shall forthwith on demand by the
Bank pay default interest on the overdue amount from the due date
up to the date of actual payment at a rate to be determined by the
Bank as the aggregate sum of 3% per cent per annum, the Margin, and
the cost of funding to the Bank as set out in Clause 9.1 (b) above.
9.3.2 Default interest will be compounded at the end of each month.
9.4 Calculation
All interest shall be calculated on the actual number of days
elapsed and on the basis of a 360-day year.
10. PAYMENTS
10.1 Place
All payments by the Borrower under this Agreement shall be made to
the Bank to such account as the Bank may notify to the Borrower.
10.2 Funds
Payments under this Agreement to the Bank shall be made for value
on the due date at such times and, subject to Clause 10.3, in such
funds as the Bank may specify to the Borrower as being customary at
the time for the settlement of transactions in the relevant
currency in the place for payment.
10.3 Currency
10.3.1 A repayment or prepayment of a Drawing or any part of a Drawing as
well as payment of interest and fees is payable in the currency in
which the Drawing is denominated on its due date.
10.3.2 Interest is payable in the currency in which the relevant Drawing
is denominated.
13
<PAGE>
10.3.3 Amounts payable in respect of costs, expenses, taxes and the like
are payable in the currency in which they are incurred.
10.3.4 Any other amount payable under this Agreement is, except as
otherwise provided in this Agreement, payable in NOK.
10.3 Set-off and counterclaim
All payments made by the Borrower under this Agreement shall be
made without set-off of counterclaim.
10.4 Non-Banking Days
If a payment under this Agreement is due on a day which is not a
Banking Day, the due date for that payment shall instead be the
next Banking Day in the same calendar month provided that (i) if
there is no next Banking Day in the same calendar month or (ii) if
the day on which that payment was otherwise due was the Final
Maturity Date, the due date for that payment shall instead be the
preceding Banking Day.
11. OPTIONAL CURRENCY
11.1 Selection
The Borrower has an option to have a drawing be made in either NOK
or USD. The Borrower shall select the currency in which a Drawing
is to be denominated in the Drawdown Notice for that Drawing, and
only one currency may be selected for each Drawing.
11.2 Revocation of currency
Without prejudice to Clauses 13 (Market disruption) and 15
(Illegality), if before 10.00 a.m. (Oslo Time) on the Banking Day
before the commencement of an Interest Period the Bank determines
that:
(a) it is impracticable for the Bank using reasonable efforts to
fund the Drawing in USD during that Interest Period; or
14
<PAGE>
(b) the advance or use of USD might contravene any law or
regulation,
the Bank shall give notice to the Borrower to that effect before
11.00 a.m. (Oslo time) on that day and, unless the Borrower before
12.00 a.m. (Oslo time) notifies the Bank that the Borrower will
cancel that Drawing, the Drawing shall be denominated in NOK during
that Interest Period.
12. TAXES
All payments by the Borrower under this Agreement shall be made
free and clear of and without deduction for or on account of any
taxes, except to the extent that the Borrower is required by law to
make payment subject to any taxes. If by requirement of law any tax
or amounts in respect of tax must be deducted or withheld from any
amounts payable or paid by the Borrower under this Agreement, the
Borrower shall pay such additional amounts as may be necessary to
ensure that the Bank receives (free from any liability in respect
of any such deduction or withholding) a net amount equal to the
full amount which it would have received had payment not been made
subject to tax or other deduction provided, however, that if the
Borrower is required to deduct or withhold taxes because of a
failure of Bank to provide the required documentation to preclude
such deduction or withholding, Borrower shall have no obligation to
pay such additional amounts. The Borrower shall promptly deliver to
the Bank any receipts, certificates or other proof evidencing the
amounts paid or payable in respect of any deduction or withholding
as aforesaid.
13. MARKET DISRUPTION
13.1 Market disruption
If, on or prior to a Quotation Date, the Bank determines that:
(a) adequate and fair means do not exist for ascertaining the
Offered Rate; or
(b) matching deposits may not be available to the Bank in
sufficient amounts to fund the Drawing for the relevant
Interest Period or the cost to the Bank of obtaining matching
deposits to fund the Drawing would be in excess of the Offered
Rate for the relevant Interest Period,
15
<PAGE>
the Bank shall promptly notify the Borrower and the Bank of the
fact and that this Clause 13.1 is in operation.
13.2 Negotiations
13.2.1 If a notification under Clause 13.1 applies to a Drawing which has
not been made, that Drawing shall not be made. However, the
Borrower and the Bank shall, within five Banking Days of receipt of
the notification, enter into negotiations in good faith (which
neither the Borrower nor the Bank shall be obliged to continue for
a period of more than 30 days) with a view to agreeing an
alternative basis for the borrowing of that and any future Drawing.
14. INCREASED COSTS
If by reason of (i) changes in any existing law, rule or
regulation, or (ii) the adoption of any new law, rule or
regulation, or (iii) any change in the interpretation or
administration of (i) or (ii) above by any governmental authority,
or (iv) compliance with any directive or request from any
governmental authority (whether or not having the force of law)
and provided that such changes provided for above were not
reasonably known to the Bank at the date hereof:
(a) the Bank incurs a cost as a result of having entered into this
Agreement and/or as a result of performing its obligations
hereunder;
(b) there is an increase in the cost to the Bank of funding or
maintaining the Loan;
(c) the Bank becomes liable for any new taxes (other than tax on
or measured by overall net income) calculated by reference to
its participation in the Loan; or
(d) the Bank becomes subject to new or increased capital adequacy
or similar requirements which will have the effect of
increasing the amount of capital required or expected to be
maintained by the Bank based on the Bank's commitment in the
Loan,
16
<PAGE>
then any such cost, liability or reduced return shall be payable by
the Borrower within 10 days after written demand by the Bank from
the date such request was received by the Borrower either in the
form of an increased Margin or in the form of an indemnification in
the amount conclusively (save in the case of manifest error)
determined by the Bank. Upon the Borrower's request, the Bank
hereby agrees to provide the Borrower with a certificate setting
forth in reasonable detail the calculation of amounts requested to
be paid under this provision.
15. ILLEGALITY
If it becomes illegal under any law applying to the Bank to make or
maintain the Loan, then the Banks commitment to make available the
Loan will end, and if any amount has been advanced, the Borrower
shall repay the Bank's participation in the Loan on the last day of
the then current Interest Period.
16. FORCE MAJEURE
The Bank shall not be liable for any failure to perform the whole
or any part of this Agreement resulting directly or indirectly from
action or inaction or purported action of any government or
governmental or local authority, or any strike, lockout, boycott
and blockade effected by or upon the Bank.
17. SECURITY
17.1 Security Instruments
The Loan together with all unpaid interest, default interest,
charges, expenses, costs and any derived liability whatsoever of
the Borrower towards the Bank in connection therewith shall be
secured by the Pledge of Accounts and the Guarantee.
17.2 Right of Set-off against Borrower's accounts with the Bank
In the event of non-payment of any amount hereunder when due, the
Bank shall, to the extent permitted by relevant law, have a
separate right of set-off in respect of any credit balance, in any
currency, on any accounts the Borrower might have
17
<PAGE>
with the Bank from time to time towards satisfaction of any sum due
to the Bank hereunder.
18. REPRESENTATIONS AND WARRANTIES
The Borrower makes to the Bank the representations and warranties
set out hereunder:
18.1 Status
The Borrower and each of the Guarantors is a corporation, duly
organized and validly existing, under the laws of the jurisdiction
of its state of incorporation and each has the power to own its
assets and carry on its business as it is presently being
conducted.
18.2 Powers and authority
The Borrower and each of the Guarantors have the power to enter
into and perform, and have taken all necessary corporate action to
authorize the entry into, performance and delivery of, this
Agreement and the Security Documents and the transactions
contemplated thereunder.
18.3 Legal validity and enforceability
This Agreement and the Security Documents constitute the legal,
valid and binding obligations of the Borrower and the Guarantors as
the case might be, enforceable against them in accordance with
their terms and conditions, and no registration, filing, payment of
tax or fees or other formalities are necessary or desirable to
render this Agreement and the Security Documents enforceable
against any of them, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance or other similar laws
affecting the enforcement of creditors' right or by general
principles of equity limiting the availability of equitable
remedies.
18.4 No-conflict
The entry into and performance by the Borrower and the Guarantors
of the transactions contemplated by this Agreement do not and will
not conflict with:
18
<PAGE>
(a) any material law or regulation or judicial or official order;
(b) their respective articles of association; or
(c) any material document or agreement which is binding upon any
of them or any of their assets.
18.5 No Default
(a) No Default is outstanding or will result from the making of
any Drawing; and
(b) no other event is outstanding which constitutes or, with the
giving of notice or lapse of time might constitute an event of
default under any material document which is binding on the
Borrower, any of the Guarantors, or any of its assets.
18.6 Authorizations
All authorizations required in connection with the entry into,
performance, validity and enforceability of, and the transactions
contemplated by, this Agreement have been obtained or effected (as
appropriate) and are in full force and effect.
18.7 Withholdings or deductions
Provided that Bank provides a completed, valid form 1001 (or such
successor form as may be required by law) to Borrower, Borrower is
not required to make any withholdings or deductions from any
payment to be made by the Borrower or the Guarantors under this
Agreement or the Security Documents.
18.8 Taxes
The Borrower has filed all tax returns required to be filed by it,
and paid or made adequate provisions for the payment of all
relevant taxes, charges and assessments.
19
<PAGE>
18.9 Accounts
The audited consolidated accounts of the Borrower and each of the
Guarantors most recently delivered to the Bank:
(i) have (save as stated therein) been prepared in accordance with
United States generally accepted accounting principles
consistently applied; and
(ii) fairly represent the consolidated financial condition as of
the date to which they were drawn up,
and there has been no adverse change in the consolidated financial
condition of the Borrower or any of the Guarantors since the date
on which those accounts were drawn up, which might reasonably be
expected to have a material adverse effect on the ability of the
Borrower or any of the Guarantors to perform their respective
obligations under this Agreement or the Security Documents.
18.10 Litigation
No litigation, arbitration or administrative proceedings are
currently in progress or are pending or threatened against either
the Borrower or any of the Guarantors which would, if adversely
determined, be reasonably expected to have a material adverse
effect on the ability of the Borrower or any of the Guarantors to
perform their respective obligations under this Agreement and/or
the Security Documents.
18.11 Information
The information supplied by the Borrower or the Guarantors to the
Bank in relation to this Agreement:
(a) was true in all material respects when made;
(b) did not omit any information which, if disclosed, could
reasonably be expected to materially and adversely affect the
decision of a person considering whether to enter into this
Agreement; and
(c) nothing has occurred which renders the said information untrue
or misleading to an extent which, if disclosed, could
reasonably be expected
20
<PAGE>
to materially and adversely affect the decision of a person
considering whether to enter into this Agreement.
18.12 Times for making representations and warranties
The representations and warranties set out in this Clause 18 are
made by the Borrower on the date of this Agreement and are deemed
to be repeated by the Borrower on the date of each Drawdown Notice
and the date on which the relevant amount is advanced with
reference to the facts and circumstances then existing, unless
otherwise informed to the Bank in writing prior to such dates.
19. COVENANTS
19.1 Positive Covenants
The Borrower undertakes and covenants that for as long as any
amounts remain outstanding under this Agreement, it shall:
(a) punctually pay all amounts due under this Agreement and
duly perform and observe all of its other obligations under
this Agreement and the Security Documents;
(b) give prompt written notice to the Bank of the following:
(i) any default or occurrence of any event which, with the
giving of notice or lapse of time or both, would
constitute a material default or breach presenting
liability in excess of USD 500,000 under any other
agreement to which the Borrower and/or any of the
Guarantors is a party; and
(ii) the occurrence of any event which might adversely
affect the ability of the Borrower and/or any of the
Guarantors to perform their respective obligations under
the Agreement and/or any of the Security Documents to
which any of them is a party.
(c) furnish the following to the Bank:
21
<PAGE>
(i) as soon as reasonably practicable after the same are
available, copy of the Borrower's and each of the
Guarantors' unaudited quarterly financial statements
consisting of balance sheet and profit and loss
statements, and notes related thereto;
(ii) such financial and other information concerning the
Borrower and the Guarantors and their affairs as the
Bank may from time to time reasonably require.
(iii) any litigation or arbitration or administrative
proceeding before or of any court or governmental
authority which is instituted against the Borrower
and/or any of the Guarantors or any of their property
or assets, and keep the Bank advised on the status
thereof;
(d) promptly and duly pay all indebtedness and perform all
contractual obligations pursuant to any agreements to which
it is a party;
(e) if the Market Value of the ACL Shares owned by the Borrower at
any time is less than 222.2% per cent of the Loan
(corresponding to a Loan to Market Value ratio of 45%), within
three Banking Days after having received a request from the
Bank;
(i) provide additional security acceptable to the Bank to
ensure that the aggregate value of the ACL Shares plus
such additional security is at least equal to 250% per
cent of the Loan; or
(ii) prepay such amount of the Loan as may be necessary to
restore such ratio set out in (i) above;
(f) cause any dividend which is distributed to the Borrower in
1997 in respect of the ACL Shares to be paid to one of the
Interest Accounts and thereafter to be applied according to
agreement between the Borrower and the Bank;
(g) cause any amount of interest on its due date to be transferred
from the relevant Interest Account to the Bank, and the
Borrower hereby
22
<PAGE>
authorizes the Bank to make such transfer on each Interest
Payment Date;
(h) maintain and procure that each of the Guarantors maintains,
with financially sound and reputable insurance companies,
funds or underwriters, adequate insurance with respect to
their respective properties and business against such
liabilities, casualties and contingencies and of such types
and in such amounts as are consistent with prudent business
practice.
19.2 Negative Covenants
The Borrower undertakes and covenants that during the Loan Period
it will not, without the prior written consent of the Banks:
(a) pay or declare any dividend or other distribution to its
shareholders; and
(c) except as contemplated by the Agreement, not (i) incur any
Financial Indebtedness, (ii) grant any Security Interest in
any of its assets and/or (iii) provide any loans, guarantees,
capital commitments or cash distributions of any kind.
20. DEFAULT
There shall be an Event of Default if:
20.1 Non-payment
The Borrower does not pay on the due date any amount payable by it
under this Agreement at the place at, and in the currency in, which
it is expressed to be payable, provided that if such failure to pay
has arisen as a consequence of an administrative or technical error
only, then such event shall not be an Event of Default unless such
failure continues for a period in excess of three Banking Days.
23
<PAGE>
20.2 Breach of other obligations
The Borrower does not comply in any material respect with any
covenant or other provision of this Agreement (other than those
referred to in Clause 20.1), provided that if such non-compliance
is, in the opinion of the Bank, capable of remedy:
(i) the Bank notifies the Borrower of such non-compliance;
and
(ii) such non-compliance remains un-remedied for a period of
15 Banking Days (or in case of Clause 19.1 (e) five
Banking days).
20.3 Misrepresentation
A representation, warranty or statement made or repeated in or in
connection with this Agreement or the Security Documents or in any
document delivered by or on behalf of the Borrower or any of the
Guarantors under or in connection with this Agreement or the
Security Documents is incorrect in any material respect when made
or deemed to be made or repeated.
20.4 Cross-default
An event of default (or any event which with the giving of notice
or lapse of time would constitute such an event of default) occurs
in respect of a material obligation of the Borrower or any of the
Guarantors under any agreement presenting an aggregate liability
in excess of USD 500,000 in respect of each of them.
20.5 Insolvency
(i) The Borrower or any of the Guarantors is, or for the
purposes of law is deemed to be, unable to pay its debts
as they fall due, or insolvent, or admits inability or
intention not to pay its debts as they fall due; or
(ii) the Borrower or any of the Guarantors, by reason solely
of financial difficulties, begins negotiations with one
or more of its creditors with a view to the readjustment
or rescheduling of any of its indebtedness, or any step
is taken with a view to an arrangement with any
creditors of the Borrower or any of the Guarantors; or
24
<PAGE>
(iii) a meeting of the Borrower or any of the Guarantors is
convened for the purpose of considering any resolution
for its winding-up or its administration or any such
resolution is passed, ordered, or requested; or
(iv) any other step (including petition ((other than. a
frivolous. or vexatious petition)), proposal or
convening a meeting) is taken with a view to the
administration, liquidation, winding-up, dissolution or
debt negotiations of the Borrower or any of the
Guarantors or any other insolvency proceedings involving
the Borrower or any of the Guarantors.
20.6 Appointment of receiver, etc.
Any liquidator, receiver, administrator or the like is appointed or
requested appointed in respect of the Borrower or any of the
Guarantors.
20.7 Cessation of business
The Borrower or any of the Guarantors ceases or threatens to
cease to carry on all or a substantial part of its business.
20.8 Illegality
It is or becomes unlawful for the Borrower or any of the Guarantors
to perform any of its material obligations under this Agreement.
20.9 Mergers
The Borrower or any of the Guarantors without the consent of the
Bank effects any demerger, merger or reconstruction which could
have a material adverse effect on the ability of the Borrower or
any of the Guarantors to perform its material obligations under
this Agreement.
20.10 Security
Any of the Security Documents for any reason other than following a
release thereof approved in writing by the Bank, cease to be valid
and in full force and effect at any time with their intended
priority.
25
<PAGE>
20.11 Change of Ownership
Thomas J. Holt Sr., resident at Philadelphia, PA, USA, at any time
directly or indirectly ceases to own 50% of the shares in the
Borrower and each of the Guarantors.
20.12 Acceleration
20.12.1 On and at any time after the occurrence of an Event of Default
whilst such Event of Default is continuing unremedied and unwaived,
the Bank may by notice to the Borrower:
(a) without prejudice to any Drawing advanced hereunder cancel the
Commitments; and/or
(b) demand that all or part of the Drawings, together with accrued
interest, and all other amounts accrued under this Agreement
be immediately due and payable, whereupon they shall become
immediately due and payable.
20.12.2 The Bank shall without prejudice to any of the Bank's other rights,
at any time after the occurrence of an Event of Default with or
without notice to the Borrower, take such action as is available to
the Bank under the Agreement and the Security Documents.
21. FEES AND EXPENSES
21.1 Arrangement Fee
The Borrower shall on the first Drawdown Date or on 15 May 1997, if
earlier, pay to the Bank an arrangement fee of NOK 300,000.
21.2 Commitment Fee
21.2.1 The Borrower shall on the first Drawdown Date or on 15 May 1997, if
earlier, pay to the Bank an initial commitment fee of 0.75% per
annum of the total Commitment, calculated as of 3 April 1997 and
until the first Drawdown Date.
26
<PAGE>
21.2.2 The Borrower shall pay a further commitment fee of 0.75% per annum
of the undrawn amount of the this Facility, quarterly in arrears at
successive three-monthly intervals after the date of this Agreement
(save that the last such period shall end on the Final Maturity
Date).
21.3 Expenses
The Borrower shall pay to the Bank on demand (whether or not the
Loan is ever advanced hereunder) all reasonable costs, expenses and
disbursements (including, but not limited to legal fees and
travelling expenses) incurred by the Bank or their agents in the
negotiation, preparation and completion of this Agreement and the
Security Documents (but not including amounts which are normal
administration costs and expenses incident to the performance of
agency duties hereunder) and the protection, preservation and
enforcement of any of their rights hereunder or thereunder.
22. INDEMNITIES
22.1 Currency indemnity
22.1.1 If the Bank receives an amount in respect of the Borrower's
liability under this Agreement or if that liability is converted
into a claim, proof, judgement or order in a currency other than
the currency in which the amount is expressed to be payable under
this Agreement, the Borrower shall indemnify the Bank as an
independent obligation against any loss or liability arising out of
or as a result of the conversion.
22.1.2 The Borrower waives any right it may have by law to pay any amount
under this Agreement in a currency other than that in which it is
expressed to be payable.
22.2 Other indemnities
The Borrower shall forthwith on demand indemnify the Bank against
any loss or liability (including funding breakage costs) which the
Bank properly incurs as a consequence of:
(a) the occurrence of any Event of Default;
27
<PAGE>
(b) the operation of Clause 20.12 (Acceleration);
(c) any repayment or prepayment of principal or payment of an
overdue amount being made otherwise than on the last day of a
relevant Interest Period; or
(d) a Drawing not being made after the Borrower has delivered a
Drawdown Notice or a Drawing (or part of a Drawing) not being
prepaid in accordance with a notice of prepayment.
The liability of the Borrower in each case includes any loss of
margin or other loss or expense on account of funds borrowed,
contracted for or utilized to fund any amount payable under this
Agreement any amount repaid or prepaid or any Drawing but the
Borrower shall in no event be liable for any loss or expense which
arises as a consequence of the gross negligence or wilful default
of the Bank.
23. AMENDMENTS AND WAIVERS
23.1 Amendment procedure
Any term of this Agreement may only be amended or waived with the
written agreement of the Borrower and the Bank.
23.2 Exercise of remedies
The Bank's rights under this Agreement
(a) may be exercised as often as necessary;
(b) are cumulative and not exclusive of its rights under the
general law; and
(c) may be waived only in writing.
Delay in exercising or non-exercise of any such right is not a
waiver of that right.
28
<PAGE>
24. CHANGES TO THE PARTIES
24.1 Transfer by the Borrower
The Borrower may not assign, transfer, novate or dispose of any of,
or any interest in, its rights and/or obligations under this
Agreement Subject to the written consent of the Bank (such consent
not to be unreasonably withheld), the Borrower may assign this
Agreement to an entity wholly owned by Thomas J. Holt Sr.
24.2 Transfers by Bank
The Bank may at any time assign, transfer or novate any of its
rights and/or obligations in respect of this Agreement to any of
its subsidiaries or, with the prior written consent of the
Borrower, such consent not to be unreasonably withheld or delayed,
to another bank or financial institution.
25. SEVERABILITY
If a provision of this Agreement is or becomes illegal, invalid or
unenforceable in any jurisdiction, that shall not affect the
validity or enforceability in that jurisdiction of any other
provision of this Agreement or the validity or enforceability in
other jurisdictions of that or any other provision of this
Agreement.
26. NOTICES
26.1 Giving of notices
All notices or other communications under or in connection with
this Agreement shall be given or made in writing, by letter or
telefax. Any such notice or communication addressed as provided in
Clause 26.2 will be deemed to be given or made as follows:
(i) if by letter, when delivered at the address of the
relevant party;
(ii) if by telefax, when received.
29
<PAGE>
However, a notice given in accordance with the above but received
on a day which is not a Banking Day or after 5.00 p.m. in the place
of receipt will only be deemed to be given at 9.00 a.m. on the next
Banking Day in that place.
26.2 Addresses for notices
To the Bank. To the Borrower:
FINANSBANKEN ASA The Riverfront Development
Stortingsgt. 8 Corporation
P.O. Box 817, Sentrum King and Essex Streets
N-0104 Oslo, Norway Gloucester City, NJ 08030, U.S.A.
Attn: Shipping Department Attn: Bernard Gelman, V.P.
Telefax: +47 22 47 4100 Telefax:+609 742 3066
or such other address, telefax number and/or marked for such other
attention as the Bank may notify to the Borrower by not less than
five Banking Days' prior notice.
27. LANGUAGE
Any notice and all other documents given or provided under or in
connection with this Agreement shall be in English.
28. SERVICE OF PROCESS
Without prejudice to any other mode of service, the Borrower
hereby:
(a) irrevocably appoints Thommessen, Krefting, Greve, Lund,
Tollbugt. 27, P.O. Box 413 Sentrum, N-0103 Oslo - Norway,
Attn.: Kim Dobrowen, as its agent for service of process
relating to any proceedings before the Norwegian courts in
connection with the Loan Agreement;
(b) agrees that failure by its process agent to notify it of the
process will not invalidate the service of process or the
proceedings concerned; and
30
<PAGE>
(c) consents to the service of process relating to such
proceedings before the Norwegian courts by prepaid posting
of a copy of the process to the process agent appointed
herein.
29. GOVERNING LAW
This Agreement and any disputes as may arise in relation thereto
shall be interpreted in accordance with and governed by Norwegian
law.
30. JURISDICTION
The parties agree that the courts of Oslo, Norway have jurisdiction
to settle any disputes in connection with this Agreement and
accordingly submit to the non-exclusive jurisdiction of the Oslo
City court.
This Agreement has been entered into on the date stated at the beginning hereof.
The Borrower The Bank
The Riverfront Development Corporation Finansbanken ASA
/s/ Bernard Gelman /s/ Roald L. Hoem
- -------------------------------------- -------------------------------------
Name: BERNARD GELMAN Name: ROALD L. HOEM
Title: V.P. Title: General Manager
31
<PAGE>
SCHEDULE 1
FORM OF DRAWDOWN NOTICE
To: FINANSBANKEN ASA
Attn: International Loan Administration
Telefax No. +47 22 47 41 00
From: THE RIVERFRONT DEVELOPMENT CORPORATION as Borrower
Date: , 199
---------------- -
NOK 60,000,000 Facility Agreement dated_____April, 1997 (the "Agreement")
We refer to Clause ___ of the Agreement. Terms used in this Drawdown Notice
have the same meanings as in the Agreement.
1. We wish to draw a Drawing as follows
(a) Drawdown Date:_________________
(b) Amount and Currency of the Drawing:________________
(c) Interest Period:___________________
(d) Instructions for payment of the Drawing:___________________
2. We confirm that each condition specified in Clause 4.2 (Further
conditions precedent) is satisfied on the date of this Drawdown Notice.
The Riverfront Development Corporation
/s/ Bernard Gelman
--------------------------------
Name: Bernard Gelman
Title: V.P.
32
<PAGE>
SCHEDULE
SCHEDULE 2
CONDITION PRECEDENT DOCUMENTS
1. A certified copy of the Certificate of Incorporation and Articles of
Association of the Borrower and each of the Guarantors.
2. An original Certificate of Good Standing of the Borrower and each of the
Guarantors dated not earlier than 30 days prior to the date of this
Agreement.
3. A certified copy or extract of the resolution of the board of directors
of the Borrower and each of the Guarantors approving the terms of, and
the transactions contemplated by, this Agreement and the Security
Documents and resolving the execution of the same by the Borrower or the
given Guarantor as the case may be;
4. An original power of attorney executed by each of the Borrower and the
Guarantors authorizing specified persons to sign and/or dispatch all
documents and notices to be signed and/or dispatched by it under or in
connection with this Agreement and/or the Security Documents.
5. An original certificate from the Borrower's legal counsel:
(a) certifying that the documents in 1, 2, 3 and 4 above are true
and correct originals, or copies or extracts of original
documents, up to date, in full force and effect and that they
have not been revoked or amended; and
(b) containing a specimen of the signature of each person authorized
by the resolution referred to in 4 above.
6. The Security Documents, duly executed by the Borrower and the Guarantors
as appropriate
7. Written confirmation from VPC and/or VPS (as the case may be) that the
ACL Shares have been duly recorded as pledged to the Bank with first
priority.
8. A legal opinion from Wikborg, Rein & Co. regarding matters of Norwegian
law from Pepper, Hamilton & Scheetz LLP regarding matters of New Jersey,
Pennsylvania, Delaware and U.S. Federal law, Vinge KB regarding matters
of Swedish law, in a form and substance satisfactory to the Bank.
33
<PAGE>
SCHEDULE
SCHEDULE 3
FORM OF PLEDGE OF ACCOUNTS
This (the "Pledge") is made on the __th day of April 1997 between:
THE RIVERFRONT DEVELOPMENT CORPORATION, a New Jersey corporation, c/o
Holt Cargo System, Inc., P.O. Box 8698, Philadelphia, P.A. 19101, U.S.A.
(the "Pledgor")
and
FINANSBANKEN ASA, Stortingsgt. 8, P.O. Box. 817 Sentrum, N-0104, Oslo,
Norway (the "Pledgee").
WHEREAS:
(A) By a loan agreement dated the 15th day of April 1997 (the
"Loan Agreement") made between the Pledgor as "Borrower" and the
Pledgee as "Bank", the Bank has agreed, subject to the terms
and conditions set forth therein to make available to the
Borrower a multi-currency revolving credit facility in the
maximum principal amount of NOK 60,000,000 or USD equivalent
(the "Loan");
(B) Pursuant to Clause 17.1 of the Loan Agreement, the Borrower
shall, as a condition precedent to the advance of the Loan, in
order to secure the repayment of the Loan and any other
Outstanding Indebtedness, and to secure the due performance and
compliance with all of the agreements, covenants and conditions
of the Loan Agreement, pledge to the Bank the ACL Shares from
time to time owned by the Borrower; and
(C) Unless otherwise defined in the Pledge or the context otherwise
requires, all words and expressions defined in the Loan
Agreement shall have the same meaning when used herein.
NOW THEREFORE:
34
<PAGE>
1. In order to secure the repayment of the Loan and any other Outstanding
Indebtedness and to secure the due performance and compliance with all
of the agreements, covenants and conditions of the Loan Agreement, the
Pledgor hereby grants to the Pledgee a first priority pledge over the
Pledgor's VPS Account no. 0968004580 in Norway administrated by the
Pledgee and the Pledgor's VPC Account no. 000070670455 in Sweden
administrated by SE-Banken (together, the "Pledged Accounts") which
shall include all securities from time to time registered on the Pledged
Accounts.
2. Within 10 Banking Days after the annual shareholders meeting of ACL, the
Pledgor shall register in the VPS Account all of its ACL Shares,
including but not limited to any ACL Shares registered in the VPC
Account or subsequently acquired by the Pledgor.
3. Save as provided in Clause 2, the Pledgor is not entitled to transfer
any securities from the Pledged Accounts without the prior written
consent of the Pledgee (such restriction to be registered on the Pledged
Accounts).
4. Upon the occurrence of an Event of Default under the Loan Agreement, the
Pledgee shall be entitled to seek enforcement directly in the Pledged
Accounts according to applicable law, including but not limited to
selling all securities registered on the Pledged Accounts through an
independent broker in accordance with the Norwegian Enforcement Act,
section 1-3, second paragraph, and applying the proceeds thereof to such
of the obligations of the Borrower under the Loan Agreement as the
Pledgee may think fit.
5. The Pledgor and the Pledgee shall promptly notify VPS and/or VPC (as
the case may be) and the approporiate stock exchange authorities in
Norway of the pledge of the ACL Shares made by Pledgor to the Pledgee
herein.
6. An irrevocable power of attorney shall be registered on the VPS Account
authorizing the Pledgee to administrate the VPS Account and to seek
enforcement directly in the VPS Accounts.
7. This Pledge shall be governed by Norwegian law and the Pledgee
irrevocably submits to the non-exclusive jurisdiction of the Norwegian
courts with Oslo City Court as due legal venue. For such purposes, the
Pledgor hereby appoints
35
<PAGE>
Thommessen, Krefting, Greve, Lund, Tollbugt. 27, P.O. Box 413 Sentrum,
N-0103 Oslo - Norway, Attn.: Kim Dobrowen as its agent for service of
process.
This Pledge has been executed on the date and year first above written.
THE RIVERFRONT DEVELOPMENT FINANSBANKEN ASA
CORPORATION
/s/ Bernard Gelman /s/ ROALD L. HOEM
------------------------ -------------------------
Name: Bernard Gelman Name: Roald L. Hoem
Title: V.P. Title: General Manager
36
<PAGE>
SCHEDULE 4
FORM OF GUARANTEE
This Guarantee, (the "Guarantee") is given on this _ day of April 1997, by:
HOLT HAULING AND WAREHOUSING SYSTEM, INC., __________________________
USA;
and
HOLT CARGO SYSTEM, INC., ________________________________________________ USA
(together, the "Guarantors")
in favour of
FINANSBANKEN ASA, Stortingsgt. 8, P.O. Box. 817 Sentrum, N-0104, Oslo, Norway
(the "Bank").
WHEREAS:
(A) By a loan agreement dated the ___ day of April 1997 (the "Loan
Agreement") made between The Riverfront Development Corporation as
"Borrower, and the Bank as "Bank," the Bank has agreed, subject to the
terms and conditions set forth therein, to make available to the Borrower
a multi-currency revolving credit facility in the maximum principal
amount of NOK 60,000,000 or USD equivalent (the "Loan"); and
(B) Pursuant to Clause 17.1 of the Loan Agreement, the Borrower shall, as a
condition precedent to the advance of the Loan, in order to secure the
repayment of the Loan and any other Outstanding Indebtedness, and to
secure the due performance and compliance with all of the agreements,
covenants and conditions of the Loan Agreement, procure that the
Guarantors give to the Bank a joint and several guarantee for the
obligations of the Borrower substantially in the form hereof.
37
<PAGE>
NOW THEREFORE:
1. CONSTRUCTION
(A) Unless otherwise defined in this Guarantee or the context otherwise
requires, all words and expressions defined in the Loan Agreement shall
have the same meaning when used herein.
(B) References to Clauses are to be construed as references to clauses of
this Guarantee unless otherwise stated.
(C) References to (or to any specified provision of) this Guarantee or any
other document shall be construed as references to this Guarantee, that
provision or that document as from time to time amended; and
(D) Words importing the plural shall include the singular and vice versa.
2. GUARANTEE AND INDEMNITY
(A) In order to secure the payment of the Outstanding Indebtedness in
accordance with the provisions of the Loan Agreement each Guarantor, as
primary obligor as and for its own debt and not merely as surety, joint
and severally with the Borrower and jointly and severally with the other
Guarantor, hereby undertakes to the Bank to be responsible for and
hereby guarantees to the Bank the due and punctual payment by the
Borrower to the Bank (as and when due by acceleration, demand or
otherwise howsoever) of the Outstanding Indebtedness and every part
thereof.
(B) Each Guarantors unconditionally and irrevocable undertakes to,
immediately on written demand by the Bank from time to time, make payment
in accordance with its obligations under Clause 2 (A) where such demand
is accompanied by a statement of the Bank that a payment has fallen due
in respect of the Outstanding Indebtedness by the Borrower, that the
Borrower has failed to make such payment when due and that notice of such
non-payment has been issued to the Borrower. Each of such payments so
demanded shall be made by the Guarantor to such account as the Bank may
from time to time notify in writing.
38
<PAGE>
3. LIMITATION
There is no limit to the number of claims that may be made by the Bank
under this Guarantee.
4. SURVIVAL OF GUARANTORS' LIABILITY
The Guarantors' liability to the Bank under this Guarantee shall not be
discharged, impaired or otherwise affected by reason of any of the
following events or circumstances (regardless of whether any such events
or circumstances occur with or without the Guarantors' knowledge or
consent):-
(a) any time, forbearance or other indulgence given or agreed by the
Bank with the Borrower in respect of any of its respective
obligations under the Loan Agreement or the Security Documents;
(b) any legal limitation, disability or incapacity of the Borrower;
(c) any invalidity, irregularity, unenforceability, imperfection or
avoidance of or any defect in any security granted by, or the
obligations of any party to the Loan Agreement or the Security
Documents, or any amendment to or variation thereof, or of any
other document or security constituted therein;
(d) the liquidation, bankruptcy or dissolution (or proceedings
analogous thereto) or the appointment of a receiver for the
Borrower or any other party to the Loan Agreement and any of the
Security Documents, or the occurrence of any circumstances
whatsoever affecting the liability of any party to discharge its
respective obligations under the Loan Agreement or any of the
Security Documents;
(e) any challenge, dispute or avoidance by any liquidator of the
Borrower in respect of any claim by a Guarantor by right of
subrogation in any such liquidation;
(f) any release, discharge, renewal, amendment, extension, compromise
exchange or realization of any security, obligation or term of the
Loan Agreement and the Security Documents, or as provided under or
by virtue
39
<PAGE>
thereof or the provision to the Bank at any time of any further
security for the obligations of the Borrower under the Loan
Agreement;
(g) any failure on the part of the Bank (whether intentional or not)
to take or perfect any security agreed to be taken under or in
relation to any of the Loan Agreement and the Security Documents;
or
(h) any other act, matter or thing (save for repayment in full of the
Outstanding Indebtedness) which might otherwise constitute a legal
discharge of the obligations of the Guarantor under this
Guarantee.
5. EXPENSES
Each Guarantor further agrees to pay to the Bank on demand on a full
indemnity basis all commissions, charges, costs and expenses (including
the reasonable fees and expenses of legal advisors) incurred by the Bank.
in the preservation and enforcement of any of the rights of the Bank
hereunder.
6. CONTINUING GUARANTEE
This Guarantee shall be:
(a) a continuing guarantee remaining in full force and effect until
payment in full has been received by the Bank of each and every
part and the ultimate balance of the Outstanding Indebtedness; and
(b) in addition to and not in substitution for or in derogation of any
other security held by the Bank from time to time in respect of
the Outstanding Indebtedness or any part thereof.
7. UNDERTAKINGS
Each Guarantor undertakes to the Bank that;-
(a) following receipt by either Guarantor of a notice from the Bank of
the occurrence of any Event of Default under the Loan Agreement,
the Guarantor
40
<PAGE>
will not make demand for or claim payment of any moneys due to the
Guarantor from the Borrower, or exercise any other right or remedy
to which the Guarantor is entitled in respect of such moneys
unless and until all moneys owing or due and payable by the
Borrower or the Guarantors to the Bank have been irrevocably paid
in full;
(b) if the Borrower shall become the subject of an insolvency
proceeding or shall be wound up or liquidated, the Guarantor shall
not (unless so instructed by the Bank and then only on condition
that the Guarantor hold the benefit of any claim in such
insolvency or liquidation to pay any amounts recovered thereunder
to the Bank) prove any such insolvency, winding-up or liquidation
until all moneys owing or due and payable by the Borrower or the
Guarantor to the Bank have been irrevocably paid in full;
(c) if the Guarantor, in breach of paragraph (a) and (b) above of this
Clause 7 receives or recovers any money pursuant to any such
exercise, claim or proof as therein referred to, such money shall
be held by the Guarantor for the Bank to apply the same as if they
were moneys received or recovered by the Bank under this
Guarantee;
(d) the Guarantor has not taken and will not take from the Borrower
any security whatsoever for the moneys hereby guaranteed; and
(e) all payments to be made hereunder shall be made in immediately
available funds without set-off or counter-claim and free and
clear of and without deduction for or on account of any present or
future taxes of any nature now or hereafter imposed, levied,
collected, withheld, deducted or assessed by any taxing and/or
governmental authority whatsoever or wheresoever unless the
Guarantor is compelled by law to deduct such taxes, provided,
however, that if Guarantor is required to deduct or withhold taxes
because of a failure of Bank to provide the required documentation
to preclude such deduction or withholding, Guarantor shall have no
obligation to pay such additional amounts. In that event all such
taxes shall be borne by the Guarantor or, if under the provisions
of any applicable law this stipulation cannot be applied, then the
Guarantor shall increase the payments to the Bank so that the net
amounts received by the Bank shall be equal to the full amounts
which the Bank would have received had payment not been made
subject to such taxes. As used in this sub-clause, the term
"taxes" includes all levies, imposts,
41
<PAGE>
duties, charges, fees, deductions and withholdings whatsoever and
any restriction or condition resulting in a charge. For the
avoidance of doubt, the Guarantor shall under no circumstances be
liable for any taxes on the Bank's overall net income.
8. EXCLUSION OF GUARANTORS' RIGHTS
Until the Outstanding Indebtedness has been paid in full, the Guarantors
shall not be entitled to share in or succeed to or benefit from (by
subrogation or otherwise) any rights which the Bank may have in respect
of the Outstanding Indebtedness or any security therefor or all or any of
the proceeds of such rights or security.
9. ENFORCEMENT
(a) The Bank shall not be obliged before taking steps to enforce this
Guarantee:
(i) to obtain judgement against the Borrower or any other party
in any court or other tribunal;
(ii) to make or file any claim in a bankruptcy or liquidation of
the Borrower or any other party; or
(iii) other than demand payment from the Borrower, to take any
action whatsoever against any the Borrower or any other
party under any of the Loan Agreement and the Security
Documents; and
the Guarantors hereby waive all such formalities or rights to
which they would otherwise be entitled or which the Bank would
otherwise first be required to satisfy or fulfil before proceeding
or making demand against the Guarantors hereunder;
(b) the Bank may take such action as the Bank acting reasonably, but
in its own discretion may consider appropriate against any other
person or parties to recover moneys due and payable in respect of
the obligations of the Borrower under the Loan Agreement and the
Security Documents, the Guarantors,
42
<PAGE>
however, remaining liable under this Guarantee for payment and
discharge of all moneys hereby guaranteed; and
(c) any release, discharge or settlement between a Guarantor and the
Bank in relation to this Guarantee shall be conditional upon no
right, security, disposition or payment to the Bank by the
Guarantor and any other person being void, set aside or ordered to
be refunded pursuant to any enactment or law relating to breach of
duty by any person, bankruptcy, liquidation, administration,
protection from creditors generally or insolvency or for any
reason.
If any such right, security, disposition or payment is void or at any
time so set aside or ordered to be refunded the Bank shall be entitled
subsequently to enforce this Guarantee against a Guarantor
notwithstanding any return of this Guarantee to the Guarantor and as if
such release, discharge or settlement had not occurred and any such
security, disposition or payment had not been made.
10. MISCELLANEOUS
10.1 Any provisions contained herein which are prohibited by or deemed
unlawful or unenforceable under any applicable law shall, to the extent
required by such law, be ineffective without modifying the remaining
provisions hereof. Where however the provisions of any such applicable
law may be waived, they are hereby waived by the Guarantors to the
fullest extent permitted by such law with the intent that this Guarantee
shall be valid, binding and enforceable in accordance with its terms.
10.2 No failure or delay by the Bank in exercising any right, power or
privilege hereunder and no course of dealing between any person and the
Bank shall operate as a waiver thereof, nor shall any single or partial
exercise thereof preclude any other or further exercise thereof or the
exercise of any other right, power or privilege. Subject always to the
maximum amount recoverable by the Bank pursuant to or in relation to the
Loan Agreement being the amount of the Outstanding Indebtedness, the
rights and remedies herein are cumulative and not exclusive of any rights
or remedies which the Bank would otherwise have.
43
<PAGE>
11. ASSIGNMENT
The Bank may assign or transfer its rights hereunder to any person to
whom the rights and obligations of the Bank under the Loan Agreement are
wholly or partially assigned or transferred.
12. NOTICES
12.1 Except as otherwise provided herein each notice, request, demand or other
communication or document to be given or made under this Guarantee shall
be given in writing but unless otherwise stated, may be made by telefax
12.2 Any notice, demand or other communication to be made or delivered by any
party pursuant to this Guarantee shall (unless the addressee has by
fifteen (15) days' written notice to that party specified another
address) be made or delivered:-
(a) If to the Bank:
FINANSBANKEN ASA
Attn: Shipping Department
Stortingsgt. 8
P.O. Box 817
N-0104 Oslo, Norway
Telefax: (47) 22 47 4100
(b) If to the Guarantors:
<TABLE>
<CAPTION>
<S> <C>
HOLT HAULING AND HOLT CARGO SYSTEM, INC.
WAREHOUSING. SYSTEM, INC.
Attn: Bernard Gelman, V.P. Attn: Bernard Gelman, V.P.
King and Essex Streets King and Essex Streets
Gloucester City, NJ 08030/USA Gloucester City, NJ 08030/USA
Telefax:609-742-3066 Telefax:609-742-3066
</TABLE>
44
<PAGE>
13. GOVERNING LAW - JURISDICTION
This Guarantee shall be governed by Norwegian law and the Guarantors
irrevocably submit to the non-exclusive jurisdiction of the Norwegian
courts with Oslo City Court as due legal venue. For such purposes, both
of the Guarantors hereby appoint Thommessen, Krefting, Greve, Lund,
Tollbugt. 27, P.O. Box 413, Sentrum, N-0103 Oslo - Norway, Attn.: Kim
Dobrowen, as their agent for service of process.
This Guarantee has been executed by the Guarantors on the day first written
above.
HOLT HAULING AND WAREHOUSING SYSTEM, INC. HOLT CARGO SYSTEM, INC.
/s/ Bernard Gelman /s/ Bernard Gelman
-------------------------- ------------------------------
Name: Bernard Gelman Name: Bernard Gelman
--------------------- -------------------------
Title: V.P Title: V.P
-------------------- ------------------------
45
<PAGE>
PLEDGE OF ACCOUNTS
This (the "Pledge") is made on the 16th day of April 1997 between:
THE RIVERFRONT DEVELOPMENT CORPORATION, a New Jersey corporation, c/o Holt
Cargo System, Inc., P.O. Box 8698, Philadelphia, P.A. 19101, U.S.A. (the
"Pledgor")
and
FINANSBANKEN ASA, Stortingsgt. 8, P.O. Box 817, Sentrum, N-0104, Oslo, Norway
(the "Pledgee").
WHEREAS:
(A) By a loan agreement dated the 16th day of April 1997 (the "Loan Agreement")
made between the Pledgor as "Borrower" and the Pledgee as "Bank", the Bank
has agreed, subject to the terms and conditions set forth therein to make
available to the Borrower a multi-currency revolving credit facility in the
maximum principal amount of NOK 60,000,000 or USD equivalent (the "Loan");
(B) Pursuant to Clause 17.1 of the Loan Agreement, the Borrower shall, as a
condition precedent to the advance of the Loan, in order to secure the
repayment of the Loan and any other Outstanding Indebtedness, and to secure
the due performance and compliance with all of the agreements, covenants
and conditions of the Loan Agreement, pledge to the Bank the ACL Shares
from time to time owned by the Borrower; and
(C) Unless otherwise defined in the Pledge or the context otherwise requires,
all words and expressions defined in the Loan Agreement shall have the same
meaning when used herein.
NOW THEREFORE:
1. In order to secure the repayment of the Loan and any other Outstanding
Indebtedness and to secure the due performance and compliance with all of
the agreements, covenants and conditions of the Loan Agreement, the Pledgor
hereby
46
<PAGE>
grants to the Pledgee a first priority pledge over the Pledgor's VPS
Account no. 0968004580 in Norway administrated by the Pledgee and the
Pledgor's VPC Account no. 000070670455 in Sweden administrated by SE-Banken
(together, the "Pledged Accounts") which shall include all securities from
time to time registered on the Pledged Accounts.
2. Within 10 Banking Days after the annual shareholders meeting of ACL, the
Pledgor shall register in the VPS Account all of its ACL Shares, including
but not limited to any ACL Shares registered in the VPC Account or
subsequently acquired by the Pledgor.
3. Save as provided in Clause 2, the Pledgor is not entitled to transfer any
securities from the Pledged Accounts without the prior written consent of
the Pledgee (such restriction to be registered on the Pledged Accounts).
4. Upon the occurrence of an Event of Default under the Loan Agreement, the
Pledgee shall be entitled to seek enforcement directly in the Pledged
Accounts according to applicable law, including but not limited to selling
all securities registered on the Pledged Accounts through an independent
broker in accordance with the Norwegian Enforcement Act, section 1-3,
second paragraph, and applying the proceeds thereof to such of the
obligations of the Borrower under the Loan Agreement as the Pledgee may
think fit.
5. The Pledgor and the Pledgee shall promptly notify VPS and/or VPC (as the
case may be) and the approporiate stock exchange authorities in Norway of
the pledge of the ACL Shares made by Pledgor to the Pledgee herein.
6. An irrevocable power of attorney shall be registered on the VPS Account
authorizing the Pledgee to administrate the VPS Account and to seek
enforcement directly in the VPS Accounts.
7. This Pledge shall be governed by Norwegian law and the Pledgee irrevocably
submits to the non-exclusive jurisdiction of the Norwegian courts with Oslo
City Court as due legal venue. For such purposes, the Pledgor hereby
appoints Thommessen, Krefting, Lund, Tollbugt. 27, P.O. Box 413, Sentrum,
N-0103 Oslo - Norway, Attn.: Kim Dobrowen as its agent for service of
process.
This Pledge has been executed on the date and year first above written.
47
<PAGE>
THE RIVERFRONT DEVELOPMENT FINANSBANKE ASA
CORPORATION
/s/ Bernard Gelman /s/ Roald L. Hoem
- --------------------------- ---------------------------
Name: Bernard Gelman Name: Roald L. Hoem
Title: V.P. Title: General Manager
48
<PAGE>
GUARANTEE
This Guarantee, (the "Guarantee") is given on this 16th day of April 1997, by:
HOLT CARGO SYSTEM, INC., Attn: Bernard Gelman, V.P.
USA; King and Essex Streets
Gloucester City, NJ 08030/USA
and
HOLT CARGO SYSTEM, INC., Attn: Bernard Gelman, V.P.
(together, the "Guarantors") King and Essex Streets
Gloucester City, NJ 08030/USA
in favour of
FINANSBANKEN ASA, Stortingsgt. 8, P.O. Box 817, Sentrum, N-0104, Oslo, Norway
(the "Bank").
WHEREAS:
(A) By a loan agreement dated the 16th day of April 1997 (the "Loan Agreement")
made between The Riverfront Development Corporation as "Borrower" and the
Bank as "Bank", the Bank has agreed, subject to the terms and conditions
set forth therein, to make available to the Borrower a multi-currency
revolving credit facility in the maximum principal amount of
NOK 60,000,0000 or USD equivalent (the "Loan"); and
(B) Pursuant to Clause 17.1 of the Loan Agreement, the Borrower shall, as a
condition precedent to the advance of the Loan, in order to secure the
repayment of the Loan and any other Outstanding Indebtedness, and to secure
the due performance and compliance with all of the agreements, covenants
and conditions of the Loan Agreement, procure that the Guarantors give to
the Bank a joint and several guarantee for the obligations of the Borrower
substantially in the form hereof.
49
<PAGE>
NOW THEREFOR:
1. CONSTRUCTION
(A) Unless otherwise defined in this Guarantee or the context otherwise
requires, all words and expressions defined in the Loan Agreement shall
have the same meaning when used herein.
(B) References to Clauses are to be construed as references to clauses of this
Guarantee unless otherwise stated.
(C) References to (or to any specified provision of) this Guarantee or any
other document shall be construed as references to this Guarantee, that
provision or that document as from time to time amended; and
(D) Words importing the plural shall include the singular and vice versa.
2. GUARANTEE AND INDEMNITY
(A) In order to secure the payment of the Outstanding Indebtedness in
accordance with the provisions of the Loan Agreement each Guarantor, as
primary obligor as and for its own debt and not merely as surety, joint and
severally with the Borrower and jointly and severally with the other
Guarantor, hereby undertakes to the Bank to be responsible for and hereby
gurantees to the Bank the due and punctual payment by the Borrower to the
Bank (as and when due by acceleration, demand or otherwise howsoever) of
the Outstanding Indebtedness and every part thereof.
(B) Each Guarantors unconditionally and irrevocable undertakes to, immediately
on written demand by the Bank from time to time, make payment in accordance
with its obligations under Clause 2 (A) where such demand is accompanied by
a statement of the Bank that a payment has fallen due in respect of the
Outstanding Indebtedness by the Borrower, that the Borrower has failed to
make such payment when due and that notice of such non-payment has been
issued to the Borrower. Each of such payments so demanded shall be made by
the Guarantor to such account as the Bank may from time to time notify in
writing.
50
<PAGE>
3. LIMITATION
There is no limit to the number of claims that may be made by the Bank
under this Guarantee.
4. SURVIVAL OF GUARANTORS' LIABILITY
The Guarantors' liability to the Bank under this Guarantee shall not be
discharged, impaired or otherwise affected by reason of any of the
following events or circumstances (regardless of whether any such events or
circumstances occur with or without the Guarantors' knowledge or consent):-
(a) any time, forbearance or other indulgence given or agreed by the Bank
with the Borrower in respect of any of its respective obligations
under the Loan Agreement or the Security Documents;
(b) any legal limitation, disability or incapacity of the Borrower;
(c) any invalidity, irregularity, unenforceability, imperfection or
avoidance of or any defect in any security granted by, or the
obligations of any party to the Loan Agreement or the Security
Documents, or any amendment to or variation thereof, or of any other
document or security constituted therein;
(d) the liquidation, bankruptcy or dissolution (or proceedings analogous
thereto) or the appointment of a receiver for the Borrower or any
other party to the Loan Agreement and any of the Security Documents,
or the occurrence of any circumstances whatsoever affecting the
liability of any party to discharge its respective obligations under
the Loan Agreement or any of the Security Documents;
(e) any challenge, dispute or avoidance by any liquidator of the Borrower
in respect of any claim by a Guarantor by right of subrogation in any
such liquidation;
(f) any release, discharge, renewal, amendment, extension, compromise
exchange or realization of any security, obligation or term of the
Loan Agreement and the Security Documents, or as provided under or by
virtue
51
<PAGE>
thereof or the provision to the Bank at any time of any further
security for the obligations of the Borrower under the Loan Agreement;
(g) any failure on the part of the Bank (whether intentional or not) to
take or perfect any security agreed to be taken under or in relation
to any of the Loan Agreement and the Security Documents; or
(h) any other act, matter or thing (save for repayment in full of the
Outstanding Indebtedness) which might otherwise constitute a legal
discharge of the obligations of the Guarantor under this Guarantee.
5. EXPENSES
Each Guarantor further agrees to pay to the Bank on demand on a full
indemnity basis all commissions, charges, costs and expenses (including the
reasonable fees and expenses of legal advisors) incurred by the Bank in the
preservation and enforcement of any of the rights of the Bank hereunder.
6. CONTINUING GUARANTEE
This Guarantee shall be:-
(a) a continuing guarantee remaining in full force and effect until
payment in full has been received by the Bank of each and every
part and the ultimate balance of the Outstanding Indebtedness; and
(b) In addition to and not in substitution for or in derogation of any
other security held by the Bank from time to time in respect of the
Outstanding Indebtedness or any part thereof.
7. UNDERTAKINGS
Each Guarantor undertakes to the Bank that;-
(a) following receipt by either Guarantor of a notice from the Bank of the
occurrence of any Event of Default under the Loan Agreement, the
Guarantor
52
<PAGE>
will not make demand for or claim payment of any moneys due to the
Guarantor from the Borrower, or exercise any other right or remedy to
which the Guarantor is entitled in respect of such moneys unless and
until all moneys owing or due and payable by the Borrower or the
Guarantors to the Bank have been irrevocably paid in full;
(b) if the Borrower shall become the subject of an insolvency proceeding
or shall be wound up or liquidated, the Guarantor shall not (unless so
instructed by the Bank and then only on condition that the Guarantor
hold the benefit of any claim in such insolvency or liquidation to pay
any amounts recovered thereunder to the Bank) prove any such
insolvency, winding-up or liquidation until all moneys owing or due
and payable by the Borrower or the Guarantor to the Bank have been
irrevocably paid in full;
(c) if the Guarantor, in breach of paragraph (a) and (b) above of this
Clause 7 receives or recovers any money pursuant to any such exercise,
claim or proof as therein referred to, such money shall be held by the
Guarantor for the Bank to apply the same as if they were moneys
received or recovered by the Bank under this Guarantee;
(d) the Guarantor has not taken and will not take from the Borrower any
security whatsoever for the moneys hereby guaranteed; and
(e) all payments to be made hereunder shall be made in immediately
available funds without set-off or counter-claim and free and clear of
and without deduction for or on account of any present or future taxes
of any nature now or hereafter imposed, levied, collected, withheld,
deducted or assessed by any taxing and/or governmental authority
whatsoever or wheresoever unless the Guarantor is compelled by law to
deduct such taxes, provided, however, that if Guarantor is required to
deduct or withhold taxes because of a failure of Bank to provide the
required documentation to preclude such deduction or withholding,
Guarantor shall have no obligation to pay such additional amounts. In
that event all such taxes shall be borne by the Guarantor or, if under
the provisions of any applicable law this stipulation cannot be
applied, then the Guarantor shall increase the payments to the Bank so
that the net amounts received by the Bank shall be equal to the full
amounts which the Bank would have received had payment not been made
subject to such taxes. As used in this sub-clause, the term "taxes"
includes all levies, imposts,
53
<PAGE>
duties, charges, fees, deductions and withholdings whatsover and any
restriction or condition resulting in a charge. For the avoidance of
doubt, the Guarantor shall under no circumstances be liable for any
taxes on the Bank's overall net income.
8. EXCLUSION OF GUARANTORS' RIGHTS
Until the Outstanding Indebtedness has been paid in full, the Guarantors
shall not be entitled to share in or succeed to or benefit from (by
subrogation or otherwise) any rights which the Bank may have in respect of
the Outstanding Indebtedness or any security therefor or all or any of the
proceeds of such rights or security.
9. ENFORCEMENT
(a) The Bank shall not be obliged before taking steps to enforce this
Guarantee:-
(i) to obtain judgement against she Borrower or any other party in
any court or other tribunal;
(ii) to make or file any claim in a bankruptcy or liquidation of the
Borrower or any other party; or
(iii) other than demand payment from the Borrower, to take any action
whatsoever against any the Borrower or any other party under any
of the Loan Agreement and the Security Documents; and
the Guarantors hereby waive all such formalities or rights to which
they would otherwise be entitled or which the Bank would otherwise
first be required to satisfy or fulfill before proceeding or making
demand against the Guarantors hereunder;
(b) the Bank may take such action as the Bank acting reasonably, but in
its own discretion may consider appropriate against any other person
or parties to recover moneys due and payable in respect of the
obligations of the Borrower under the Loan Agreement and the Security
Documents, the Guarantors,
54
<PAGE>
however, remaining liable under this Guarantee for payment and
discharge of all moneys hereby guaranteed; and
(c) any release, discharge or settlement between a Guarantor and the Bank
in relation to this Guarantee shall be conditional upon no right,
security, disposition or payment to the Bank by the Guarantor and any
other person being void, set aside or ordered to be refunded pursuant
to any enactment or law relating to breach of duty by any person,
bankruptcy, liquidation, administration, protection from creditors
generally or insolvency or for any reason.
If any such right, security, disposition or payment is void or at any time
so set aside or ordered to be refunded the Bank shall be entitled
subsequently to enforce this Guarantee against a Guarantor notwithstanding
any return of this Guarantee to the Guarantor and as if such release,
discharge or settlement had not occurred and any such security, disposition
or payment had not been made.
1O. MISCELLANEOUS
10.1 Any provisions contained herein which are prohibited by or deemed unlawful
or unenforceable under any applicable law shall, to the extent required by
such law, be ineffective without modifying the remaining provisions hereof.
Where however the provisions of any such applicable law may be waived, they
are hereby waived by the Guarantors to the fullest extent permitted by such
law with the intent that this Guarantee shall be valid, binding and
enforceable in accordance with its terms.
10.2 No failure or delay by the Bank in exercising any right, power or privilege
hereunder and no course of dealing between any person and the Bank shall
operate as a waiver thereof, nor shall any single or partial exercise
thereof preclude any other or further exercise thereof or the exercise of
any other right, power or privilege. Subject always to the maximum amount
recoverable by the Bank pursuant to or in relation to the Loan Agreement
being the amount of the Outstanding Indebtedness, the rights and remedies
herein are cumulative and not exclusive of any rights or remedies which the
Bank would otherwise have.
55
<PAGE>
11. ASSIGNMENT
The Bank may assign or transfer its rights hereunder to any person to whom
the rights and obligations of the Bank under the Loan Agreement are wholly
or partially assigned or transferred.
12. NOTICES
12.1 Except as otherwise provided herein each notice, request, demand or other
communication or document to be given or made under this Guarantee shall be
given in writing but unless otherwise stated, may be made by telefax.
12.2 Any notice, demand or other communication to be made or delivered by any
party pursuant to this Guarantee shall (unless the addressee has by fifteen
(15) days' written notice to that party specified another address) be made
or delivered:-
(a) If to the Bank:
FINANSBANKEN ASA
Attn: Shipping Department
Stortingsgt. 8
P.O. Box 817
N-0104 Oslo, Norway
Telefax: (47) 22 47 41 00
(b) If to the Guarantors:
HOLT HAULING AND HOLT CARGO SYSTEM, INC.
WAREHOUSING SYSTEM, INC.
Attn: Bernard Gelman, V.P. Attn: Bernard Gelman, V.P.
King and Essex Streets King and Essex Streets
Gloucester City, NJ 08030/USA Gloucester City, NJ 08030/USA
Telefax: 609-742-3066 Telefax: 609-742-3o66
56
<PAGE>
13. GOVERNING LAW - JURISDICTION
This Guarantee shall be governed by Norwegian law and the Guarantors
irrevocably submit to the non-exclusive jurisdiction of the Norwegian
courts with Oslo City Court as due legal venue. For such purposes, both of
the Guarantors hereby appoint Thommessen, Krefting, Greve, Lund, Tollbugt.
27, P.O. Box 413 Sentrum, N-0103 Oslo - Norway, Attn.: Kim Dobrowen, as
their agent for service of process.
This Guarantee has been executed by the Guarantors on the day first written
above.
HOLT HAULING AND WAREHOUSING SYSTEM, INC. HOLT CARGO SYSTEM, INC.
/s/ Bernard Gelman /s/ Bernard Gelman
-------------------------- ------------------------------
Name: Bernard Gelman Name: Bernard Gelman
--------------------- -------------------------
Title: V.P Title: V.P
-------------------- ------------------------
57
<PAGE>
SCHEDULE 1
FORM OF DRAWDOWN NOTICE
To: FINANSBANKEN ASA
Attn: International Loan Administration
Telefax No. +47 22 47 41 00
From: THE RIVERFRONT DEVELOPMENT CORPORATION as Borrower
Date: April 16, 1997
NOK 60,000,000 Facility Agreement dated 16th April, 1997 (the "Agreement")
We refer to Clause __ of the Agreement Terms used in this Drawdown Notice have
the same meanings as in the Agreement.
1. We wish to draw a Drawing as follows
(a) Drawdown Date: April 17, 1997
(b) Amount and Currency of the Drawing: 3,757,244 NOK
(c) Interest Period: 30 days
(d) Instructions for payment of the Drawing:.........
To Fornsfinans A.S., Attention Nils A. Hovton
Telphone number 23-11-3002
2. We confirm that each condition specified in Clause 4.2 (Further conditions
precedent) is satisfied on the date of this Drawdown Notice.
The Riverfront Development Corporation
/s/ Bernard Gelman
------------------------------
Name: Bernard Gelman
-------------------------
Title: V.P
------------------------
58
<PAGE>
SCHEDULE 1
FORM OF DRAWDOWN NOTICE
To: FINANSBANKEN ASA
Attn: International Loan Administration
Telefax No. +47 22 47 41 00
From: THE RIVERFRONT DEVELOPMENT CORPORATION as Borrower
Date: April 18, 1997
NOK 60,000,000 Facility Agreement dated 16th April, 1997 (the "Agreement")
We refer to Clause 5.2 of the Agrement Terms used in this Drawdown Notice have
the same meanings as in the Agreement.
1. We wish to draw a Drawing as follows
(a) Drawdown Date: April 22, 1997
(b) Amount and Currency of the Drawing: NOK EQUIV. OF U.S. $6,609,356
(c) Interest Period: 1 MONTH
(d) Instruction for payment of he Drawing: PAY TO
REDERIAKTIEBOLAGET
TRANSATLANTIC
AT SE-BANKEN, N.Y. ABA # 026 003 036
ACCOUNT SE-BANKEN GOTHEBURG IN FAVOUR OF REDERIAKTIEBOLAGET
TRANSATLANTIC
2. We confirm that each condition specified in Clause 4.2 (Further conditions
precedent) is satisfied on the date of this Drawdown Notice.
The Riverfront Development Corporation
/s/ Bernard Gelman
------------------------------
Name: Bernard Gelman
-------------------------
Title: V.P
------------------------
59
<PAGE>
We hereby consent to the increase of the Total Commitment as stated above and
agree that the Guarantee shall secure the entire Outstanding Indebtedness of the
Borrower from time to time, including any increased Outstanding Indebtedness
incurred as a result of the present change to the Total Commitment.
HOLT HAULING AND WAREHOUSING SYSTEM, INC. HOLT CARGO SYSTEM, INC.
/s/ Bernard Gelman /s/ Bernard Gelman
-------------------------- ------------------------------
Name: Bernard Gelman, V.P. Name: Bernard Gelman, V.P.
--------------------- -------------------------
60
AMENDMENT NO. 1 TO
MULTI CURRENCY SECURED REVOLVING CREDIT FACILITY DATED 16 APR.
This Amendment No. 1 to the Multi Currency Secured Revolving Credit Facility
dated 16 April 1997 (the "Loan Agreement") is made on this 23rd day of April
1997 by and between:
THE RIVERFRONT DEVELOPMENT CORPORATION as Borrower (the "Borrower"),
and
FINANSBANKEN ASA as lender (the "Bank"),
IT IS HEREBY AGREED AS FOLLOWS:
1. Unless otherwise defined herein, terms used in this Amendment No. 1 shall
have the meanings given to them in the Loan Agreement.
2. The Total Commitment of the Bank is increased from NOK 60,000,000 to NOK
69,000,000. All references to NOK 60,000,000 in the Loan Agreement and the
Security Documents are accordingly amended to NOK 69,000,000, provided,
however, that the Total Commitment shall be reduced to NOK 60,000,000 on 2
June 1997. The Borrower shall on or before the said date make appropriate
repayment and/or prepayment, in order for the Loan on 2 June 1997 not to
increase NOK 60,000,000.
3. The Borrower shall pay to the Bank an additional arrangement fee of NOK
45,000 related to this Amendment No. 1 and the said amount shall be paid by
the Borrower on the date hereof.
4. The Security Documents shall secure the entire Outstanding Indebtedness of
the Borrower from time to time, including any Outstanding Indebtedness
incurred as a result of the increase in Total Commitment granted herein.
5. All other terms of the Loan Agreement shall remain unchanged.
THE RIVERFRONT DEVELOPMENT FINANSBANKEN ASA
CORPORATION
/s/ Bernard Gelman /s/ Roald L. Hoen
- ----------------------------- -----------------------------------
Bernard Gelman, VP Roald L. Hoen, General Manager
We hereby consent to the increase of the Total Commitment as stated. This
Guarantee shall secure the entire Outstanding Indebtedness of the Borrower,
including any increased Outstanding Indebtedness incurred as a result of the
Total Commitment.
HOLT HAULING AND WAREHOUSING HOLT CARGO SYSTEMS, INC.
SYSTEMS, INC.
/s/ Bernard Gelman /s/ Bernard Gelman
- ----------------------------- -----------------------------------
Bernard Gelman, VP Bernard Gelman, VP
EQUIPMENT LEASE AGREEMENT
THIS EQUIPMENT LEASE AGREEMENT (the "Lease") is made as of the 18th day
of November, 1997, by and between EMERALD EQUIPMENT LEASING, INC., a Delaware
corporation ("Lessor"); and NPR, INC. and HOLT CARGO SYSTEMS, INC.
(individually, "Lessee" and collectively, "Lessees")
The parties agree that Lessees shall lease from Lessor the property (the
"Equipment") described in the Equipment Schedule(s) to be executed pursuant
hereto and upon execution incorporated herein (collectively, the "Equipment
Schedule"), subject to the terms set forth herein, including the terms
contained in the Riders annexed hereto and in the Equipment Schedule. The
definitions and construction of certain of the terms used herein are provided in
Section 19 hereof.
1. Term. The term of lease with respect to any item of the Equipment
shall consist of the term set forth in the Equipment Schedule relating thereto;
provided, however, that this Lease shall be effective from and after the date of
execution hereof.
2. Rent. Lessees shall pay Lessor the rental installments in the
aggregate amounts specified in the Equipment Schedule, without prior notice or
demand, and all other amounts payable pursuant to this Lease (such installments
and other amounts, the "rent"). This Lease constitutes a non-cancellable net
lease, and Lessees' obligation to pay rent, and otherwise to perform their
obligations under this Lease, and all of the other documents and agreements
entered into in connection herewith (collectively, the "Lease Documents"), are
and shall be absolute and unconditional and shall not be affected by any
circumstances whatsoever, including any right of setoff, counterclaim,
recoupment, deduction, defense or other right which any Lessee may have against
Lessor, the manufacturer or vendor of the Equipment (the "Suppliers"), or anyone
else, for any reason whatsoever. Without limitation to the foregoing, the
Lessees may not set-off against, deduct from or attempt to obtain any credit
reduction or stay in the full and absolute payment of the rent and the
performance and payment of all duties and obligations required of the Lessees
hereunder as a result of any debts or obligations owed from time to time by the
Lessor to either or both of the Lessees, including, but not limited to, any
obligations owing by the Lessor to NPR, Inc. with respect to a loan from NPR,
Inc. to the Lessor in the stated principal amount of Eleven Million Dollars
($11,000,000.00). Rental installments are payable as, when and in the manner
specified in the Equipment Schedule or by such other method as may be from time
to time directed by Lessor or its assignee in writing; and payments of rent
shall be effective upon receipt. Timeliness of Lessees' payment and their other
performance under the Lease Documents is of the essence. If any rent is not paid
on the due date, Lessor may
Page 1
<PAGE>
collect, and Lessees agree to pay, a charge calculated as the product of the
late charge rate specified in the Equipment Schedule (the "Late Charge Rate")
and the amount in arrears for the period such amount remains unpaid. Except as
otherwise expressly provided herein, this Lease and the obligations of Lessees
hereunder shall not be affected by reason of any defect in, or damage to, or any
loss or destruction of, the Equipment, or the interference with the use thereof
by the Lessor or any person, or the invalidity or unenforceability or lack of
due authorization of this Lease or lack of right, power or authority of Lessor
to enter into this Lease, or any failure of the Lessor to perform any obligation
of Lessor to Lessees under this Lease or any of the Lease Documents, or for any
cause, whether similar or dissimilar to the foregoing, any present or future law
or regulation to the contrary notwithstanding, it being the express intention of
Lessor and Lessees that all rent payable by Lessees hereunder shall be, and
continue to be, payable in all events unless the obligations to pay the same
shall be terminated pursuant to the express provisions of this Lease.
3. Representations And Warranties Of Lessees. Each Lessee represents and
warrants that:
(a) Such Lessee is a corporation duly organized, validly existing and
in good standing under the laws of the state of its incorporation and in
all other states in which it is required under applicable law to qualify to
conduct its business;
(b) The execution, delivery and performance of the Lease Documents and
compliance with the terms thereof (i) have been duly authorized by all
necessary corporate action on the part of such Lessee, (ii) do not require
the approval of any stockholder, trustee or holder of any obligations of
such Lessee except such as have been duly obtained, and (iii) do not and
will not contravene any law, governmental rule, regulation or order now
binding on such Lessee, or the charter or by-laws of such Lessee, or
contravene the provisions of, or constitute a default under, or result in
the creation of any lien or encumbrance upon the property of such Lessee
under, any indenture, mortgage, contract or other agreement to which such
Lessee is a party or by which it or its property is bound;
(c) Each of the Lease Documents, when entered into, will constitute
legal, valid and binding obligations of such Lessee enforceable against
such Lessee, in accordance with the terms thereof;
(d) There are no pending actions or proceedings to which such Lessee
is a party, and there are no other pending or threatened actions or
proceedings of which such Lessee has knowledge, before any court,
arbitrator or administrative agency, which, either individually or in the
aggregate, would adversely affect the financial condition of such Lessee,
or the ability of such Lessee to perform its obligations under or remain in
Page 2
<PAGE>
compliance with the Lease Documents; further, such Lessee is not in default
under any obligation for borrowed money, for the deferred purchase price of
property or any lease agreement which, either individually or in the
aggregate, would have the same such effect;
(e) Under the laws of the state(s) in which the Equipment is to be
located, the Equipment consists solely of personal property and not
fixtures;
(f) The address stated below the signature of such Lessee is the chief
place of business and chief executive office of such Lessee; and
(g) Such Lessee does not conduct business under a trade, assumed or
fictitious name.
4. Financials, Further Assurances And Notices. Each Lessee covenants and
agrees as follows:
(a) To supply to the Lessor each financial statement and other
submission required by Section 5.5 of the Lease Guaranty Agreement (the
"Lease Guaranty Agreement") by and between The Holt Group, Inc., a Delaware
corporation, Holt Hauling And Warehousing System, Inc., a Pennsylvania
corporation, Wilmington Stevedores, Inc., a Delaware corporation, Murphy
Marine Services, Inc., a Delaware corporation, The Riverfront Development
Corporation, a New Jersey corporation, NPR Holding Corporation, a Delaware
corporation, NPR-Navieras Receivables, Inc., a Delaware corporation, and
NPR S.A., Inc. for the benefit of the Lessor and its successors and assigns
with respect to various duties and obligations of the Lessees.
(b) Each Lessee will promptly execute and deliver to Lessor such
further documents, instruments and assurances and take such further action
as Lessor from time to time may reasonably request in order to carry out
the intent and purpose of this Lease and to establish and protect the
rights and remedies created or intended to be created in favor of Lessor
under the Lease Documents; and
(c) Each Lessee shall provide written notice to Lessor (i) thirty (30)
days prior to any contemplated change in the name or address of the chief
executive office of such Lessee, (ii) promptly upon the occurrence of any
Default (as hereinafter defined) or event which, with the lapse of time or
the giving of notice, or both, would become a Default (a "default"; except
as used in Sections 15 and 16), and (iii) promptly upon any Lessee becoming
aware of any alleged violation of applicable law relating to the Equipment
or this Lease.
5. Conditions Precedent. Lessor's obligations under this Lease, including
its obligation to lease any Equipment described in an Equipment Schedule, are
conditioned upon Lessor's determination
Page 3
<PAGE>
that all of the following have been satisfied as of the date of the applicable
Equipment Schedule:
(a) Lessor having received the following, in form and substance
satisfactory to Lessor (i) evidence as to due compliance with the insurance
provisions hereof, (ii) Uniform Commercial Code financing statements and
all other filings and recordings as required by Lessor, (iii) certificate
of each Lessee's Secretary certifying (1) resolutions of such Lessee's
Board of Directors duly authorizing the leasing of the Equipment described
in such Equipment Schedule and the execution, delivery and performance of
this Lease, such Equipment Schedule and all related instruments and
documents, and (2) the incumbency and signature of the officers of such
Lessee authorized to execute such documents, (iv) the only manually
executed original of this Lease, including all Equipment Schedules, and all
other Lease Documents, and (v) such other documents, agreements,
instruments, certificates, opinions, and assurances, as Lessor reasonably
may require;
(b) All representations and warranties provided in favor of Lessor in
any of the Lease Documents shall be true and correct;
(c) There shall be no default or Default under this Lease or any other
Lease Documents; and
(d) Lessor shall have received good title to the Equipment described
in the Equipment Schedule, free and clear of any lien, claim or encumbrance
of any kind, other than liens created by the Lessor.
6. Acceptance By Lessee. This Lease is being executed in connection with
a sale-leaseback transaction in which the Lessor has purchased the Equipment
from NPR, Inc. and pursuant to this Lease is leasing the Equipment to the
Lessees. NPR, Inc. selected the Equipment and has maintained possession of the
Equipment. Holt Cargo Systems, Inc. has inspected the Equipment. Each Lessee
acknowledges that the Equipment has been finally accepted by such Lessee
pursuant to this Lease.
7. Use And Maintenance.
(a) Lessees shall (i) use the Equipment solely in the conduct of their
businesses, for the purpose for which the Equipment was designed, in a
careful and proper manner (and shall not permanently discontinue use of the
Equipment), (ii) operate, maintain, service and repair the Equipment, and
maintain all records and other materials relating thereto, (1) in
accordance and consistent with (A) all maintenance and operating manuals or
service agreements, whenever furnished or entered into, including any
subsequent amendments or replacements thereof, issued by the Supplier or
service provider, (B) the requirements of all applicable insurance
policies, (C) all purchase documents pertaining to the Equipment
(collectively, "Supply Contract"), so
Page 4
<PAGE>
as to preserve all of Lessees' and Lessor's rights thereunder, including
all rights to any warranties, indemnities or other rights or remedies, (D)
all applicable laws, and (E) the prudent practice of other similar
companies in the same business as Lessees, but in any event, to no lesser
standard than that employed by Lessees for comparable equipment owned or
leased by them, and (2) without limiting the foregoing, so as to cause the
Equipment to be in good repair and operating condition, except for ordinary
wear and tear resulting despite Lessees' full compliance with the terms
hereof, (iii) not move any Equipment to a location outside of the
continental United States other than a location listed on the Equipment
Schedule without the prior written consent of Lessor, and (iv) not attach
or incorporate the Equipment to or in any other item of equipment in such a
manner that the Equipment may be deemed to have become an accession to or a
part of such other item of equipment;
(b) Lessees, within a reasonable time, will replace any parts of the
Equipment which become worn out, lost, destroyed, damaged beyond repair or
otherwise permanently rendered unfit for use, by replacement parts which
are free and clear of all liens, encumbrances or rights of others and have
a value, utility and remaining useful life at least equal to the parts
replaced. Title to all such parts, improvements and additions to the
Equipment immediately shall vest in Lessor, without cost or expense to
Lessor or any further action by any other person, and such parts,
improvements and additions shall be deemed incorporated in the Equipment
and subject to the terms of this Lease as if originally leased hereunder.
Except to the extent the same are replaced in accordance with this Section
7(b), Lessees shall not detach or otherwise remove any parts originally or
from time to time attached to the Equipment, if such parts are essential to
the operation of the Equipment or cannot be detached from the Equipment
without materially interfering with the operation of the Equipment or
adversely affecting the value, utility and remaining useful life which the
Equipment would have had without the addition thereof. Lessees shall not
make any material alterations to the Equipment without the prior written
consent of Lessor;
(c) Upon twenty-four (24) hours notice, Lessees shall afford Lessor
and/or its designated representatives access to the premises where the
Equipment is located for the purpose of inspecting such Equipment and all
applicable records at any reasonable time during normal business hours;
provided, however, if a default or Default shall have occurred and then be
continuing, no notice of any inspection by Lessor shall be required.
8. Disclaimer of Warranties. LESSOR IS NOT A SELLER, SUPPLIER OR
MANUFACTURER (AS SUCH TERMS ARE DEFINED OR USED, AS THE CASE MAY BE, IN THE
UNIFORM COMMERCIAL CODE), NOR A SELLER'S OR A DEALER'S AGENT. THE EQUIPMENT IS
LEASED HEREUNDER "AS IS", AND LESSOR HAS NOT MADE, AND HEREBY DISCLAIMS
LIABILITY FOR, AND LESSEES HEREBY WAIVE ALL RIGHTS AGAINST LESSOR RELATING TO,
ANY AND
Page 5
<PAGE>
ALL WARRANTIES, REPRESENTATIONS OR OBLIGATIONS OF ANY KIND WITH RESPECT TO THE
EQUIPMENT, EITHER EXPRESS OR IMPLIED, ARISING BY APPLICABLE LAW OR OTHERWISE,
INCLUDING ANY OF THE SAME RELATING TO OR ARISING IN OR UNDER: (a)
MERCHANTABILITY OR FITNESS FOR PARTICULAR USE OR PURPOSE; (b) COURSE OF
PERFORMANCE, COURSE OF DEALING OR USAGE OR TRADE; OR (c) TORT (WHETHER OR NOT
ARISING FROM THE ACTUAL, IMPLIED OR IMPUTED NEGLIGENCE OF LESSOR OR STRICT
LIABILITY) OR THE UNIFORM COMMERCIAL CODE (INCLUDING ARTICLE 2A, AS HEREINAFTER
DEFINED; AND, WITHOUT LIMITING THE FOREGOING, INCLUDING, (i) ANY WARRANTIES
CONTAINED IN ss.ss. 2A-210, 211, 212 AND 213, (ii) ANY RIGHT TO DEEM LESSOR IN
DEFAULT PURSUANT THERETO, AND (iii) ALL OF LESSEES' RIGHTS AND REMEDIES UNDER
ss.ss. 2A-508 THROUGH 521) OR OTHER APPLICABLE LAW WITH RESPECT TO THE
EQUIPMENT, INCLUDING ITS TITLE OR FREEDOM FROM LIENS, FREEDOM FROM TRADEMARK,
PATENT OR COPYRIGHT INFRINGEMENT, FREEDOM FROM LATENT DEFECTS (WHETHER OR NOT
DISCOVERABLE), CONDITION, MANUFACTURE, DESIGN, SERVICING OR COMPLIANCE WITH
APPLICABLE LAW; it being agreed that all such risks, as between Lessor and
Lessees, are to be borne by Lessees; and Lessor's agreement to enter into this
Lease is in reliance upon the freedom from and complete negation of liability or
responsibility for the matters waived and disclaimed herein. Lessor is not
responsible for any direct, indirect, incidental or consequential damage to or
losses resulting from the installation, operation or use of the Equipment or any
products manufactured thereby. All assignable warranties made by the Supplier as
to any item of Equipment are hereby assigned to Lessees for and during the term
of this Lease and Lessees agree to resolve all such claims directly with the
Supplier. Provided that no default or Default has occurred and is then
continuing, Lessor fully shall cooperate with Lessees with respect to the
resolution of such claims, in good faith and by appropriate proceedings at
Lessees' expense. Any such claim shall not affect in any manner the
unconditional obligation of Lessees to make rent payments hereunder.
9. Fees And Taxes.
(a) To the extent permitted by law, Lessees shall file any necessary
report and return for, shall pay promptly when due, shall otherwise be
liable to reimburse Lessor (on an after-tax basis) for, and agrees to
indemnify and hold Lessor harmless from: (i) all titling, recordation,
documentary stamp and other fees, and (ii) taxes (other than taxes
calculated solely on the basis of net income), assessments and all other
charges or withholdings of any nature (together with any penalties, fines
or interest thereon); arising at any time upon or relating to the Equipment
or this Lease or the delivery, acquisition, ownership, use, operation or
leasing or other disposition of the Equipment, or upon the rent, whether
the same be assessed to Lessor or Lessees (any of the foregoing, an
"Imposition").
(b) If any report, return or property listing, or any Imposition is,
by law, required to be filed by, assessed or billed to, or paid by, Lessor,
Lessees at their own expense will do all
Page 6
<PAGE>
things required to be done by Lessor (to the extent permitted by law) in
connection therewith and is hereby authorized by Lessor to act on behalf of
Lessor in all respects, including the contest or protest, in good faith and
by appropriate proceedings, of the validity of any Imposition, or the
amount thereof. Lessor agrees fully to cooperate with Lessees in any such
contest, and Lessees agree promptly to indemnify Lessor for all reasonable
expenses incurred by Lessor in the course of such cooperation. An
Imposition or Claim (as hereinafter defined) therefor shall be paid,
subject to refund proceedings, if failure to pay would adversely affect the
title or rights of Lessor. Provided that no default or Default has occurred
and is continuing, if Lessor obtains a refund of any Imposition which has
been paid (by Lessees, or by Lessor and for which Lessor has been
reimbursed by Lessees), Lessor shall promptly pay to Lessees the net amount
of such refund to the extent actually received. Lessees will cause all
billings of such charges to Lessor to be made to Lessor in care of Lessees
and will, in preparing any report or return required by law, show the
ownership of the Equipment in Lessor, and shall send a copy of any such
report or return to Lessor. If Lessees fail to pay any such charges when
due, except any Imposition being contested in good faith and by appropriate
proceedings as above provided for a reasonable period of time, Lessor at
its option may do so, in which event the amount so paid (including any
penalty or interest incurred as a result of Lessees' failure), plus
interest thereon at the Late Charge Rate, shall be paid by Lessees to
Lessor with the next periodic payment of rent.
10. Intent, Title And Liens.
(a) The parties intend and agree that the Equipment shall remain
personal property, and that Lessor's title thereto not be impaired.
(b) It is the express intention of the parties hereto that (1) this
Lease, constitutes a true "lease" and a "finance lease' as such terms are
defined in the Uniform Commercial Code Article 2A - Leases ("Article 2A")
(whether or not Article 2A is then in effect in the State) and not a sale
or retention of security interest; and (2) title to the Equipment shall at
all times remain in Lessor, and Lessees shall acquire no ownership,
property, rights, equity, or interest other than a leasehold interest,
solely as Lessees subject to the terms and conditions hereof. If,
notwithstanding the express intent of the parties, a court of competent
jurisdiction determines that this Lease is not a true lease, but is rather
a sale and extension of credit, a lease intended for security, a loan
secured by the Equipment or other similar arrangement, the parties agree
that in such event: (i) (A) in order to secure the prompt payment and
performance as and when due of all of Lessees' obligations (both now
existing and hereafter arising) under this Lease, Lessees shall be deemed
to have granted, and they hereby grant, to Lessor a first priority security
interest in the following (whether now existing or hereafter created): the
Page 7
<PAGE>
Equipment, all replacements, substitutions, attachments, accessions, and
additions thereto, all warranties and licenses relating thereto and all
proceeds (cash and non-cash; but without power of sale), including the
proceeds of all insurance policies, thereof, and (B) Lessees agree that
with respect to the Equipment, in addition to all of the other rights and
remedies available to Lessor hereunder upon the occurrence of a Default,
Lessor shall have all of the rights and remedies of a first priority
secured party under the Code; and (ii) (A) the principal amount of any such
loan shall be an amount equal to the aggregate of the "Total Purchase
Cost," as defined and set forth in the Equipment Schedule, (B) the term of
any such loan shall be the same as the longest Term specified in any
Equipment Schedule, (C) the loan payments under any such loan shall be the
regular installments of Rent specified in the Equipment Schedule, and (D)
any such loan shall be at an interest rate that is equal to the lesser of
the maximum lawful rate permitted by applicable law or the effective
interest rate calculated on the basis of the foregoing principal amount,
loan term and loan payments as if the principal amount were fully amortized
over the term of the loan.
(c) Lessees may not dispose of any of the Equipment except to the
extent expressly provided herein, notwithstanding the fact that proceeds
constitute a part of the Equipment. Lessees further agree to maintain the
Equipment free from all claims, liens, attachments, rights of others and
legal processes ("Liens") of creditors of Lessees or any other persons,
other than Liens for fees, taxes, levies, duties or other governmental
charges of any kind, Liens of mechanics, materialmen, laborers, employees
or suppliers and similar Liens arising by operation of law incurred by a
Lessee in the ordinary course of business for sums that are not yet
delinquent or are being contested in good faith by negotiations or by
appropriate proceedings which suspend the collection thereof (provided,
however, that such proceedings do not involve any substantial danger (as
determined in Lessor's sole reasonable discretion) of the sale, forfeiture
or loss of the Equipment or any interest therein). Lessees will defend, at
their own expense, Lessor's title to the Equipment from such claims, Liens
or legal processes. Lessees shall also notify Lessor immediately upon
receipt of notice of any Lien affecting the Equipment in whole or in part.
11. Insurance. Lessees shall obtain and maintain all-risk insurance
coverage with respect to the Equipment insuring against, among other things: any
casualty to the Equipment (or any portion thereof), including loss or damage
due to fire and the risks normally included in extended coverage, malicious
mischief and vandalism, for not less than the greater of the full replacement
value or the Stipulated Loss Value (as defined in Section 12 hereof); and any
public liability arising in connection with the Equipment, including both
personal injury and property damage with a combined single limit per occurrence
of not less than the amount specified in the Equipment Schedule, with no
deductible. All said
Page 8
<PAGE>
insurance shall be in form (including all endorsements required by Lessor) and
amount and with companies reasonably satisfactory to Lessor. All insurance for
loss or damage shall provide that losses, if any, shall be payable to Lessor or
Lessor's assigns as sole loss payee and Lessees shall utilize their best efforts
to have all checks relating to any such losses delivered promptly to Lessor.
Lessor and Lessor's assigns shall be named as an additional insured with respect
to all such liability insurance. Lessees shall pay the premiums therefor and
deliver to Lessor evidence satisfactory to Lessor of such insurance coverage.
Lessees shall cause to be provided to Lessor, not less than fifteen (15) days
prior to the scheduled expiration or lapse of such insurance coverage, evidence
satisfactory to Lessor of renewal or replacement coverage. Each insurer shall
agree, by endorsement upon the policy or policies issued by it or by independent
instrument furnished to Lessor and Lessor's assigns, that (a) it will give
Lessor and Lessor's assigns thirty (30) days' prior written notice of the
effective date of any material alteration or cancellation of such policy; and
(b) insurance as to the interest of any named additional insured or loss payee
other than Lessees shall not be invalidated by any actions, inactions, breach of
warranty or conditions or negligence of any Lessee or any person other than
Lessor with respect to such policy or policies. The proceeds of such insurance
payable as a result of loss of or damage to the Equipment shall be applied as
required by the provisions of Section 12 hereof.
12. Loss And Damage. Lessees assume the risk of direct and consequential
loss and damage to the Equipment from all causes. Except as provided in this
Section for discharge upon payment of Stipulated Loss Value and the other
specified amounts, no loss or damage to the Equipment or any part thereof shall
release or impair any obligations of Lessees under this Lease. Lessees agree
that Lessor shall not incur any liability to any Lessee for any loss of
business, loss of profits, expenses, or any other Claims resulting to any Lessee
by reason of any failure of or delay in delivery or any delay caused by any
non-performance, defective performance, or breakdown of the Equipment, nor shall
Lessor at any time be responsible for personal injury or the loss or destruction
of any other property resulting from the Equipment. In the event of loss or
damage to any item of Equipment which does not constitute a Total Loss (as
hereinafter defined), Lessees shall, at their sole cost and expense, promptly
repair and restore such item of the Equipment to the condition required by this
Lease. Provided that no default or Default has occurred and is continuing, upon
receipt of evidence reasonably satisfactory to Lessor of completion of such
repairs, Lessor will apply any net insurance proceeds received by Lessor on
account of such loss to the cost of repairs. Upon the occurrence of the actual
or constructive total loss of any item of the Equipment, or the loss,
disappearance, theft or destruction of any item of the Equipment or damage to
any item of the Equipment to such extent as shall make repair thereof
uneconomical or shall render any item of the Equipment permanently unfit for
normal use
Page 9
<PAGE>
for any reason whatsoever, or the condemnation, confiscation, requisition,
seizure, forfeiture or other taking of title to or use of any item of the
Equipment (as established to the reasonable satisfaction of Lessor; any such
occurrence being herein referred to as a "Total Loss"), during the term of this
Lease, Lessees shall give prompt notice thereof to Lessor. Within fifteen (15)
days after the Total Loss, Lessees shall give Lessor written notice of its
election (it being understood that if Lessees fail to give such notice of
election within fifteen (15) days after the occurrence of such Total Loss,
Lessees shall be deemed to have elected to perform the option set forth in
clause (a) below) to either make payment to Lessor or, so long as no default or
Default shall have occurred and be continuing, to substitute Equipment, as
provided, respectively, in alternatives (a) and (b) below:
(a) On the next date for or the payment of rent, Lessees shall pay to
Lessor the rent due on that date plus the Stipulated Loss Value of the item or
items of the Equipment with respect to which the Total Loss has occurred
("Destroyed Equipment") and any other sums due hereunder with respect to that
Destroyed Equipment (less any insurance proceeds or condemnation award actually
paid). Upon making such payment, this Lease and the obligation to make future
rental payments shall terminate solely with respect to the Destroyed Equipment
so paid for and (to the extent applicable) Lessees shall become entitled thereto
"AS IS WHERE IS" without warranty, express or implied, with respect to any
matter whatsoever. Lessor shall deliver to Lessees a bill of sale transferring
and assigning to Lessees without recourse or warranty, all of Lessor's right,
title and interest in and to the Destroyed Equipment. Lessor shall not be
required to make and may specifically disclaim any representation or warranty as
to the condition of the Destroyed Equipment or any other matters. As used in
this Lease, "Stipulated Loss Value" shall mean the product of the "Equipment
Cost" (as defined in the Equipment Schedule) of the applicable Equipment and the
applicable percentage factor set forth on the Schedule of Stipulated Loss Values
attached to the applicable Equipment Schedule. Stipulated Loss Value shall be
determined as of the next date on which a payment of rent is or would be due
after a Total Loss or other termination of the Lease as to an item of Equipment,
after payment of any rent due on such date, and the applicable percentage factor
shall be that which is set forth with respect to such rent payment. After
payment of the final payment of rent due under the original term of this Lease
and during any renewal term thereof, Stipulated Loss Value shall be determined
as of the date of termination of this Lease (absent any renewal thereof) or, if
during a renewal term, on the next date on which a payment of rent is or would
be due after a Total Loss or other termination of such renewal term, after
payment of any rent due on such date, and the applicable percentage factor shall
be the last percentage factor set forth on the Schedule of Stipulated Loss
Values attached to the Equipment Schedule. Following payment of the sums due
pursuant to this clause (a) by the Lessees, the Lessor shall, provided that no
default or Default has occurred and is
Page 10
<PAGE>
continuing, remit to Lessees any and all insurance proceeds received by the
Lessor for such items of Destroyed Equipment.
(b) Within thirty (30) days from the Total Loss replace the items of
Destroyed Equipment with like equipment in good condition and working order
acceptable to Lessor and any assignee of Lessor, and Lessee shall transfer title
to the replacement equipment to the Lessor, free and clear of all liens, claims
and encumbrances, which equipment shall thereupon become subject to this Lease
and deemed a replacement for the Destroyed Equipment. If this option is elected,
the Lessees shall provide to the Lessor: (i) evidence that the Lessees have
obtained for such item of equipment all insurance required pursuant to Section
11 of this Lease; (ii) a copy of the bill of sale or other evidence of
acquisition pursuant to which the Lessees obtained the replacement equipment;
(iii) such evidence of title as Lessor may reasonably request to the effect that
the replacement equipment has been conveyed to the Lessor and the replacement
equipment is subject to the terms of this Lease; (iv) such Uniform Commercial
Code financing statements or chattel mortgages concerning such replacement
equipment as may be requested by Lessor or its assigns; and (v) a certificate
signed by duly authorized financial or executive officers of Lessees certifying
that, upon consummation of such replacement, no default or Default exists under
this Lease. Provided that no default or Default has occurred and is continuing,
upon receipt of evidence of the satisfaction of all of the above conditions,
Lessor will remit to the Lessees any and all insurance proceeds for the
Destroyed Equipment for which replacement equipment has been obtained. All terms
and provisions of this Lease shall apply to the replacement equipment and such
replacement equipment shall be deemed Equipment hereunder.
13. Redelivery. Upon the expiration or earlier termination of the term of
this Lease (or of any renewal thereof, if applicable), Lessees shall, at their
own expense, return the Equipment to Lessor within ten (10) days (a) in the same
condition as the Equipment is on the date of this Lease, ordinary wear and tear
resulting from proper use thereof excepted, (b) in such operating condition as
is capable of performing its originally intended use, (c) having been used,
operated, serviced and repaired in accordance with, and otherwise complying
with, Section 7 hereof, and (d) free and clear of all Liens whatsoever except
Liens resulting from claims against Lessor. Lessees shall return the Equipment
by delivering it to such place within the continental United States as Lessor
shall specify. In addition to Lessor's other rights and remedies hereunder, if
the Equipment is not returned in a timely fashion, or if repairs are necessary
to place any items of Equipment in the condition required in this Section,
Lessees shall continue to pay to Lessor per diem rent at the last prevailing
lease rate under the Equipment Schedule with respect to such items of Equipment,
for the period of delay in redelivery, or for the period of time reasonably
necessary to accomplish such repairs together with the cost of such repairs, as
applicable.
Page 11
<PAGE>
Lessor's acceptance of such rent on account of such delay or repair does not
constitute a renewal of the term of the this Lease or a waiver of Lessor's right
to prompt return of the Equipment in proper condition.
14. Indemnity. Each Lessee assumes and agrees to indemnify, defend and
keep harmless Lessor, and any assignee of Lessor's rights, obligations, title or
interests under this Lease, its agents and employees ("Indemnitees"), from and
against any and all Claims (other than such as may directly and proximately
result from the gross negligence or willful misconduct of, such Indemnitees;
provided, however, that each Lessee expressly agrees to indemnify each such
Indemnitee where the Claims arise in whole or in part from the simple negligence
of such Indemnitee), by paying (on an after-tax basis) or otherwise discharging
same, when and as such Claims shall become due, including Claims arising on
account of (a) any Lease Document, or (b) the Equipment, or any part thereof,
including the ordering, acquisition, delivery, installation or rejection of the
Equipment, the possession, maintenance, use, condition, ownership or operation
of any item of Equipment, and by whomsoever owned, used or operated, during the
term of this Lease with respect to that item of Equipment, the existence of
latent and other defects (whether or not discoverable by Lessor or a Lessee) any
claim in tort for negligence or strict liability, and any claim for patent,
trademark or copyright infringement, or the loss, damage, destruction, removal,
return, surrender, sale or other disposition of the Equipment, or any item
thereof, or for whatever other reason whatsoever. It is the express intention of
both Lessor and Lessees, that the indemnity provided for in this Section 14
includes the agreement by each Lessee to indemnify the Indemnitees from the
consequences of such Indemnitees' own simple negligence, whether that negligence
is the sole or concurring cause of the Claims, and to further indemnify such
Indemnitees with respect to Claims for which the Indemnitees are strictly
liable. Lessor shall give Lessees prompt notice of any claim hereby indemnified
against and Lessees shall be entitled to control the defense thereof, so long as
no default or Default has occurred and is then continuing; provided, however,
that Lessor shall have the right to approve defense counsel selected by Lessees.
For the purposes of this Lease, the term "Claims" shall mean all claims,
allegations, harms, judgments, good faith settlements entered into, suits,
actions, debts, obligations, damages (whether incidental, consequential or
direct), demands (for compensation, indemnification, reimbursement or
otherwise), losses, penalties, fines, liabilities (including strict liability),
charges that Lessor has incurred or for which it is responsible, in the nature
of interest, Liens, and costs (including attorneys' fees and disbursements and
any other legal or non-legal expenses of investigation or defense of any Claim,
whether or not such Claim is ultimately defeated or enforcing the rights,
remedies or indemnities provided for hereunder, or otherwise available at law or
equity to Lessor), of whatever kind or nature, contingent or
Page 12
<PAGE>
otherwise, matured or unmatured, foreseeable or unforeseeable, by or against any
person.
15. Default. A default shall be deemed to have occurred hereunder
("Default") if (a) Lessees shall fail to make any payment of rent hereunder when
and as due; or (b) Lessees shall fail to obtain and maintain the insurance
required herein; or (c) any Lessee shall fail to perform or observe any other
covenant, condition or agreement to be performed or observed by it under any
Lease Document and such failure is not cured within five (5) calendar days after
written notice from Lessor or its assignee to Lessees; or (d) any Lessee shall
(i) take action for the purpose of invoking the protection of any bankruptcy or
insolvency law, or (ii) have any bankruptcy or insolvency law invoked against or
with respect to any Lessee or its property and the petition filed against a
Lessee involving such law is not dismissed within sixty (60) days; or (e) any
Lessee shall make or permit any unauthorized Lien against, or assignment or
transfer of, this Lease, the Equipment or any interest therein; or (f) any
certificate, statement, representation or warranty contained herein or furnished
with respect hereto by or on behalf of any Lessee proving to have been false in
any material respect at the time as of which the facts therein set forth were
stated or certified; or (g) any Lessee shall be in default under any loan,
lease, guaranty, installment sale or other financing agreement or contract,
which singularly or in the aggregate relates to indebtedness in excess of One
Million Dollars ($1,000,000.00), and the applicable grace period with respect
thereto shall have expired; or (h) any Lessee shall have terminated its
corporate existence, or consolidated with or merged into any person; or (i)
there is the occurrence of any "EVENT OF DEFAULT" as that term is defined in the
Lease Guaranty Agreement; or (j) any Lessee rejects the Lease pursuant to
Section 365 of the United States Bankruptcy Code or any successor statute; or
(k) any judgments against the Lessees (or either one of them) or against their
assets or properties for amounts in excess of One Hundred Thousand Dollars
($100,000.00), in the aggregate, remain unpaid, unstayed on appeal,
undischarged, unbonded, and undismissed for a period of thirty (30) days; or (1)
any Lessee shall discontinue or liquidate in any material respect any
substantial part of its operations or business; or (m) any Lessee shall sell,
transfer, assign or otherwise dispose of any of its assets unless such sale or
disposition shall be in the ordinary course of its business for value received
or is of assets no longer useful in its business; or (n) any Lessee shall
create, assume, or suffer to exist any liens, pledges, security interests, or
other encumbrances upon any accounts receivable, inventory or other current
assets now owned or hereafter acquired by it.
16. Remedies. Without limiting Lessor's other rights hereunder, if
Lessees shall fail to pay any amount of rent hereunder within sixty (60) days
after the same shall have become due, Lessees shall automatically be deemed to
be in default hereunder and all of Lessees' rights, but not their obligations,
Page 13
<PAGE>
under this lease and in and to the Equipment automatically shall be cancelled,
whereupon Lessees' right to possess and use the Equipment immediately shall
cease; and Lessees hereby agree that the foregoing shall occur without act or
notice as a condition thereto, and any such requirement of any act or notice
under applicable law is hereby expressly and irrevocably waived to the extent
permitted thereunder. Upon the occurrence of any other Default under the
provisions of Section 15 (including the failure to make any payment of rent as
and when due), Lessor may, at its option, declare this Lease to be in default.
At any time after cancellation of this Lease or after declaration by Lessor that
this Lease is in default, Lessor may, in addition to any other remedies provided
herein or by applicable law, exercise one or more of the following remedies as
Lessor in its sole discretion shall elect:
(a) Require Lessees to assemble any or all of the Equipment at the
location to which the Equipment was delivered or the location to which such
Equipment may have been moved by Lessees or such other location in reasonable
proximity to either of the foregoing as Lessor shall designate; and/or to return
promptly, at Lessees' expense, any or all of the Equipment to Lessor at the
location, in the condition and otherwise in accordance with all of the terms of
Section 13 hereof; and/or take possession of and render unusable by Lessees any
or all of the Equipment, wherever it may be located, without any court order or
other process of law and without liability for any damages occasioned by such
taking of possession (other than to premises) (any such taking of possession
shall constitute an automatic cancellation of this Lease pertaining thereto
without further notice, and such taking of possession shall not prohibit Lessor
from exercising its other remedies hereunder).
(b) Sell, re-lease or otherwise dispose of any or all of the Equipment,
whether or not in Lessor's possession, in a commercially reasonable manner at
public or private sale with notice to Lessees (the parties agreeing that ten
(10) days, prior written notice shall constitute adequate notice of such sale),
with the right of Lessor to purchase and apply the net proceeds of such
disposition, after deducting all costs of such disposition (including but not
limited to costs of transportation, possession, storage, refurbishing,
advertising and brokers' fees), to the obligations of Lessees pursuant to this
sub-part (b), with Lessees remaining liable for any deficiency and with any
excess being retained by Lessor; or retain any or all of the Equipment; and
recover from Lessees damages, not as a penalty, but herein liquidated for all
purposes as follows:
(1) if Lessor elects to dispose of the Equipment pursuant to a lease
which is substantially similar to this Lease: an amount equal to the sum of (A)
any accrued and unpaid rent under this Lease as of the date of commencement (the
*Commencement Date") of the term of the new lease, and (B) (i) the present value
as of the Commencement Date of the total rent for the then remaining term of
this Lease, minus (ii) the present value as of the Commencement
Page 14
<PAGE>
Date of the rent under the new lease applicable to that period of the new lease
term which is comparable to the then remaining term of this Lease, and (C) any
incidental damages allowed under Article 2A, less expenses saved by Lessor in
consequence of the Default ("Incidental Damages");
(2) if Lessor elects to retain the Equipment or to dispose of the
Equipment by sale, by re-lease (pursuant to a lease which is not substantially
similar to this Lease), or otherwise: an amount equal to the sum of (A) any
accrued and unpaid rent as of the date Lessor repossesses the Equipment or such
earlier date as Lessees tender possession of the Equipment to Lessor, (B) (i)
the present value as of the date determined under clause (A) of the total rent
for the then remaining term of this Lease, minus (ii) the present value, as of
that certain date which may be determined by taking a reasonable opportunity to
repossess and remarket the Equipment, of the "market rent" (as computed pursuant
to Article 2A) at the place where the Equipment was located on that date,
computed for the same lease term, and (C) any Incidental Damages (provided,
however, that if the measure of damages provided is inadequate to put Lessor in
as good a position as performance would have, the damages shall be the present
value of the profit, including reasonable overhead, Lessor would have made from
full performance by Lessees, together with any incidental damages allowed under
Article 2A, due allowance for costs reasonably incurred and due credit for
payments or proceeds of disposition);
(3) if Lessor has not repossessed the Equipment, or if Lessor has
repossessed the Equipment or Lessees have tendered possession of the Equipment
to Lessor and Lessor is unable after reasonable effort to dispose of the
Equipment at a reasonable price or the circumstances reasonably indicate that
such an effort will be unavailing: an amount equal to the sum of (A) accrued and
unpaid rent as of the date of entry of judgment in favor of Lessor, (B) the
present value as of the date determined under clause (A) of the rent for the
then remaining term of this Lease, and (C) any Incidental Damages. Lessor may
dispose of the Equipment at any time before collection of a judgment for
damages. If the disposition is before the end of the remaining term of this
Lease, Lessor's recovery against Lessees for damages will be governed by
sub-part (b)(1) or (2) (as applicable), and Lessor will cause an appropriate
credit to be provided against any judgment for damages to the extent that the
amount of the judgment exceeds the applicable recovery pursuant to sub-part
(b)(1) or (2).
(c) In lieu of the damages specified in sub-part (b) Lessor may recover
from Lessees, as liquidated damages for loss of a bargain and not as a penalty,
an amount calculated as the sum of: (1) the greater of either (A) the Stipulated
Loss Value of the Equipment (determined as of the next date on which a payment
is or would have been due after the occurrence of the subject Default), together
with all other sums due under this Lease as of such determination date or (B)
all sums due and to become due under this
Page 15
<PAGE>
Lease for or the full term thereof (including any tax indemnities becoming due
as a result of the Default, and any mandatory purchase or renewal options which
Lessees have contracted to pay) (provided that all sums becoming due after the
occurrence of such Default shall be discounted to present value as of the date
of payment by Lessees) plus Lessor's estimated residual interest in the
Equipment; plus (2) the amount of all commercially reasonable costs and expenses
incurred by Lessor in connection with repossession, recovery, storage, repair,
sale, re-lease or other disposition of the Equipment, including reasonable
attorneys' fees and costs incurred in connection therewith or otherwise
resulting from the Default; minus (3) if Lessor has repossessed the Equipment,
the amount calculated pursuant to clause (B)(ii) of sub-part (b)(1) or (2) (as
applicable). Notwithstanding the foregoing, in the event this Lease and Lessees'
rights thereunder automatically are cancelled pursuant to the first sentence of
this Section 16, the amounts payable under clause (1) of this paragraph (c)
automatically shall become due and payable on the date of such cancellation,
without notice or demand, except as otherwise may be provided in writing by
Lessor.
(d) Cancel this Lease as to any or all of the Equipment.
(e) Proceed by appropriate court action, either at law or in equity
(including an action for specific performance), to enforce performance by
Lessees or to recover damages associated with such Default; or exercise any
other right or remedy available to Lessor at law or in equity.
(f) By offset, recoupment or other manner of application, apply any
security deposit, monies held in deposit or other sums then held by Lessor, and
with respect to which any Lessee has an interest, against any obligations of
Lessees arising under this Lease, whether or not a Lessee has pledged, assigned
or granted a security interest to Lessor in any or all such sums as collateral
for said obligations.
All amounts to be present valued shall be discounted at a rate equal to
the discount rate of the Federal Reserve Bank of Richmond in effect on the
applicable date. Unless otherwise provided above, a cancellation of this Lease
shall occur only upon written notice by Lessor to Lessees and only with respect
to such items of the Equipment as Lessor specifically elects to cancel in such
notice. Except as to such item of the Equipment with respect to which there is a
cancellation, this Lease shall remain in full force and effect and Lessees shall
be and remain liable for the full performance of all their obligations
hereunder. Except as otherwise specifically provided above, (A) Lessees shall
also be liable for (1) all unpaid rent due hereunder before, during or after
exercise of any of the foregoing remedies, (2) for all reasonable legal fees and
other expenses incurred by reason of any default or Default or the exercise of
Lessor's rights or remedies with respect thereto, including all costs and
expenses incurred in
Page 16
<PAGE>
connection with the return, repossession or other recovery of any Equipment in
accordance with the terms of Section 13 hereof and this Section 16 or in placing
such Equipment in the condition required by said Sections, and all other pre-
judgment and post-judgment enforcement related actions taken by Lessor, and (3)
Late Charges which shall accrue and be payable with respect to any and all
amounts becoming due pursuant to this Section 16 from and after the due date
therefor until payment of the full amount thereof is made; and (B) no right or
remedy referred to in this Section is intended to be exclusive, but each shall
be cumulative and shall be in addition to any other remedy referred to above or
otherwise available at law or in equity, and may be exercised concurrently or
separately from time to time. The failure of Lessor to exercise the rights
granted hereunder upon any Default by Lessees shall not constitute a waiver of
any such right upon the continuation or reoccurrence of any such Default.
17. ASSIGNMENT.
(a) WITHOUT THE PRIOR WRITTEN CONSENT OF LESSOR (WHICH SHALL NOT
UNREASONABLY BE WITHHELD), NEITHER LESSEE WILL ASSIGN, TRANSFER OR ENCUMBER
ANY OF ITS RIGHTS OR OBLIGATIONS HEREUNDER, OR ITS LEASEHOLD INTEREST,
SUBLET THE EQUIPMENT OR OTHERWISE PERMIT THE EQUIPMENT TO BE OPERATED OR
USED BY, OR TO COME INTO OR REMAIN IN THE POSSESSION OF, ANYONE BUT
LESSEES. No assignment or sublease, whether authorized in this Section or
in violation of the terms hereof, shall relieve Lessees of their
obligations, and each Lessee shall remain primarily liable, hereunder. Any
unpermitted assignment, transfer, encumbrance, delegation or sublease by a
Lessee shall be void ab initio.
(b) LESSOR MAY AT ANY TIME ASSIGN ANY OR ALL OF ITS RIGHTS,
OBLIGATIONS, TITLE AND INTERESTS HEREUNDER TO ANY OTHER PERSON. If Lessees
are given notice of any such assignment, Lessees shall acknowledge receipt
thereof in writing. Any such assignee shall have and be entitled to
exercise any and all rights and powers of Lessor hereunder, but such
assignee shall not be obligated to perform any of the obligations of Lessor
hereunder (other than as otherwise provided in any notice with respect
thereto by Lessor to Lessees). Lessees will pay all rent and other amounts
payable by Lessees hereunder to such assignee, notwithstanding any defense
or claim of whatever nature, whether by reason of breach or otherwise which
it may now or hereafter have against Lessor; it being understood that in
the event of a default or breach by Lessor, that Lessees shall pursue any
rights on account thereof solely against Lessor. Lessees agree that any
such assignment shall not materially change Lessees' duties or obligations
under the Lease nor materially increase Lessees' risks or burdens. Upon
such assignment and except as may otherwise be provided therein all
references in this Lease to Lessor shall include such assignee.
Page 17
<PAGE>
(c) Subject always to the foregoing, this Lease inures to the benefit
of, and is binding upon, the successors and assigns of the parties hereto
and thereto, as the case may be.
18. Miscellaneous.
(a) This Lease, the Riders annexed hereto and each Equipment Schedule,
constitute the entire agreement between the parties with respect to the
subject matter hereof and thereof and shall not be rescinded, amended or
modified in any manner except by a document in writing executed by both
parties.
(b) Any provision of this Lease which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability
in any jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
(c) The representations, warranties and covenants of Lessees herein
shall be deemed to be continuing and to survive the execution and delivery
of this Lease, and any other Lease Documents.
(d) If a Lessee fails to perform any of its obligations hereunder,
Lessor shall have the right, but shall not be obligated, to effect such
performance, and the amount of any out of pocket and other reasonable
expenses of Lessor incurred in connection with such performance, together
with interest thereon at the Late Charge Rate, shall be payable by Lessees
upon demand. Lessor's effecting such compliance shall not be a waiver of
Lessees' default.
(e) each Lessee irrevocably appoints Lessor as Lessees' attorney-in-
fact (which power shall be deemed coupled with an interest) to execute,
endorse and deliver any documents and checks or drafts relating to or
received in payment for any loss or damage under the policies of insurance
required by the provisions of Section 11 hereof, but only to the extent
that the same relates to the Equipment.
(f) LESSOR AND LESSEES HEREBY WAIVE TRIAL BY JURY IN ANY ACTION OR
PROCEEDING TO WHICH ANY LESSEE AND/OR LESSOR MAY BE PARTIES ARISING OUT OF
OR IN ANY WAY PERTAINING TO THIS LEASE. EACH LESSEE AUTHORIZES LESSOR TO
FILE THIS PROVISION WITH THE CLERK OR JUDGE OF ANY COURT HEARING ANY SUCH
CLAIM. IT IS HEREBY AGREED AND UNDERSTOOD THAT THIS WAIVER CONSTITUTES A
WAIVER OF TRIAL BY JURY OF ALL CLAIMS AGAINST PARTIES TO SUCH ACTIONS OR
PROCEEDINGS, INCLUDING CLAIMS AGAINST PARTIES WHO ARE NOT PARTIES TO THIS
LEASE. THIS WAIVER IS KNOWINGLY, WILLINGLY AND VOLUNTARILY MADE BY THE
PARTIES AND THE PARTIES HEREBY ACKNOWLEDGE THAT NO REPRESENTATIONS OF FACT
OR OPINION HAVE BEEN MADE BY ANY INDIVIDUAL TO INDUCE THIS WAIVER OF TRIAL
BY JURY OR IN ANY WAY TO MODIFY OR NULLIFY ITS
Page 18
<PAGE>
EFFECT. LESSOR AND LESSEES FURTHER ACKNOWLEDGE THAT THEY HAVE BEEN REPRESENTED
IN THE SIGNING OF THIS LEASE AND IN THE MAKING OF THIS WAIVER BY INDEPENDENT
LEGAL COUNSEL, SELECTED OF THEIR OWN FREE WILL, AND THAT THEY HAVE HAD THE
OPPORTUNITY TO DISCUSS THIS WAIVER WITH COUNSEL.
(g) All notices (excluding billings and communications in the ordinary
course of business) hereunder shall be in writing, personally delivered,
delivered by overnight courier service, sent by facsimile transmission
(with confirmation of receipt), or sent by certified mail, return receipt
requested, addressed to the other party at its respective address stated
below the signature of such party or at such other address as such party
shall from time to time designate in writing to the other party; and shall
be effective from the date of receipt.
(h) THIS LEASE IS SUBJECT TO AND SUBORDINATE TO THE SECURITY INTEREST
IN THE EQUIPMENT GRANTED BY THE LESSOR TO MBC LEASING CORP.
(i) This Lease and all of the other Lease Documents shall not be
effective unless and until accepted by execution by an officer of Lessor.
THIS LEASE AND ALL OF THE OTHER LEASE DOCUMENTS, AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND THEREUNDER, SHALL IN ALL RESPECTS
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE
COMMONWEALTH OF PENNSYLVANIA (the "STATE") (WITHOUT REGARD TO THE CONFLICT
OF LAWS PRINCIPLES OF THE STATE), INCLUDING ALL MATTERS OF CONSTRUCTION,
VALIDITY AND PERFORMANCE, REGARDLESS OF THE L0CATION OF THE EQUIPMENT. The
parties agree that any action or proceeding arising out of or relating to
this Lease may be commenced in any state or Federal court in the State, and
agree that a summons and complaint commencing an action or proceeding in
any such court shall be properly served and shall confer personal
jurisdiction if served personally or by certified mail to it at its address
hereinbelow set forth, or as it may provide in writing from time to time,
or as otherwise provided under the laws of the State.
(j) Lessor hereby agrees that it does not have and hereby releases any
maritime lien or other claim against any vessel on which any of the
Equipment may at any time be used with respect to any claim by the Lessor
under this Lease.
19. Definitions And Rules of Construction. (a) The following terms when
used in this Lease have the following meanings: (i) "applicable law" or "law":
any law, rule, regulation, ordinance, order, code, common law, interpretation,
judgment, directive, decree, treaty, injunction, writ, determination, award,
permit or similar norm or decision of any governmental authority; (ii) "business
day": any day, other than a Saturday, Sunday, or legal holiday for commercial
banks under the laws of the state of the governing law of this Lease; (iii)
"Code" or "Uniform Commercial
Page 19
<PAGE>
Code": the Uniform Commercial Code as in effect in the State or in any other
applicable jurisdiction; and any reference to an article (including Article 2A)
or section thereof shall mean the corresponding article or section (however
termed) of any such other applicable version of the Uniform Commercial Code;
(iv) "governmental authority": any federal, state, county, municipal, regional
or other governmental authority, agency, board, body, instrumentality or court,
in each case, whether domestic or foreign; and (v) "person": any individual,
corporation, partnership, joint venture, or other legal entity or a governmental
authority, whether employed, hired, affiliated, owned, contracted with, or
otherwise related or unrelated to Lessee or Lessor.
(b) The following terms when used herein shall be construed as follows:
(i) "herein," "hereof," "hereunder," etc.: in, of, under, etc. this Lease or
such other Lease Document in which such term appears (and not merely in, of,
under, etc. the section or provision where the reference occurs); (ii)
"including": containing, embracing or involving all of the enumerated items, but
not limited to such items unless such term is followed by the words "and limited
to," or similar words; and (iii) "or": at least one, but not necessarily only
one, of the alternatives enumerated. Any defined term used in the singular
preceded by "any' indicates any number of the members of the relevant class. Any
lease Document or other agreement or instrument referred to herein means such
agreement or instrument as supplemented and amended from time to time. Any
reference to Lessor, Lessees or Lessee shall include their permitted successors
and assigns.
(c) Any reference to a law shall also mean such law as amended,
superseded or replaced from time to time.
(d) Unless otherwise expressly provided herein to the contrary, all
actions that a Lessee takes or is required to take under any Lease Document
shall be taken at such Lessee's sole cost and expense, and all such costs and
expenses shall constitute Claims and be covered by Section 14 hereof.
20. Joint And Several Obligations. It is anticipated that the Equipment
shall be used by both Lessees from time to time and it is not intended that any
single item of Equipment shall be used solely by either Lessee. Due to the
nature of the Equipment and the Lessees' businesses, it is difficult or
impossible to determine the extent of the use of any single piece of Equipment
by either Lessee. All obligations and liabilities of the Lessees hereunder are
joint and several liabilities and obligations of each Lessee and their
respective successors and permitted assigns. Notwithstanding the foregoing, each
of the Lessees agrees that if the Lessees determine that one Lessee ("Lessee A")
has paid to the Lessor under this Lease an amount disproportionate to Lessee A's
use of the Equipment or if any court so determines, Lessee A shall be entitled
to recover from the other Lessee ("Lessee B"), and Lessee B shall pay to Lessee
A such amount as is necessary to
Page 20
<PAGE>
insure that each Lessee pays under this Lease an amount proportionate to each
Lessee's use of the Equipment. Each of the Lessees acknowledges and agrees that
the agreement to pay to each other such amounts as are necessary to insure that
each Lessee pays under this Lease an amount proportionate to each Lessee's use
of the Equipment shall not impair or affect the joint and several nature of the
obligations of the Lessees, or their respective successors and permitted
assigns, to the Lessor.
IN WITNESS WHEREOF, the parties hereto have caused this Lease to be duly
executed, under seal, as of the day and year first above set forth.
WITNESS/ATTEST: LESSEES:
NPR, INC.,
A Delaware Corporation
/s/ Mario F.Escudero, By: /s/ Ronald Katims
------------------------ -------------------------(SEAL)
Mario F.Escudero, Ronald Katims, President
Secretary
Address: 701 North Broadway
King & Essex Streets
Gloucester City, NJ 08030
HOLT CARGO SYSTEMS, INC.,
A Delaware Corporation
/s/ John A. Evans By: /s/ Thomas J. Holt, Sr.
-------------------------- -------------------------(SEAL)
John A. Evans, Secretary Thomas J. Holt, Sr.
President
Address: 701 North Broadway
King & Essex Streets
Gloucester City, NJ 08030
LESSOR:
EMERALD EQUIPMENT LEASING, INC.,
A Delaware Corporation
/s/ Marc Goldman By: /s/ Arthur B. Davis
----------------------- -------------------------(SEAL)
Marc Goldman, Secretary Arthur B. Davis, President
Address: 701 North Broadway
King & Essex Streets
Gloucester City, NJ 08030
Page 21
<PAGE>
EQUIPMENT SCHEDULE NO. 1
THIS EQUIPMENT SCHEDULE NO. 1 is incorporated into and made a part of the
Equipment Lease Agreement dated as of November 20, 1997 between Emerald
Equipment Leasing, Inc., a Delaware corporation, as lessor and NPR, Inc., a
Delaware corporation, and Holt Cargo Systems, Inc., a Delaware corporation, as
lessees ("Lease").
1. EQUIPMENT. The equipment leased hereunder shall be as set forth in
Schedule 1 attached hereto ("Equipment"). As used in the Lease, the term "Total
Purchase Cost" means Thirty-Five Million Dollars ($35,000,000.00) and the term
"Equipment Cost" shall mean the cost for each item of Equipment as set forth on
Schedule 2 attached hereto.
2. TERM. Upon and after the date of execution hereof, the Equipment shall
be subject to the terms and conditions provided in the Lease. The "Term" of the
Lease shall commence on the date hereof and shall extend for sixty (60) months
until November 20, 2002.
3. RENT. From and after November 20, 1997, the monthly rent for the
Equipment during the term of the Lease shall be Seven Hundred Thirty-Eight
Thousand One Hundred Four Dollars and Forty Cents ($738,104.40). Rent payments
shall be made, in arrears, on the twentieth (20th) day of the month for each
month during the term of the Lease with the first payment due on December 20,
1997 and the last payment due on November 20, 2002.
4. SCHEDULE OF STIPULATED LOSS VALUES. The Schedule of Stipulated Loss
Values attached hereto is incorporated herein by reference and shall be
applicable solely to the Equipment described in this Equipment Schedule.
4. LATE CHARGE RATE. The Late Charge Rate shall be two (2) percent per
month of the amount in arrears for the period such amount remains unpaid
(provided, however, that if such rate exceeds the highest rate permitted by
applicable law, then the Late Charge Rate shall be the highest rate permitted by
applicable law).
5. PUBLIC LIABILITY INSURANCE. The amount of public liability insurance
referenced in Section 11 of the Lease is $4,000,000.00.
DATE OF EXECUTION: November 20, 1997
<PAGE>
WITNESS/ATTEST: LESSEES:
NPR, INC.,
A Delaware Corporation
/s/ Mario F. Escudero By: /s/ Ronald Katims
----------------------------------- --------------------------(SEAL)
Mario F. Escudero, Secretary Ronald Katims, President
HOLT CARGO SYSTEMS, INC.,
A Delaware Corporation
/s/ John A. Evans By: /s/ Thomas J. Holt, Sr.
------------------------- --------------------------(SEAL)
John A. Evans, Secretary Thomas J. Holt, Sr.,
President
LESSOR:
EMERALD EQUIPMENT LEASING, INC.,
A Delaware Corporation
/s/ Marc Goldman By: /s/ Arthur B. Davis
-------------------------- --------------------------(SEAL)
Marc Goldman, Secretary Arthur B. Davis, President
2
LEASE GUARANTY AGREEMENT
By And Between
THE HOLT GROUP, INC.,
A Delaware Corporation;
HOLT HAULING AND WAREHOUSING SYSTEM, INC.,
A Pennsylvania Corporation;
WILMINGTON STEVEDORES, INC.,
A Delaware Corporation;
MURPHY MARINE SERVICES, INC.,
A Delaware Corporation;
THE RIVERFRONT DEVELOPMENT CORPORATION,
A New Jersey Corporation;
NPR HOLDING CORPORATION,
A Delaware Corporation;
NPR-NAVIERAS RECEIVABLES, INC.,
A Delaware Corporation;
and
NPR S.A., INC., A Delaware Corporation
GUARANTORS
For The Benefit Of
EMERALD EQUIPMENT LEASING, INC.,
A Delaware Corporation
(And Its Assigns)
LESSOR
With Respect To The Obligations Of
HOLT CARGO SYSTEMS, INC.
And
NPR, INC.,
Both Delaware Corporations
LESSEES
Dated As Of November 20, 1997
<PAGE>
LEASE GUARANTY AGREEMENT
TABLE OF CONTENTS
Page
----
Section 1. Definitions .....................................................1
Section 1.1. Cash Equivalents ......................................1
Section 1.2. Cash Flow .............................................2
Section 1.3. Change Of Control .....................................2
Section 1.4. Code ..................................................2
Section 1.5. Employee Benefit Plan .................................2
Section 1.6. Environmental Laws ....................................3
Section 1.7. EPA Permit ............................................3
Section 1.8. ERISA .................................................3
Section 1.9. ERISA Affiliate .......................................3
Section 1.10. ERISA Liabilities .....................................3
Section 1.11 Event Of Default ......................................3
Section 1.12. Facilities ............................................3
Section 1.13. Fiscal Quarter ........................................3
Section 1.14. Fiscal Year ...........................................4
Section 1.15. G.A.A.P . .............................................4
Section 1.16. Governmental Authority ................................4
Section 1.17. Guaranteed Pension Plan ...............................4
Section 1.18. Guaranty Indebtedness .................................4
Section 1.19. Indebtedness . ........................................4
Section 1.20. Insolvency Proceedinas . ..............................5
Section 1.21. Interest Expense ......................................5
Section 1.22. Laws ..................................................5
Section 1.23. Lease .................................................5
Section 1.24. Lease Documents .......................................5
Section 1.25. Leased Equipment ......................................5
Section 1.26. Lessor's Expenses .....................................5
Section 1.27. Loan ..................................................6
Section 1.28. Loan Agreement ........................................6
Section 1.29. Material Adverse Event ................................6
Section 1.30. MBC ...................................................6
Section 1.31. Multiemployer Plan ....................................6
Section 1.32. Obligations ...........................................6
Section 1.33. Person ................................................7
Section 1.34. Regulated Substance ...................................7
Section 1.35. Release ...............................................7
Section 1.36. Restricted Payment ....................................7
Section 1.37. Rule 144A Transaction .................................8
Section 1.38. Solvent ...............................................8
Section 1.39. Subrogation Rights ....................................8
Section 1.40. Subsidiary ............................................8
Section 1.41. Tangible Net Worth ....................................8
Section 1.42. Termination Event .....................................8
i
<PAGE>
Section 2. Guaranty .......................................................9
Section 3. Nature Of Guaranty .............................................9
Section 4. Representations And Warranties .................................9
Section 4.1. Enforceability of Guaranty ...........................10
Section 4.2. Enforceability of Lease Documents ....................10
Section 4.3. Accuracy Of Lessees' Representations And Warranties ..10
Section 4.4. Accuracy Of Information ..............................10
Section 4.5. No Litigation ........................................10
Section 4.6. Authority: Approvals And Consents ....................10
Section 4.7. No Events Of Default .................................11
Section 4.8. Lease Documents ......................................11
Section 4.9. Taxes ................................................11
Section 4.10. Compliance With Laws .................................11
Section 4.11. Chief Places Of Business .............................11
Section 4.12. Subsidiaries .........................................11
Section 4.13. No Labor Agreements ..................................11
Section 4.14. Capitalization .......................................12
Section 4.15. Approvals ............................................12
Section 4.16. Financial Statements .................................12
Section 4.17. Solvency .............................................12
Section 4.18. Employee Benefit Plans ...............................13
Section 4.19. Environmental Conditions .............................13
Section 4.20. Business Locations ...................................14
Section 4.21. No Materially Adverse Contracts. Etc .................14
Section 4.22. Disclosure Generally .................................14
Section 5. Affirmative Covenants .........................................14
Section 5.1. Payment And Performance ..............................14
Section 5.2. Notice Of Litigation And Proceedings .................15
Section 5.3. Payment Of Liabilities To Third Persons ..............15
Section 5.4. Payment Of Taxes .....................................15
Section 5.5. Reporting Requirements ...............................15
Section 5.6. Employee Benefit Plans And Guaranteed Pension Plans ..17
Section 5.7. Compliance With Laws .................................17
Section 5.8. Environmental Laws ...................................17
Section 5.9. Maintenance Of Books And Records .....................18
Section 6. Negative Covenants ............................................18
Section 6.1. Consolidations, Mergers, And Ownership Of
Subsidiaries .........................................18
Section 6.2. Disposition Of Assets ................................18
Section 6.3. Encumbrance Of Current Assets ........................18
Section 6.4. Acquisitions And Investments .........................19
Section 6.5. Changes In Fiscal Year ...............................19
ii
<PAGE>
Section 6.6. Amendments To Coroorate Documents ....................19
Section 6.7. Restricted Payments ..................................19
Section 6.8. Defaults By Lessees Or Other Guarantors ..............19
Section 6.9. Ratio Of Indebtedness To Tangible Net Worth ..........19
Section 6.10. Interest Coverage Ratio ..............................20
Section 6.11. Minimum Tangible Net Worth ...........................20
Section 7. Events Authorizing Acceleration Of Obligations ................20
Section 7.1. Failure To Pay Or Perform ............................20
Section 7.2. Representation Or Warranty ...........................20
Section 7.3. Lease Documents ......................................20
Section 7.4. Cross-Default ........................................20
Section 7.5. Judgments ............................................21
Section 7.6. Attachments ..........................................21
Section 7.7. Involuntary Insolvency Proceedings ...................21
Section 7.8. Voluntary Insolvency Proceedings .....................21
Section 7.9. Insolvency Proceedings Pertaining To Lessees
or Lease Guarantors ..................................21
Section 7.10. Change In Control ....................................21
Section 7.11. Material Adverse Event ...............................21
Section 7.12. ERISA ................................................21
Section 7.13. Indictment Of Lessees Or Guarantors ..................22
Section 7.14. Injunctions ..........................................22
Section 7.15. Loss Of Material License, Permit, Etc ................22
Section 7.16. Notice And Cure Riahts ...............................22
Section 8. Acceleration Rights ...........................................22
Section 9. Lessor Need Not Pursue Other Rights ...........................23
Section 10. Subrogation ..................................................23
Section 11. Right of Contribution ........................................23
Section 12. Certain Rights Of Lessor .....................................23
Section 13. Waivers By Guarantor .........................................24
Section 14. Unenforceability Of Obligations Of Lessees ...................24
Section 15. No Conditions Precedent ......................................24
Section 16. No Duty To Disclose ..........................................24
Section 17. Enforcement During Bankruptcy ................................25
Section 18. Cumulative Liability .........................................25
iii
<PAGE>
Section 19. Obligations Are Unconditional ................................25
Section 20. Defenses Against Lessees .....................................25
Section 21. Lessor's Expenses ............................................25
Section 22. Remedies Cumulative ..........................................26
Section 23. Discharge Of Guaranty ........................................26
Section 24. Subordination Of Certain Indebtedness ........................26
Section 25. Choice Of Law ................................................26
Section 26. Consent To Jurisdiction: Agreement As To Venue ...............26
Section 27. Invalidity Of Any Part .......................................26
Section 28. Amendment Or Waiver ..........................................27
Section 29. Notices ......................................................27
Section 30. Assignability ................................................28
Section 31. Joint And Several Nature .....................................29
Section 32. Final Agreement ..............................................29
Section 33. Tense, Gender, Defined Terms, Captions .......................29
Section 34. Seal And Effective Date ......................................29
Section 35. Waiver Of Trial By Jury ......................................29
Schedules
Schedule 4.5 Pending Litigation
Schedule 4.11 Chief Place of Businesses of Guarantors
Schedule 4.12 Subsidiaries
Schedule 4.13 Labor Agreements
Schedule 4.14 Capitalization of Each Guarantor
Schedule 4.16 Undisclosed Material Liabilities
Schedule 4.18 Withdrawal Liability
Schedule 4.19 Environmental Conditions
Schedule 4.20 Business Locations of Lessees and Guarantors
iv
<PAGE>
LEASE GUARANTY AGREEMENT
THIS LEASE GUARANTY AGREEMENT ("GUARANTY") is made this 20th day of
November, 1997 by THE HOLT GROUP, INC., a Delaware corporation ("HOLT GROUP'),
HOLT HAULING AND WAREHOUSING SYSTEM, INC., a Pennsylvania corporation ("HOLT
HAULING"), WILMINGTON STEVEDORES, INC., a Delaware corporation ("WILMINGTON),
MURPHY MARINE SERVICES, INC., a Delaware corporation ("MURPHY"), THE RIVERFRONT
DEVELOPMENT CORPORATION, a New Jersey corporation ("RIVERFRONT"), NPR HOLDING
CORPORATION, a Delaware corporation ("NPR HOLDING"), NPR-NAVIERAS RECEIVABLES,
INC., a Delaware corporation ("NPR-NAVIERAS"), and NPR S.A., INC. ("NPR S.A."),
for the benefit of EMERALD EQUIPMENT LEASING, INC., a Delaware corporation, and
its successors and assigns ("LESSOR") with respect to various duties and
obligations of NPR, INC., a Delaware corporation ("NPR"), and HOLT CARGO
SYSTEMS, INC., a Delaware corporation ("HOLT CARGO"). Hereafter, HOLT GROUP,
HOLT HAULING, WILMINGTON, MURPHY, RIVERFRONT, NPR HOLDING, NPR-NAVIERAS, and NPR
S.A. are collectively referred to as the "GUARANTORS"; and NPR and HOLT CARGO
are collectively referred to as the "LESSEES."
RECITALS:
The LESSEES have requested that the LESSOR lease certain equipment and
personalty to the LESSEES. The LESSOR has conditioned its agreement to provide
the requested equipment leasing to the LESSEES upon the receipt by the LESSOR of
the unconditional joint and several guarantys of the GUARANTORS of all of the
duties and obligations of payment and performance owed by the LESSEES to the
LESSOR in connection with such equipment leasing.
Each of the GUARANTORS has a business relationship with each of the
LESSEES and expects to receive substantial economic and other direct or indirect
benefits from the proposed equipment leasing transaction.
The GUARANTORS have each executed and delivered this GUARANTY in order to
induce the LESSOR to provide the requested equipment leasing to the LESSEES.
Section 1. Definitions. As used in this GUARANTY, the following terms
have the following meanings. Terms defined in this Section 1 or elsewhere in
this GUARANTY are in all capital letters throughout this GUARANTY. The singular
use of any defined term includes the plural and the plural use includes the
singular. All accounting terms not specifically defined in this GUARANTY shall
be construed in accordance with G.A.A.P.
Section 1.1. Cash Equivalents. The term "CASH EQUIVALENTS" means: (a)
marketable direct obligations issued or unconditionally guaranteed by the United
States Government or issued by any agency thereof and backed by the full faith
and credit of the United States, in each case maturing within three (3) months
from the date of acquisition thereof; (b) investments in certificates of deposit
or bankers'
<PAGE>
acceptances maturing within three (3) months from the date of acquisition issued
by a LENDER or any other commercial bank organized under the laws of the United
States or any state thereof having capital surplus and undivided profits
aggregating at least Two Hundred Fifty Million Dollars ($250,000,000.00); (c)
investments in commercial paper of any LENDER or any other PERSON which, at the
time of issuance, has a rating of at least A-1 from Standard & Poor's Rating
Group or at least P-1 from Moodys Investor Service, Inc. and maturing not more
than six (6) months from the date of acquisition thereof; (d) obligations of the
type described in (a), (b) or (c) above purchased pursuant to a repurchase
agreement obligating the counterpart to repurchase such obligations not later
than thirty (30) days after the purchase thereof, secured by a fully perfected
security interest in any such obligation, and having a market value at the time
such repurchase agreement is entered into of not less than one hundred percent
(100%) of the repurchase obligation of the issuing bank; and (e) time deposits
or eurodollar time deposits maturing no more than thirty (30) days from the date
of creation with commercial banks having membership in the Federal Deposit
Insurance Corporation in amounts not exceeding the lesser of One Hundred
Thousand Dollars ($100,000.00) or the maximum insurance applicable to the
aggregate amount of the referenced PERSON'S deposits in such institution.
Section 1.2. Cash Flow. The term "CASH FLOW means, for any period,
without duplication, the amounts for such period, taken as a single accounting
period, of: (a) net income; (b) non-cash charges; (c) INTEREST EXPENSE; and (d)
to the extent reducing net income, income tax expenses, as such items are shown
in the consolidated financial statement of the GUARANTORS and their
SUBSIDIARIES.
Section 1.3. Chance Of Control. The term "CHANGE OF CONTROL" means such
time as: (a) Thomas J. Holt, Sr., his spouse, his lineal descendants, or any
spouse of such lineal descendants (including without limitation (i) any person
whose relationship is by legal adoption and (ii) trusts for the benefit of any
of the foregoing) shall cease to own beneficially and of record fifty-one
percent (51%) of the capital stock of the HOLT GROUP; or (b) during any period
of two consecutive years, individuals who at the beginning of such period
constituted the Board of Directors of any of the GUARANTORS or of either of the
LESSEES (together with any new directors whose election was approved by a vote
of a majority of the directors then still in office, who either were directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
directors of any of the GUARANTORS or of either of the LESSEES then in office;
or (c) either of the LESSEES or any of the GUARANTORS (other than the HOLT
GROUP) ceases to be wholly owned, or wholly owned through one or more
intermediaries, by the HOLT GROUP.
Section 1.4. Code. The term "CODE" means the Internal Revenue Code of
1986, as amended, and all Treasury regulations, revenue rulings, revenue
procedures or announcements issued thereunder.
Section 1.5. Emoloyee Benefit Plan. The term "EMPLOYEE BENEFIT PLAN"
means an "employee benefit plan" as defined in Section 3(3) of ERISA.
2
<PAGE>
Section 1.6. Environmental Laws. The term "ENVIRONMENTAL LAWS means
individually or collectively any local, state or federal law, statute, rule,
regulation, order, ordinance, common law, permit or license term or condition,
or state superlien or environmental clean-up or disclosure statutes pertaining
to the environment or to environmental contamination, regulation, management,
control, treatment, storage, disposal, containment, removal, clean-up,
reporting, or disclosure, including, but not limited to, the Comprehensive
Environmental Response. Compensation and Liability Act of 1980, as now or
hereafter amended (including, but not limited to, the Superfund Amendments and
Reauthorization Act); the Resource Conservation and Recovery Act, as now or
hereafter amended (including, but not limited to, the Hazardous and Solid Waste
Amendments of 1984): the Toxic Substances Control Act, as now or hereafter
amended; the Clean Water Act, as now or hereafter amended; the Safe Drinking
Water Act, as now or hereafter amended; or the Clean Air Act, as now or
hereafter amended.
Section 1.7. EPA Permit. The term "EPA PERMIT" has the meaning given that
term in Section 4.19 of this GUARANTY.
Section 1.8. ERISA. The term "ERISA" means the Employee Retirement Income
Security Act of 1974 and regulations issued thereunder, as amended from time to
time and any successor statute.
Section 1.9. ERISA Affiliate. The term "ERISA AFFILIATE" means, in
relation to any referenced PERSON, any trade or business (whether or not
incorporated) which is a member of a group of which that PERSON is a member and
which is under common control within the meaning of the regulations promulgated
under Section 414 of the CODE.
Section 1.10. ERISA Liabilities. The term "ERISA LIABILITIES" means the
aggregate of all unfunded vested benefits under any employee pension benefit
plan, within the meaning of Section 3(2) of ERISA, of the referenced PERSON or
any ERISA AFFILIATE of the referenced PERSON under any plan covered by ERISA
that is not a MULTIEMPLOYER PLAN and all potential withdrawal liabilities of the
referenced PERSON or any ERISA AFFILIATE under all MULTIEMPLOYER PLANS.
Section 1.11. Event Of Default. The term "EVENT OF DEFAULT" means any of
the events set forth in Section 7 of this GUARANTY, provided that any
requirement for the giving of notice, the lapse of time, or both, or any other
expressly stated condition, has been satisfied.
Section 1.12. Facilities. The term "FACILITIES" means all real property
and the improvements thereon used or occupied or leased by any of the GUARANTORS
or otherwise used at any time by any of the GUARANTORS in the operation of its
business or for the manufacture, storage, or location of any of its assets.
Section 1.13. Fiscal Quarter. The term "FISCAL QUARTER" means each
period of three consecutive calendar months beginning on January 1, April 1,
July 1 and October 1 of each FISCAL YEAR.
3
<PAGE>
Section 1.14. Fiscal Year. The term "FISCAL YEAR" means the fiscal year
of each referenced PERSON for reporting, accounting, and tax purposes. The
FISCAL YEAR for each of the GUARANTORS is the twelve (12) month period
commencing January 1 and ending December 31 of each calendar year.
Section 1.15. G.A.A.P. The term "G.A.A.P." means, with respect to any
date of determination, generally accepted accounting principles in the United
States of America in effect from time to time, as used by the Financial
Accounting Standards Board and/or the American Institute of Certified Public
Accountants consistently applied and maintained throughout the periods
indicated.
Section 1.16. Governmental Authority. The term "GOVERNMENTAL AUTHORITY"
means any nation or government, any state or other political subdivision thereof
and any municipality, court (including bankruptcy courts) or other entity
exercising executive, legislative, judicial, regulatory or administrative
functions of or pertaining to government.
Section 1.17. Guaranteed Pension Plan. The term "GUARANTEED PENSION PLAN"
means any pension plan maintained by the referenced PERSON or an ERISA AFFILIATE
of the referenced PERSON, or to which the referenced PERSON or an ERISA
AFFILIATE contributes, some or all of the benefits under which are guaranteed by
the United States Pension Benefit Guaranty Corporation.
Section 1.18. Guaranty Indebtedness. The term "GUARANTY INDEBTEDNESS"
means any obligation, contingent or otherwise, of any referenced PERSON directly
or indirectly guaranteeing any debt or obligation of any other PERSON and,
without limiting the generality of the foregoing, any obligation, direct or
indirect, contingent or otherwise, of such PERSON: (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such debt or obligation
(whether arising by virtue of partnership arrangements, by agreement to
keep-well, to purchase assets, goods, securities or services, to take-or-pay, or
to maintain financial statement conditions or otherwise, other than agreements
to purchase goods at an arm's length price in the ordinary course of business);
or (b) entered into for the purpose of assuring in any other manner the holder
of such debt or obligation of the payment thereof or to protect such holder
against loss in respect thereof (in whole or in part), provided that the term
GUARANTY INDEBTEDNESS shall not include endorsements for collection or deposit
in the ordinary course of business.
Section 1.19. Indebtedness. The term "INDEBTEDNESS" means, as to any
referenced PERSON (determined without duplication): (a) indebtedness of such
PERSON for borrowed money (whether by loan or the issuance and sale of debt
securities), or for the deferred purchase or acquisition price of property or
services (other than accounts payable incurred in the ordinary course of
business); (b) obligations of such PERSON in respect of letters of credit or
similar instruments issued or accepted by banks and other financial institutions
for the account of such PERSON (whether or not such obligations are contingent);
(c) capital lease obligations of such PERSON; (d) GUARANTY INDEBTEDNESS; (e) any
other indebtedness or obligation which according to G.A.A.P.
4
<PAGE>
shall be reflected as a liability upon the balance sheet of the referenced
PERSON; and (f) indebtedness of others of the type described in clause (a),
(b), (c) or (d) above secured by a lien on the property of such PERSON,
whether or not the respective obligation so secured has been assumed by
such PERSON.
Section 1.20. Insolvency Proceedings. The term "INSOLVENCY PROCEEDINGS"
means, with respect to any referenced PERSON, any proceeding commenced by or
against such PERSON, under any provision of the United States Bankruptcy Code,
as amended, or under any other bankruptcy or insolvency law, or any assignments
for the benefit of creditors, formal or informal moratoriums, receiverships,
compositions or extensions with some or all creditors with respect to any
indebtedness of such PERSON.
Section 1.21. Interest Expense. The term "INTEREST EXPENSE" means for any
period of determination, all interest expense as calculated and determined in
accordance with G.A.A.P.
Section 1.22. Laws. The term "LAWS" means all ordinances, statutes,
rules, regulations, orders, injunctions, writs or decrees of any GOVERNMENTAL
AUTHORITY.
Section 1.23. Lease. The term "LEASE" means the Equipment Lease Agreement
dated November 18, 1997, by and between the LESSOR and the LESSEES, and all
riders, schedules and attachments thereto, as added, amended, modified, or
supplemented from time to time.
Section 1.24. Lease Documents. The term "LEASE DOCUMENTS" means
collectively the LEASE, this GUARANTY, and all riders, schedules, assignments,
financing statements, and other documents or writings which evidence, secure,
document, or otherwise relate or pertain to the LEASE or the obligations of the
LESSEES thereunder, or this GUARANTY and the obligations of the GUARANTORS
hereunder, as amended, modified, extended, or supplemented from time to time.
Section 1.25. Leased Equipment. The term "LEASED EQUIPMENT" means
collectively all of the containers, gensets, chassis, equipment, personalty and
other items set forth in the Equipment Schedule attached to and associated with
the LEASE (including all subsequent Equipment Schedules added to the LEASE from
time to time) together with all warranties, licenses, accessions, additions, and
accretions thereto and all replacements and substituted items.
Section 1.26. Lessor's Expenses. The term "LESSOR'S EXPENSES"
collectively means all reasonable expenses or costs incurred by the LESSOR
arising out of, pertaining to, or in any way connected with this GUARANTY, the
OBLIGATIONS, the LEASE or the LEASE DOCUMENTS, or any documents executed in
connection therewith or transactions thereunder. The term "LESSOR'S EXPENSES"
shall include, without limitation: (a) all reasonable costs or expenses required
to be paid by the GUARANTORS pursuant to this GUARANTY or as required by any
other present or future agreement
5
<PAGE>
between the GUARANTORS and the LESSOR evidencing and/or securing the
OBLIGATIONS; (b) taxes and insurance premiums of every nature and kind advanced
or otherwise paid by the LESSOR in connection with the LEASE, the LEASED
EQUIPMENT or this GUARANTY; (c) filing, recording, title insurance,
environmental and consulting fees, audit fees, search fees and other expenses
paid or incurred by the LESSOR in connection with the LEASE or this GUARANTY;
(d) reasonable costs and expenses of litigation incurred by the LESSOR in
enforcing or defending this GUARANTY or any portion hereof or in collecting any
of the OBLIGATIONS; (e) reasonable attorneys' fees and expenses incurred by the
LESSOR in obtaining advice or the services of legal counsel with respect to the
structuring, drafting, negotiating, reviewing, amending, terminating, enforcing
or defending of this GUARANTY or any of the LEASE DOCUMENTS, or any portion
hereof or any agreement or matter related hereto, whether or not litigation is
instituted; and (f) travel expenses related to any of the foregoing, or
otherwise relating to or arising from the LEASE, the LEASE DOCUMENTS, or this
GUARANTY.
Section 1.27. Loan. The term "LOAN" means the term loan credit facility
in the originally stated principal amount of up to Thirty-Five Million Dollars
($35,000,000) extended by MBC to the LESSOR in accordance with the terms set
forth in the LOAN AGREEMENT.
Section 1.28. Loan Agreement. The term "LOAN AGREEMENT'means the Loan
And Security Agreement to be executed in connection with the LOAN between
the LESSOR and MBC, and their successors and assigns, and all amendments
and modifications thereto.
Section 1.29. Material Adverse Event. The term "MATERIAL ADVERSE EVENT"
means any event or condition which: (a) is reasonably likely to have a material
adverse effect on the financial condition, assets, operations or prospects of
the GUARANTORS taken as a group; (b) gives reasonable grounds to conclude that
any GUARANTOR will not be able to perform its obligations under this GUARANTY;
or (c) is reasonably likely to affect the legality, validity or enforceability
of this GUARANTY or any of the rights and remedies of the LESSOR (or any
assignee or successor in interest thereof).
Section 1.30. MBC. The term "MBC" means MBC Leasing Corp., a Maryland
corporation.
Section 1.31. Multiemployer Plan. The term "MULTI EMPLOYER PLAN" means a
"multiemployer plan" as defined in Section 4001(a)(3) of ERISA which is
maintained for employees of any referenced PERSON, or any ERISA AFFILIATE of any
referenced PERSON.
Section 1.32. Obligations. The term "OBLIGATIONS" means collectively: (a)
the payment of any and all sums now or hereafter due by either or both of the
LESSEES to the LESSOR, including but not limited to all rents and other payments
required to be paid by the stated terms of the LEASE DOCUMENTS, or any
substitutions therefor (without regard as to whether the LEASE is ever rejected,
avoided, rescinded, or
6
<PAGE>
terminated, in whole or in part by the LESSEES or by any order or decision of
any GOVERNMENTAL AUTHORITY), whether direct or indirect, absolute or contingent,
primary or secondary, joint or several, unconditional or conditional, known or
unknown, liquidated or unliquidated, contractual or tortious, including all
renewals, extensions, substitutions, and amendments, and whether or not
presently contemplated or anticipated; (b) the payment of all taxes, insurance
premiums, filing fees, recording costs, publication expenses, record search
fees, documentary taxes, and other disbursements, expenses, or costs incurred by
the LESSOR in connection with or arising from the LEASE DOCUMENTS, or the
enforcement thereof; (c) the payment of all LESSOR'S EXPENSES; (d) the payment
of any sales taxes, use taxes, excise taxes or any other taxes or charges
assessed by any GOVERNMENTAL AUTHORITY which arise out of or relate to: (i) the
acquisition by the LESSOR of the LEASED EQUIPMENT from NPR, (ii) the LEASE
DOCUMENTS, (iii) any certification, registration, or transfer upon the public
records of any titles or other evidences of ownership of any of the LEASED
EQUIPMENT, or (iv) the exercise of any enforcement rights or remedies by the
LESSOR of the LEASE DOCUMENTS, including but not limited to any taxes which
arise from the sale or transfer of any of the LEASED EQUIPMENT as the result of
the sale of transfer thereof by the LESSOR; and (e) the strict and absolute
performance of every duty, obligation, indemnity, agreement, and covenant of the
LESSEES provided for in the LEASE DOCUMENTS, at the time and in the manner set
forth in the LEASE DOCUMENTS, even if any of the LEASE DOCUMENTS are ever
determined by any GOVERNMENTAL AUTHORITY or otherwise to be invalid or
unenforceable, in whole or in part.
Section 1.33. Person. The term "PERSON" means any individual,
corporation, partnership, limited liability company, association, joint-stock
company, trust, business trust, unincorporated organization, joint venture,
court, or GOVERNMENTAL AUTHORITY.
Section 1.34. Regulated Substance. The term "REGULATED SUBSTANCE" means
any substance which, pursuant to any ENVIRONMENTAL LAW, is identified as a
hazardous substance (or other term having similar import) or is otherwise
subject to special requirements in connection with the use, storage,
transportation, disposition or other handling thereof.
Section 1.35. Release. The term "RELEASE' means a "release' as defined in
Section 101(22) of the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as now or hereafter amended.
Section 1.36. Restricted Payment. The term "RESTRICTED PAYMENT" means,
with respect to any referenced PERSON: (a) any dividend or other distribution on
any shares of the capital stock of such PERSON (except dividends payable solely
in shares of capital stock of the same class of such PERSON); or (b) any payment
on account of the purchase, redemption, retirement or acquisition of: (i) any
shares of the capital stock of such PERSON; or (ii) any option, warrant or other
right to acquire such PERSON'S shares of the capital stock.
7
<PAGE>
Section 1.37. Rule 144A Transaction. The term "RULE 144A TRANSACTION"
means a private placement by the GUARANTORS of approximately One Hundred
Twenty-Five Million Dollars ($125,000,000.00) of debt securities pursuant to a
transaction meeting the requirements of Rule 144A under the Securities Act of
1933.
Section 1.38. Solvent. The term "SOLVENT" means with respect to any
referenced PERSON, that as of any date of determination: (a) the amount of the
present fair saleable value of the assets of such PERSON, taken as a whole,
will, as of such date, exceed the amount that will be required to pay all
liabilities of such PERSON, contingent or otherwise, as of such date as such
liabilities become absolute and matured, (b) such PERSON will not have, as of
such date, an unreasonably small amount of capital with which to conduct its
business, and (c) such PERSON will be able to pay its debts as they mature,
taking into account the timing of and amounts of cash to be received by such
PERSON and the timing of and amounts of cash to be payable on or in respect of
INDEBTEDNESS of such PERSON, in each case after giving effect to such
INDEBTEDNESS and the application of the proceeds of such INDEBTEDNESS.
Section 1.39. Subrogation Rights. The term "SUBROGATION RIGHTS" means any
and all rights of subrogation, reimbursement, exoneration, contribution or
indemnification, any right to participate in any claim or remedy acquired as a
result of the payment, performance or enforcement by a GUARANTOR of any of the
OBLIGATIONS, whether or not such claim, remedy or right arises in equity, or
under contract, statute or common law, including the right to take or receive,
directly or indirectly, in cash or other property or by set-off or in any other
manner, payment or security on account of such claim or other rights.
Section 1.40. Subsidiary. The term "SUBSIDIARY" means any corporation or
other entity, the shares of stock or other equity interests of which having
ordinary voting power (other than stock or other equity interests having such
power only by reason of the happening of a contingency) to elect a majority of
the board of directors or other managers of such corporation or other entity are
at the time owned, or the management of which is otherwise controlled, directly
or indirectly through one or more intermediaries or both, by any referenced
PERSON.
Section 1.41. Tangible Net Worth. The term "TANGIBLE NET WORTH" means
total assets, excluding patents, copyrights, capitalized research and
development costs, goodwill, operating rights and other intangible assets less
total liabilities shown on the balance sheet of the referenced PERSON in
accordance with G.A.A.P.
Section 1.42. Termination Event. The term "TERMINATION EVENT" means: (a)
a "Reportable Event" described in Section 4043 of ERISA and the regulations
issued thereunder, but not including any such event for which the 30-day notice
requirement has been waived by applicable regulation; (b) the withdrawal of the
referenced PERSON or an ERISA AFFILIATE of the referenced PERSON from a
GUARANTEED PENSION PLAN during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA; (c) the filing of a notice
of intent to terminate a GUARANTEED PENSION PLAN or the treatment of a
GUARANTEED PENSION PLAN
8
<PAGE>
amendment as a termination under Section 4041 of ERISA; (d) the institution of
proceedings to terminate a GUARANTEED PENSION PLAN by the Pension Benefit
Guaranty Corporation; (e) the withdrawal or partial withdrawal of the referenced
PERSON or an ERISA AFFILIATE of the referenced PERSON from a MULTIEMPLOYER PLAN;
or (f) any other event or condition which might reasonably be expected to
constitute grounds under ERISA for the termination of, or the appointment of a
trustee to administer, any GUARANTEED PENSION PLAN.
Section 2. Guaranty. The GUARANTORS, jointly and severally, irrevocably
and unconditionally, guarantee to the LESSOR (and to the assignees and
successors in interest of the LESSOR) the absolute payment and strict
performance of all of the OBLIGATIONS. The GUARANTORS agree to indemnify and
hold the LESSOR (and the assignees and successors in interest thereof) harmless
from any and all losses, claims, expenses, or costs incurred or suffered by the
LESSOR (or the assignees and successors in interest thereof) which arise out of
or relate in any manner to the OBLIGATIONS, LEASE DOCUMENTS, the LEASED
EQUIPMENT, or this GUARANTY, including but not limited to the payment of all
LESSOR'S EXPENSES. It is the intention of each of the GUARANTORS in executing
and delivering this GUARANTY: (a) to provide complete assurances that the LESSOR
(and the assignees and successors in interest thereof) shall be paid all sums
payable under the LEASE and all other sums which constitute OBLIGATIONS; (b) to
guaranty that the LESSOR (and the assignees and successors in interest thereof)
shall suffer no loss of any kind as a result of the extension of the LEASE by
the LESSOR to the LESSEES, the failure of any payments scheduled to be made
pursuant to the terms of the LEASE DOCUMENTS to be paid as provided, or as a
result of any other occurrences, events, or conditions arising out of or
relating to the LEASE (or the non-performance thereof) or the LEASED EQUIPMENT;
and (c) to guaranty that the LESSOR (and its assignees and successors in
interest) shall receive under all circumstances, and without regard as to
whether the LEASE is terminated, avoided, rescinded or rejected in whole or in
part (with or without the approval or order of any GOVERNMENTAL AUTHORITY), not
less than the full economic benefits and values which the LESSOR is entitled to
receive under and in accordance with the express stated terms of the LEASE or
would have been entitled to receive under and in accordance with the express
stated terms of the LEASE if it had not been terminated, avoided, rescinded or
rejected.
Section 3. Nature Of Guaranty. This GUARANTY: (a) is (i) irrevocable,
(ii) absolute and unconditional, (iii) direct, immediate, and primary, and (iv)
a guaranty of payment and not just of collection; and (b) makes each of the
GUARANTORS a surety with respect to the payment and performance of the
OBLIGATIONS.
Section 4. Representations And Warranties. To induce the LESSOR to extend
the LEASE to the LESSEES, each of the GUARANTORS makes the representations and
warranties set forth below to the LESSOR. Each of the GUARANTORS acknowledges
the justifiable right of the LESSOR (and of its assigns and successors) to reply
upon the GUARANTORS' representations and warranties.
9
<PAGE>
Section 4.1. Enforceability of Guaranty. This GUARANTY constitutes the
legal, valid, and binding obligation of each of the GUARANTORS and is
enforceable against each of the GUARANTORS in accordance with all stated terms.
Section 4.2. Enforceability Of Lease Documents. The LEASE and each of the
other LEASE DOCUMENTS executed by the LESSEES constitutes the legal, valid, and
binding obligation of each of the LESSEES and is enforceable against each of the
LESSEES in accordance with all stated terms.
Section 4.3. Accuracy Of Lessees' Representations And Warranties. Each
representation and warranty made by the LESSEES in the LEASE DOCUMENTS is true,
accurate and complete in all material respects as of the date made.
Section 4.4. Accuracy Of Information. All information, documents,
reports, statements, financial statements, and data submitted by or on behalf of
the LESSEES or any of the GUARANTORS in connection with the LEASE, LEASE
DOCUMENTS or this GUARANTY, or in support thereof, are true, accurate, and
complete in all material respects as of the date made and contain no knowingly
false, incomplete or misleading statements.
Section 4.5. No Litigation. There are no actions, suits, investigations,
or proceedings pending or, to the knowledge of the GUARANTORS, threatened
against any of the GUARANTORS or either of the LESSEES, or against any of the
assets of any of the GUARANTORS or either of the LESSEES except as specifically
disclosed on Schedule 4.5 attached hereto.
Section 4.6. Authority; Aporovals And Consents.
a. Each GUARANTOR has the power, authority and legal right to enter into
this GUARANTY and to perform, observe and comply with all of its agreements and
obligations set forth in this GUARANTY.
b. The execution and delivery by each of the GUARANTORS of this GUARANTY
has been duly authorized by all necessary action and will not (i) contravene any
provision of its organizational documents; (ii) conflict with, or result in a
breach of the terms, conditions or provisions of, or constitute a default under,
or result in the creation of any lien upon any of its property under any
agreement, trust deed, indenture, mortgage or other instrument to it is a party
or by which it or any of its property is bound or affected; (iii) violate or
contravene any provision of any LAWS or any order, ruling or interpretation
thereunder or any decree, order of judgment of any court or GOVERNMENTAL
AUTHORITY (all as from time to time in effect and applicable to it); or (iv)
require any waivers, consents or approvals by any of its creditors, or to the
extent required, any such waiver, consent or approval has been obtained.
c. No approval, consent, order, authorization or license by, or giving
notice to, or taking any other action with respect to any GOVERNMENTAL AUTHORITY
is required, under any provision of any applicable LAW for the execution and
delivery by
10
<PAGE>
the GUARANTORS of this GUARANTY, or for the performance by the GUARANTORS of the
covenants and obligations set forth herein, or to the extent required, any such
approval, consent, order, authorization or license has been obtained.
Section 4.7. No Events Of Default. There is not currently existing any
action, event, or condition which presently constitutes an EVENT OF DEFAULT, or
which with notice, the passage of time, or both would constitute an EVENT OF
DEFAULT.
Section 4.8. Lease Documents. The GUARANTORS warrant with respect to the
LEASE DOCUMENTS that: (a) the LEASED EQUIPMENT has been fully and
unconditionally delivered to the LESSEES in satisfactory condition and has been
unconditionally accepted by the LESSEES; (b) the LEASE DOCUMENTS and all related
dealings conform with all applicable LAWS; (c) all disclosures to the LESSEES
required by applicable LAWS with respect to the LEASE DOCUMENTS have been duly
and properly made; (d) there are no defaults under the LEASE DOCUMENTS; and (e)
the LEASE DOCUMENTS are free from all defenses, set-offs and counterclaims of
the LESSEES.
Section 4.9. Taxes. Each GUARANTOR: (a) has filed all federal, state and
local tax returns and other reports which it is required by LAW to file prior to
the date hereof and which are material to the conduct of its business; (b) has
paid or caused to be paid all taxes, assessments and other governmental charges
that are due and payable prior to the date hereof; and (c) has made adequate
provision for the payment of such taxes, assessments or other charges accruing
but not yet payable. The GUARANTORS have no knowledge of any deficiency or
additional assessment in connection with any taxes, assessments or charges not
provided for on the GUARANTORS' books of account or reflected in the GUARANTORS'
financial statements. All sales, excise, transfer and other taxes, if any,
arising from or relating to the acquisition by the LESSOR of the LEASED
EQUIPMENT or the leasing thereof to the LESSEES in accordance with the LEASE
have been paid in full, or will be paid as they come due.
Section 4.10. Compliance With Laws. Each of the GUARANTORS has complied
in all material respects with all applicable LAWS, including, but not limited
to, all LAWS with respect to: (a) all restrictions, specifications, or other
requirements pertaining to products that it sells or to the services it
performs; (b) the conduct of its business; and (c) the use, maintenance, and
operation of the real and personal properties owned or leased by it in the
conduct of its business.
Section 4.11. Chief Places Of Business. The chief executive office and
chief place of business of each of the GUARANTORS is set forth on Schedule 4.11
attached hereto.
Section 4.12. Subsidiaries. Except as set forth on Schedule 4.12 attached
hereto, no GUARANTOR has any SUBSIDIARIES.
Section 4.13. No Labor Agreements. Except as set forth on Schedule 4.13
attached hereto, no GUARANTOR is subject to any collective bargaining agreement
11
<PAGE>
or any agreement, contract, decree or order requiring it to recognize, deal with
or employ any PERSONS organized as a collective bargaining unit or other form of
organized labor, and no strike, walkout, work stoppage or other material labor
difficulty presently exists or has been threatened or is imminent.
Section 4.14. Capitalization. The capitalization of each GUARANTOR is as
set forth on Schedule 4.14 attached hereto. All of the issued and outstanding
shares of capital stock of each GUARANTOR are validly issued, fully paid and
non-assessable, and free and clear of any liens or other rights or claims, and
the holders thereof are not entitled to any pre-emptive or other similar rights.
Except as set forth on Schedule 4.14, there are no subscriptions, options,
warrants, convertible securities, exchangeable securities or the like pursuant
to which any GUARANTOR is required to issue any shares of its capital stock.
Section 4.15. Approvals. Each GUARANTOR possesses all franchises,
approvals, licenses, contracts, merchandising agreements, merchandising
contracts and governmental approvals, registrations and exemptions necessary for
it lawfully to conduct its business and operation as presently conducted and as
anticipated to be conducted.
Section 4.16. Financial Statements. The combined financial statements of
HOLT HAULING and its affiliated companies as of and for the FISCAL YEARS ending
December 31, 1995 and December 31, 1996 and for the interim six-month period
ending June 30, 1997, consisting in each case of a balance sheet, a statement of
operations, a statement of shareholders' equity, a statement of cash flows and
accompanying footnotes (except in the case of interim financial statements),
furnished to the LESSOR and MBC in connection herewith, present fairly, in all
material respects, the financial position, results of operations and operating
statistics of the GUARANTORS as of the dates and for the periods referred to, in
conformity with G.A.A.P. Except as set forth on Schedule 4.16 hereto, there are
no material liabilities, fixed or contingent, which are not reflected in such
financial statements, other than liabilities which are not required by G.A.A.P.
to be reflected in such balance sheets. No event or condition has occurred since
June 30, 1997 which: (a) is reasonably likely to result in a material adverse
change in the financial condition, assets, operations, or prospects of the
GUARANTORS and their SUBSIDIARIES taken as a group; or (b) gives reasonable
grounds to conclude that any GUARANTOR will not be able to perform or observe
(in the ordinary course) its obligations under this GUARANTY or under any
documentation evidencing any INDEBTEDNESS.
Section 4.17. Solvency. Each of the GUARANTORS is, and after giving
effect to the transactions contemplated in this GUARANTY, will be, SOLVENT. In
determining solvency, each GUARANTOR shall be entitled to treat as an asset (in
the form of receivables from the other GUARANTORS) the contribution obligations
of the other GUARANTORS to the determining GUARANTOR in the event that the
determining GUARANTOR were to pay the entirety of the OBLIGATIONS outstanding
under this GUARANTY; provided, however, each contribution obligation shall be
net of a reserve for any doubt in the ability of the applicable contribution
obligor to pay its contribution obligation.
12
<PAGE>
Section 4.18. Employee Benefit Plans.
a. Each GUARANTOR and its ERISA AFFILIATES are in compliance in all
material respects with all applicable provisions of ERISA and the regulations
thereunder and of the CODE with respect to all EMPLOYEE BENEFIT PLANS.
b. No TERMINATION EVENT has occurred or is reasonably expected to occur
with respect to any GUARANTEED PENSION PLAN.
c. The actuarial present value (as defined in Section 4001 of ERISA) of
all benefit commitments (as defined in Section 4001 of ERISA) under each
GUARANTEED PENSION PLAN does not exceed the assets of that plan.
d. Except as set forth on Schedule 4.18 attached hereto, no GUARANTOR or
ERISA AFFILIATE has incurred or reasonably expects to incur any withdrawal
liability under ERISA in connection with any MULTIEMPLOYER PLANS.
Section 4.19. Environmental Conditions. Except as set forth on Schedule
4.19 attached hereto:
a. Each GUARANTOR has obtained all necessary permits, licenses,
variances, clearances and all other necessary approvals (collectively, the "EPA
PERMITS") for use of the FACILITIES and the operation and conduct of its
business from all applicable federal, state, and local governmental authorities,
utility companies or development-related entities including, but not limited to,
any and all appropriate Federal or State environmental protection agencies and
other county or city departments, public water works and public utilities in
regard to the use of the FACILITIES, the operation and conduct of its business,
and the handling, transporting, treating, storage, disposal, discharge, or
RELEASE of REGULATED SUBSTANCES, if any, into, on or from the environment
(including, but not limited to, any air, water, or soil).
b. Each issued EPA PERMIT is in full force and effect, has not expired or
been suspended, denied or revoked, and is not under challenge by any PERSON.
Each GUARANTOR is in compliance in all material aspects with each issued EPA
PERMIT.
c. No GUARANTOR nor any of the FACILITIES of any GUARANTOR is subject to
any private or governmental litigation, or to the GUARANTORS' knowledge,
threatened litigation, lien or judicial or administrative notice, order or
action involving any of the GUARANTORS or any of the FACILITIES relating to
REGULATED SUBSTANCES or environmental problems, impairments or liabilities.
d. There has been no RELEASE into, on or from any of the FACILITIES of
the GUARANTORS and no REGULATED SUBSTANCES are located on or have been treated,
stored, processed, disposed of, handled or transported to or from, any of the
FACILITIES in violation of any ENVIRONMENTAL LAWS. To the GUARANTORS' knowledge,
no REGULATED SUBSTANCES have been treated, stored, disposed, RELEASED, located,
discharged, possessed, managed, processed, or otherwise handled
13
<PAGE>
in the operation or conduct of any of the GUARANTOR'S businesses in violation of
any ENVIRONMENTAL LAWS. The GUARANTORS have complied in all material respects
with all ENVIRONMENTAL LAWS affecting the FACILITIES and businesses of the
GUARANTORS.
e. The GUARANTORS do not transport, in any manner, any REGULATED
SUBSTANCES except in the ordinary course of business in compliance with all
ENVIRONMENTAL LAWS.
f. No GUARANTOR has received any notices that any REGULATED SUBSTANCES
transported from any FACILITY was disposed of in violation of any ENVIRONMENTAL
LAWS.
g. No GUARANTOR has received written notice of any circumstances which
would result in any obligation under any ENVIRONMENTAL LAW to investigate or
remediate any REGULATED SUBSTANCES in, on or under any of the FACILITIES.
Section 4.20. Business Locations. The sole business locations for the
LESSEES and for the GUARANTORS are set forth on Schedule 4.20 attached hereto.
Section 4.21. No Materially Adverse Contracts, Etc. No GUARANTOR is
subject to any charter, corporate or other legal restriction, or any judgment,
decree, order, or, to the best of the GUARANTORS' knowledge, rule or regulation
which in the judgment of its directors or officers has or is reasonably expected
in the future to cause a MATERIAL ADVERSE EVENT. No GUARANTOR or SUBSIDIARY of a
GUARANTOR is a party to any contract or agreement which in the judgment of its
directors or officers has or is reasonably expected to result in the occurrence
of a MATERIAL ADVERSE EVENT, except as otherwise reflected in adequate reserves.
Section 4.22. Disclosure Generally. The representations and statements
made by each of the GUARANTORS or on its behalf in connection with this GUARANTY
do not and will not contain any untrue statement of a material fact or omit to
state a material fact or any fact necessary to make the representations made not
materially misleading. No written information, exhibit, report, brochure or
financial statement furnished by any of the GUARANTORS to the LESSOR or MBC in
connection with this GUARANTY, the LEASE, or any of the LEASE DOCUMENTS contains
or will contain any material misstatement of fact or omit to state a material
fact or any fact necessary to make the statements contained therein not
misleading.
Section 5. Affirmative Covenants. Each of the GUARANTORS covenants during
the term of this GUARANTY and while any OBLIGATIONS are outstanding and unpaid
to do and perform each of the following acts and promises:
Section 5.1. Payment And Performance. The GUARANTORS shall pay and
perform all OBLIGATIONS when and as due, without any abatement, set-off or
compromise.
14
<PAGE>
Section 5.2. Notice Of Litigation And Proceedings. Each GUARANTOR shall
provide prompt notice to the LESSOR of any action, suit, citation, violation,
direction, notice or proceeding before any GOVERNMENTAL AUTHORITY, affecting it,
the LESSEES or any other GUARANTOR, or the assets or properties thereof, which,
if determined adversely: (a) could require any LESSEE to pay more than One
Million Dollars ($1,000,000.00) or deliver assets the value of which exceeds
that sum; (b) could require any GUARANTOR to pay more than One Million Dollars
($1,000,000.00) or deliver assets the value of which exceeds that sum; or (c)
could reasonably be expected to cause a MATERIAL ADVERSE EVENT.
Section 5.3. Payment Of Liabilities To Third Persons. Each GUARANTOR
shall pay when and as due, or within applicable grace periods, all LIABILITIES
due to third persons, except when the amount thereof is being contested in good
faith by appropriate proceedings and with adequate reserves therefor being
established by such GUARANTOR.
Section 5.4. Payment Of Taxes. Each of the GUARANTORS shall pay or cause
to be paid when and as due all taxes, assessments and charges or levies imposed
upon it or on any of its property or which it is required to withhold and pay
over to the taxing authority or which it must pay on its income, except where
contested in good faith, by appropriate proceedings and at its own cost and
expense; provided, however, that it shall not be deemed to be contesting in good
faith by appropriate proceedings unless: (a) such proceedings operate to prevent
the taxing authority from attempting to collect the taxes, assessments or
charges; (b) its assets are not subject to sale, forfeiture or loss during such
proceedings; (c) the contest does not subject it to any claim by the taxing
authority or any other PERSON; (d) it establishes appropriate reserves for the
payment of all taxes, assessments, charges, levies, legal fees, court costs and
other expenses for which it would be liable if it is unsuccessful in its
contest; (e) it prosecutes the contest continuously to its final conclusion; and
(f) at the conclusion of the proceedings, it promptly pays all amounts
determined to be payable, including but not limited to all taxes, assessments,
charges, levies, legal fees and court costs.
Section 5.5. Reporting Requirements. The GUARANTORS shall submit the
following items to the LESSOR:
a. Quarterly Financial Statements. As soon as available and in any event
within sixty (60) calendar days after the end of each of the first three FISCAL
QUARTERS, the GUARANTORS and their SUBSIDIARIES shall submit to the LESSOR a
consolidated balance sheet of the GUARANTORS and their SUBSIDIARIES as of the
end of each such FISCAL QUARTER, a consolidated statement of income and retained
earnings of the GUARANTORS and their SUBSIDIARIES for the period commencing at
the end of the previous FISCAL YEAR and ending with the end of such FISCAL
QUARTER, and a consolidated statement of cash flow of the GUARANTORS and their
SUBSIDIARIES for the portion of the FISCAL YEAR ended with the last day of such
FISCAL QUARTER, all in reasonable detail and stating in comparative form the
respective figures for the corresponding date and period in the previous FISCAL
YEAR and all prepared in
15
<PAGE>
accordance with G.A.A.P. and certified by the chief financial officer of the
HOLT GROUP subject to year-end adjustments).
b. Annual Financial Statements. As soon as available and in any event
within one hundred twenty (120) calendar days after the end of each FISCAL YEAR
of the GUARANTORS and their SUBSIDIARIES, the GUARANTORS and their SUBSIDIARIES
shall submit to the LENDER a consolidated and consolidating balance sheet of the
GUARANTORS and their SUBSIDIARIES as of the end of such FISCAL YEAR and a
consolidated and consolidating statement of income and retained earnings of the
GUARANTORS and their SUBSIDIARIES for such FISCAL YEAR, and a consolidated and
consolidating statement of cash flow of the GUARANTORS and their SUBSIDIARIES
for such FISCAL YEAR, all in reasonable detail and stating in comparative form
the respective figures for the corresponding date and period in the prior FISCAL
YEAR and all prepared in accordance with G.A.A.P. and accompanied by an audited
opinion thereon from BDO Seidman LLP, or from any other independent certified
public accountants of nationally recognized standing which are reasonably
acceptable to the LESSOR.
c. Management Letters. Promptly upon receipt thereof, the GUARANTORS
shall submit to the LENDER copies of any reports submitted to the GUARANTORS by
independent certified public accountants in connection with the examination of
the financial statement of the GUARANTORS made by such accountants.
d. Certificates Of No Default. Within sixty (60) calendar days after the
end of each FISCAL QUARTER, the GUARANTORS shall submit to the LESSOR a
certificate of the chief financial officer of the GUARANTORS certifying that:
(i) there exists no EVENT OF DEFAULT, or if an EVENT OF DEFAULT exists,
specifying the nature thereof, the period of existence thereof and what action
the GUARANTORS propose to take with respect thereto; and (ii) no material
adverse change in the condition, financial or otherwise, business, property or
results of operations of any of the GUARANTORS has occurred since the previous
certificate was sent to the LESSOR by the GUARANTORS or, if any such change has
occurred, specifying the nature thereof and what action the GUARANTORS have
taken or propose to take with respect thereto.
e. Management Changes. Each GUARANTOR shall notify the LESSOR (or the
assignee or successor in interest thereto) promptly of any changes in the
personnel holding executive management positions with it, including but not
limited to its President and Chief Financial Officer.
f. Summary Annual Budget. As soon as possible and in any event within one
hundred twenty (120) days after the end of each FISCAL QUARTER, a budget for the
GUARANTORS and their SUBSIDIARIES for the then current FISCAL YEAR setting forth
in reasonable detail the projected profit or loss, resulting balance sheets,
cash flows, and anticipated loan balances of the GUARANTORS and their
SUBSIDIARIES.
g. General Information. In addition to the items set forth in paragraphs
(a) through (e) above, the GUARANTORS shall submit such other information
respecting
16
<PAGE>
the condition or operations, financial or otherwise, of the GUARANTORS and their
SUBSIDIARIES as the LESSOR may reasonably request from time to time.
Section 5.6. Employee Benefit Plans And Guaranteed Pension Plans. Each
GUARANTOR will, and will cause each of its ERISA AFFILIATES to: (a) comply with
all requirements imposed by ERISA and the CODE, applicable from time to time to
any of its GUARANTEED PENSION PLANS or EMPLOYEE BENEFIT PLANS; (b) make full
payment when due of all amounts which, under the provisions of EMPLOYEE BENEFIT
PLANS or under applicable LAW, are required to be paid as contributions thereto;
(c) not permit to exist any material accumulated funding deficiency, whether or
not waived; (d) file on a timely basis all reports, notices and other filings
required by any governmental agency with respect to any of its EMPLOYEE BENEFITS
PLANS; (e) make any payments to MULTIEMPLOYER PLANS required to be made under
any agreement relating to such MULTIEMPLOYER PLANS, or under any LAW pertaining
thereto; (f) not amend or otherwise alter any GUARANTEED PENSION PLAN if the
effect would be to cause the actuarial present value of all benefit commitments
under any GUARANTEED PENSION PLAN to be less than the current value of the
assets of such GUARANTEED PENSION PLAN allocable to such benefit commitments;
(g) furnish to all participants, beneficiaries and employees under any of the
EMPLOYEE BENEFIT PLANS, within the periods prescribed by LAW, all reports,
notices and other information to which they are entitled under applicable LAW;
and (h) take no action which would cause any of the EMPLOYEE BENEFIT PLANS to
fail to meet any qualification requirement imposed by the CODE. As used in this
Section, the term "accumulated funding deficiency" has the meaning specified in
Section 302 of ERISA and Section 412 of the CODE, and the terms "actuarial
present value", "benefit commitments" and "current value" have the meaning
specified in Section 4001 of ERISA.
Section 5.7. Compliance With Laws. Each GUARANTOR shall comply in all
material respects with all applicable LAWS, including, but not limited to, all
LAWS with respect to: (a) all restrictions, specifications, or other
requirements pertaining to products that it sells or to the services it
performs; (b) the conduct of its business; (c) the use, maintenance, and
operation of the real and personal properties owned or leased by it in the
conduct of its business; and (d) the obtaining of all necessary licenses,
franchises, permits and governmental approvals, registrations and exemptions
necessary to engage in its business.
Section 5.8. Environmental Laws. In addition to and without limiting the
generality of the preceding Section, each GUARANTOR shall: (a) comply in all
material respects with, and ensure such compliance by all tenants and
subtenants, if any, with, all applicable ENVIRONMENTAL LAWS and obtain and
comply in all material respects with and maintain, and ensure that all tenants
and subtenants obtain and comply with and maintain, any and all licenses,
approvals, notifications, registrations or permits required by applicable
ENVIRONMENTAL LAWS; (b) conduct and complete all investigations, studies,
sampling and testing, and all remedial, removal and other actions required under
ENVIRONMENTAL LAWS, and promptly comply with all lawful orders and directives of
any GOVERNMENTAL AUTHORITY regarding ENVIRONMENTAL LAWS; and (c) defend,
indemnify and hold harmless the LESSOR (and its assignees and successors in
17
<PAGE>
interests), and its employees, agents, officers and directors, from and against
any claims, demands, penalties, fines, liabilities, settlements, damages, costs
and expenses of whatever kind or nature known or unknown, contingent or
otherwise, arising out of, or in any way relating to the violation of,
noncompliance with or liability under any ENVIRONMENTAL LAWS applicable to the
operations of the GUARANTORS, or any orders, requirements or demands of
governmental authorities related thereto, including, without limitation,
reasonable attorney's and consultants fees, investigation and laboratory fees,
response costs, court costs and litigation expenses, except to the extent that
any of the foregoing directly result from the gross negligence or willful
misconduct of the party seeking indemnification therefor. The GUARANTORS shall
notify the LESSOR of any RELEASE of REGULATED SUBSTANCE on, to or from any
FACILITY in violation of any ENVIRONMENTAL LAWS or of any notice received by the
GUARANTORS that any GUARANTOR or any FACILITY is not in compliance with any
ENVIRONMENTAL LAWS within five (5) BUSINESS DAYS after any such RELEASE or
receipt of any such notice.
Section 5.9. Maintenance Of Books And Records. Each GUARANTOR shall
maintain its financial books and records in accordance with G.A.A.P.
Section 6. Negative Covenants. Each of the GUARANTORS covenants and
agrees during the term of this GUARANTY and while any OBLIGATIONS are
outstanding and unpaid not to do or to permit to be done or to occur any of the
following acts or happenings:
Section 6. 1. Consolidations, Mergers, And Ownership Of Subsidiaries.
(a) No GUARANTOR will consolidate or merge with or into any other PERSON
unless the surviving entity is a GUARANTOR.
(b) No GUARANTOR shall take any action which would result in its failure
to own, directly or indirectly, one hundred percent (100%) of each PERSON which
is currently, or hereafter becomes, a SUBSIDIARY of such GUARANTOR.
(c) No GUARANTOR shall create any SUBSIDIARIES after the date of this
GUARANTY unless any such newly-created SUBSIDIARY within thirty (30) days of
being formed, executes and delivers or otherwise joins into this GUARANTY and
executes any other documents which the LESSOR reasonably requires with respect
thereto.
Section 6.2. Disposition Of Assets. No GUARANTOR shall: (a) sell,
transfer, assign or otherwise dispose of any of its assets unless such sale or
disposition shall be in the ordinary course of its business for value received;
or (b) discontinue or liquidate in any material respect any substantial part of
its operations or business.
Section 6.3. Encumbrance Of Current Assets. No GUARANTOR shall create,
assume, or suffer to exist any liens, pledges, security interests, or other
encumbrances upon any accounts receivable, inventory, or other current assets
now owned or hereafter acquired by it.
18
<PAGE>
Section 6.4. Acquisitions And Investments. The GUARANTORS shall not
purchase or otherwise acquire (including without limitation by way of share
exchange) any part or amount of the capital stock or assets of, or make any
investments in any other PERSON; or enter into any new business activities or
ventures not directly related to their present businesses except: (a) they may
acquire and hold stock, obligations or securities received in settlement of
debts (created in the ordinary course of business) owing to them; (b) they may
make and own CASH EQUIVALENTS; (c) transactions authorized by the express terms
of Section 6.1 of this GUARANTY; (d) the purchase of additional shares of
Atlantic Container Line Aktiebolag; or (e) the purchase of any shares of stock
of Transroll Navieras Express, Inc. by NPR HOLDING pursuant to: (i) any put or
call rights set forth in a Shareholders Agreement by and among the shareholders
of Transroll Navieras Express, Inc.; and (ii) any right of first refusal or
other similar right under that certain joint venture Agreement dated as of
August 6, 1997 by and among NPR and Transroll Navegacao S.A.
Section 6.5. Changes In Fiscal Year. No GUARANTOR shall change its FISCAL
YEAR without the LESSOR'S consent.
Section 6.6. Amendments To Corporate Documents. No GUARANTOR shall amend,
waive, or suffer to be amended or waived any provision of its Certificate of
Incorporation, By-Laws, or other corporate documents from the respective forms
thereof delivered to the LESSOR in connection with this GUARANTY without the
prior written consent of the LESSOR, such consent not to be unreasonably
withheld or unduly delayed.
Section 6.7. Restricted Payments. The HOLT GROUP shall not make any
RESTRICTED PAYMENTS other than: (a) as permitted pursuant to Section 6.4 of this
GUARANTY; and (b) RESTRICTED PAYMENTS in any FISCAL YEAR of the HOLT GROUP which
in aggregate amount do not exceed fifty percent (50%) of the net income of the
HOLT GROUP for such FISCAL YEAR. No RESTRICTED PAYMENTS which are otherwise
permitted by this Section shall be made at any time during which there is a
continuing EVENT OF DEFAULT (or any condition or event which with notice, the
passage of time, or both, would result in an EVENT OF DEFAULT) or if the
RESTRICTED PAYMENT would result in an EVENT OF DEFAULT or have the effect of
causing the violation of any financial or other covenants set forth in this
GUARANTY.
Section 6.8. Defaults By Lessees Or Other Guarantors. Each of the
GUARANTORS agrees that it will not consent to, approve or acquiesce in any
actions or conduct by either of the LESSEES or by any other GUARANTOR which
would violate, or cause the violation of, any of the terms or conditions of any
of the LEASE DOCUMENTS, or any agreement, promise or covenant made by any other
GUARANTOR in this GUARANTY.
Section 6.9. Ratio Of Indebtedness To Tangible Net Worth. The ratio of
INDEBTEDNESS to TANGIBLE NET WORTH of the GUARANTORS and their SUBSIDIARIES,
calculated on a consolidated basis shall not exceed the following ratios during
the following FISCAL YEARS: (a) 1997 - 7.0 to 1.0 before the occurrence of a
RULE 144A TRANSACTION and 7.7 to 1.0 after the occurrence of a RULE 144A
19
<PAGE>
TRANSACTION; (b) 1998 - 7.7 to 1.0; (c) 1999 - 7.0 to 1.0; (d) 2000 - 6.5 to
1.0; and (e) 2001 and thereafter - 6.0 to 1.0.
Section 6.10. Interest Coverage Ratio. The ratio of CASH FLOW to INTEREST
EXPENSE of the GUARANTORS and their SUBSIDIARIES calculated on a consolidated
basis for the four (4) most recently ended consecutive FISCAL QUARTERS shall not
be less at any time of determination than 1.5 to 1.0.
Section 6.11. Minimum Tangible Net Worth. As of the date hereof and at
the end of each FISCAL QUARTER hereafter, the TANGIBLE NET WORTH of the
GUARANTORS and their SUBSIDIARIES, on a consolidated basis, will not at any time
be less than the sum of: (a) Fifty Million Five Hundred Thousand Dollars
($50,500,000.00) prior to a RULE 144A TRANSACTION by the GUARANTORS, or
Forty-Six Million Five Hundred Thousand Dollars ($46,500,000.00) from and after
the date of a RULE 144A TRANSACTION by the GUARANTORS; (b) fifty percent (50%)
of net income for each FISCAL YEAR ending after September 30, 1997 without
deduction for any net losses; and (c) one hundred percent (100%) of the amount
of any additional equity issued after the date hereof, provided, however, any
additions to equity after the date hereof which are made for the sole purpose of
enabling the GUARANTORS to be in compliance with the terms and conditions of
this GUARANTY or any other agreement or document evidencing any INDEBTEDNESS FOR
BORROWED FUNDS shall not increase the minimum TANGIBLE NET WORTH requirement at
the time of such addition the GUARANTORS shall provide written notice of such
purpose to the LESSOR (or its assignee or successor in interest) specifying the
amount required therefor.
Section 7. Events Authorizing Acceleration Of Obligations. Subject to the
notice and cure provisions set forth in Section 7.16, the occurrence of any of
the following events or conditions shall constitute an "EVENT OF DEFAULT":
Section 7.1. Failure To Pay Or Perform. The failure of the GUARANTORS to
pay or perform any of the OBLIGATIONS, when and as due.
Section 7.2. Representation Or Warranty. The failure of any
representation or warranty made by the GUARANTORS to the LESSOR (or to MBC as
the contemplated assignee of the LESSOR) to be true, accurate, and complete in
any material respect as of the date made.
Section 7.3. Lease Documents. The occurrence of any default by the
LESSEES under the LEASE DOCUMENTS, including without limitation, the failure to
make all payments required by the LEASE, when and as due, after the expiration
of any applicable notice and cure rights.
Section 7.4. Cross-Default. The occurrence of any default under any loans
or credit facilities existing from time to time between any of the GUARANTORS or
either of the LESSEES and any lender or holder of notes or debt securities (or
other forms of INDEBTEDNESS), which singularly or in the aggregate exceeds One
Million Dollars
20
<PAGE>
($1,000,000.00), and such failure shall continue beyond any applicable notice
and cure period.
Section 7.5. Judgments. Any judgments against the GUARANTORS or the
SUBSIDIARIES of the GUARANTORS or against their assets or properties for amounts
in excess of One Million Dollars ($1,000,000.00) in the aggregate remain unpaid,
unstayed on appeal, undischarged, unbonded, and undismissed for a period of
thirty (30) days.
Section 7.6. Attachments. Any assets of any GUARANTOR or of any
SUBSIDIARY of any GUARANTOR shall become subject to attachments, levies, or
garnishments for amounts in excess of One Million Dollars ($1,000,000.00) in the
aggregate which have not been dissolved or satisfied within thirty (30) days
after service of notice thereof to the GUARANTORS or any SUBSIDIARY of the
GUARANTORS.
Section 7.7. Involuntary Insolvency Proceedings. The institution of
involuntary INSOLVENCY PROCEEDINGS against any GUARANTOR and the failure of any
such INSOLVENCY PROCEEDINGS to be dismissed before the earliest to occur of: (a)
the date which is sixty (60) days after the institution of such INSOLVENCY
PROCEEDINGS; or (b) the entry of any order for relief in the INSOLVENCY
PROCEEDING or any order adjudicating such GUARANTOR to be insolvent.
Section 7.8. Voluntary Insolvency Proceedings. The commencement by any
GUARANTOR of INSOLVENCY PROCEEDINGS.
Section 7.9. Insolvency Proceedings Pertaining To Lessees or Lease
Guarantors. The occurrence of any of the events listed in Sections 7.7 and 7.8
above to either of the LESSEES.
Section 7.10. Change In Control. The occurrence of a CHANGE IN CONTROL.
Section 7.11. Material Adverse Event. The occurrence of a MATERIAL
ADVERSE EVENT.
Section 7.12. ERISA. Except for any liabilities set forth on Schedule
4.18 of this GUARANTY, if any TERMINATION EVENT shall occur and as of the date
thereof or any subsequent date, the sum of the various liabilities of any
GUARANTOR and its ERISA AFFILIATES (such liabilities to include, without
limitation, any liability to the Pension Benefit Guaranty Corporation (or any
successor thereto) or to any other party under Sections 4062, 4063, or 4064 of
ERISA or any other provision of LAW and to be calculated after giving effect to
the tax consequences thereof) resulting from or otherwise associated with such
event exceeds One Million Dollars ($1,000,000.00); or the GUARANTOR or any of
its ERISA AFFILIATES as an employer under any MULTIEMPLOYER PLAN shall have made
a complete or partial withdrawal from such MULTIEMPLOYER PLANS and the plan
sponsors of such MULTIEMPLOYER PLANS shall have notified such withdrawing
employer that such employer has incurred a withdrawal
21
<PAGE>
liability requiring a payment in an amount exceeding Five Hundred Thousand
Dollars ($500,000.00).
Section 7.13. Indictment Of Lessees Or Guarantors. The indictment of any
of the GUARANTORS or either of the LESSEES for a felony under any federal, state
or other LAW, and the LESSOR reasonably determines that such indictment is
likely to result in a MATERIAL ADVERSE EVENT.
Section 7.14. Injunctions. If either LESSEE or any GUARANTOR is enjoined,
restrained or in any way prevented by court order from continuing to conduct all
or any material part of its business affairs.
Section 7.15. Loss Of Material License, Permit, Etc. The loss,
suspension, revocation or failure to renew any license, permit, franchise,
merchandising agreement, or governmental approval, registration or exemption now
held or hereafter acquired by any GUARANTOR, which loss, suspension, revocation
or failure to renew is determined by the LESSOR to be likely to cause a MATERIAL
ADVERSE EVENT.
Section 7.16. Notice And Cure Rights. An EVENT OF DEFAULT shall not be
deemed to have occurred with respect to the violation of any covenant or
requirement of this GUARANTY, excepting the specific provisions of this GUARANTY
excluded in the next succeeding sentence of this Section, until after the LESSOR
has forwarded notice of such violation to the GUARANTORS and the GUARANTORS have
failed to correct such violation within five (5) calendar days after the date of
the giving of such notice. A violation of any of the following Sections of this
GUARANTY shall immediately constitute an EVENT OF DEFAULT without the GUARANTORS
having any notice or cure rights: Sections 5.1, 6.1, 6.2, 6.3, 6.4, 6.5, 6.6,
6.7, 7.1, 7.2, 7.3, 7.4, 7.5, 7.6, 7.7, 7.8, 7.9, 7.10, 7.12, and 7.13.
Section 8. Acceleration Rights. Upon the occurrence of an EVENT OF
DEFAULT, the LESSOR (or its assignees or successors in interest) shall have the
immediate right to elect to accelerate the payment of all OBLIGATIONS and to
demand payment therefor from the GUARANTORS without regard as to whether the
obligations of the LESSEES under the LEASE DOCUMENTS have been accelerated, are
in default, or are being paid as agreed by the LESSEES in accordance with the
terms of the LEASE DOCUMENTS. The amount of the OBLIGATIONS to be paid by the
GUARANTORS upon such acceleration which are attributable to the unpaid payments
under the LEASE (and all Equipment Schedules thereto) for the remaining term of
the LEASE shall be equal to the sum of: (a) any due and unpaid rent under the
LEASE DOCUMENTS as of the date of payment by the GUARANTORS; plus (b) the
present value, as of the date of payment by the GUARANTORS, of the total rent
for the then remaining term of the LEASE. All amounts to be present valued shall
be discounted at a rate equal to the discount rate of the Federal Reserve Bank
of Richmond in effect on the date of payment by the GUARANTORS.
22
<PAGE>
Section 9. Lessor Need Not Pursue Other Rights. The LESSOR shall be under
no obligation to pursue the LESSOR'S rights against the LESSEES or any GUARANTOR
before pursuing the LESSOR'S rights against any other GUARANTOR.
Section 10. Subrogation. Each of the GUARANTORS hereby irrevocably agrees
to subordinate any SUBROGATION RIGHTS to the rights of the LESSOR (and its
assigns and successors in interest) to recover from the LESSEES or any other
GUARANTOR with respect to any payments made or obligations incurred as a result
of this GUARANTY. To effectuate such subordination, each of the GUARANTORS
hereby agrees that it shall not be entitled to any payment from the LESSEES or
from any other GUARANTOR in respect of any SUBROGATION RIGHT until all of the
OBLIGATIONS have been indefeasibly paid in full. If any amount shall be paid to
any GUARANTOR in violation of the preceding sentence and the OBLIGATIONS shall
not have been paid in full, such amount shall be deemed to have been paid to
such GUARANTOR for the benefit of, and held in trust for, the LESSOR (and its
assigns and successors in interest), and shall forthwith be paid to the LESSOR
(or its assigns or successors in interest) to be credited and applied to the
OBLIGATIONS, whether matured or unmatured. Each of the GUARANTORS acknowledges
that it will receive direct and indirect benefits from the leasing arrangements
contemplated by the LEASE DOCUMENTS and that the subordination set forth in this
Section is knowingly made in contemplation of obtaining such benefits.
Section 11. Right of Contribution. Each of the GUARANTORS hereby agrees
that to the extent that a GUARANTOR shall have paid more than its proportionate
share of any payment made hereunder upon the OBLIGATIONS, such GUARANTOR shall
be entitled to seek and receive contribution from and against any other
GUARANTOR hereunder which has not paid its proportionate share of such payment.
Each GUARANTOR'S right of contribution shall be subject to the terms and
subordination conditions of Section 10 of this GUARANTY. The provisions of this
Section shall in no respect limit the obligations and liabilities of any
GUARANTOR hereunder and each GUARANTOR shall remain jointly and severally liable
for the full amount guaranteed by the GUARANTORS hereunder.
Section 12. Certain Rights Of Lessor. Each of the GUARANTORS hereby
assents to any and all terms and agreements between the LESSOR and the LESSEES
or between the LESSOR and any other GUARANTOR, and all amendments and
modifications thereof, whether presently existing or hereafter made and whether
oral or in writing. The LESSOR may, without compromising, impairing,
diminishing, or in any way releasing the GUARANTORS from the GUARANTORS' duties
to pay and perform the OBLIGATIONS and without notifying or obtaining the prior
approval of any of the GUARANTORS, at any time or from time to time: (a) waive
or excuse a default by the LESSEES or any other GUARANTOR, or delay in the
exercise of any or all of the LESSOR'S rights or remedies with respect to such
default or defaults; (b) grant extensions of time for payment or performance by
the LESSEES or any other GUARANTOR; (c) release, substitute, exchange,
surrender, or add collateral of the LESSEES or of any other GUARANTOR, or waive,
release, or subordinate, in whole or in part, any lien or security interest held
by the LESSOR on any real or personal property securing payment or performance,
in whole or in part, of the obligations of the LESSEES to the LESSOR or of any
other guarantor; (d) release the LESSEES or any other GUARANTOR from any duties
or obligations owed by
23
<PAGE>
the LESSEES or any other GUARANTOR to the LESSOR; (e) add Equipment Schedules to
the LEASE and increase the obligations of the LESSEES under the LEASE; and (f)
modify, change, renew, extend, terminate, or amend in any respect any of the
LEASE DOCUMENTS or the LESSOR'S agreements with the LESSEES or with any other
GUARANTOR.
Section 13. Waivers By Guarantor. Each of the GUARANTORS waives: (a) any
and all notices whatsoever with respect to this GUARANTY or with respect to any
of the obligations owed by the LESSEES to the LESSOR, including, but not limited
to, notice of (i) the acceptance hereof by the LESSOR or of the intention to act
by the LESSOR, or any action taken by the LESSOR in reliance hereon, (ii) the
present existence or future incurring of any of the obligations of the LESSEES
to the LESSOR or any terms or amounts thereof or any change therein (including
without limitation the addition of Equipment Schedules and increased payment
obligations to the LEASE), (iii) any default by the LESSEES or any surety,
pledgor, grantor of security, or any PERSON who has guaranteed or secured in
whole or in part any of the obligations of the LESSEES to the LESSOR, and (iv)
the obtaining or release of any guaranty or surety agreement, pledge,
assignment, or other security for any of the obligations of the LESSEES to the
LESSOR; (b) presentment and demand for payment of any sum due from the LESSEES
or any other GUARANTOR and protest of nonpayment; (c) demand for performance by
the LESSEES or any other GUARANTOR; and (d) any defenses to this GUARANTY or the
payment and performance of the OBLIGATIONS based upon any suretyship or
impairment of collateral.
Section 14. Unenforceability Of Obligations Of Lessees. This GUARANTY
shall be valid, binding, and enforceable even if any or all of the obligations
of the LESSEES to the LESSOR which are guaranteed hereby are now, or hereafter,
become invalid or unenforceable for any reason, or are set aside, avoided or
determined to have been invalid for any reason, in whole or in part.
Section 15. No Conditions Precedent. This GUARANTY shall be effective and
enforceable immediately upon its execution. The GUARANTORS acknowledge that no
unsatisfied conditions precedent to the effectiveness and enforceability of this
GUARANTY exist as of the date of its execution and that the effectiveness and
enforceability of this GUARANTY is not in any way conditioned or contingent upon
any event, occurrence, or happening, or upon any condition existing or coming
into existence either before or after the execution of this GUARANTY.
Section 16. No Duty To Disclose. The LESSOR shall not have any present or
future duty or obligation to discover or to disclose to any GUARANTOR any
information, financial or otherwise, concerning the LESSEES, the LEASED
EQUIPMENT, any other GUARANTOR, the LEASE or any collateral securing the
obligations of the LESSEES to the LESSOR or of any other PERSON who may have
guaranteed in whole or in part the obligations of the LESSEES to the LESSOR.
Each of the GUARANTORS waives any right to claim or assert any such duty or
obligation on the part of the LESSOR. The GUARANTORS agree to obtain all
information which the GUARANTORS consider either appropriate or relevant to this
GUARANTY and the agreements and undertakings of the GUARANTORS hereunder from
sources other than the LESSOR and to become and
24
<PAGE>
remain at all times current and continuously apprised of all information
concerning the LESSEES, other GUARANTORS or the LEASE DOCUMENTS which the
GUARANTORS consider to be material or relevant to the duties of the GUARANTORS
pursuant to this GUARANTY or the payment and performance of the OBLIGATIONS by
the GUARANTORS.
Section 17. Enforcement During Bankruptcy. Enforcement of this GUARANTY
against any GUARANTOR shall not be stayed or in any way delayed as a result of
the filing of a petition under the United States Bankruptcy Code, as amended, by
or against either of the LESSEES or any other GUARANTOR. Should the LESSOR (or
the assignee or successor in interest thereof) be required to obtain an order of
the United States Bankruptcy Court to begin enforcement of this GUARANTY after
the filing of a petition under the United States Bankruptcy Code, as amended, by
or against any GUARANTOR, such GUARANTOR hereby consents to this relief and
agrees to file or cause to be filed all appropriate pleadings to evidence and
effectuate such consent and to enable the LESSOR (or the assignee or successor
in interest thereof) to obtain the relief requested.
Section 18. Cumulative Liability. The liability of the GUARANTORS to the
LESSOR pursuant to this GUARANTY shall be cumulative to, and not in lieu of, all
other duties, obligations and liabilities owed by any of the GUARANTORS to the
LESSOR from time to time.
Section 19. Obligations Are Unconditional. The payment and performance of
the OBLIGATIONS shall be the absolute and unconditional duty and obligation of
each of the GUARANTORS, and shall be independent of any defense or any rights of
set-off, recoupment or counterclaim which any of the GUARANTORS might otherwise
have against the LESSOR (or its assignee or successor in interest). The
GUARANTORS shall pay and perform all OBLIGATIONS, free of any deductions and
without abatement, diminution or set-off. Until such time as the OBLIGATIONS
have been fully paid and performed, each GUARANTOR: (a) shall not suspend or
discontinue any payments provided for herein; (b) shall perform and observe all
of the covenants and agreements contained in this GUARANTY; and (c) shall not
terminate or attempt to terminate this GUARANTY, in whole or in part, for any
reason. No delay by the LESSOR in making demand upon the GUARANTORS for
satisfaction of the OBLIGATIONS shall prejudice or in any way impair the ability
of the LESSOR to enforce this GUARANTY.
Section 20. Defenses Against Lessees. Until the OBLIGATIONS of the
GUARANTORS hereunder have been satisfied in full, each of the GUARANTOR waives
any right to assert against either of the LESSEES any defense (whether legal or
equitable), claim, counterclaim, or right of set-off or recoupment which the
GUARANTORS may now or hereafter have against the LESSEES or any other GUARANTOR.
Section 21. Lessor's Expenses. Should this GUARANTY be referred to an
attorney for collection, the GUARANTORS shall pay all of the reasonable LESSOR'S
EXPENSES resulting from such referral, including reasonable attorneys' fees.
25
<PAGE>
Section 22. Remedies Cumulative. All of the LESSOR'S rights and remedies
shall be cumulative and any failure of the LESSOR to exercise any right
hereunder shall not be construed as a waiver of the right to exercise the same
or any other right at any time, and from time to time, thereafter.
Section 23. Discharge Of Guaranty. This GUARANTY shall not be discharged
and the GUARANTORS shall not be released from liability until all OBLIGATIONS
have been paid, performed and satisfied in full and the satisfaction of the
OBLIGATIONS is not subject to challenge, contest or any contingency. If all or
any portion of the OBLIGATIONS are satisfied and the LESSOR is required by order
of a court of competent jurisdiction to pay to any PERSON the sums used to
satisfy the OBLIGATIONS, the OBLIGATIONS shall remain in effect and enforceable
to the extent thereof.
Section 24. Subordination Of Certain Indebtedness. If the GUARANTOR has
advanced or advances any sums to the LESSEES or its successors or assigns or if
the LESSEES or its successors or assigns shall hereafter become indebted to the
GUARANTOR, such sums and indebtedness shall be subordinate in payment and right
of enforcement and in all other respects to the amounts then or thereafter due
and owing to the any or all of the LESSOR by the LESSEES.
Section 25. Choice Of Law. The laws of the Commonwealth of Pennsylvania
(excluding, however, conflict of law principles) shall govern and be applied to
determine all issues relating to this GUARANTY and the rights and obligations of
the parties hereto, including the validity, construction, interpretation, and
enforceability of this GUARANTY and its various provisions and the consequences
and legal effect of all transactions and events which resulted in the issuance
of this GUARANTY or which occurred or were to occur as a direct or indirect
result of this GUARANTY having been executed.
Section 26. Consent To Jurisdiction; Agreement As To Venue. Each of the
GUARANTORS irrevocably consents to the non-exclusive jurisdiction of the courts
of the Commonwealth of Pennsylvania and of the United States District Court for
the Eastern District of Pennsylvania, if a basis for federal jurisdiction
exists. Each of the GUARANTORS agrees that venue shall be proper in any court of
the Commonwealth of Pennsylvania selected by the LESSOR or in the United States
District Court for the Eastern District of Pennsylvania if a basis for federal
jurisdiction exists and waives any right to object to the maintenance of a suit
in any of the state or federal courts of the Commonwealth of Pennsylvania on the
basis of improper venue or of inconvenience of forum.
Section 27. Invalidity Of Any Part. If any provision or part of any
provision of this GUARANTY shall for any reason be held invalid, illegal, or
unenforceable in any respect, such invalidity, illegality, or unenforceability
shall not affect any other provisions or the remaining part of any effective
provisions of this GUARANTY, and this GUARANTY shall be construed as if such
invalid, illegal, or unenforceable provision or part thereof had never been
contained herein, but only to the extent of its invalidity, illegality, or
unenforceability.
26
<PAGE>
Section 28. Amendment Or Waiver. This GUARANTY may be amended only by a
writing duly executed by the GUARANTORS and by the LESSOR. No waiver by the
LESSOR of any of the provisions of this GUARANTY or any of the rights or
remedies of the LESSOR with respect hereto shall be considered effective or
enforceable unless in writing.
Section 29. Notices. Any notice required or permitted by or in connection
with this GUARANTY shall be in writing and shall be made by facsimile (confirmed
on the date the facsimile is sent by one of the other methods of giving notice
provided for in this Section) or by hand delivery, by Federal Express, or other
similar overnight delivery service, or by certified mail, unrestricted delivery,
return receipt requested, postage prepaid, addressed to the LESSOR or to the
GUARANTORS at the appropriate address set forth below or to such other address
as may be hereafter specified by written notice by the LESSOR or the GUARANTOR.
Notice shall be considered given as of the date of the facsimile or the hand
delivery, one (1) calendar day after delivery to Federal Express or similar
overnight delivery service, or five (5) calendar days after the date of mailing,
independent of the date of actual delivery or whether delivery is ever in fact
made, as the case may be, provided the giver of notice can establish the fact
that notice was given as provided herein. If notice is tendered pursuant to the
provisions of this Section and is refused by the intended recipient thereof, the
notice, nevertheless, shall be considered to have been given and shall be
effective as of the date herein provided.
If to the LESSOR:
EMERALD EQUIPMENT LEASING, INC.
701 North Broadway
King & Essex Streets
Gloucester City, New Jersey 08030
Attn: John A. Evans, Esquire
Fax No.: (609) 742-3015
And to:
MBC LEASING CORP.
2 Hopkins Plaza, 5th Floor
Baltimore, Maryland 21201
Attn: W. Keith Moore, Vice President
Fax No.: (410) 237-5430
27
<PAGE>
If to the GUARANTORS:
THE HOLT GROUP, INC.
HOLT HAULING AND WAREHOUSING SYSTEM, INC.
WILMINGTON STEVEDORES, INC.
MURPHY MARINE SERVICES, INC.
THE RIVERFRONT DEVELOPMENT CORPORATION
NPR HOLDING CORPORATION
NPR-NAVIERAS RECEIVABLES, INC.
NPR S.A., INC.
701 North Broadway
King & Essex Streets
Gloucester City, New Jersey 08030
Attn: John A. Evans, Esquire
Fax No.: (609) 742-3015
With A Courtesy Copy To:
Pepper, Hamilton & Scheetz LLP
3000 Two Logan Square
Eighteenth and Arch Streets
Philadelphia, Pennsylvania 19103-2799
Attn: Lisa D. Kabnick, Esquire
Fax No.: (215) 981-4750
The failure of the LESSOR to send the above courtesy copy shall not impair the
effectiveness of notice given to the GUARANTORS in the manner provided herein.
Section 30. Assignability. This GUARANTY shall inure to the benefit of
the assigns of the LESSOR and shall be binding and enforceable upon the
successors in interest of the LESSOR and the GUARANTORS. The GUARANTORS
acknowledge that it has been contemplated by the LESSOR, the LESSEES, and the
GUARANTORS that the LESSOR shall immediately upon the execution of the LEASE,
this GUARANTY, and the other LEASE DOCUMENTS assign all of such documentation to
MBC to secure the LOAN, as more particularly described in the LOAN AGREEMENT, a
draft copy of which has been provided to each GUARANTOR. Each GUARANTOR
unconditionally and irrevocably acknowledges and agrees that: (a) each
representation, warranty, and submission of information and documentation made
by it in connection with this GUARANTY or any of the other LEASE DOCUMENTS shall
be deemed to have been made directly to MBC for the purposes of inducing MBC to
extend the LOAN to the LESSOR and to accept the collateral assignment of the
LEASE DOCUMENTS in connection therewith as contemplated by the LOAN AGREEMENT;
(b) MBC may reasonably rely upon all representations, warranties, and
submissions made by the GUARANTORS in connection with the LEASE DOCUMENTS and
the transactions contemplated therein, including but not limited to each
representation and warranty of the GUARANTORS set forth in this GUARANTY; (c)
each reference in this GUARANTY to the defined term "LESSOR" shall be deemed to
include MBC until such time as MBC has advised the GUARANTORS in
28
<PAGE>
writing that MBC no longer claims any interest in this GUARANTY or in the other
LEASE DOCUMENTS, and MBC may directly enforce this GUARANTY against the
GUARANTORS either in MBC's name or in the name of the LESSOR and shall have the
exclusive right to take all actions, and grant or deny all consents or approvals
reserved to the LESSOR hereunder; (d) Emerald Equipment Leasing, Inc. shall have
no right to agree to any amendment, modification, waiver or termination of this
GUARANTY, or to otherwise provide any consents or take any enforcement or other
actions in connection with this GUARANTY until such time as MBC has advised the
GUARANTORS in writing that MBC no longer claims any interest in this GUARANTY;
and (e) MBC shall not be deemed to have assumed any obligations of the LESSOR
under the LEASE DOCUMENTS as the result of the assignment of the LEASE DOCUMENTS
to MBC by the LESSOR.
Section 31. Joint And Several Nature. The liability of each GUARANTOR
shall be joint and several with the liability of the other GUARANTORS which are
parties to this GUARANTY.
Section 32. Final Agreement. This GUARANTY contains the final and entire
agreement between the LESSOR and the GUARANTORS with respect to the guaranty by
the GUARANTORS of the LESSEES' obligations to the LESSOR.
Section 33. Tense, Gender, Defined Terms, Captions. As used herein, the
plural includes the singular, and the singular includes the plural. The use of
any gender applies to any other gender. All defined terms are completely
capitalized throughout this GUARANTY. All captions are for the purpose of
convenience only.
Section 34. Seal And Effective Date. This GUARANTY is an instrument
executed under seal and is to be considered effective and enforceable as of the
date set forth on the first page hereof, independent of the date of actual
execution.
Section 35. Waiver Of Trial By Jury. The GUARANTORS and the LESSOR, by
their execution and acceptance, respectively, of this GUARANTY, agree that any
suit, action, or proceeding, whether claim or counterclaim, brought or
instituted by any party hereto or any successor or assign of any party on or
with respect to this GUARANTY or the LEASE DOCUMENTS or which in any way
relates, directly or indirectly, to this GUARANTY or the LEASE DOCUMENTS or any
event, transaction, or occurrence arising out of or in any way connected with
this GUARANTY or the LEASE DOCUMENTS, or the dealings of the parties with
respect thereto or the administration thereof, shall be tried only by a court
and not by a jury. EACH PARTY HEREBY EXPRESSLY WAIVES ANY RIGHT TO A TRIAL BY
JURY IN ANY SUCH SUIT, ACTION, OR PROCEEDING.
29
<PAGE>
IN WITNESS WHEREOF, each of the GUARANTORS has executed this GUARANTY
under seal as of the date first written above.
WITNESS/ATTEST: GUARANTORS:
THE HOLT GROUP, INC.,
A Delaware Corporation
/s/ John Evans By: /s/ Bernard Gelman
- --------------------------- ------------------------(SEAL)
Bernard Gelman, Vice President
Date: November 20 1997
HOLT HAULING AND WAREHOUSING
SYSTEM, INC.,
A Pennsylvania Corporation
/s/ John Evans By: /s/ Bernard Gelman
- --------------------------- -------------------------(SEAL)
Bernard Gelman, Vice President
Date: November 20, 1997
WILMINGTON STEVEDORES, INC.,
A Delaware Corporation,
/s/ John Evans By: /s/ Bernard Gelman
- --------------------------- -------------------------(SEAL)
Bernard Gelman, Vice President
Date: November 20, 1997
MURPHY MARINE SERVICES, INC.,
A Delaware Corporation
By: /s/ Bernard Gelman
------------------------- (SEAL)
Bernard Gelman, Vice President
Date: November 20, 1997
30
<PAGE>
THE RIVERFRONT DEVELOPMENT
CORPORATION,
A New Jersey Corporation
/s/ John Evans By: /s/ Bernard Gelman
- --------------------------- -------------------------(SEAL)
Bernard Gelman, Vice President
Date: November 20, 1997
NPR HOLDING CORPORATION,
A Delaware Corporation
/s/ John Evans By: /s/ Mario F. Escudero
- --------------------------- -------------------------(SEAL)
Mario F. Escudero,
Senior Vice President
Date: November 20, 1997
NPR-NAVIERAS RECEIVABLES, INC.,
A Delaware Corporation
/s/ John Evans By: /s/ Mario F. Escudero
- --------------------------- -------------------------(SEAL)
Mario F. Escudero,
Senior Vice President
Date: November 20, 1997
NPR S.A., INC.,
A Delaware Corporation
/s/ John Evans By: /s/ Mario F. Escudero
- --------------------------- -------------------------(SEAL)
Mario F. Escudero,
Senior Vice President
Date: November 20, 1997
31
AMENDED AND RESTATED
LEASE AND OPERATING AGREEMENT
BETWEEN
PHILADELPHIA REGIONAL PORT AUTHORITY
AND
HOLT CARGO SYSTEMS, INC.
FOR
PACKER AVENUE MARINE TERMINAL
<PAGE>
Page
----
TABLE OF CONTENTS
ARTICLE I. LEASE AND USE OF TERMINAL . . . . . . . . . . . . . . . . 4
1.1 Grant . . . . . . . . . . . . . . . . . . . 4
1.2 Appointment . . . . . . . . . . . . . . . . 4
1.3 Independent Contractor . . . . . . . . . . 4
1.4 Use . . . . . . . . . . . . . . . . . . . . 5
1.5 PRPA Field Representative . . . . . . . . . 6
1.6 Operations to Maximize Use. . . . . . . . . 7
1.7 Title; Quiet Enjoyment. . . . . . . . . . . 7
1.8 Non-Disturbance . . . . . . . . . . . . . . 9
1.9 Estoppel Certificates . . . . . . . . . . . 10
1.10 Zoning and Other Permits. . . . . . . . . . 11
1.11 DRPA Owned Areas. . . . . . . . . . . . . . 11
ARTICLE II. EFFECTIVE DATE; TERM. . . . . . . . . . . . . . . . . . . 13
2.1 Effective Date. . . . . . . . . . . . . . . 13
2.2 Term. . . . . . . . . . . . . . . . . . . . 13
2.3 Renewal Options . . . . . . . . . . . . . . 13
2.4 Termination . . . . . . . . . . . . . . . . 18
2.5 Surrender of Possession; Holdover . . . . . 18
ARTICLE III. COMPENSATION . . . . . . .. . . . . . . . . . . . . . . . 22
3.1 Base Compensation . . . . . . . . . . . . . 22
3.2 Letter of Credit. . . . . . . . . . . . . . 31
3.3 Records and Books . . . . . . . . . . . . . 36
3.4 Reports . . . . . . . . . . . . . . . . . . 37
3.5 Late Charges. . . . . . . . . . . . . . . . 38
3.6 Certain Taxes . . . . . . . . . . . . . . . 38
ARTICLE IV. MARKETING; COOPERATION . . . . . . . . . . . . . . . . . 39
4.1 Marketing . . . . . . . . . . . . . . . . . 39
4.2 Transfer of Service. . . . . . . . . . . . 39
4.3 Intentionally Omitted . . . . . . . . . . . 44
4.4 Definition of HOLT . . . . . . . . . . . . 44
4.5 Certain Operating Agreements . . . . . . . 44
4.6 Certain Tax Exemptions . . . . . . . . . . 47
4.7 Transportation Tolls . . . . . . . . . . . 47
- i -
<PAGE>
ARTICLE V. INSURANCE; INDEMNIFICATION . . . . . . . . . . . . . . . 48
5.1 Property Insurance . . . . . . . . . . . . 48
5.2 Liability Insurance . . . . . . . . . . . . 49
5.3 Worker's Compensation Insurance . . . . . . 50
5.4 Automobile Insurance . . . . . . . . . . . 50
5.5 Waiver of Subrogation . . . . . . . . . . . 51
5.6 Insurance General . . . . . . . . . . . . . 51
5.7 Accident Reports . . . . . . . . . . . . . 53
5.8 Liability for Damage Caused by
Third Parties . . . . . . . . . . . . . . 53
5.9 Event of Loss . . . . . . . . . . . . . . . 54
5.10 Insurance Audit . . . . . . . . . . . . . . 55
5.11 Indemnification . . . . . . . . . . . . . . 55
ARTICLE VI. REPAIRS AND MAINTENANCE . . . . . . . . . . . . . . . . 57
6.1 PRPA's Obligations . . . . . . . . . . . . 57
6.2 HOLT's Obligations . . . . . . . . . . . . 60
6.3 Wharf Structure . . . . . . . . . . . . . 64
6.4 Fire Systems . . . . . . . . . . . . . . . 65
6.5 Load Limits . . . . . . . . . . . . . . . 66
6.6 Maintenance and Servicing of Cranes . . . 66
6.7 Dredging . . . . . . . . . . . . . . . . . 68
6.8 Access . . . . . . . . . . . . . . . . . . 70
6.9 PRPA's Rights . . . . . . . . . . . . . . . 70
ARTICLE VII. EQUIPMENT; CAPITAL IMPROVEMENTS . . . . . . . . . . . . . 71
7.1 Provision . . . . . . . . . . . . . . . . . 71
7.2 Required Equipment. . . . . . . . . . . . . 72
7.3 HOLT Cranes . . . . . . . . . . . . . . . . 72
7.3A Purchase of Paceco Crane . . . . . . . . . 75
7.4 Ownership of HOLT Cranes and
Equipment . . . . . . . . . . . . . . . . 80
7.5 Heavy Lift Crane . . . . . . . . . . . . . 82
7.6 HOLT's Improvements . . . . . . . . . . . . 83
7.7 PRPA's Improvements . . . . . . . . . . . . 91
7.8 Building 2A . . . . . . . . . . . . . . . . 95
ARTICLE VIII. UTILITIES . . . . . . . . . . . . . . . . . . . . . . . . 96
8.1 Utilities . . . . . . . . . . . . . . . . . 96
- ii -
<PAGE>
ARTICLE IX. TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 96
9.1 Taxes . . . . . . . . . . . . . . . . . . . 96
9.2 Appeals . . . . . . . . . . . . . . . . . . 97
ARTICLE X. ENVIRONMENTAL MATTERS . . . . . . . . . . . . . . . . . . 97
10.1 Environmental Matters . . . . . . . . . . . 97
10.2 Compliance With Law . . . . . . . . . . . . 98
10.3 Site Contamination . . . . . . . . . . . . 100
10.4 Other Hazardous or Toxic Material . . . . 101
10.5 Disposal and Removal of Waste . . . . . . . 101
10.6 Indemnification by HOLT . . . . . . . . . 101
10.7 PRPA Responsibilities . . . . . . . . . . . 102
10.8 Inspections . . . . . . . . . . . . . . . . 103
10.9 Remedies. . . . . . . . . . . . . . . . . . 103
10.10 Survival. . . . . . . . . . . . . . . . . . 104
ARTICLE XI. ASSIGNMENT AND LICENSING . . . . . . . . . . . . . . . . 104
11.1 Assignment and Subleasing;
Transfers of Stock . . . . . . . . . . . 104
11.2 PRPA's Assignment and Successors . . . . . 109
ARTICLE XII. SIGNS AND PUBLICITY . . . . . . . . . . . . . . . . . . . 109
12.1 Signs . . . . . . . . . . . . . . . . . . . 109
12.2 Publicity . . . . . . . . . . . . . . . . . 110
ARTICLE XIII. DAMAGE TO THE TERMINAL . . . . .. . . . . . . . . . . . . 110
13.1 Damage and Destruction . . . . . . . . . . 110
ARTICLE XIV. CONDITION OF TERMINAL AND PRPA CRANES . . . . . . . . . . 111
14.1 Condition and Surrender of
Terminal . . . . . . . . . . . . . . . . 111
ARTICLE XV. WAIVER. . . . . . . . . . . . . . . . . . . . . . . . . . 113
15.1 Waivers . . . . . . . . . . . . . . . . . . 113
- iii -
<PAGE>
ARTICLE XVI. WAIVER OF CLAIMS; TERMINATION BY
REGULATORY AGENCY OR COURT DECREE . . . . . . . . . . . 114
16.1 Waiver of Claims . . . . . . . . . . . . . 114
16.2 Termination by Regulatory Agency
or Court Decree . . . . . . . . . . . . . 114
ARTICLE XVII. FORCE MAJEURE . . . . . . . . . . . . . . . . . . . . . . 115
17.1 Force Majeure . . . . . . . . . . . . . . . 115
ARTICLE XVIII. HOLT'S COVENANTS . . . . . . . . . . . . . . . . . . . . 117
18.1 HOLT's Further Covenants . . . . . . . . . 117
18.2 Conditions . . . .. . . . . . . . . . . . . 118
ARTICLE XIX. REMEDIES; ARBITRATION . . . . . . . . . . . . . . . . . . 119
19.1 PRPA's Remedies . . . . . . . . . . . . . . 119
19.2 Remedies Cumulative . . . . . . . . . . . . 124
19.3 Expedited Proceedings . . . . . . . . . . . 124
19.4 Notice and Grace Period. . . . . . . . . . 124
19.5 Arbitration . . . . . . . . . . . . . . . . 126
ARTICLE XX. CONDEMNATION. . . . . . . . . . . . . . . . . . . . . . . 129
20.1 Condemnation. . . . . . . . . . . . . . . . 129
ARTICLE XXI. RAILROADS . . . . . . . . . . . . . . . . . . . . . . . . 131
21.1 Railroad Tracks. . . . . . . . . . . . . . 131
ARTICLE XXII. EMPLOYMENT PRACTICES. . . . . . . . . . . . . . . . . . . 132
22.1 Fair Employment Practices . . . . . . . . . 132
ARTICLE XXIII. OPINION OF COUNSEL. . . . . . . . . . . . . . . . . . . . 132
23.1 Opinion of HOLT's Counsel . . . . . . . . . 132
23.2 Opinion of PRFA's Chief Counsel . . . . . . 133
- iv -
<PAGE>
ARTICLE XXIV. ADDITIONAL PROPERTY. . . . . . . . . . . . . . . . . . . 133
24.1 Delaware Avenue Parcel. . . . . . . . . . . 133
24.2 Additional Parcels. . . . . . . . . . . . . 135
ARTICLE XXV. PRPA'S RIGHT OF ACCESS TO THE TERMINAL. . . . . . . . . 146
25.1 Visitors . . . . . . . . . . . . . . . . . 146
25.2 Property and Cargo Under HOLT's
Control . . . . . . . . . . . . . . . . . 146
25.3 Utility Lines and Easements . . . . . . . . 147
25.4 Commonwealth . . . . . . . . . . . . . . . 147
ARTICLE XXVI. PUBLICKER PROPERTY . . . . . . . . . . . . . . . . . . . 148
26.1 Publicker Site . . . . . . . . . . . . . . 148
ARTICLE XXVII. REPRESENTATIONS AND WARRANTIES
OF HOLT AND PRPA . . . . . . . . . . . . . . . . . . . 148
27.1 Authorization. . . . . . . . . . . . . . . 148
27.2 Non-Conflict . . . . . . . . . . . . . . . 148
27.3 Crane Relocation . . . . . . . . . . . . . 149
ARTICLE XXVIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . 150
28.1 Notices . . . . . . . . . . . . . . . . . 150
28.2 Captions . . . . . . . . . . . . . . . . . 151
28.3 Terms Binding on Successors . . . . . . . . 151
28.4 Applicable Law . . . . . . . . . . . . . . 151
28.5 Consent to Jurisdiction,
Service and Venue . . . . . . . . . . . . 152
28.6 Limit on PRFA's Liability. . . . . . . . . 152
28.7 Certain Certificates. . . . . . . . . . . . 152
28.8 Time of Essence . . . . . . . . . . . . . . 153
28.9 Severability. . . . . . . . . . . . . . . . 153
28.10 Entire Agreement. . . . . . . . . . . . . . 154
28.11 No Third Party Beneficiaries. . . . . . . . 154
28.12 Certain Payments at End of Term . . . . . . 154
28.13 Releases. . . . . . . . . . . . . . . . . . 155
28.14 Review of Operations. . . . . . . . . . . . 156
28.15 Transfer Taxes . . . . . . . . . . . . . . 156
28.16 Refrigerated Warehouse Release. . . . . . . 156
28.17 Counterparts. . . . . . . . . . . . . . . . 156(a)
- v -
<PAGE>
SCHEDULE OF EXHIBITS:
EXHIBIT A - PACKER AVENUE MARINE TERMINAL SITE PLAN
EXHIBIT B - PLAN SHOWING THE MAIN TERMINAL AREA, THE
COMMONWEALTH AREA AND SHED C
EXHIBIT C - CONTAINER PICK RATE SCHEDULE
EXHIBIT D - COPY OF INITIAL LETTER OF CREDIT
EXHIBIT E - LIST OF MAJOR CRANE PARTS
EXHIBIT F - LOAD LIMITS
EXHIBIT G - HEAVY CRANE LIMIT
EXHIBIT H - PRPA CAPITAL IMPROVEMENTS
EXHIBIT I - HOLT CAPITAL IMPROVEMENTS
EXHIBIT J - NONDISCRIMINATION REQUIREMENTS; INTEGRITY
PROVISIONS
EXHIBIT K - LEASES AND OTHER AGREEMENTS AFFECTING THE
ADDITIONAL PARCELS
EXHIBIT L - CERTAIN TRACKAGE RIGHTS
EXHIBIT M - PLAN SHOWING THE ADDITIONAL PARCELS
EXHIBIT N - DEFERRED MAINTENANCE ITEMS
EXHIBIT 0 - CALCULATION OF BASE RENT UNDER SECTION 4.2(a)(ii)
EXHIBIT P - PAYMENT SCHEDULE REGARDING THE PACECO CRANE
- vi -
<PAGE>
DEFINITIONAL CROSS-REFERENCE SHEET
Term Section
---- -------
"Additional Parcels" 24.2
"Additional Parcel Fee" 24.2(a)(iv)
"Additional Parcels Termination Date" 24.2(b)(iii)
"Additional Pick Fee" 3.1(c)
"Additional Pick Guarantee" 3.1(c)
"Alternative Purchase Date" 7.3A(b)
"Arbitrators" 2.3(c)
"Base Compensation" 3.1(f)
"Base Rent" 3.1(a)
"Base Rent Surcharge" 3.1(i)
"Berth 6" 6.2(a)(i)
"Best Efforts" 4.7
"Breakbulk Fee" 3.1(d)
"Breakbulk Capital Improvements" 7.7(a)
"Breakbulk Guarantee" 3.1(e)
"Breakbulk Guarantee Deficiency" 3.1(e)
"Building Six Extension" Exhibit H
"Canopy Project" Exhibit I
"Capital Improvements" 7.7(a)
"City" Preamble
"Commonwealth" Preamble
"Commonwealth Area" Preamble
"Commonwealth Sublease" Preamble
"Completed" 3.1(b)
"Container Capital Tmprovement" 7.7(a)
"Container Capital Improvements Completion Date" 3.1(a)(ii)
"Container Customer" 4.3
"Container Line" 4.2(b)(ii)
"Container Pick Fee" 3.1(b)
"Container Pick Rate" 3.1(b)
"Container Pick Guarantee" 3.1(c)
"Contamination" 10.3(b)
"Cost-Plus Arrangement" 4.5
"Crane Rail Extension" Exhibit H
"Crane Retrofit" Exhibit H
"Cranes" 6.7
"Crane Pick Credit" 4.2(b)(ii)
"Delaware Avenue Parcel" 24.1
"Demolition and Paving" Exhibit H
"Development Fee" 24.2(b)(i)
"DRPA" 1.11
"DRPA Area" 1.7
"DRPA Rent" 3.1(j)
"DRPA Parcel" 1.11
"DRPA Parcel Project" Exhibit I
- vii -
<PAGE>
"Effective Date" 2.1
"Environmental Statutes" 10.2(a)
"Equipment Removal Period" 2.5(b)
"Existing Gatehouse Project" Exhibit I
"Fill Project Reimbursement Amount" 24.2(c)(ii)
"FMC" 1.6
"Gatehouse Booth Project" Exhibit I
"General Cargo" 3.1(d)
"Gloucester Terminal" 7.3(a)
"Gloucester Cranes" 7.3
"Gloucester Reefer Plugs" 7.3(c)
"Guarantee Period" 3.1(c)
"Hazardous Substances" 10.3(c)
"HOLT" Preamble
"HOLT Capital Improvements" 7.6(a)
"HOLT Cranes" 7.3(b)
"HOLT Crane Removal Period" 2.5(c)
"HOLT Management" 11.1(c)
"HOLT Proposal" 4.7
"ICTF" 21.1(b)
"Imposition" 9.1
"Interest Rate" 24.2(c)(ii)
"Initial Letter of Credit" 3.2(a)
"Lease Year" 3.1(a)
"Letter of Credit" 3.2(a)
"Main Terminal Area" Preamble
"Major Development" 7.6(e)
"Major Improvements" 24.2(d)(i)
"Master Plan" 24.2(d)(ii)
"MLWD" 6.7
"Moveable Capital Inventory" 3.4
"NJEDA" 27.2
"Paceco Crane" 7.3A
"Paceco Crane Lease" 7.3A(b)
"Paceco Crane Rent" 7.3A(b)
"PAMT" Preamble
"PASHA" 24.2(b)
"PCBs" 10.4
"Permanent Gate House" Exhibit H
"Pick" 3.1(b)
"Pick Credit" 4.2(b)(i)
"Plan" 7.4
"Portside" 6.2(a)(i)
"Portside License" Preamble
"PPC" Preamble
"PPC-HOLT Agreement" Preamble
"Preliminary Lease Term" 24.2(d)(iv)
"Proposed Master Plan" 24.2(d)(i)
"PRPA" Preamble
"PRPA Capital Improvements" 7.7(a)
"PRPA Cranes" 6.6(a)
viii
<PAGE>
"PRPA Field Representative" 1.5
"PRPA Letter of Credit" 24.2(c)(iii)
"Purchase Date" 7.3A(a)
"Purchase Price" 7.3A(a)
"Railport" 24.1
"Reefer Plugs" Exhibit H
"Refrigerated Warehouse" 6.2(a)(i)
"Remaining Purchase Price" 7.3A(b)
"Removal Periods" 2.5(d)
"Renewal Period" 2.3
"Rent" 3.1(f)
"Requesting Party" 1.9
"Required Equipment" 7.2
"Shed 1-1A Project" Exhibit I
"Shed 3A Project" Exhibit I
"Shed C" Preamble
"Shed 96" 24.2(a)(v)
"Shed 98" 24.2(a)(v)
"Shop Heaters Project" Exhibit I
"Steel" 3.1(d)
"Stock Transaction" 11.1(a)
"Striping and Signage Project" Exhibit I
"Substantially Completed" 2.3(b)
"Term" 2.2
"Terminal" Preamble
"Terminal Lighting" Exhibit H
"Third Crane Rail" Exhibit H
"Transfer" 11.1(a)
"Transferee" 11.1(a)
"VARs" 3.4
"Wharf Structure" 6.3
- ix -
<PAGE>
THIS AGREEMENT is made this 30th day of December, 1990, by and between
PHILADELPHIA REGIONAL PORT AUTHORITY ("PRPA"), a body politic and corporate and
a public authority and instrumentality of the Commonwealth of Pennsylvania, and
HOLT CARGO SYSTEMS, INC. ("HOLT"), a Delaware corporation.
WITNESSETH:
WHEREAS, the Philadelphia Port Corporation ("PPC") and HOLT entered into
that certain Lease and Operating Agreement dated March 30, 1989, filed with the
Federal Maritime Commission ("FMC") on March 31, 1989 and designated FMC
Agreement No. 224-200233, as amended by the following certain agreements filed
with the FMC: FMC Agreement Nos: 224-200233-01 and 224-200233-002, both
effective May 12, 1989; Agreement No. 224-2O0233-003, effective May 16, 1989;
Agreement No. 224-200233-004, effective June 28, 1989; and Agreement No.
224-200233-005, effective October 3, 1989; and
WHEREAS, PPC and Portside Refrigerated Services, Inc. ("Portside")
entered into a license agreement dated January 11, 1990, FMC Agreement No.
224-200-316 (the "Portside License"), with respect to a portion of PAMT, as
hereinafter defined, which license agreement shall be terminated no later than
the Effective Date hereof; and
<PAGE>
WHEREAS, by that certain Tripartite Agreement dated July 26, 1990 between
PPC, PRPA and the City of Philadelphia (the "City"), PPC assigned to PRPA, and
PRPA assumed from PPC, inter alia, certain of PPC's rights, title and interest
in, to and under the said Lease and Operating Agreement and the Portside License
from and after July 26, 1990, which assignment and assumption was confirmed by
that certain Assignment Agreement between PPC and PRPA also dated July 26, 1990,
filed with the FMC on July 30, 1990 and designated FMC Agreement No.
224-200233-006, effective July 30, 1990 (the Lease and Operating Agreement, as
so amended and assigned prior to the date of this amendment and restatement is
hereinafter referred to as the "PPC-Holt Agreement"); and
WHEREAS, by that certain deed dated July 26, 1990 the City conveyed to
PRPA all of the City's right, title and interest in and to those certain port
facilities known as the Packer Avenue Marine Terminal ("PAMT") more fully
described on Exhibit A, attached hereto and made a part hereof; and
WHEREAS, PRPA owns in fee a certain portion of the PAMT (the "Main
Terminal Area") as shown on Exhibit B, and PRPA and the Commonwealth of
Pennsylvania (the "Commonwealth") own in fee as tenants in common a portion of
PAMT described as part of Exhibit B (the "Commonwealth Area") (PRPA's and the
Commonwealth's interest being 516/1000ths and 484/1000ths respectively); and
2
<PAGE>
WHEREAS, PRPA and the Commonwealth own in fee as tenants in common a
portion of the PAMT commonly known as Shed C, as shown on Exhibit B ("Shed C")
(PRPA's and the Commonwealth's interest being 32/1000ths and 968/1000ths
respectively);
WHEREAS, the Commonwealth, pursuant to that certain Sublease Agreement
dated April 1, 1977, subleased its interest in PAMT to the City (the
"Commonwealth Sublease"); and
WHEREAS, by that certain Assignment Agreement dated July 26, 1990 the
City assigned to PRPA, and PRPA assumed from the City, all of the City's right,
title and interest in, to and under the Commonwealth Sublease; and
WHEREAS, PRPA is authorized to enter into leases, operating agreements
and other agreements with respect to the PAMT and to amend and modify existing
leases, operating agreements and other agreements with respect to the PAMT; and
WHEREAS, PRPA and HOLT desire to amend and restate the PPC-Holt
Agreement.
NOW, THEREFORE, in consideration of the mutual terms, covenants,
provisions and conditions herein set forth, and intending to be legally bound
hereby, the parties hereto agree as follows:
3
<PAGE>
ARTICLE I
LEASE AND USE OF TERMINAL
1.1 Grant. PRPA hereby leases to HOLT, and HOLT hereby leases from PRPA,
the entire PAMT (consisting of the Main Terminal Area, the Commonwealth Area and
Shed C), the Additional Parcels (as hereinafter defined) (the Main Terminal
Area, the Commonwealth Area, Shed C and the Additional Parcels are hereinafter
collectively referred to as the "Terminal") and the PRPA Cranes (as hereinafter
defined), all for the term and on the conditions set forth herein.
1.2 Appointment. It is the intent of the parties that HOLT, subject to
the terms and conditions hereof, shall be the exclusive public marine terminal
operator at the Terminal, which shall be operated and used by HOLT in a
competent, efficient and first-class manner, to accommodate shipping of
containerized, bulk and breakbulk cargo through the Terminal by water, rail and
truck.
1.3 Independent Contractor. HOLT shall be an independent contractor in
the performance of its obligations under this Agreement. Any employees of HOLT
who perform terminal operations and/or stevedoring services or other services
shall be the employees of HOLT solely, and PRPA shall not be a joint employer of
any of HOLT's employees. In addition, any employees of any other terminal
operator and/or stevedoring company contracted by HOLT to perform any services
at the Terminal shall
4
<PAGE>
not be the employees of PRPA, and PRPA shall in no way be considered a joint
employer of such employees. To that end, HOLT shall have the exclusive right and
duty to supervise and direct the day-to-day activities of its employees,
including without limitation, the responsibility to determine and pay their
wages and any benefits, to fulfill all applicable requirements under any
collective bargaining agreements and to pay all federal, state and local taxes
or contributions imposed or required under unemployment, workers' compensation,
social security, wage and income tax laws with respect to them. There shall be
no direct or indirect participation by PRPA in any employee relations matter
concerning those persons employed to perform terminal or stevedoring operations.
Nothing herein shall be deemed to prohibit PRPA from participating in
discussions or negotiations between labor and management in the interest of
fostering labor relations.
1.4 Use.
(a) The primary use of the Terminal and to the extent applicable, the
Cranes, as hereinafter defined, shall be as a marine terminal, which is hereby
defined as a facility for: (1) the docking and mooring of vessels; (2) the
receipt, assembling, distributing, moving, loading and unloading of merchandise,
goods, and cargo in containers, bulk and breakbulk into and from such vessels;
and (3) uses incidental thereto. Other permitted uses shall be the providing of
berth space and/or terminal services to vessels of all kinds; the consolidating,
5
<PAGE>
stuffing and stripping, storing and warehousing of merchandise, goods and cargo;
transferring merchandise, goods and cargo to, from and between cargo vessels of
all kinds, trucks and railcars; ancillary office activities; and marine
activities similar to the foregoing.
(b) HOLT shall not use or permit the Terminal to be used in whole or in
part during the Term of this Agreement for any purpose other than as hereinabove
set forth, except with the prior written consent of PRPA. HOLT expressly agrees
that it shall not use the Terminal for any use in violation of any present or
future laws, orders, ordinances, judgments, decrees, general rules, regulations
or the like of any public or federal, state or local governmental authority
(other than PRPA) at any time applicable thereto, including but not limited to,
the Commonwealth and the City, and including but not limited to laws, rules,
regulations, statutes and ordinances relating to the public health, safety or
welfare, or use of the Terminal. HOLT hereby expressly agrees at all times
during the Term of this Agreement, at its own cost except as expressly provided
in this Agreement, to operate the Terminal in compliance with any and all
present and future laws, ordinances and general rules or regulations of any
public or governmental authority (other than PRPA) now or at any time in force
during the Term of this Agreement, and to pay and save PRPA harmless from all
penalties, fines, damages or costs resulting from HOLT's failure to do so.
6
<PAGE>
1.5 PRPA Field Representative. PRPA shall have the right to have present
at the Terminal at all times a field representative (the "PRPA Field
Representative"). At no cost or expense to PRPA, HOLT shall provide the PRPA
Field Representative with sufficient and secure office space (acceptable to
PRPA) and access to restrooms at the Terminal to carry out his or her
responsibilities. HOLT shall, at its sole cost and expense, provide in-terminal
telephone service to the PRPA Field Representative. PRPA shall have the right to
install and operate a telephone system and line upon the Terminal, at PRPA's
sole cost and expense, for use by PRPA and the PRPA Field Representative. PRPA
shall be responsible for the maintenance and repair of such telephone system and
line.
1.6 Operations to Maximize Use. HOLT agrees to conduct its operations at
the Terminal at all times in such a commercially reasonable way as to maximize
the use of the Terminal.
1.7 Title: Quiet Enjoyment. PRPA represents and warrants that: the
Commonwealth Sublease has not been modified or amended on the date hereof, and
that a true and correct copy of the Commonwealth Sublease has been delivered to
HOLT prior to the date hereof. PRPA represents and warrants that, subject only
to the matters referred to in this Section 1.7 and Section 24.2, it has good and
marketable fee title to the Main Terminal Area (except that certain area owned
by DRPA (as hereinafter defined) as shown on Exhibit A (the "DRPA Area")), to
its 516/1000ths
7
<PAGE>
interest in the Commonwealth Area, to its 32/1000ths fee interest in Shed C, to
all fixtures and other property located at PAMT on the date hereof, including
the PRPA Cranes (but excluding the Holt Cranes, as hereinafter defined, and
further excluding all other container-handling equipment such as tractors,
forklifts, chassis and top loaders owned by HOLT), to the Additional Parcels
(except, with respect to all the foregoing, to the land extending from the low
water mark to the pier head line of the Delaware River), and good and marketable
title to its leasehold interest in the Commonwealth Area and Shed C. PRPA
covenants that so long as HOLT observes and performs all of the covenants, terms
and conditions to be observed and performed by HOLT under this Agreement, HOLT
shall, subject to the matters referred to in this Section 1.7 and Section 24.2,
peaceably and quietly hold and enjoy the Terminal pursuant to this Agreement for
the term hereby demised. This Agreement and PRPA's interest in the Terminal are
subject to (i) easements, agreements and restrictions of record; (ii) easements
visible upon the ground; (iii) that certain Lease Agreement between PRPA, as
lessor, and the Commonwealth, as lessee, and that certain Agreement of Sublease
between PRPA, as sublessee, and the Commonwealth, as sublessor, both dated as of
July 15, 1990 (collectively, the "Commonwealth Leases"); (iv) trackage rights of
railroads as set forth on Exhibit L; (v) the leases and other agreements set
forth on Exhibit K affecting portions of the Additional Parcels; (vi) that
certain option agreement between PRPA and the City of Philadelphia dated
8
<PAGE>
July 26, 1990, a copy of which has been delivered to HOLT; (vii) existing
riparian and navigational rights of the United States, the Commonwealth and the
public; and (viii) rights-of-way for public streets. PRPA represents and
warrants that the matters set forth in Subsections (i) through (iv) and (vi) of
the preceding sentence will not unreasonably interfere with the use or enjoyment
of the Terminal as a marine terminal as contemplated by this Agreement, that the
matters set forth in Subsection (v) of the preceding sentence will not
unreasonably interfere with the use or enjoyment of portions of the Terminal
other than the Additional Parcels as a marine terminal as contemplated by this
Agreement, and that the matters set forth in Subsection (viii) of the preceding
sentence will not unreasonably interfere with the use or enjoyment of the
Terminal as a marine terminal as the contemplated by this Agreement except to
the extent that streets shown on the City Plan and located within the Terminal
are not vacated.
1.8 Non-Disturbance. The Commonwealth, by joining in this Agreement
for the limited purposes set forth on the signature page hereof, as part fee
owner of the Commonwealth Area and Shed C, agrees that, notwithstanding any
breach of default by PRPA under the Commonwealth Sublease or the Commonwealth
Leases, or any termination or expiration of the Commonwealth Sublease or the
Commonwealth Leases prior to the end of the Term hereof, provided that HOLT is
not in default hereunder, the Commonwealth and its successors or assigns, shall
not disturb HOLT's
9
<PAGE>
possession of the Terminal pursuant to the covenants, terms and conditions of
this Agreement.
1.9 Estoppel Certificates. Each of PRPA and HOLT, at any time from time
to time upon the written request of the other of them (the "Requesting Party"),
shall within fifteen (15) days of the date of such written request, execute and
deliver to the Requesting Party a written statement:
(a) confirming the commencement and expiration dates of this Agreement;
(b) certifying that this Agreement is in full force and effect and has
not been modified, assigned, supplemented or amended except by such writings as
shall be stated;
(c) certifying that all conditions and agreements under this Agreement to
be satisfied or performed by the Requesting Party have been satisfied and
performed except as shall be stated;
(d) certifying that the Requesting Party is not in breach or default
under this Agreement and there are no defenses or offsets against the
enforcement of this Agreement by the Requesting Party except as shall be stated;
(e) stating the date through which the Base Compensation, as hereinafter
defined, and all other sums payable hereunder have been paid; and
(f) providing any other information which the Requesting Party shall
reasonably request.
10
<PAGE>
1.10 Zoning and Other Permits. PRPA represents and warrants that the use
of the Terminal as a marine terminal as contemplated by this Agreement is a
permitted use of the Terminal pursuant to the Philadelphia Zoning Code. PRPA
makes no other warranty or representation with respect to the use of the
Terminal except as expressly stated herein.
1.11 DRPA Owned Areas.
(a) If the Delaware River Port Authority ("DRPA") leases the area
identified as the "DRPA Parcel" on Exhibit A to PRPA, PRPA shall, by amendment
to this Agreement, sublease the DRPA Parcel to HOLT for the shorter of the term
of the DRPA-PRPA lease and the Term of this Agreement, and the DRPA Parcel shall
be deemed a part of the Terminal, subject to the following terms and conditions
and upon such other terms and conditions as the parties may agree:
(i) HOLT shall assume all of the obligations, liabilities, terms,
conditions and covenants, including without limitation the payment of any rent
and other charges, of PRPA under the DRPA-PRPA lease. It is the intention of the
parties that such sublease shall be triple net. To that end HOLT shall also
agree to provide directly to DRPA any indemnifications required under the
DRPA-PRPA lease, and to name DRPA as an additional insured on any insurance
policy required to be maintained under the DRPA-PRPA lease.
(ii) HOLT shall enter into an indemnification agreement with PRPA
pursuant to which HOLT agrees to indemnify
<PAGE>
PRPA with respect to any liability that it may incur under the DRPA-PRPA lease
and with respect to the DRPA Parcel;
(iii) PRPA shall not be deemed to have made any warranties or
representations of any sort with respect to the DRPA Parcel, and,
notwithstanding anything to the contrary contained herein, PRPA shall not have
any maintenance, repair or other obligations of any sort hereunder with respect
to the DRPA Parcel or any improvements that may be made thereon except for the
maintenance and repair of those items for which it is responsible with respect
to the Terminal pursuant to Section 6.1. HOLT shall have an opportunity to
comment on the terms and conditions of the proposed DRPA-PRPA lease and, to the
extent deemed necessary by PRPA, HOLT shall participate with PRPA in lease
negotiations with DRPA. PRPA shall not enter into a lease with DRPA for the DRPA
Parcel prior to HOLT's written approval of the terms and conditions thereof.
(b) PRPA shall use its best efforts to cause DRPA to enter into a written
agreement pursuant to which DRPA grants to PRPA, its lessees and their
respective agents, employees and invitees, the right to use the DRPA Area for a
period not less than the Term of this Agreement. HOLT's Base Compensation shall
not be increased on account of such agreement.
12
<PAGE>
ARTICLE II
EFFECTIVE DATE; TERM
2.1 Effective Date. This Agreement shall become effective on the last
to occur of (i) January 1, 1991; (ii) the date on which an executed copy of this
Agreement is submitted to the FMC for filing in accordance with the Shipping Act
of 1984 (hereinafter the "Effective Date"); (iii) the date on which the Attorney
General of the Commonwealth of Pennsylvania approves this Agreement; and (iv)
the date on which the Commonwealth joins herein for the limited purposes set
forth on the joinder attached to this Agreement. PRPA shall cause this Agreement
to be submitted to the FMC for filing promptly following execution. The parties
shall execute and deliver to one another a confirmation of the Effective Date
promptly following the Effective Date.
2.2 Term. This Agreement shall commence on the Effective Date and shall
end, subject to Section 2.3 hereof, ten (10) years after the Effective Date (the
"Term"), unless sooner terminated as hereinafter provided.
2.3 Renewal Options.
(a) HOLT shall have the option to extend the Term of this Agreement
for two (2) consecutive additional periods of ten (10) years each (each of which
periods is hereinafter
13
<PAGE>
referred to as a "Renewal Period"), provided that HOLT is not in default under
this Agreement either at the time of exercising such option or at the
commencement of the respective Renewal Period. HOLT shall exercise the aforesaid
options to renew, in each instance, by giving PRPA written notice at least 180
days prior to the end of the Term or the last day of the Renewal Period then in
effect, as applicable. Each Renewal Period shall begin on the day immediately
following either the end of the Term or the last day of the prior Renewal
Period, as applicable. In the event HOLT shall fail to exercise its option with
regard to any Renewal Period in a timely manner, HOLT's rights hereunder with
regard to such Renewal Period and any subsequent Renewal Period shall
immediately and irrevocably terminate. The terms and conditions applicable in
each Renewal Period shall be those specified for the Term of this Agreement,
except for the compensation due from HOLT to PRPA for such Renewal Period and
the amount of the Letter of Credit (as hereinafter defined) required to be
delivered by HOLT, which items shall be established as set forth in subsection
(c) below, and except that upon the expiration of the second Renewal Period,
HOLT shall have no further right to extend the Term unless HOLT has been granted
additional renewal rights as set forth in Subsection 2.3(b).
(b) At such time, if any, during the Term (including any Renewal
Period) that the Major Development (as hereinafter defined) is substantially
completed by HOLT in accordance with plans therefor approved by PRPA in
accordance
14
<PAGE>
with Sections 7.6 and 24.2 hereof, then HOLT shall be granted two (2) additional
options to renew for a period of ten years each (provided HOLT is not in default
under this Agreement either at the time of exercising such option or at the
commencement of the respective Renewal Period), each of which periods shall also
be referred to as a "Renewal Period" hereunder. HOLT shall exercise the
aforesaid options to renew, if at all, in each instance by giving PRPA written
notice at least 180 days prior to the end of the last day of the Renewal Period
then in effect. Each Renewal Period shall begin on the day immediately following
the last day of the prior Renewal Period. In the event HOLT shall fail to
exercise its option with regard to any Renewal Period in a timely manner, HOLT's
rights hereunder with regard to such Renewal Period and any subsequent Renewal
Periods shall immediately and irrevocably terminate. The terms and conditions
applicable in each Renewal Period shall be those specified for the Term of this
Agreement, except for the compensation due from Holt to PRPA for such Renewal
Period and the amount of the Security Deposit and the Letter of Credit required
to be delivered by HOLT, which items shall be established as set forth in
Subsection (c) below, and except that upon expiration of the final Renewal
Period, Holt shall have no further right to extend the Term. For the purposes of
this Section 2.2.43(b) and Section 24.2, the Major Development shall be deemed
"substantially completed" upon the first to occur of the completion of the
construction or work in accordance with the plans therefor of 80%
15
<PAGE>
of the Major Improvements (as hereinafter defined), subject only to minor punch
list items which can be completed without unreasonably interfering with HOLT's
use of such improvements, or the commencement of HOLT's use of such improvements
for their intended purpose without physical impediments significantly reducing
potential volume or increasing costs compared to those that will obtain upon
final completion. In the event that HOLT and PRPA fail to agree upon when a
Major Development is substantially completed, the issue shall, at the request of
either party, be determined by the Arbitrators (as hereinafter defined), whose
decision shall be final and binding and, if necessary, may be enforced by
appropriate judicial proceedings.
(c) HOLT and PRPA shall negotiate in good faith the compensation to
be paid by HOLT to PRPA with respect to a Renewal Period and the amount of the
Security Deposit and the Letter of Credit to be delivered by HOLT prior to the
commencement of such Renewal Period. In the event that HOLT and PRPA do not
reach agreement on such matters at least ninety (90) days prior to the last day
of the Term or the Renewal Period during which the option to renew was
exercised, then the compensation due from HOLT to PRPA for such Renewal Period
and the amount of the Letter of Credit and the Security Deposit shall be
determined by the Arbitrators. The Arbitrators shall base their decision upon
such factors as they deem commercially reasonable, including but not limited to
rent being charged and security being required for comparable facilities located
in the
16
<PAGE>
Port of Philadelphia, and in other ports on the east coast of the United States
of America, HOLT's costs incurred in providing services at the Terminal, PRPA's
operational and capital costs (including capital funds of the Commonwealth)
related to the Terminal, the fair market rental value of the Terminal if it were
available for lease to other interested parties, and HOLT's costs incurred in
connection with non-moveable capital improvements to and (provided HOLT submits
the Moveable Capital Inventories as required by Section 3.4 hereof) moveable
capital improvements at the Terminal. The Arbitrators shall request such
information as they deem necessary to make their determination including without
limitation the accumulated depreciation in respect to the Moveable Capital
Inventories. Regardless of the fill or other improvements that HOLT may make to
the Additional Parcels, the Arbitrators shall not reduce below zero either the
Development Fee (as hereinafter defined) or the Additional Parcel Fee (as
hereinafter defined), if applicable, with respect to the Additional Parcels, nor
require any payment to HOLT by PRPA on account of such fill or other
improvements. In the event HOLT has not received approval of a Master Plan (as
hereinafter defined), then the Arbitrators, in determining the compensation for
the Additional Parcels, may consider, among other factors, the possibility that
HOLT may not enjoy possession of the Additional Parcels for the full Renewal
Period then under consideration. In determining the compensation for the
Additional Parcels, the Arbitrators shall value the Additional
17
<PAGE>
Parcels independently from the remainder of the Terminal. If the Arbitrators
have not rendered their decision by the commencement of the applicable Renewal
Period, HOLT shall continue to pay compensation at the rates applicable during
the Lease Year preceding such Renewal Period and the amount of the Letter of
Credit shall remain at the amount for such preceding year until the Arbitrators
have rendered their decision, and, within forty-five (45) days following such
decision, HOLT shall pay to PRPA, or PRPA shall refund to HOLT, as the case may
be, the amount by which compensation for the applicable Renewal Period has been
underpaid or overpaid, and HOLT shall deliver the Letter of Credit in the amount
determined by the Arbitrators.
(d) In the event HOLT exercises a renewal option or options
hereunder, "Term" as used in this Agreement shall be deemed to include such
Renewal Period(s) unless the sense of this Agreement requires otherwise. The
parties hereto shall undertake, prior to the commencement of any Renewal Period,
to file with the FMC an amendment extending this Agreement for such Renewal
Period.
2.4 Termination. This Agreement is subject to the termination rights
granted hereunder to PRPA and HOLT. No termination shall be effective until
notice thereof has been filed with the FMC.
2.5 Surrender of Possession; Holdover.
(a) HOLT shall peaceably deliver up and surrender possession of the
Terminal to PRPA at the expiration or
18
<PAGE>
termination of this Agreement. Except as otherwise provided in Subsections
2.5(b) and (c), HOLT shall not holdover in all or any part of the Terminal after
termination or expiration of this Agreement without first obtaining the written
approval of PRPA, which PRPA shall have no obligation whatsoever to grant. Any
such holdover shall be deemed an extension of this Agreement on a month-to-month
basis upon the same terms and conditions of this Agreement, except that HOLT
shall pay to PRPA during each month of the holdover period an amount equal to
the greater of (i) one-twelfth (1/12) of one hundred fifty percent (150%) of the
Base Compensation, as hereinafter defined, payable for the twelve (12) months
immediately preceding the inception of the holdover period, or (ii) an amount
equal to the Base Compensation determined pursuant to the terms hereof with
respect to operations during the holdover period. Nothing in this Section 2.5
shall be deemed to give HOLT any right to holdover or to prevent PRPA from
evicting HOLT or pursuing other remedies in the event of such holdover.
(b) Notwithstanding anything to the contrary contained herein, upon
the expiration or termination of this Agreement HOLT shall be permitted, at its
risk, to leave HOLT's equipment and cargo upon the Terminal at such area as PRPA
reasonably determines (taking into consideration the reasonable needs for
security), for a period not to exceed thirty (30) days (the "Equipment Removal
Period"). PRPA shall at least twenty (20) days prior to the expiration or, if
appropriate, the
19
<PAGE>
termination of this Agreement notify HOLT of such designated areas. HOLT, prior
to the expiration or termination of this Agreement, shall move, at its sole cost
and expense, all of its equipment and cargo to such designated area. HOLT shall
be permitted access to those areas of the Terminal designated by PRPA at
reasonable times and upon reasonable notice to remove such equipment and cargo
during the Equipment Removal Period. During the Equipment Removal Period, PRPA
shall be entitled to receive rent at a rate of ten cents ($0.10) per square foot
per month for such area designated for cargo, and HOLT shall not be required to
pay any holdover payment or charge for the storage of such equipment.
(c) Notwithstanding anything to the contrary contained herein, in
the event PRPA does not purchase all of the HOLT Cranes upon the expiration or
termination of this Agreement, the HOLT Crane(s) not purchased by PRPA shall
not be used for operations of the Terminal following such termination or
expiration, and HOLT shall be permitted to leave upon the Terminal at a location
on the crane rail to be determined solely by PRPA, for a period not to exceed
one hundred fifty (150) days following the expiration or termination of this
Agreement (the "HOLT Crane Removal Period"), the HOLT Crane(s) not purchased by
PRPA. There shall be no Base Compensation, holdover payments or other charges
due from HOLT on account of the HOLT Cranes during the HOLT Crane Removal
Period. HOLT and its contractors shall be permitted access to the Terminal in
accordance with the Plan, as
20
<PAGE>
hereinafter defined, to remove and dismantle such HOLT Crane(s) during the HOLT
Crane Removal Period. If any such services are requested by HOLT, HOLT shall pay
to PRPA all of PRPA's reasonable incremental out of pocket costs associated with
or caused by such removal or dismantling such as, by way of example only,
utility, security and labor costs. HOLT shall, at its expense, restore the
Terminal and the crane rails to their condition prior to such removal.
(d) The Equipment Removal Period and the HOLT Crane Removal Period
are hereinafter occasionally referred to collectively as the "Removal Periods."
During the Equipment Removal Period, and any subsequent holdover period, HOLT
shall cause to be insured as set forth in Section 5.1(b) all of HOLT's equipment
and cargo which remains on the Terminal beyond the expiration or termination of
this Agreement. During the HOLT Crane Removal Period, and any subsequent
holdover period, HOLT shall keep the HOLT Cranes which are not purchased by PRPA
insured from "all risks" of direct physical loss on a replacement cost basis. In
addition, during the Removal Periods, and any subsequent holdover period: HOLT
shall continuously keep in effect the insurance set forth in Sections 5.2
through 5.6; HOLT's indemnification obligation under Section 5.11(a) shall
continue in full force and effect (subject to Sections 5.11(c) and (d)); HOLT's
representations, warranties, covenants and indemnification obligations in
Sections 6.2(a)(ii), 10.1, 10.2, in the last sentence of Section 10.3(a),
Sections 10.4, 10.5 (to
21
<PAGE>
the extent generated by HOLT), 10.6 and 24.2(a)(ii) shall continue in full force
and effect; and all of PRPA's remedies in Sections 10.9 and 19.1 through 19.3
shall continue in full force and effect. HOLT shall further comply with the
provisions set forth in Section 7.4 regarding the removal of the HOLT Cranes.
(e) If HOLT fails to remove HOLT's equipment and cargo by the end
of the Equipment Removal Period, or to remove the HOLT Crane(s) by the end of
the HOLT Crane Removal Period, then PRPA shall give HOLT written notice of such
failure. If HOLT fails to remove HOLT's equipment and cargo or the HOLT Cranes
within 30 days after such notice, then PRPA shall have the right to remove the
same to a reasonable location off the Terminal, in which event HOLT shall pay to
PRPA on demand all moving and storage costs incurred by PRPA. Following such
removal and notification to HOLT of the location to which such items were
removed, PRPA shall have no obligations whatsoever with respect to such items.
ARTICLE III
COMPENSATION
3.1 Base Compensation. As consideration to PRPA for HOLT's use of the
Terminal and the PRPA Cranes, and for the benefits specified herein, HOLT shall
during the Term hereof pay to PRPA in United States Dollars, on the fifteenth
day of each
22
<PAGE>
month, without prior demand, set-off, or delay (but after having deducted any
credits specifically authorized by this Agreement in the amounts and at the
times so provided), at the offices of PRPA as set forth in Section 28.1 hereof
or at such other place as PRPA may from time to time direct, compensation as
follows:
(a) Base Rent. (i) Commencing on the Effective Date and continuing
thereafter until the expiration of the Term, an annual base rent (the "Base
Rent"), in advance, in the amount set forth below in Schedule I for each
respective Lease Year, as hereinafter defined. The Base Rent shall be due and
payable during each respective Lease Year in twelve equal monthly installments
as set forth below in Schedule I. If the Effective Date is a day other than the
15th of a calendar month, HOLT shall pay to PRPA on or before the Effective Date
a pro rata portion of the Base Rent. If the last month of the Term ends on a day
other than the 14th of a calendar month, Base Rent for the last month shall be
prorated on a per diem basis.
SCHEDULE I
LEASE YEAR ANNUAL BASE RENT MONTHLY INSTALLMENT
---------- ---------------- -------------------
91 1 $ 400,000 $ 33,333.33
92 2 $ 425,000 $ 35,416.67
93 3 $ 750,000 $ 62,500.33
94 4 $ 825,000 $ 68,750.33
95 5 $1,025,000 $ 85,416.67
96 6 $1,150,000 $ 95,833.33
97 7 $1,300,000 $108,333.33
98 8 $1,370,000 $114,116.67
99 9 $1,425,000 $118,750.00
2000 10 $1,445,000 $120,416.67
23
<PAGE>
A "Lease Year" as used in this Agreement shall mean a one year period, the first
of which shall commence on the Effective Date.
(ii) Notwithstanding anything to the contrary contained in this
Section 3.1(a), in the event that the Container Capital Improvements (as
defined, in Section 7.7(a)) are not completed (as defined in 3.1(b)) or the
repairs set forth on Exhibit N are not completed on or before the first day of
the third Lease Year, then, as HOLT's sole remedy (provided that the failure to
complete the Container Capital Improvements by such date is not due to PRPA's
failure to proceed with due diligence to meet the respective target completion
dates for each Container Capital Improvement as set forth in Exhibit H), the
Base Rent shall remain at and be $425,000 until the earlier of the (A) date upon
which the last Container Capital Improvement to be completed is completed and
the repairs set forth on Exhibit N have been completed (the "Container Capital
Improvements Completion Date"), and (B) the first day of the fifth Lease Year,
when the Base Rent shall be increased to $525,000 and shall remain at such
amount until the Container Capital Improvements Completion Date. Notwithstanding
Schedule I, the Base Rent shall be determined as follows: (x) in the event the
Container Capital Improvements Completion Date occurs during the third Lease
Year, the Base Rent due and payable for the period from the Container Capital
Improvements Completion Date to the end of the third Lease Year shall be
pro-rated on a per diem basis at the amount for the
24
<PAGE>
third Lease Year as set forth on Schedule I, and thereafter the Base Rent shall
increase on each anniversary of the Effective Date to the amount set forth on
Schedule I for the next Lease Year; (y) in the event the Container Capital
Improvements Completion Date occurs during the fourth Lease Year, the Base Rent
due and payable for the period from the Container Capital Improvements
Completion Date to the end of the fourth Lease Year shall be prorated on a per
diem basis at the amount for the third Lease Year as set forth in Schedule I,
and thereafter the Base Rent shall increase on the next anniversary of the
Effective Date to the amount set forth on Schedule II for the fourth Lease Year
and thereafter on each anniversary of the Effective Date to the amount set forth
on Schedule II for the next Lease year; and (z) in the event the Container
Capital Improvements Completion Date occurs on or after the first day of the
fifth Lease Year, the Base Rent due and payable for the period from the
Container Capital Improvements Completion Date to the end of the Lease Year in
which such date occurs shall be prorated on a per diem basis at the amount for
Lease Year #3 as set forth on Schedule II, and thereafter the Base Rent shall
increase on the next anniversary of the Effective Date to the amount set forth
on Schedule II for the fourth Lease Year and thereafter on each anniversary of
the Effective Date to the amount set forth on Schedule II for the next Lease
Year.
25
<PAGE>
SCHEDULE II
LEASE YEAR ANNUAL BASE RENT MONTHLY INSTALLMENT
---------- ---------------- -------------------
1 N/A N/A
2 N/A N/A
3 $ 850,000 $ 70,833.33
4 $ 925,000 $ 77,083.33
5 $1,025,000 $ 85,416.67
6 $1,150,000 $ 95,833.33
7 $1,300,000 $108,333.33
8 $1,370,000 $114,116.67
9 $1,425,000 $118,750.00
10 $1,445,000 $120,416.67
(b) Container Pick Fees. A container pick fee (the "Container Pick
Fee") equal to the product of the applicable container pick rate ("Container
Pick Rate") as set forth on Exhibit C, attached hereto and made a part hereof,
multiplied by the number of moves of a container (loaded or unloaded) onto or
off any and all vessels, excluding restows, which occurred at the Terminal
during the preceding month (each such move is hereinafter referred to as a
"pick"). No Container Pick Fee shall be due or payable by HOLT to PRPA until the
Container Capital Improvements are completed. For the purposes of Section
3.1(a), this Section 3.1(b), Section 3.1(c), Section 6.2(a) and Section 7.3(a),
the term "completed" shall mean the earlier of completion of the construction,
demolition, renovation or other work, in accordance with the plans therefor,
subject only to minor punch list items which can be completed without
unreasonably interfering with HOLT's use and enjoyment of such
26
<PAGE>
improvements, or the commencement of HOLT's use of such improvements for their
intended purpose without physical impediments significantly reducing potential
volume or increasing costs compared to those that will obtain upon final
completion. In the event that HOLT and PRPA fail to agree upon when the
Container Capital Improvements are completed, the issue shall, at the request of
either party, be determined by the Arbitrators, whose decision shall be final
and binding and, if necessary, may be enforced by appropriate judicial
proceedings.
(c) Container Pick Guarantee. Commencing on the Container Capital
Improvements Completion Date and continuing thereafter during the Term, HOLT
guarantees to PRPA that HOLT shall handle at the Terminal 225,000 picks (the
"Container Pick Guarantee") during each consecutive thirty-six (36) month period
during the Term (the "Guarantee Period"), the first of which periods shall
commence on the Container Capital Improvements Completion Date, with subsequent
periods commencing every three years thereafter. In the event HOLT fails to meet
the Container Pick Guarantee during any Guarantee Period, HOLT shall pay to
PRPA within thirty (30) days of the end of such Guarantee Period a fee equal to
the sum of Ten Dollars ($10.00) multiplied by the difference between 225,000 and
the number of picks handled by HOLT during such Guarantee Period (the
"Additional Pick Fee"). PRPA's sole remedy in the event that HOLT fails to meet
the Container Pick Guarantee shall be its receipt of the Additional Pick Fee.
27
<PAGE>
(d) Breakbulk Cargo Fees. A breakbulk cargo fee (the "Breakbulk Fee")
equal to the sum of (x) the product of $1.50 multiplied by the number of tons of
temperature controlled breakbulk cargo moved onto or off any and all vessels at
the Terminal during the preceding month, plus (y) the product of $.20 multiplied
by the number of tons of breakbulk steel, iron, aluminum, zinc, copper and other
metal ingots, sheets, rods, bars, coils and similar products ("Steel") moved
onto or off any and all vessels at the Terminal during the preceding month, plus
(z) the product of $0.70 multiplied by the number of tons of all other types of
breakbulk cargo ("General Cargo") moved onto or off any and all vessels at the
Terminal during the preceding month. At such time, if any, that the Breakbulk
Fee paid by HOLT with respect to a Lease Year equals the Breakbulk Guarantee (as
herein defined), then any additional Breakbulk Fee due with respect to such
Lease Year shall be determined based solely upon the tonnage of temperature
controlled breakbulk cargo, with no additional Breakbulk Fee with respect to
such Lease Year based upon Steel or General Cargo.
(e) Breakbulk Cargo Guarantee. Commencing on the Effective Date and
continuing thereafter during the Term, HOLT guarantees to PRPA that HOLT shall
handle at the Terminal during each Lease Year an aggregate amount of breakbulk
cargo that will generate Two Hundred Fifty Thousand Dollars ($250,000) in
Breakbulk Fees (the "Breakbulk Guarantee"). In the event HOLT fails to meet the
Breakbulk Guarantee during any Lease Year, HOLT
28
<PAGE>
shall pay to PRPA within thirty (30) days of the end of such Lease year a fee
(the "Breakbulk Guarantee Deficiency") equal to the difference between Two
Hundred Fifty Thousand Dollars ($250,000) and the total amount of Breakbulk Fees
paid by HOLT to PRPA with respect to such Lease Year. PRPA's sole remedy in the
event that HOLT fails to meet the Breakbulk Guarantee shall be its receipt of
the Breakbulk Guarantee Deficiency. To the extent that HOLT fails to meet the
Container Pick Guarantee and HOLT exceeds the level of the Breakbulk Guarantee
over the three year period corresponding to that Guarantee Period, the Breakbulk
Fees paid by HOLT to PRPA in excess of the Breakbulk Guarantee during such three
year period corresponding to the Guarantee Period shall be applied by PRPA
against the shortfall in the Container Pick Guarantee and toward HOLT's
obligations in regard thereto.
(f) Base Compensation Defined. The fees, charges and compensation
payable by HOLT to PRPA under this Agreement, including without limitation the
Base Rent, the Container Pick Fee, the Breakbulk Fee, the Base Rent Surcharge
(as hereinafter defined), the DRPA Rent (as hereinafter defined), the Additional
Pick Fee, the Breakbulk Guarantee Deficiency, the Development Fee (as
hereinafter defined) and the Additional Parcel Fee (as hereinafter defined) are
hereinafter collectively referred to as "Base Compensation." All amounts payable
as Base Compensation and all other sums payable by HOLT hereunder shall be
deemed to be "rent," and all remedies available at law or in equity for the
collection of rent will be available to PRPA to collect the same.
29
<PAGE>
(g) Proration. If the last Guarantee Period of the Term (including all
exercised Renewal Periods) is less than a full thirty-six (36) month period, the
Container Pick Guarantee for such Guarantee Period shall be prorated on a per
diem basis. On the fifteenth day of the first month after the end of the Term,
HOLT shall pay to PRPA the balance of the Base Compensation due to PRPA with
respect to the last Lease Year of the Term.
(h) Bulk Cargo. Prior to any bulk cargos being handled at the Terminal
HOLT and PRPA shall agree upon the method of handling the bulk cargo and the
terms and conditions with respect thereto.
(i) Base Rent Surcharge. Commencing on the first day of the seventh
Lease Year, and each year thereafter during the initial Term, Holt shall pay a
Base Rent Surcharge of $100,000 per year (the "Base Rent Surcharge"). The Base
Rent Surcharge shall be due and payable during each of such Lease Years in
advance in twelve equal monthly installments of $8,333.33 each. If the first day
of the seventh Lease Year is a day other than 15th day of the calendar month,
HOLT shall pay to PRPA on or before the first day of seventh Lease Year a pro
rata portion of the Base Rent Surcharge, with subsequent payments to be made on
the 15th day of each month together with payments of Base Rent. If the last
month of the initial Term ends on a day other than the 14th day of a calendar
month, the Base Rent Surcharge for the last month shall be prorated on a per
diem basis.
30
<PAGE>
(j) DRPA Rent. Not later than five (5) days before the date that
such payments are due under the DRPA-PRPA lease, HOLT shall pay to PRPA all rent
and other charges required to be paid by PRPA under the DRPA-PRPA lease (the
"DRPA Rent").
3.2 Letter of Credit.
(a) HOLT delivered to PPC, pursuant to the PPC-Holt Agreement, a
letter of credit issued by Meridian Bank in the amount of One Million Dollars
($1,000,000), which letter of credit was transferred by PPC to PRPA, and a
replacement letter of credit was subsequently issued by Meridian Bank to PRPA,
as beneficiary (the "Initial Letter of Credit"), a copy of which is attached
hereto as Exhibit D. As security for the payment of Base Compensation and its
faithful performance of all covenants, terms and conditions of this Agreement,
promptly following the Effective Date, HOLT shall cause the Initial Letter of
Credit in the amount of One Million Dollars ($1,000,000) to be amended to: (i)
refer to this Agreement rather than to the PPC-Holt Agreement; (ii) reduce the
amount thereof to One Hundred Seventy-Five Thousand Dollars ($175,000); and
(iii) to have an expiration date of January 15, 1992, which amended letter of
credit (the "Letter of Credit") shall be substantially in the same form as the
Initial Letter of Credit, with only such modifications as are acceptable to PRPA
in form and substance, issued or confirmed by a Philadelphia bank acceptable to
PRPA, naming PRPA as beneficiary. PRPA shall cooperate with HOLT to make
arrangements reasonably acceptable to PRPA by which PRPA
31
<PAGE>
shall surrender the Initial Letter of Credit to the issuing bank in order to
permit such bank to issue the Letter of Credit in accordance with the terms of
the preceding sentence and concurrently therewith the issuing bank shall deliver
to PRPA the Letter of Credit. In the event HOLT fails to deliver to PRPA by
January 15, 1991 such an amended Letter of Credit, PRPA may draw upon the
Initial Letter of Credit up to the amount of $175,000 and deposit the proceeds
thereof into an account to serve as security for HOLT's performance of the terms
and conditions of this Agreement. Upon delivery to PRPA of the amended Letter of
Credit, the proceeds so deposited, less any amounts properly retained by PRPA on
account of breaches of this Agreement by HOLT, shall be paid to HOLT. Within ten
(10) days of the Container Capital Improvements Completion Date, HOLT shall at
its option either cause the amount of the Letter of Credit to be increased by
Three Hundred Twenty-Five Thousand Dollars ($325,000), to a total of Five
Hundred Thousand Dollars ($500,000), and cause an amended Letter of Credit to be
delivered in such increased amount to PRPA meeting the requirements of this
Section 3.2(a), or deliver to PRPA cash in the amount of Three Hundred
Twenty-Five Thousand Dollars ($325,000) (the "Security Deposit"). For the
purposes of this Agreement, any reference to the Letter of Credit shall be
deemed to include and be a reference to the Security Deposit, and any right of
PRPA to draw on the Letter of Credit shall be deemed to include the right to
draw on the Security Deposit. The Security Deposit shall be
32
<PAGE>
deposited or invested by PRPA in any account or instrument in which PRPA may
invest or deposit its funds pursuant to the Philadelphia Regional Port Authority
Act, as directed from time to time in writing by HOLT. In the event HOLT does
not provide PRPA with written directions regarding the investment of the
Security Deposit, PRPA shall deposit or invest the Security Deposit in direct
obligations of the United States Government, each having a maturity date of
ninety (90) days or less. All interest accruing on the Security Deposit shall be
for the account of HOLT. Interest accrued on the Security Deposit, if any, shall
be distributed to HOLT by PRPA by check on March 1, June 1, September 1 and
January 1 of each Lease Year (or if such date is a Saturday, Sunday or a holiday
on the next business day). During the Term hereof HOLT shall cause the Letter of
Credit to be renewed and replaced yearly, and HOLT shall cause to be delivered
each replacement Letter of Credit on or before December 15 of each year of the
Term. Each Letter of Credit shall have an expiration date of January 15 of the
year which is two (2) years after the date on which it is delivered, except for
the Letter of Credit to be delivered on December 15 of the last Lease Year of
the initial term or the last Lease Year of any Renewal Period, which shall have
an expiration date no earlier than February 15 of the year which is two years
after the date on which such Letter of Credit is delivered. HOLT shall cause
the Letter of Credit, in place at such time as this Agreement expires or is
terminated to be extended to a date not earlier than one
33
<PAGE>
month after the end of the Removal Periods. In the event that at such time as
this Agreement expires or is terminated an issue is pending before the
Arbitrators, the determination of which could result in HOLT's owing sums to
PRPA, HOLT shall cause the Letter of Credit in place at such time to be extended
to a date not earlier than sixty days after the Arbitrator's determination of
such issue. In the event HOLT fails to cause to be delivered any such
replacement Letter of Credit to PRPA by December 15 of any year of the Term, or
to cause to be extended the Letter of Credit as provided above, PRPA may draw
upon the then current Letter of Credit to its full amount, and shall deposit the
proceeds in an interest-bearing account in a bank, the accounts of which are
federally insured, as security for the payment of Base Compensation and HOLT's
faithful performance of all covenants, terms and conditions of this Agreement;
upon delivery of such replacement or extended Letter of Credit to PRPA, the
proceeds so deposited, less any amounts retained by PRPA on account of breaches
of this Agreement by HOLT and any incidental costs related to such deposits,
shall be paid to HOLT.
(b) Subject to Section 19.1(d), if at the end of the Term of this
Agreement or the sooner termination hereof any of the Base Compensation shall
be overdue and unpaid, or any other sum payable by HOLT to PRPA hereunder shall
be overdue and unpaid, then PRPA may, at its option, draw on the Letter of
Credit and/or the Security Deposit for the payment of any such overdue Base
Compensation or other sum in an amount equal to the
34
<PAGE>
amount by which such overdue Base Compensation and other sums exceeds undisputed
amounts PRPA owes to HOLT. In the event of the failure of HOLT to keep and
perform any of its other obligations under this Agreement, then PRPA, at its
option, may draw on the Letter of Credit and/or the Security Deposit to the
extent necessary to make PRPA whole and to compensate PRPA for any loss or
damage sustained or suffered by PRPA due to such breach on the part of HOLT. If
at any time PRPA should draw on the Letter of Credit and/or on the Security
Deposit, HOLT shall, within sixty (60) days after written demand by PRPA, cause
the Letter of Credit and/or the Security Deposit, as applicable, to be restored
to its full required amount.
(c) Should HOLT comply with all of said terms, covenants and
conditions hereunder and pay all Base Compensation hereunder provided for, and
pay all other sums payable by HOLT to PRPA hereunder, the Letter of Credit (or
its replacement) and the Security Deposit shall be returned to HOLT on or before
sixty (60) days after the later of (i) the end of the Term or the earlier
termination of this Agreement, (ii) the end of the Removal Periods; (iii) the
completion of all restorations or repairs to the Terminal required to be made by
HOLT, including, if applicable, repairs or restorations necessitated by the
removal of the HOLT Cranes; or (iv) the determination by the Arbitrators of any
and all issues submitted to them the determination of which could result in
HOLT's owing sums to PRPA. At such time, if any, after the end of the Term or
the
35
<PAGE>
termination of this Agreement that such repairs or restorations are limited to
reasonable punchlist items or other reasonably ascertainable amounts
substantially less than the amount of the Letter of Credit, PRPA shall agree to
the reduction of the aggregate amount of the Letter of Credit and the Security
Deposit to an amount equal to one hundred fifty percent (150%) of the cost of
such punchlist items or other ascertainable amounts, as reasonably determined by
PRPA.
3.3 Records and Books. HOLT shall keep complete and accurate books,
records and accounts relating to all its operations upon the Terminal, including
without limitation the number of containers handled, the number of picks, the
tonnage of bulk and breakbulk (other than steel) cargo handled, the tonnage of
steel handled, the hours of Crane usage, the number of moves through the
Terminal gate, cargo storage and transshipment information, and vessel occupancy
of the berths, and PRPA and the Commonwealth shall have the right and privilege
through their representatives and at all reasonable times, upon one week's
advance notice, to inspect and audit such books, records and accounts in order
to verify the accuracy of the amounts of Base Compensation due and owing to PRPA
hereunder. HOLT agrees that such books, records and accounts for each year shall
be kept by HOLT for a ten (10) year period and shall be made available to PRPA
and/or the Commonwealth in Philadelphia, Pennsylvania, upon written request.
HOLT shall keep separate books and records for its operations at the Terminal
and its other operations. If any
36
<PAGE>
audit conducted under this Section shows that HOLT has underpaid the Base
Compensation due from it to PRPA under the terms of this Agreement, HOLT shall
pay the shortfall upon demand, and in the event the amount of underpayment is in
excess of three percent (3%) of the amount paid by HOLT with respect to the
audited period, then HOLT shall pay all costs and expenses for the PRPA audit,
if any. PRFA shall use its best efforts to coordinate any such audit with the
Commonwealth. The duty to retain books, records and accounts imposed on HOLT and
the right herein granted by HOLT to PRPA and the Commonwealth to inspect such
books, records and accounts shall survive the expiration or termination of this
Agreement.
3.4 Reports. HOLT shall submit to PRPA, as soon as it is practicable,
on a ship-by-ship basis written vessel activity reports ("VARs") in form
satisfactory to PRPA, summarizing all vessel movements, all containers and cargo
loaded, discharged or held at the Terminal, and the number of containers
handled, both loaded and empty, the type of cargo (temperature controlled,
steel, or other) and the tonnage of such cargo. To the extent necessary for PRPA
to comply with all applicable laws and regulations, HOLT shall also submit to
PRPA such other reports as reasonably requested in writing by PRPA from time to
time. PRPA shall maintain the confidentiality of all information regarding
HOLT's customers and all HOLT trade secrets contained in such reports (other
than the VARs) to the extent permitted by law. On or before July 31 of each
year, HOLT shall submit to PRPA an
37
<PAGE>
itemized inventory of all moveable capital equipment owned or leased by HOLT and
used at the Terminal during the year ended July 1 of such year and of all
moveable capital equipment owned or leased by HOLT and removed from the Terminal
during such year ("Moveable Capital Inventory"). HOLT and PRPA shall investigate
the possibility and feasibility of providing to PRPA on-line access to HOLT's
computer system and programs in order for PRPA to review data therein contained
in respect of the information required to be set forth in the VARs. Such access
shall not unreasonably interfere with HOLT's use and operation of the computer
system, and shall not permit PRPA access to any confidential information of HOLT
not otherwise available to PRPA under this Agreement.
3.5 Late Charges. As compensation to PRPA for costs and expenses
involved in handling delinquent payments, all charges that remain due and unpaid
for a period of ten (10) days after the date they are due shall be subject to a
delinquency payment equal to one and one-half percent (1.5%) of said charges per
month or fraction thereof from the end of the ten day period until the charges
have been paid. Said delinquency payment is in addition to all other remedies
that PRPA may have that are provided by this Agreement or otherwise by law to
enforce payment of charges that have been incurred and have not been paid.
3.6 Certain Taxes. If the Terminal or operations on the Terminal become
subject to any taxes, assessments or charges which are not in effect on the date
hereof and which will result
38
<PAGE>
in a significant increase in the tax burden of HOLT, then PRPA and HOLT will
renegotiate the Base Compensation in an equitable manner taking into account
such increase. In the event that HOLT and PRPA are unable to agree on an
equitable adjustment to the Base Compensation, the matter shall be determined by
the Arbitrators. Nothing in the preceding sentence shall be deemed to entitle
HOLT to any renegotiation of the Base Compensation on account of any federal or
state corporate income tax, or any change in the rates thereof.
ARTICLE IV
MARKETING: COOPERATION
4.1 Marketing. HOLT shall market its services offered at the Terminal
and the Terminal itself in a professional, first class manner at least
equivalent to the marketing efforts of similar terminals.
4.2 Transfer of Service.
(a) (i) Within a reasonable period of time after the execution of
this Agreement, HOLT shall provide to PRPA evidence satisfactory to PRPA of
commitments to call at the Terminal from various container lines acceptable to
PRPA, in its sole discretion, and whose anticipated volume of container activity
shall be acceptable to PRPA, in its sole discretion.
39
<PAGE>
(ii) Notwithstanding anything to the contrary contained in this
Agreement, in the event that HOLT does not deliver the commitments required by
Subsection 4.2(a)(i). Holt and PRPA, without the necessity of notice or
opportunity to cure, shall engage in good faith negotiations with respect to
what amendments, if any, should be made to this Agreement in view of the absence
of such commitments, and from and after the date on which PRPA notifies HOLT
that HOLT has failed to fulfill the requirements of Subsection 4.2(a)(i) until
the earlier of (A) the expiration of the Term of this Agreement and (B) the
filing with the FMC of an amendment to this Agreement specifically referring to
this Subsection and setting forth the agreement of the parties with respect to
the amendments, if any, to obtain for the balance of the Term, this Agreement
shall be deemed automatically to have been amended to provide as follows:
1. The Additional Parcels shall be excluded from the Terminal demised
hereunder. Holt shall have no development or other rights with respect thereto,
and the Development Fee and the Additional Parcel Fee shall be abated;
2. Holt shall be granted only one ten year option to renew the Term;
3. The last sentence of Subsection 3.1(d), capping a portion of the
Breakbulk Fee under certain circumstances, shall be deemed deleted from the
Agreement; and
4. PRPA shall not be required to complete any of the PRPA Capital
Improvements other than the Crane Retrofit; provided,
40
<PAGE>
however, that in the event the Container Capital Improvements are not completed
by PRPA on or before the first day of the third Lease Year, Base Rent shall be
calculated as set forth on Exhibit O.
In the event this Agreement is automatically amended as provided herein, the
parties shall promptly execute and PRPA shall promptly file confirmation thereof
with the FMC. Except as expressly provided in this Subsection, this Agreement
shall be unamended and remain in full force and effect.
(b) In recognition of certain costs associated with the transfer of
certain customer operations and the Gloucester Cranes to the Terminal:
(i) subject to the provisions of this Subsection, HOLT shall be
entitled to a Five Dollar ($5.00) credit against Base Rent for each pick of a
container at the Terminal onto or off any vessel owned or chartered by any of
the container shipping lines or groups which currently call at HOLT's Gloucester
Terminal (each, a "Container Line") (the "Pick Credit") up to an aggregate
maximum of Three Hundred Twenty Thousand Dollars ($320,000);
(ii) in the event both Gloucester Cranes are moved to the
Terminal pursuant to Section 7.2, HOLT shall be entitled to a Five Dollar
($5.00) credit against Base Rent for each pick of a container at the Terminal
onto or off a Container Line vessel or a vessel of any other new line introduced
at the
41
<PAGE>
Terminal by HOLT after the Effective Date hereof provided that such picks occur
after the date on which the Gloucester Cranes are made operational at the
Terminal, up to an aggregate maximum of One Hundred Eighty Thousand Dollars
($180,000) (the "Crane Pick Credit"); provided, however, that: during the first
Lease Year the aggregate of Crane Pick Credits and Pick Credits shall not exceed
$320,000; during the first Lease Year a container movement cannot earn both a
Pick Credit and a Crane Pick Credit; and the aggregate maximum of Pick Credits
and Crane Pick Credits shall never exceed $500,000. From and after the first
anniversary of the Effective Date, a container movement can earn both a Pick
Credit and a Crane Pick Credit.
(iii) Pick Credits and Crane Pick Credits shall be credited
against the payment of Base Rent due on the 15th day of the month following the
date on which such Pick Credits or Crane Pick Credits are earned, in an amount
up to the amount of Base Rent due with respect to such month, with any unused
portion of such Credits being carried forward to the succeeding month or months
until HOLT has been able to utilize the full amount thereof.
(c) HOLT hereby agrees to accommodate and handle at the Terminal
during the Term (including all Renewal Periods) all new container business which
HOLT secures for Delaware River marine terminal facilities. Notwithstanding the
preceding sentence, HOLT may handle at the Gloucester Terminal (i) incidental
containers on ships whose primary mission is not the
42
<PAGE>
transportation of containers and (ii) new container business in the event that
(A) the Terminal is unable to accommodate such containers due to the volume of
cargo being handled at the Terminal, and (B) PRPA, within thirty (30) days
following notice by HOLT to PRPA of the Terminal's inability to accommodate such
container business, is unable to provide substantially equivalent alternate
facilities at which HOLT can handle such container cargo at costs comparable to
costs for similar container cargo incurred by HOLT at HOLT's Gloucester Terminal
or is unable to provide alternative arrangements for some or all of HOLT's other
activities at the Terminal in order to make space available at the Terminal to
accommodate such new container business. HOLT shall not be required to accept
such alternative arrangements unless the parties reach a mutually acceptable
arrangement with respect to the adverse financial impact, if any, of such
alternative arrangements on HOLT and/or its customers. For the purposes of this
Section 4.2(c) only, PRPA's marine terminal facilities at Tioga Avenue,
Philadelphia shall be deemed comparable to the Terminal. HOLT shall consider in
good faith any such alternative facility offered for HOLT's use by PRPA. HOLT
shall provide, upon PRPA's request, all information relating to the costs
incurred by HOLT at HOLT's Gloucester Terminal for container cargo similar to
the proposed new container business. HOLT recognizes that such proposed
alternative facilities and any use thereof by HOLT may be subject to the rights
of other tenants or licensees of PRPA, but HOLT shall not be required to accept
43
<PAGE>
any alternative facilities if the exercise of such rights by others would
unreasonably interfere with HOLT's operations. In the event HOLT and PRPA
disagree as to whether the Terminal has the capacity to handle such new
container business, whether an alternate facility proposed by PRPA is
substantially equivalent, or whether an alternate arrangement has an adverse
financial impact on HOLT or its customers, the issue shall be submitted to the
Arbitrators whose decision shall be final. In the event any HOLT container
customer does not wish to call at either PAMT or such alternative facility, and
PRPA has been afforded a reasonable opportunity to participate with HOLT in
discussions with such HOLT customer to persuade such customer to call at the
Terminal or the alternative facility, then HOLT may accommodate such customer at
the Gloucester Terminal.
4.3 Intentionally Omitted.
4.4 Definition of HOLT. For the purposes of Section 4.2, HOLT shall
mean Holt Cargo Systems, Inc., its parent from time to time, and all present and
future subsidiaries and affiliates, any Transferee (as hereinafter defined), and
Thomas J. Holt and all members oil Thomas J. Holt's immediate family during the
time they are employed by Thomas J. Holt or any of the entities described in
this Section 4.4.
4.5 Certain Operating Agreements. From and after the date hereof until
the expiration or termination of this Agreement, PRPA shall not make or enter
into any cost-plus arrangements (as hereinafter defined) with any terminal
44
<PAGE>
operators, stevedoring companies or other terminal lessees or licensees with
respect to container cargo facilities owned, leased or operated by PRPA, except
as permitted under this Section 4.5. The term "cost-plus arrangement" shall
mean, with respect to terminal operations and/or stevedoring services, payment
by PRPA of (or agreement to pay) all or any part of any terminal operating
expense that is not paid by PRPA on behalf of HOLT under this Agreement, or
payment by PRPA of a sum of money, or other comparable arrangement, not paid on
behalf of HOLT (excluding for this purpose as a payment to HOLT any credits
provided to HOLT by the terms of this Agreement). Payment by or on behalf of
PRPA of capital costs in connection with any PRPA port facility shall not give
rise to a cost-plus arrangement. PRPA shall not make or enter into any cost-plus
arrangement with respect to container cargo facilities owned, leased or operated
by PRPA prior to publicly soliciting responses to a request for proposals with
respect to such facility. If, upon PRPA's exercise of its reasonable business
judgment (which shall relate to the quality and cost of the service to be
provided, the need therefor, and the desire to promote the PRPA's policies and
objectives), PRPA makes or enters into a cost-plus arrangement at such container
cargo facilities with a party other than HOLT, then PRPA shall notify HOLT that
it has done so, and HOLT and PRPA shall negotiate in good faith for a period of
up to thirty (30) days with respect to the reduction, if any, required to be
made in the Base Compensation payable by HOLT to PRPA hereunder
45
<PAGE>
and other modifications, if any, required to be made to this Agreement in order
to permit HOLT to compete on commercially reasonable terms for business with the
intended recipient of the cost-plus arrangement. If at the expiration of such
30-day period HOLT and PRPA have not reached a mutually satisfactory agreement,
then the issue, at HOLT's option and as HOLT's sole remedy, shall be submitted
to the Arbitrators, whose decision shall be final, or by written notice to PRPA
within 30 days of the expiration of such 30 day period, HOLT may terminate this
Agreement. In the event the issue is submitted to the Arbitrators, the
Arbitrators may consider all matters that may bear upon HOLT's ability to
compete on commercially reasonable terms. Notwithstanding the foregoing, if an
agreement for services at a container cargo facility owned, leased or operated
by PRPA expires, is terminated by PRPA or is breached by the terminal operator,
stevedoring company, lessee or licensee, then PRPA may make or enter into a
cost-plus arrangement with respect to such services at such facility for a
period not to exceed nine (9) months (including renewal periods) without thereby
invoking the provisions of this Section 4.5. Nothing contained in this Section
shall be deemed to restrict or prohibit PRPA from entering into a management
agreement with a person or entity that manages and operates such facility for
PRPA in consideration of a predetermined fee paid by PRPA which is not tied to
and will not be adjusted by such person's or such entity's operating costs or
results of operations, provided that any such person or entity
46
<PAGE>
and any of their affiliates will not also provide, directly or indirectly,
stevedoring services or equipment at such facility. The exercise by any lessee
or operator of a PRPA port facility of any right of renewal contained in an
agreement filed as of the date hereof with the FMC shall not be deemed to invoke
the provisions of this Section 4.5.
4.6 Certain Tax Exemptions. PRPA shall use its best efforts to assist
HOLT in qualifying for the same exemptions from Commonwealth of Pennsylvania
and/or City of Philadelphia taxes related to HOLT's use and occupancy of the
Terminal that are available to any other similarly situated lessee of PRPA.
4.7 Transportation Tolls. PRPA shall use its best efforts to cause the
DRPA to eliminate tolls for the movement of all containerized cargo shipped
through the Ports of Philadelphia across the bridges under DRPA's control. For
the purposes of this Section 4.7 and Section 4.6, "best efforts" shall mean
meeting and discussing with appropriate governmental or DRPA staff or officials
the subject matter of Sections 4.6 or 4.7, as the case may be; in no event shall
PRPA be required to incur any costs in connection therewith.
47
<PAGE>
ARTICLE V
INSURANCE: INDEMNIFICATION
5.1 Property Insurance.
(a) PRPA shall keep the Terminal, including without limitation the
pier and Wharf Structure, continuously insured from "all risk" of direct
physical loss on a replacement cost basis during the Term. PRPA shall include
HOLT as an additional insured as its interest may appear, including extra
expense insurance in the amount of One Million Dollars ($1,000,000) from any one
loss, with no monthly limitation.
(b) HOLT shall keep the contents of the Terminal, including the
property of others and cargo, improvements and betterments, and "contractor's
equipment," continuously insured during the Term from "all risks" of direct
physical loss, on a legal liability basis with respect to cargo and property of
others, and an actual cash value basis with respect to all other contents,
improvements and betterments and "contractor's equipment." HOLT shall include
PRPA and the Commonwealth as additional insureds as their respective interest
may appear.
(c) HOLT shall keep the Cranes continuously insured from "all
risks" of direct physical loss, including "mechanical breakdown" and removal of
any boom warranty, on a replacement cost basis during the Term; provided, that
if mechanical breakdown coverage for the PRPA Cranes is not available at rates
mutually acceptable to HOLT and PRPA, then
48
<PAGE>
HOLT shall have no obligation to obtain mechanical breakdown coverage for any of
the Cranes. With respect to the Cranes, HOLT shall also maintain extra expense
insurance and business interruption insurance in the combined amount of One
Million Dollars ($1,000,000) from any one loss, with no monthly limitation. PRPA
shall pay to HOLT an equitable percentage of the cost of such coverage allocable
to the PRPA Cranes by crediting such amount to HOLT against Base Compensation
owing by HOLT in the month immediately following HOLT's payment of a premium for
such insurance. HOLT shall include PRPA and the Commonwealth as additional
insureds, loss payees or mortgagees as their respective interests may appear.
(d) PRPA shall provide comprehensive boiler and machinery coverage
on insurable objects (excluding the Cranes) on a Repair or Replacement basis
during the Term. PRPA shall include HOLT as an additional insured as its
interest may appear, including extra expense insurance in an amount of Two
Hundred Fifty Thousand Dollars ($250,000), for any one loss, with no monthly
limitation.
5.2 Liability Insurance. HOLT shall continuously keep in effect
comprehensive general liability insurance of at least Ten Million Dollars
($10,000,000.00) as to personal injury, including bodily injury, sickness,
disease or death, and property damage combined. HOLT shall cause the policies
evidencing such insurance to name the Commonwealth and PRFA as additional
49
<PAGE>
insureds and to incorporate cross liability endorsement provisions substantially
as follows:
"Cross Liability - it is understood and agreed that the insurance
afforded by this policy for more than one insured shall not operate to
increase the limits of the Company's liability, but otherwise shall not
operate to limit or void the coverage of any one insured with respect
to claims against the said insured by any other insured or the
employees of any such other insured."
5.3 Worker's Compensation Insurance. HOLT itself shall maintain in full
force and effect at all times during the Term of this Agreement, Statutory
Worker's Compensation and Employers' Liability insurance, United States
Longshoremens' and Harborworkers' Act insurance, Jones Act insurance,
Occupational Disease Act insurance, and any disability benefits act insurance
required by law, in appropriate statutory amounts under policies written by an
insurance company authorized to engage in the insurance business in the
Commonwealth of Pennsylvania or otherwise acceptable to PRPA, or HOLT in the
event HOLT becomes an approved self insured. In the event HOLT becomes an
approved self insured, it agrees to maintain excess insurance of the types
enumerated above in this Section 5.3 in amounts not less than $10,000,000 for
each accident or occupational disease.
5.4 Automobile Insurance. HOLT shall continuously keep in effect
comprehensive automobile liability insurance in the amount of $10,000,000 per
each accident for bodily injury and property damage combined.
50
<PAGE>
5.5 Waiver of Subrogation. All casualty insurance (excluding that
described in Section 5.3) and all property insurance policies carried by either
party covering PRPA and HOLT as required by this Article V shall expressly waive
any right on the part of the party carrying such insurance and its insurer
against the other insureds; provided, however, that if there is an additional
premium charge to obtain such waiver, then the party carrying such insurance may
discontinue such waiver upon notice to the other party of an intent to
discontinue such waiver, unless within thirty (30) days of the giving of such
notice the other party agrees to pay such additional premium charge.
5.6 Insurance General.
(a) If either HOLT or PRPA fails to maintain any insurance required
in this Agreement to be maintained by HOLT or by PRPA, the other party may
procure same, wherever available, at the non-complying party's expense, and the
non-complying party shall pay the cost thereof, and such other costs incurred by
such party in connection therewith, including without limitation, its reasonable
attorney's fees, on demand as compensation.
(b) Every policy of insurance required by this Agreement to be
maintained by HOLT or by PRPA shall contain a provision prohibiting cancellation
thereof or changes therein without at least thirty (30) days prior written
notice to HOLT or to PRPA, and to the Commonwealth at the address designated
from time to time in writing by the Commonwealth. Prior to the
51
<PAGE>
Effective Date and on each anniversary thereof, each party shall deliver to the
other two copies of certificates evidencing each of the insurance policies that
it is required to carry under this Article V, and shall upon the written request
of the other party deliver two copies of such portions of each such policy
providing the insurance herein required to the other party.
(c) All policies required hereunder and any renewals thereof shall
be in form satisfactory to PRPA, shall be issued by companies authorized to
engage in the insurance business in the Commonwealth or otherwise satisfactory
to PRPA, and shall be maintained in full force and effect. Other policies and
coverages purchased by HOLT not specifically required by PRPA, including
coverages carried in excess of the required minimum, shall be with companies as
HOLT deems appropriate. Notwithstanding anything to the contrary in this
Agreement, PRPA may satisfy any or all of its insurance coverage obligations
herein contained through participation by PRPA in the Commonwealth's insurance
or self-insurance programs, so long as the coverage provided thereby is not
less than is required by this Agreement.
(d) HOLT shall provide such additional types of insurance in such
amounts as PRPA shall reasonably require with a view to a change in the nature
of the Terminal, or the use to be made thereof by HOLT. In the event that any
such additional insurance is required, HOLT shall deliver two certificates of
each policy to PRPA and shall upon PRPA's written request deliver
52
<PAGE>
two copies of such portions of each policy providing such insurance to PRPA.
PRPA shall investigate the possibility and feasibility of its obtaining for the
account and at the expense of HOLT certain types of insurance required to be
maintained by HOLT under this Agreement.
(e) HOLT agrees not to use the Terminal in any manner that will
result in the cancellation or increase in cost of any insurance policy that PRPA
or HOLT is required to carry hereunder.
5.7 Accident Reports. HOLT shall provide a report to PRPA, in writing,
within seven (7) days after HOLT, its officers, or agents have knowledge of any
accident or occurrence involving death of or injury to any person or persons, or
damage in excess of Twenty Thousand Dollars ($20,000) to property (other than
cargo) of any person other than HOLT and PRPA, occurring upon or about the
Terminal. All such reports shall include, to the extent available and
appropriate, (1) the names and address of the persons involved; (2) a general
statement as to the nature and extent of the injury or damage; (3) the date and
hour of the occurrence; (4) the names and addresses of witnesses; and (5) such
other information reasonably requested by PRPA as may be known to HOLT, its
officers or agents.
5.8 Liability for Damage Caused by Third Parties. HOLT shall maintain
the necessary security on the Terminal to assure that the Terminal is not being
used by anyone not having the permission of HOLT or PRPA. HOLT is and shall be
liable
53
<PAGE>
(a) for all damage to the Terminal not insured against under Section 5.1 or with
respect to which a waiver of subrogation is not being carried pursuant to
Section 5.5 and (b) for all damage to the Terminal up to the amount of any
deductible of any insurance policy required to be maintained under Section 5.1,
which damage is caused by third parties not authorized to be upon the Terminal,
or by HOLT, HOLT's employees, agents, contractors, invitees, or licensees.
5.9 Event of Loss. In the event of loss to the Terminal or the PRPA
Cranes, HOLT shall give notice thereof as soon as practicable to PRPA, and PRPA
may make proof of loss if not made promptly by HOLT; any adjustment of a proof
of loss shall require the prior written consent of PRPA. Each insurance company
issuing any property insurance policies in respect to the Terminal is hereby
authorized and directed to make payment under such insurance directly to PRPA
instead of to HOLT and PRPA jointly, and HOLT appoints PRPA, irrevocably, as
HOLT's attorney-in-fact to endorse any draft therefor; provided, that
notwithstanding the foregoing, proceeds of insurance required under Section
5.1(b) or Section 5.1(c) (except for proceeds of insurance for a loss to the
PRPA Cranes), and extra expense insurance proceeds, shall be paid directly to
HOLT. Such policies of property insurance and all renewals thereof are hereby
assigned to PRPA as additional security for HOLT's performance of its
obligations hereunder, and HOLT agrees that after default hereunder any values
available thereunder upon
54
<PAGE>
cancellation or termination of any of said policies or renewals, whether in the
form of return of premiums or otherwise, shall be payable to PRPA as assignee.
5.10 Insurance Audit. On the second anniversary of the Effective Date
and every three years thereafter during the Term and any Renewal Period, HOLT
and PRPA shall cause an insurance audit to be conducted jointly by their
respective insurance consultants to determine the adequacy and availability at
commercially reasonable rates of the types of insurance and the amounts of
coverages then being carried by either of them. In the event that PRPA's and
HOLT's insurance consultants are unable to arrive at mutually agreeable
recommendations as a result of the insurance audit required under this Section
5.10, the parties agree that they will submit such dispute to the Arbitrators,
and the decision of the Arbitrators shall be final and binding upon the parties.
HOLT and PRPA agree that promptly following such insurance audit or the
resolution of any dispute, this Article V shall be amended to conform to the
recommendations of the insurance audit, and PRPA and HOLT shall promptly obtain
and maintain such insurance of such amounts as this Agreement, as so amended,
shall require.
5.11 Indemnification.
(a) HOLT hereby covenants and agrees to indemnify, defend and hold
PRPA and the Commonwealth harmless from any and all liability, loss, cost or
expense, claims, and/or suits for, or by reason of, any injury, loss or damage
to any
55
<PAGE>
person or property occurring on the Terminal from a condition caused by or for
which HOLT is responsible under the terms of this Agreement, or arising out of
HOLT's use of or operations at the Terminal, whether the loss, injury or damage
be to the person or property of HOLT or any other person, except to the extent
due to PRPA's failure to fulfill its obligations or responsibilities under this
Agreement or to the negligence of PRPA, or the Commonwealth, and their
respective agents, contractors, employees, lessees, invitees or licensees.
(b) The indemnification obligations of HOLT under this Section 5.11
shall not be limited in any way by any limitation on the amount or type of
damages, compensation or benefits payable by or for HOLT or any of its employees
under workers' compensation acts, disability benefits acts or other employee
benefits acts.
(c) The provisions of Sections 5.11(a) shall not apply to any
matter insured against under Section 5.1 and as to which a waiver of
subrogation is in effect, or to any matters covered by the subject matter of
Article X.
(d) The indemnifications given in this Section 5.11 shall survive
the expiration or termination of this Agreement.
56
<PAGE>
ARTICLE VI
REPAIRS AND MAINTENANCE
6.1 PRPA's Obligations.
(a) PRPA shall maintain the structural integrity of and shall
repair the roof, exterior walls, floors, foundations, pavements and pilings of
all Terminal buildings and structures, maintain and repair the structural
integrity of the Wharf Structure, as hereinafter defined, maintain and repair
the mooring capstans and the fendering system, perform exterior painting
required to preserve all such buildings and structures, perform any necessary
maintenance and repairs to any perimeter fencing on the Terminal, and perform
any required structural maintenance and repairs as distinguished from
nonstructural maintenance and repairs, all when not caused by HOLT, its
employees, agents, contractors, invitees or licensees (normal wear and tear
excepted) and as PRPA reasonably shall determine, taking into account among
other things, the operational needs of the Terminal. PRPA shall determine the
type of fendering system to be employed at the Terminal. PRPA shall also perform
structural maintenance of and repairs to the underground systems of water, sewer
and electric utilities upon the Terminal. PRPA's obligations hereunder shall
include maintenance and repairs of the scales and track, including switches, on
the Terminal and the furnishing and maintenance of safe berths, including
moorage and approaches to the berths as PRPA reasonably shall determine.
57
<PAGE>
PRPA shall be responsible for any necessary repair or replacement of any
electrical transformers on the portions of the Terminal other than the
Additional Parcels. Notwithstanding anything to the contrary contained herein,
neither HOLT nor PRPA shall be required to maintain, repair or replace the
electrical transformers currently servicing Shed 98. Except as expressly
provided in this Agreement, PRPA shall not be obligated to make any repairs,
alterations, additions or betterments to the Terminal during the Term hereof.
Subject to Section 14.1 hereof, PRPA's obligation to maintain and repair as
described above shall be deemed to require PRPA to maintain and repair those
portions of PAMT for which it is responsible in their "as is" condition as of
the HOLT Possession Date or their repaired or upgraded condition with respect to
those matters which are repaired or upgraded by PPC or by PRPA as a result of
and following the survey referred to in Section 14.1, or the terms of this
Agreement. Notwithstanding anything to the contrary contained herein, PRPA shall
have no responsibility to maintain, repair or replace the Additional Parcels or
any improvements thereon, other than any obligation of PRPA set forth in
Article X.
(b) Upon completion of any of the Capital Improvements, PRPA
shall maintain and repair those elements of the Capital Improvements set forth
in Section 6.1(a) which have been completed in good condition, reasonable wear
and tear excepted, but in any event in operable condition.
58
<PAGE>
(c) If PRPA fails to perform any of its obligations of maintenance,
painting, or repair under this Section 6.1, then HOLT, at its option, if PRPA
fails to perform or to commence in good faith to perform (and thereafter
diligently to perform) any such obligation after having received, in the case of
an emergency requiring prompt attention in order to prevent danger to life or
serious property damage, 24 hours, and in the case of other matters, 72 hours
written notice from HOLT, and if PRPA provides its written approval of the
specific action proposed to be undertaken by HOLT, then HOLT shall be permitted
but shall not be obligated to perform such maintenance, painting or repair, and
HOLT shall be reimbursed for the reasonable cost thereof, provided that HOLT
shall not be reimbursed for any such costs in excess at any time of $100,000.
Costs incurred by HOLT and eligible for reimbursement hereunder shall be
reimbursed as follows: HOLT shall be entitled to a credit in an amount up to
fifty percent (50%) of all Base Compensation payable to PRPA by HOLT in that
month, until such time as all amounts to which HOLT is entitled to reimbursement
under this Section 6.1 have been repaid in full. Any notice or approval given
pursuant to this Section 6.1(c) shall be delivered in accordance with the
provisions of Section 28.1 in respect of emergencies. In the event that PRPA
fails to provide HOLT notice of PRPA's approval or disapproval of any course of
action proposed to be undertaken by HOLT pursuant to this Section, within, in
the case of an emergency requiring prompt attention in
59
<PAGE>
order to prevent danger to life or serious property damage 24 hours, and
otherwise 72 hours, of PRPA's receipt of HOLT's notice, PRPA's approval of such
proposed course of action shall be deemed granted.
(d) PRPA agrees that for the purposes of this Agreement, unless
specifically stated otherwise, the duty to repair an item includes, in the
event such item becomes inoperable, the duty to replace such item with an
operable item of like kind.
6.2 HOLT's Obligations.
(a) (i) HOLT shall, at all times, keep the Terminal in a neat,
clean and orderly condition. HOLT shall perform all nonstructural maintenance
and repair, including without limitation sweeping, snow removal, trash removal,
all interior painting, traffic or terminal striping, relamping of Terminal
lights, replacing light bulbs, cleaning closed drains, daily janitorial service,
storm, drain inlet maintenance and repair, rolling and sliding door maintenance
and repair, Terminal electrical signage maintenance and repair (excluding
electrical signs installed after the Effective Date by PRPA), Gatehouse
equipment maintenance and repair, carpet, tile and vinyl floor replacement, and
shall be responsible for security in and about the Terminal. HOLT shall be
responsible for any necessary maintenance of all electrical transformers on the
Terminal. HOLT shall use every reasonable precaution against fire. HOLT shall
perform aboveground maintenance and repair (except the repair and
60
<PAGE>
replacement of electrical transformers on portions of the Terminal other than
the Additional Parcels) of water, sewer and electric utilities upon the
Terminal. Notwithstanding anything to the contrary contained herein, neither
HOLT nor PRPA shall be required to maintain, repair or replace the electrical
transformers currently servicing Shed 98. HOLT shall be liable, at its own
expense, to make all repairs to windows, irrespective of cause. HOLT shall be
responsible for and shall repair all damage to the Terminal within a reasonable
period of time following the occurrence of damage. HOLT shall not be obligated
to repair any damage to the Terminal caused by PRPA, its employees, agents,
contractors, invitees, licensees, or lessees (other than HOLT). HOLT's
obligations hereunder shall be to maintain and repair those elements of the
Terminal for which it is responsible in the condition they were in at the
commencement of HOLT's possession with respect to the applicable portion of the
Terminal (the "HOLT Possession Date"); provided, that upon any repair or
upgrading of such element by PPC or by PRPA following the survey referred to in
Section 14.1 or in accordance with Sections 7.6 or 7.7, HOLT shall maintain and
repair such elements for which HOLT is responsible in their repaired or upgraded
condition, reasonable wear and tear excepted. The HOLT Possession Date as used
in this Agreement means April 1, 1989 with respect to PAMT (other than the
premises licensed to Portside pursuant to the Portside License (the
"Refrigerated Warehouse") and the Berth 6 area which was leased to HOLT by
61
<PAGE>
previous amendment to the PPC-Holt Agreement dated October 2, 1989 ("Berth
6")), October 3, 1989 with respect to Berth 6, and January 19, 1990 with respect
to Refrigerated Warehouse, and the Effective Date with respect to the Additional
Parcels. Notwithstanding anything to the contrary contained in this Section
6.2(a)(i), as to those items as to which HOLT has maintenance or repair
obligations hereunder, HOLT shall not have any such obligation to maintain or
repair any deferred maintenance item set forth on Exhibit N until the repair to
such item to be undertaken by PRPA is completed; provided, however, HOLT shall
be responsible for damage caused to such item by HOLT, its employees, agents,
contractors, invitees or licensees, and HOLT's obligation to maintain or repair
as to each such deferred maintenance item shall commence when the repair to such
item has been completed. PRPA shall be responsible for replacing any exterior
terminal lighting bulbs which burn-out during the period from the Effective Date
to the date on which the Container Capital Improvement relating to terminal
lighting is completed, and thereafter HOLT shall be responsible for replacing
any such bulbs.
(ii) Notwithstanding anything to the contrary contained herein,
except with respect to damage caused by HOLT, its agents or invitees, HOLT's
maintenance and repair obligations with respect to the Additional Parcels shall
be to maintain and repair the Additional Parcels to a level commensurate with
the use thereof by HOLT, provided that in the event of such use such
62
<PAGE>
maintenance and repair shall always be performed to a level sufficient to comply
with all applicable laws and regulations with respect to the health and safety
of persons. HOLT shall indemnify, defend and hold PRPA harmless from and against
any and all expense, loss, claim, suit or liability suffered by PRPA as a result
of death or injury to person, or property damage occurring on or about the
Additional Parcels, even if such death, injury or property damage is due in part
to the negligence of PRPA with respect to the current or future condition of the
Additional Parcels (except as to a future condition caused by an affirmative
negligent act of PRPA), the negligence of the Commonwealth, or their respective
agents, contractors, employees, lessees, invitees or licensees. The
indemnification obligation of HOLT under this Section shall not be limited in
any way by any limitation on the amount or type of damages, compensation or
benefits payable by or for HOLT or any of its employees under workers'
compensation acts, disability benefits acts, or other employee benefits acts.
(b) Upon the completion of each Capital Improvement, as
hereinafter defined, HOLT shall maintain and repair those elements of such
Capital Improvement set forth in Section 6.2(a) in good condition, reasonable
wear and tear excepted, but in any event in operable condition.
(c) In the event any alterations or improvements shall be made by
HOLT which can easily be removed without damage to the Terminal, or trade
fixtures installed by HOLT which can be
63
<PAGE>
removed without injury to the Terminal, such alterations, improvements or trade
fixtures shall remain the property of HOLT, and upon the expiration or
termination of this Agreement HOLT may remove the same within the HOLT Equipment
Removal Period, provided that HOLT shall repair and restore any damage to the
Terminal caused thereby. Any such alterations, improvements or trade fixtures
which are not removed by HOLT from the Terminal within the HOLT Equipment
Removal Period shall be and remain the property of PRPA. It is expressly agreed
that the HOLT Cranes are fixtures, but HOLT shall nevertheless have the right
and obligation to remove the HOLT Cranes after the termination of this Agreement
as provided in Section 7.4. HOLT agrees that if and when any repairs,
alterations, additions or betterments shall be made by it as provided in this
Section 6.2, it promptly shall pay for all labor done or materials furnished and
shall keep the Terminal free of all liens and shall comply with the applicable
provisions of Article VII.
(d) HOLT agrees that for the purposes of this Agreement, unless
specifically stated otherwise, the duty to repair an item includes, in the event
such item becomes inoperable, the duty to replace such item with an operable
item of like kind.
6.3 Wharf Structure. Notwithstanding anything to the contrary in this
Agreement, if damage to the Wharf Structure is caused by the acts of or failure
to act by HOLT, its officers, employees, agents, contractors, invitees, or
licensees, including
64
<PAGE>
persons performing work on the Terminal at the request or under the direction of
HOLT, PRPA may make all necessary repairs and HOLT agrees to reimburse PRPA for
all such costs incurred by PRPA upon presentation of supporting documentation by
PRPA to HOLT to the extent such costs are not covered by insurance. For the
purposes of this Agreement, the "Wharf Structure" shall mean and be defined as
the beams, girders, subsurface support slabs, and prestressed concrete or wood
piling located between the pier head line and the bulkhead line and any and all
mooring dolphins that service the berths at the Terminal. The Wharf Structure
shall not include the surface paving at the Terminal.
6.4 Fire Systems. All fire protection sprinkler systems, fire hydrant
systems, standpipe systems, fire alarm systems, portable fire extinguishers and
other fire protective or extinguishing systems or appliances which have or may
be installed on the Terminal shall be maintained and repaired by HOLT in an
operational condition and in accordance with all applicable laws at all times,
subject to Exhibit N. All repairs and servicing shall be made in accordance with
all applicable laws, including without limitation, the City of Philadelphia Fire
Code and the regulations of the Department of Licenses and Inspections of the
City of Philadelphia and all additions, revisions and amendments thereto, and in
accordance with the recognized standards relating thereto. HOLT shall cause a
sprinkler system maintenance and inspection service, each as approved by the
agency having jurisdiction over same and by PRPA,
65
<PAGE>
in its reasonable judgment, to carry out, respectively, systematic inspection,
adjustment and maintenance, to the extent required by law, and to furnish
reports of each such inspection to PRPA. At HOLT's sole cost and expense HOLT
shall provide remote monitoring of the fire protection system. In the event the
fire protection system must be replaced or overhauled in PRPA's reasonable
judgment, or if the system must be replaced as a result of legislative action,
PRPA shall, at its sole cost and expense, cause the system to be replaced or
overhauled, as appropriate.
6.5 Load Limits. HOLT shall not place loads on the Terminal in excess
of the maximum load limits which are set forth in the certification of PRPA's
engineer which are attached hereto as Exhibit F and made a part hereof, without
the prior written consent of PRPA. HOLT acknowledges receipt of the Hudson
Engineers report on the load capabilities of the Additional Parcels and agrees
to consult with PRPA concerning uses that may adversely affect the structural
integrity of the Additional Parcels.
6.6 Maintenance and Servicing of Cranes.
(a) During the Term hereof, HOLT shall at its own cost and expense
provide crane operators to provide for the operation of the two (2) Kocks 45LT
container cranes and one (1) Kocks combination heavy lift (385T) container crane
located on the Terminal (collectively, the "PRPA Cranes") and the HOLT Cranes,
as hereinafter defined (the PRPA Cranes and the HOLT
66
<PAGE>
Cranes are occasionally referred to herein collectively as the "Cranes"), and
HOLT shall contract with an independent crane maintenance contractor acceptable
to PRPA, in its reasonable judgment, to maintain and service the Cranes or
undertake such maintenance and service by itself, including without limitation
the observance of the manufacturers' recommendations (except to the extent that
HOLT demonstrates to PRPA's reasonable satisfaction that certain of such
recommendations are inapplicable or have been satisfied by alternative measures)
so as to keep them in the same operating condition they were in, as to the PRPA
Cranes, on April 1, 1989 or as subsequently retrofitted by PRPA, and, as to the
HOLT Cranes, at the date each such HOLT Crane was introduced into service at the
Terminal, subject in all cases to ordinary wear and tear. (Notwithstanding
anything to the contrary contained herein, PRPA and not HOLT shall be required
to replace any major crane parts (as listed on Exhibit E), as needed, on any
PRPA Crane (other than the heavy lift crane) until such PRPA Crane (other than
the heavy lift crane) has been retrofitted by PRPA as provided herein, unless
the need for such replacement is caused by HOLT's negligence or by HOLT's
failure to perform its maintenance obligations set forth in this Section 6.6(a).
Furthermore, PRPA and HOLT agree that with respect to diesels and generators for
the PRPA Cranes, after the completion of the Crane Retrofit with respect to a
PRPA Crane, the first time each diesel and generator with respect to such Crane
needs to be replaced, HOLT shall bear the cost thereof
67
<PAGE>
to the extent that such replacement is not covered by insurance, up to $100,000,
and PRPA shall pay the balance. Thereafter, each time such diesel and generator
needs to be replaced, HOLT shall bear the full cost thereof (to the extent that
such replacement is not covered by insurance)). Crane maintenance personnel
shall be fully trained and qualified to perform such services. If requested by
PRPA, maintenance reports shall be submitted to PRPA by HOLT not less frequently
than quarterly. PRPA shall not be liable for the actions of any crane operator,
crane maintenance contractor, or the employees of either of them.
(b) PRPA shall not be liable for any claims, liabilities, costs and
expenses, including, without limitation, consequential and incidental damages,
arising out of or caused by a breakdown of the Cranes or their being out of
service for any reason whatsoever (except to the extent caused by PRPA's
failure to perform its obligations hereunder), and HOLT hereby releases PRPA
from any such liability.
(c) PRPA shall make crane parts available for purchase by HOLT from
PRPA's spare parts inventory at the fair market value for such parts.
6.7 Dredging.
(a) During the Term hereof and any Renewal Period, PRPA shall, at
its sole cost and expense, and at such times as it reasonably determines
necessary taking into account the soundings referred to in Section 6.7(c), and
upon its obtaining all necessary permits and approvals (which PRPA will
68
<PAGE>
pursue in a commercially reasonable manner), conduct maintenance dredging
alongside Berths #1 and #2 at the Terminal to a depth of thirty-six (36) feet
from Mean Low Water Datum ("MLWD"), alongside Berths #3, #4 and #5 to a depth of
forty (40) feet from MLWD, and alongside Berth #6 to a depth of thirty-eight
(38) feet from MLWD. Upon the presentation by HOLT to PRPA of reasonable
evidence illustrating a reasonable, current business need, PRPA shall, upon its
obtaining all necessary permits and approvals (which PRPA will pursue in a
commercially reasonable manner), dredge alongside Berths #1, #2 and #6, to the
extent of such demonstrated need, to a depth of forty (40) feet from MLWD. PRPA
shall conduct maintenance dredging to a depth of forty (40) feet from MLWD
alongside any such Berth that PPC or PRPA previously caused to be dredged to
such depth so long as a reasonable, current business need exists for such a
depth to be maintained.
(b) No later than the substantial completion of a Major Development
contemplating the use of one or more of the berths on the Additional Parcels,
PRPA shall, upon its obtaining all necessary permits and approvals (which PRPA
will pursue in a commercially reasonable manner), dredge alongside such berths
to the depths for which there is a demonstrated reasonable, current business
need, and, upon its obtaining all necessary permits and approvals (which PRPA
will pursue in a commercially reasonable manner), and so long as reasonable,
current business needs exist for such depths to be maintained, PRPA shall
conduct maintenance dredging of such berths to such depths.
69
<PAGE>
(c) During the Term of this Agreement, HOLT, at its cost and
expense, shall cause a reputable engineering company to perform soundings
alongside Berths #1 through #6 at PAMT and, following the dredging of such
berths pursuant to Section 6.7(b), the berths at the Additional Parcels and
shall make the results of such soundings available to PRPA. HOLT shall cause
such soundings to be made periodically during the Term as HOLT determines is
necessary, but in any event HOLT shall cause such soundings to be made at least
once per year during the Term of this Agreement.
6.8 Access. PRPA, its contractors, invitees and their respective
employees shall have the right of access to the Terminal to perform their
respective duties, responsibilities and jobs as contemplated under this Article
VI and to determine the state of maintenance and repair. PRPA will schedule such
access, to the extent, possible, so as to not unduly interfere with any terminal
operations. PRPA shall, at its expense, make all improvements and repairs to the
Terminal for which it is responsible within a reasonable period of time and
shall be responsible for all damage to cargo, containers and all other property
of others located on the Terminal when such repair is necessitated by or damage
is caused by the negligent or wrongful acts of PRPA or its employees, agents,
contractors, lessees, invitees, or licensees.
6.9 PRPA's Rights. Should HOLT fail to make any repairs or perform any
maintenance for which it is responsible,
70
<PAGE>
including without limitation any repair or maintenance to the Cranes, PRPA shall
have the option to make or perform the same if HOLT fails to do so after having
received thirty (30) days written notice from PRPA or immediately if in PRPA's
reasonable business judgment the repairs required must be made to prevent
further damage, injury or loss. Upon receipt of an invoice together with
supporting documentation, as appropriate, from PRPA, HOLT shall promptly
reimburse PRPA for the reasonable cost thereof. The making of such repairs by
PRPA shall in no event be construed as a waiver of the duty of HOLT to make
repairs as herein provided.
ARTICLE VII
EQUIPMENT; CAPITAL IMPROVEMENTS
7.1 Provision. Throughout the Term HOLT shall provide by lease or
purchase, at its sole cost and expense, an IBM AS-400 computer or equivalent and
appropriate software for monitoring and coordinating its operations conducted at
the Terminal. HOLT shall provide the equipment necessary for the efficient
operation of the Terminal, including without limitation all container handling
equipment such as tractors, fork lifts, chassis, and top loaders, except the
PRPA Cranes, which shall be provided by PRPA. HOLT shall, at its sole cost and
expense, on or before the date that is thirty (30) days following the completion
of the
71
<PAGE>
Container Capital Improvements either (i) purchase container handling equipment
or (ii) move to the Terminal from the Gloucester Terminal such of HOLT's
container handling equipment, in either case as may be necessary for efficient
container operations at the Terminal.
7.2 Required Equipment. Any modification, improvement, or addition to
the Terminal (other than the Capital Improvements), and any equipment
installation or system modification required by the Fire Department of the City
of Philadelphia, Department of Licenses and Inspections of the City, Coast
Guard, Environmental Protection Agency, or any other local, regional, state or
federal agency ("Required Equipment") as a result of any modification,
improvement, or addition to the Terminal (other than the Capital Improvements)
or an equipment installation or system modification made by HOLT shall be
constructed, installed or made at HOLT's sole cost and expense and in accordance
with all rules of such requiring agency. Any Required Equipment necessitated by
a change in the laws or regulations of such requiring agency or as a result of
the construction of the Capital Improvements or as a result of any other
improvements made by PRPA shall be constructed or installed at PRPA's sole cost
and expense and in accordance with all rules of such requiring agency.
7.3 HOLT Cranes.
(a) HOLT shall use its best efforts to obtain on or before the date
that is sixty (60) days following the
72
<PAGE>
Effective Date any and all approvals necessary from all governmental,
quasi-governmental and private parties necessary to permit HOLT to move to the
Terminal the two container cranes (the "Gloucester Cranes") currently located at
HOLT's marine terminal in Gloucester, New Jersey (the "Gloucester Terminal"). If
HOLT obtains all such approvals on or before June 16, 1994, HOLT shall cause, at
its sole cost and expense, the Gloucester Cranes to be moved to, installed and
made operational on the Terminal as promptly as reasonably possible, but in any
event not later than ninety (90) days after the Third Crane Rail (as hereinafter
defined) has been completed. The June 16, 1994 date set forth in the preceding
sentence shall not be affected by any event of force majeure. HOLT shall use its
best efforts to schedule barge service for the move of such cranes at a time
that will permit HOLT to comply with the preceding sentence. If all such
approvals have not been obtained within such sixty (60) day period following the
Effective Date, which period shall not be affected by any event of force
majeure, upon the demonstration of the need for an additional container crane at
the Terminal, HOLT shall (unless it has, by the date such need is demonstrated,
obtained such approvals and delivered to PRFA an opinion as contemplated by
Section 23.1, and thereafter installs the Gloucester Cranes on the Terminal),
within 120 days following the latter of the end of the Lease Year in which such
need is demonstrated and, if HOLT petitions the Arbitrators with respect to the
demonstration of such need, the date of the decision of
73
<PAGE>
the Arbitrators with respect thereto, at its sole cost and expense, contract
with a container crane manufacturer for the purchase, delivery and installation
of a current model of a container crane suitable for use on the Terminal's crane
rail system and of a quality and with specifications equal to or better than the
Paceco Crane previously installed on the Terminal by HOLT and shall use its best
efforts to cause such crane to be delivered, installed and operational on the
Terminal on or before three hundred sixty (360) days from the date on which HOLT
is required to order such crane or, if the crane manufacturer's then-current
delivery schedule is longer than 360 days, in accordance with such schedule. For
purposes of this Subsection, the need for an additional container crane shall be
deemed to have been demonstrated when HOLT has performed one hundred thirty
thousand (130,000) container picks or more in any Lease Year; provided,
however, that HOLT may petition the Arbitrators not later than thirty (30) days
following the end of such Lease Year if HOLT believes that such volume of picks
is equal to one hundred ten percent (110%) or more of the reasonably anticipated
level of container activity at the Terminal for each of the immediately
following two (2) Lease Years. If the Arbitrators determine that such volume is
equal to one hundred ten percent (110%) or more than the reasonably anticipated
level of container activity at the Terminal for each of the immediately
following two (2) Lease Years, then the need for the additional crane shall be
deemed not to have been demonstrated. In the event that HOLT
74
<PAGE>
has not obtained all approvals referred to in the first sentence of this Section
7.3(a) on or before June 16, 1994, HOLT may nevertheless, at its option, move
the Gloucester Cranes to the Terminal, in which event PRPA shall proceed with
the Third Crane Rail. At such time, if any, that both Gloucester Cranes are
installed and made fully operational on the Terminal, HOLT's obligation to
purchase an additional crane upon demonstration of the need therefor shall be
deemed satisfied.
(b) The Gloucester Cranes, upon their installation on the Terminal,
the Paceco Crane presently on the Terminal (until such time, if any, that it is
purchased by PRPA), and the Crane HOLT may be required to purchase pursuant to
the preceding paragraph of this Section 7.3 are collectively hereunder referred
to as the "HOLT Cranes". The HOLT Cranes shall be and remain at the Terminal
until the expiration or termination of the Term and all exercised Renewal
Periods subject to Section 2.5(c). If HOLT, during the Term of this Agreement or
any renewals thereof, provides any additional or replacement container cranes
to the Terminal, such cranes shall also be deemed to be HOLT Cranes and shall be
subject to the same terms and conditions applicable to the HOLT Cranes as set
forth herein.
7.3A Purchase of Paceco Crane.
(a) When HOLT moves the Gloucester Cranes to the Terminal as
contemplated by Section 7.3(a), then PRPA shall purchase from HOLT (or the
record title holder), within thirty (30) days of the date on which the
Gloucester Cranes become
75
<PAGE>
operational on the Terminal (the "Purchase Date"), the Paceco Crane (and the
spreader and all other accessories and parts used in connection therewith,
together with all warranties and service contracts related thereto)
(collectively, the "Paceco Crane") currently located on the Terminal, free and
clear of all liens, encumbrances and security interests, for a purchase price to
be determined by an independent appraiser selected by the parties and on such
other terms and conditions agreed to by the parties. Notwithstanding anything to
the contrary contained in the preceding sentence or elsewhere in this Agreement,
in the event that on or before June 16, 1994, HOLT has not delivered to PRPA
written notice of its intent to move the Gloucester Cranes to the Terminal and
an opinion of HOLT's counsel as contemplated by Section 23.1, then PRPA shall
not have any obligation to purchase the Paceco Crane from HOLT. The June 16,
1994 date set forth in the preceding sentence shall not be affected by any event
of force majeure. In the event the parties are unable to agree on the selection
of an appraiser, the selection of the appraiser shall be made by the
Arbitrators. The appraiser shall determine the purchase price as an "in-place"
item, giving value to the lead time that would otherwise be required for the
delivery of a comparable crane (the "Purchase Price"). In the event that HOLT
fails to cause the Gloucester Cranes to be moved to and installed and made
operational on the Terminal as provided in Section 7.3(a), then PRPA shall have
no obligation to purchase the Paceco Crane. At such time, if any, that PRPA
purchases the Paceco
76
<PAGE>
Crane, the Paceco Crane shall be deemed a PRPA Crane hereunder, and HOLT shall
continue to be responsible for the maintenance, repair and operation of the
Paceco Crane in the same operating condition it was in on the date the Paceco
Crane was accepted from the manufacturer by HOLT, subject to ordinary wear and
tear.
(b) In the event that PRPA is not able to purchase the Paceco Crane
on the Purchase Date, then HOLT shall lease to and PRPA shall lease from HOLT
the Paceco Crane (the "Paceco Crane Lease"). The lease payments to be made by
PRPA to HOLT shall be made in such amounts and at such times in order to enable
HOLT to meet its scheduled principal and interest payments to the Export-Import
Bank in such amounts and at such times as they become due as reflected on
Exhibit P. The term of the Paceco Crane Lease shall commence on the Purchase
Date and shall terminate on June 15, 1994. In the event the Purchase Date is a
date other than a date on which a payment is scheduled to be made in accordance
with Exhibit P, the initial lease payment to be made by PRPA to HOLT shall be
pro-rated on a per diem basis. In addition to the above sums to be paid by PRPA
to HOLT, there shall also be paid and included as lease payments to HOLT an
amount equal to interest, at the Interest Rate (as hereinafter defined) on the
difference between the Purchase Price and the outstanding principal due on the
Purchase Date by HOLT to Export-Import Bank as reflected on Exhibit P. On June
15, 1994 (the "Alternate Purchase Date"), PRPA shall purchase the Paceco Crane
from HOLT for a price equal to the difference between the
77
<PAGE>
Purchase Price and the sum of the principal payments made by HOLT to the Bank,
which principal payments were received by HOLT from and included in the lease
payments by PRPA to HOLT ("Remaining Purchase Price").
(c) In the event that PRPA is unable to purchase the Paceco Crane
on the Alternate Purchase Date, then PRPA shall continue to lease the Paceco
Crane from HOLT for an additional twenty-four (24) months for rent equal to One
Million Dollars ($1,000,000.00) per year ("Paceco Crane Rent"), plus interest on
the difference between the Remaining Purchase Price and Paceco Crane Rent paid
to date by PRPA at a rate equal to the Interest Rate plus three (3%) percent, to
be paid in twenty-four (24) equal installments of Paceco Crane Rent, plus
interest as aforesaid, over the extended twenty-four (24) month term of the
Paceco Crane Lease. At the end of the Paceco Crane Lease, PRPA shall purchase
the Paceco Crane for a sum equal to the Remaining Purchase Price less fifty
percent (50%) of the Paceco Crane Rent paid by PRPA. If PRPA is unable to
purchase the Paceco Crane at the end of such additional twenty-four (24) month
period, then PRPA's right to purchase the Paceco Crane shall terminate, and HOLT
shall have the right to determine the disposition of the Paceco Crane
thereafter.
(d) PRPA may pay the unpaid portion of the Purchase Price or the
Remaining Purchase Price in full at any time without penalty, except as set
forth below, in which event PRPA shall be entitled to a credit against the
Purchase Price in
78
<PAGE>
an amount equal to the aggregate lease payments made by PRPA to HOLT which were
applied toward payment of principal due to Export-Import Bank, or, if the
prepayment occurs after the Alternate Purchase Date, in an amount equal to
one-half (1/2) of the Paceco Crane Rent paid by PRPA. In the event PRPA
purchases the Paceco Crane on a date after the Purchase Date, PRPA shall pay any
prepayment penalty due under the Export-Import Bank loan.
(e) HOLT covenants to comply with and perform all of its
agreements, covenants and obligations under any document, instrument or
agreement between HOLT and Export-Import Bank relating to the Paceco Crane, not
to amend any of the foregoing without PRPA's written consent, and to remedy any
default under any of the foregoing. Any default by HOLT under any such document,
instrument or agreement shall be a default hereunder. In the event that
Export-Import Bank proceeds to execute on its security interest in the Paceco
Crane or otherwise exercises any remedy against HOLT to which it is entitled
which may affect the title to the Paceco Crane, PRPA may terminate the Paceco
Crane Lease, whereupon HOLT shall immediately reimburse PRPA all amounts that
PRPA has paid to HOLT on account of the Purchase Price (including without
limitation the portion of lease payments relating to the payment of principal to
the Export-Import Bank) and Paceco Crane Rent. HOLT covenants that it shall not
permit the Paceco Crane to be further encumbered or permit additional security
interests to be granted with respect thereto, except as set forth in Subsection
7.3A.
79
<PAGE>
(f) Subject to the consent of PRPA, which shall not be unreasonably
withheld, HOLT may refinance the Export-Import Bank loan, and in connection
therewith grant a security interest in the Paceco Crane to the lender, provided
that: (i) the Export-Import Bank loan is repaid in full and all security
interests in connection therewith are terminated; (ii) the new loan is in an
amount not greater than the then current principal balance of the Export-Import
Bank loan; and (iii) the new loan is on terms and conditions (other than
interest rate) not more onerous than those of the Export-Import Bank loan. In
such event the provisions of Subsection 7.3A(e) shall apply with respect to such
new loan. PRPA's payments with respect to the lease and/or purchase of the
Paceco Crane shall not be affected by any such refinancing.
7.4 Ownership of HOLT Cranes and Equipment. The HOLT Cranes and all
other equipment provided by HOLT (including without limitation that equipment
described in Sections 7.1 and 7.2) shall be and remain the property of HOLT.
Upon the expiration or termination of this Agreement (except when (i) such
termination results from HOLT's exercise of its termination rights set forth in
Section 4.5; or (ii) HOLT terminates this Agreement for cause and a court having
jurisdiction has determined that PRPA, at the time of such termination, was in
default of this Agreement beyond any applicable cure period) PRPA shall have the
option to purchase any one or more of the HOLT Cranes at their fair market
value and on other mutually agreeable
80
<PAGE>
terms. In the event PRPA elects to purchase one or more HOLT Cranes pursuant to
this Agreement, HOLT shall deliver good title to each such HOLT Crane, free and
clear of all liens, encumbrances and security interests. PRPA shall exercise
such option, if at all, by giving written notice thereof to HOLT not less than
one hundred fifty (150) days prior to the end of the initial Term or the last
Renewal Period as to which HOLT timely exercised its option to renew, or
simultaneously with any notice to terminate this Agreement given by PRPA, as
applicable. If HOLT and PRPA are unable to mutually agree upon the fair market
value of and other terms relating to any HOLT Crane(s) which PRPA has notified
HOLT of PRPA's desire to purchase in accordance with this Section 7.4, within
thirty (30) days of PRPA's delivery of such notice to HOLT, then PRPA's option
to purchase such HOLT Crane(s) shall terminate. To the extent that PRPA elects
not to exercise its option to purchase any HOLT Crane, HOLT shall remove, at
its sole cost and expense, any of the HOLT Cranes that PRPA did not elect to
purchase. Immediately upon notification by PRPA of its election not to purchase
any one or more of the HOLT Cranes, HOLT shall commence and diligently conduct
the removal of any HOLT Crane not purchased by PRPA in accordance with this
Section and Section 2.5. The parties shall cooperate with one another as
promptly as possible after the parties have determined that the HOLT Cranes will
be removed from the Terminal in arranging a mutually satisfactory schedule and
plan (the "Plan") for the dismantling and removal of the HOLT Cranes during the
81
<PAGE>
HOLT Crane Removal Period. Such Plan shall take into account the interest of
PRPA in operating the Terminal to the maximum extent commercially reasonable and
the interest of HOLT in removing the HOLT Cranes in as expeditious a manner as
possible without incurring premium or extra costs. In the event the HOLT Crane
removal schedule included within such Plan extends past the last date of the
HOLT Crane Removal Period, such HOLT Crane Removal Period shall be deemed
extended to the first day after the last work identified on such schedule is
scheduled to be completed. In the event a notice to terminate is given less than
one hundred fifty (150) days prior to the effective date of such termination,
the HOLT Crane Removal Period shall be extended by the number of days by which
the date of such notice was less than one hundred fifty (150) days prior to the
effective date of such termination. If the parties cannot agree upon such a Plan
within fifteen (15) days after it has been determined that one or more of the
HOLT Cranes is to be removed, then they shall submit the matter to the
Arbitrators, and the decision of the Arbitrators shall be final and binding upon
the parties.
7.5 Heavy Lift Crane. HOLT recognizes and acknowledges that the Kocks
heavy lift (385T) crane is a unique and valuable asset of PRPA and the Port of
Philadelphia. Accordingly, HOLT covenants that it shall accommodate all requests
to use such heavy lift crane at commercially reasonable rates comparable to
industry standards, to the extent that such requested use does not unreasonably
interfere with HOLT's other
82
<PAGE>
operations at the Terminal. The heavy lift crane shall be used in the heavy lift
mode in only the area of the Terminal shown on Exhibit G attached hereto and
made a part hereof.
7.6 HOLT's Improvements.
(a) Holt shall, at its costs and expense, subject to the provisions
of this Section 7.6, construct or reconstruct the capital improvements set forth
on Exhibit I (the "HOLT Capital Improvements") at the Terminal during the Term
of this Agreement.
(b) Approval of Plans. HOLT shall not construct any HOLT Capital
Improvement or construct, effect major repairs or restorations of, alter or
demolish any works, structures or other improvements upon the Terminal,
including a change in the grade or filling of a berth thereof, without first
submitting to PRPA a complete set of drawings, plans, and specifications and
contracts and obtaining PRPA's written approval thereof, which approval shall
not be unreasonably withheld, and any other approvals of the Commonwealth, to
the extent required, and any approvals required by law. PRPA shall have the
right to order charges in said drawings, plans and specifications for reasonable
cause and HOLT shall make such changes at its own expense. HOLT shall keep
records of all goods, material and labor employed in connection with any such
construction and shall make the same available to PRPA at reasonable times upon
prior written notice.
(c) Compliance with Applicable Laws. Every work, structure or
improvement constructed, or alteration or change of
83
<PAGE>
grade made by HOLT shall conform with the plans and specifications as approved
by PRPA and any other entity or governmental agency whose approval is required,
and shall conform in all respects to the applicable federal, state, regional,
and local laws, statutes, ordinances, rules and regulations. The approvals given
as provided in this Section 7.6 shall not constitute a representation or
warranty as to such conformity and shall not relieve HOLT of its
responsibilities with regard thereto.
(d) Cost of Permits. HOLT, at its own expense, shall obtain all
permits necessary for such construction and shall require by contract that its
contractors and subcontractors comply with all applicable federal, state, and
local statutes, ordinances, rules and regulations, and with the provisions of
Section 22.1. PRPA shall cooperate with HOLT with respect to obtaining
necessary permits.
(e) Cost of Construction. All construction by HOLT pursuant to
this Section 7.6 shall be at HOLT's sole expense. Notwithstanding anything to
the contrary contained in the preceding sentence, or in Section 7.6(d), PRPA
agrees to reimburse HOLT in regard to each HOLT Capital Improvement for the
actual costs incurred by HOLT in connection with such HOLT Capital Improvement
up to the following maximum amounts:
(i) as to the Gatehouse Booth Project (as defined in Exhibit
I), Forty-Five Thousand Dollars ($45,000);
84
<PAGE>
(ii) as to the Shed 1-1A Project and the PRPA Parcel Project
(both as defined in Exhibit I), an aggregate amount of Two Million and Two
Hundred Fifty Thousand Dollars ($2,250,000);
(iii) as to the Shop Heaters Project (as defined in Exhibit I),
Sixty Thousand Dollars ($60,000);
(iv) as to the Striping and Signage Project (as defined in
Exhibit I), Two Hundred Thousand Dollars ($200,000);
(v) as to the Shed 3A Project (as defined in Exhibit I), Three
Hundred Thousand Dollars ($300,000), provided, however, that to the extent that
the cost of the demolition of Shed 3A exceeds $300,000 as a result of
environmental conditions, PRPA shall reimburse HOLT for the actual differential
in costs attributable to such environmental conditions in an amount up to the
difference between the total cost of the demolition and $300,000;
(vi) as to the Existing Gatehouse Project (as defined in
Exhibit I), One Hundred Thousand Dollars ($100,000); and
(vii) as to the Canopy Project (as defined in Exhibit I), Four
Hundred Fifty Thousand Dollars ($450,000); provided, however, that PRPA shall
not be obligated to reimburse HOLT in any amount until the Canopy Project is
incorporated into the Container Capital Improvement relating to the Permanent
Gate
85
<PAGE>
House or HOLT delivers the site for the Permanent Gate House as discussed in
Exhibit H, whichever is earlier.
With respect to item (i) above, PRPA shall reimburse HOLT within ten (10)
business days of PRPA's receipt from HOLT of an invoice for the purchase by HOLT
of the booths. As to item (iii) above, PRPA shall reimburse HOLT within thirty
(30) days of the date on which the Shop Heaters Project is completed. In respect
to items (ii), (iv), (v), (vi), and, subject to (vii) above, PRPA shall
reimburse HOLT, from time to time, within ten (10) business days after PRPA's
receipt from HOLT of an advance request. As to item (ii) above, PRPA shall pay
to HOLT by check, within ten days after the Effective Date, $175,000 as an
initial reimbursement to HOLT for HOLT's actual costs incurred to date in
connection with the Shed 1-1A Project. If any reimbursement due pursuant to this
Subsection has not been paid by PRPA within thirty (30) days of the date it is
due, HOLT may take a credit against the next payment of Base Compensation up to
the undisputed amount of such unpaid amount and may continue to do so until such
unpaid amount is paid in full. Each advance request shall delineate the item
against which the reimbursement shall be applied and shall be accompanied by (A)
a certificate from HOLT's architect or consultant certifying that the work
relating to such advance request has been completed in accordance with the plans
therefor approved by PRPA; (B) copies of all invoices, statements and bills
relating to any labor, material or other cost or expense to
86
<PAGE>
which such advance request relates and proof of payment thereof by HOLT; and (C)
an approval by PRPA's inspector of the requested advance. Reimbursement made by
PRPA to HOLT pursuant to HOLT's request shall be limited to no more than one per
calendar month, except as PRPA in its discretion may otherwise permit. The
aggregate amount reimbursed by PRPA to HOLT in respect of any advance request
for a HOLT Capital Improvement shall not exceed, in PRPA's opinion, the value of
work done and materials physically incorporated into such HOLT Capital
Improvement or delivered to and securely stored on the Terminal in connection
with such HOLT Capital Improvement (except for the final reimbursement paid by
PRPA to HOLT in respect of such HOLT Capital improvement). For the purposes of
this Section 7.6(e) the phrase "actual costs" shall mean all out-of-pocket
expenses for labor, services, materials, and permits and an overhead fee equal
to ten percent (10%) of HOLT's direct labor costs and materials associated with
such HOLT Capital Improvement. PRPA shall not be required to reimburse HOLT in
respect of any HOLT Capital Improvement in an amount greater than the maximum
amount therefor set forth above. PRPA agrees, however, if HOLT's actual costs in
connection with a HOLT Capital Improvement exceed the maximum reimbursable
amount for such HOLT Capital Improvement, as set forth above, to increase the
reimbursement to HOLT up to the amount of the savings, if any, realized on other
HOLT Capital Improvements, for application by HOLT against its actual costs in
87
<PAGE>
excess of the maximum reimbursable amount incurred in connection with the HOLT
Capital Improvements.
HOLT shall keep the Terminal free and clear of liens for labor and materials and
shall hold PRPA and the Commonwealth harmless from any responsibility in respect
thereto.
(f) Notices. HOLT shall give written notice to PRPA, in advance, of
the date it will commence any construction. Immediately upon the completion of
the construction, HOLT shall notify PRPA of the date of such completion and
shall, within thirty (30) days after such completion, file with PRPA a
statement, verified by an appropriate officer of HOLT, setting forth the cost of
the labor and material used. HOLT shall also file with PRPA, in a form
acceptable to PRPA, a set of "as built" plans for such construction.
(g) Ownership. All improvements, works and structures made or
erected by HOLT upon the Terminal under this Section 7.6 shall be and become the
property of PRPA, except as provided in Section 6.2.
(h) Diligence. HOLT will proceed diligently to construct its
improvements upon the Terminal without delay, and in a good and workmanlike
manner, employing therefor workers and materials satisfactory in quantity and
quality to PRPA. PRPA shall not be responsible for any delay in any
construction schedule for any HOLT Capital Improvement except to the extent such
delay is caused by any action or inaction by PRPA and such
88
<PAGE>
action or inaction is not remedied after notice and opportunity to cure as
provided herein.
(i) Inspections.
(i) HOLT will permit and assist PRPA or PRPA's representatives
to make inspections of the Terminal and HOLT's improvements. Prior to the
commencement of any construction by HOLT, HOLT shall provide to PRPA a
construction schedule. HOLT and PRPA shall establish an inspection schedule
setting forth reasonable and appropriate times for PRPA to make such
inspections, although PRPA may choose to inspect more frequently. If upon any
such inspection PRPA in writing reasonably rejects as unsound or improper and
not in substantial compliance with the plans any portion of the improvements or
any materials used or to be used therein, HOLT will promptly commence to remove
from the Terminal or improvements (as the case may be) all rejected materials,
and will take down and replace (or, at PRPA's option, repair) any portion of
such improvements so rejected.
(ii) PRPA's inspections are solely for PRPA's benefit and no
action or inaction by PRPA shall constitute any representation that such
improvements comply with the respective plans or that such improvements are
sound or free from defects in material, design or workmanship.
(j) Commonwealth. The Commonwealth, by joining in this Agreement
for the limited purposes set forth on the signature page hereof, as one of the
fee owners of part of the
89
<PAGE>
Commonwealth Area and Shed C, consents to the specific construction, repairs,
restorations, alterations, demolition and filling of berths by HOLT which PRPA
has approved pursuant to this Agreement, and such other matters as PRPA may from
time to time approve in the future under this Section 7.6, to the extent
required under the Commonwealth Sublease, the Commonwealth Leases or in any
other instrument, lease or agreement.
(k) Mechanics' and Materialmen's Lien Waivers. Prior to the
commencement of any construction or other performance by a contractor,
subcontractor or materialman under a contract with HOLT for improvements at the
Terminal, HOLT shall cause a waiver of mechanics' and materialmen's liens from
all such contractors, subcontractors and materialmen to be filed in accordance
with the Pennsylvania mechanics' lien law.
(1) Contractors. In addition to the foregoing requirements, HOLT
shall not construct, effect major repairs or restorations of, alter or demolish
any works, structures or other improvements upon the Terminal without first
obtaining PRPA's written approval of the identity of the contractor (unless HOLT
or a HOLT affiliate acts as the general contractor), which approval shall not be
unreasonably withheld. HOLT shall have the exclusive right to salvage any
structural steel and other materials from any demolition on the Terminal and use
such salvaged materials at that time or in the future in connection with
improvements on the Terminal. HOLT hereby releases PRPA from any and all claims
arising from or related to the condition
90
<PAGE>
of such salvaged materials or any contaminants or hazardous substances that may
be contained therein.
7.7 PRPA's Improvements.
(a) PRPA Constructed Improvements. Subject to the provisions of
this Section 7.7, the capital improvements set forth on Exhibit H (the "PRPA
Capital Improvements") shall be constructed or reconstructed by PRPA at the
Terminal during the Term of this Agreement. The provisions of Exhibit H,
including the Comments sections thereof, are incorporated herein by reference
and shall be given the same force and effect as if set forth in full in the main
body of this Agreement. The term "Container Capital Improvements" shall mean
those PRPA Capital Improvements designated as such on Exhibit H. PRPA shall not
be required to expend on any PRPA Capital Improvement more than the maximum cost
therefor set forth on Exhibit H. PRPA agrees, however, to use its best efforts
(i) to raise additional funds to complete the PRPA Capital Improvements if the
maximum costs set forth on Exhibit H are insufficient, and (ii) if the maximum
costs set forth on Exhibit H are exceeded in one or more of the PRPA Capital
Improvements, to cause the savings, if any, realized on the other PRPA Capital
Improvements to be made available to complete the PRPA Capital Improvements
where such maximum costs were exceeded. PRPA represents that it has requested
from the Commonwealth capital funds for its fiscal year 1990-1991 and 1991-1992
the total sum of Sixteen Million Seven Hundred Sixty-Seven Thousand Dollars
($16,767,000), which capital funds are to
91
<PAGE>
be used for the PRPA Capital Improvements. PRPA agrees that upon receipt of
said capital funds, to the extent required, PRPA shall use said capital funds
for the PRPA Capital Improvements. PRPA agrees that any portions of capital
funds available to it under the capital budget of the Commonwealth and
designated for the Terminal which are not spent in connection with the PRPA
Capital Improvements shall, to the maximum extent permitted by law, be applied
to other capital improvements at the Terminal. PRPA Capital Improvements and the
HOLT Capital Improvements are occasionally hereinafter collectively referred to
as the "Capital Improvements."
(b) Timing of Improvements. PRPA will use its best efforts to cause
the PRPA Capital Improvements to be constructed promptly and by the respective
target completion dates set forth in Exhibit H. Notwithstanding the preceding
sentence, PRPA shall not be obligated to commence the construction of the Third
Crane Rail Project (as defined in Exhibit H) until PRPA has been provided with
evidence satisfactory to PRPA that HOLT has obtained all necessary approvals and
has full authority to move the Gloucester Cranes to the Terminal. If PRPA
thereafter fails to proceed with due diligence to initiate and complete the
Third Crane Rail, then HOLT may install the Third Crane Rail and recover its
cost in connection therewith by credits against payments of Base Compensation
due hereunder, may seek specific performance of this Agreement, and/or may seek
any damages to which it may be legally
92
<PAGE>
entitled. In the event that on or before August 31, 1991, HOLT has not provided
to PRPA such evidence, then thereafter the Third Crane Rail shall be deemed to
have been completed for purposes of Article III. In the event that HOLT elects
to move the Gloucester Cranes to PAMT after June 16, 1994 and provides to PRPA
notice of such intent and an opinion of its counsel as contemplated by Section
23.1, PRPA shall be obligated to complete the Third Crane Rail within one
hundred twenty (120) days after PRPA's receipt of such notice and opinion. In
the event HOLT fails to move the Gloucester Cranes to the Terminal within ninety
(90) days after PRPA's completion of the Third Crane Rail, as the same may be
extended by force majeure, whether before or after June 16, 1994, then HOLT
shall within ten (10) business days of notice from PRPA reimburse PRPA for its
actual costs incurred in connection with the Third Crane Rail. If HOLT elects to
transfer the Gloucester Cranes after June 16, 1994 and PRPA fails to complete
the Third Crane Rail Project within one hundred eighty (180) days, as the same
may be extended by force majeure, after its receipt of HOLT's notice and the
required opinion, then PRPA shall pay to HOLT as liquidated damages Fifty
Thousand Dollars ($50,000).
(c) Effect on HOLT's Operations. HOLT recognizes that its
operations will be affected during the time construction or reconstruction of
the Capital improvements is carried out. HOLT agrees that PRPA is not liable for
damages resulting from delays in construction or from inability to construct the
Capital
93
<PAGE>
Improvements except to the extent such delay is caused by any action or inaction
by PRPA and such action or inaction is not remedied after notice and opportunity
to cure as provided herein. HOLT agrees the completion of the Capital
Improvements is not a condition precedent to this Agreement's becoming effective
or remaining in effect. PRPA shall use its best efforts to see that any work in
respect of the PRPA Capital Improvements does not unreasonably interfere with
any terminal operations; however, nothing in this Section 7.7(c) shall be deemed
to require PRPA to conduct such work at night or at times other than normal
business hours except on an occasional basis as necessary to prevent significant
interference with terminal operations.
(d) Supervision of Work. HOLT recognizes that PRPA and/or the
Commonwealth reserve total control over the design of the Capital Improvements,
award of any contracts, and supervision of contractors for work undertaken by
PRPA, provided that PRPA shall consult with and take into account the advice of
HOLT in the design of the Capital Improvements and the construction thereof. The
foregoing sentence shall not be deemed to require PRPA to accept HOLT's advice.
During construction of the Capital Improvements, HOLT shall give no orders to
any contractors unless first requested or permitted in writing by PRPA to do so.
HOLT agrees to cooperate fully with contractors in providing all necessary
access to the Terminal and generally cooperating with contractors.
94
<PAGE>
(e) Commonwealth. The Commonwealth, by joining in this Agreement for
the limited purposes set forth on the signature page hereof, as one of the fee
owners of part of the Commonwealth Area and Shed C, consents to the
construction, reconstruction and demolition by PRPA of certain improvements
described in this Section 7.7, to the extent required under the Commonwealth
Sublease, or any other instrument, lease or agreement.
(f) Mechanics' and Materialmen's Lien Waivers. Prior to the
commencement of any construction or other performance by a contractor,
subcontractor or materialman under a contract with PRPA for improvements at the
Terminal, PRPA shall cause a waiver of mechanics' and materialmen's liens from
all such contractors, subcontractors and materialmen to be filed in accordance
with the Pennsylvania mechanics' lien law. To the extent that PRPA's properties
are exempt from mechanics' and materialmen's liens pursuant to applicable
statute, PRPA may, at its option, elect not to cause such waivers to be filed.
7.8 Building 2A. PRPA and HOLT acknowledge that it may be necessary in
the future to discuss the demolition of Building 2A. PRPA and Holt agree to
cooperate in assessing the need for such demolition and in accomplishing the
same if it is necessary.
95
<PAGE>
ARTICLE VIII
UTILITIES
8.1 Utilities. Utility costs including costs of water, electricity,
gas, propane, and sewer service and telephone service billed to the Terminal,
will be borne by HOLT. HOLT shall pay any such utility costs for which it is
responsible with respect to the Terminal when due and payable and prior to the
imposition of any late charge or penalty by the supplier of the utility. HOLT
shall be solely responsible for any such late charge or penalty.
ARTICLE IX
TAXES
9.1 Taxes. HOLT covenants and agrees to pay all lawful taxes,
assessments or charges which may be levied by any federal, state, county, city
or any tax or assessment levying agency imposed upon HOLT in connection with
HOLT's activities at the Terminal (collectively "Imposition"). HOLT shall not
permit any tax lien, other than the lien of taxes not yet due and payable, to
attach to the Terminal, PRPA's interest therein, the HOLT Cranes or any other
property of HOLT on or about the Terminal.
96
<PAGE>
9.2 Appeals. HOLT shall have the right to contest or object to the
amount or validity of any such Imposition by appropriate legal proceedings, but
this shall not be deemed or construed in any way as relieving, modifying or
extending the covenants of HOLT to pay any such Imposition at the time and in
the manner provided in Section 9.1, unless HOLT shall have given prior written
notice to PRPA of intent to so contest or object to an Imposition, and unless,
at PRPA's sole option, (i) HOLT shall demonstrate to PRPA's satisfaction that
the legal proceeding shall operate conclusively to prevent the placing of a lien
on the Terminal, or any part thereof, to satisfy such Imposition prior to final
determination of such proceedings; or (ii) HOLT shall furnish a good and
sufficient bond or surety as requested by and satisfactory to PRPA; or (iii)
HOLT shall have provided PRPA with a good and sufficient undertaking as may be
required or permitted by law to accomplish a stay of such proceedings.
ARTICLE X
ENVIRONMENTAL MATTERS
10.1 Environmental Matters. HOLT represents, warrants and covenants
that it shall comply at all times with the following terms of this Agreement
relating to environmental matters. HOLT shall not, however, be responsible for
any noncompliance to the extent attributable to contamination already existing
on the applicable HOLT Possession Date; or (ii)
97
<PAGE>
contamination caused by PPC or PRPA after the applicable HOLT Possession Date.
Nothing herein shall be deemed to impair HOLT's right to contest any
governmental agency's orders or directives with respect to environmental
matters.
10.2 Compliance With Law.
(a) HOLT shall conduct all of its activities at the Terminal in
compliance with all statutes, ordinances, regulations, orders, and requirements
of common law concerning (i) those activities, (ii) repairs or construction of
any improvements, (iii) handling of any materials, (iv) discharges to the air,
soil, the Delaware River, or other surface water or groundwater, and (v)
storage, treatment, or disposal of any waste at or connected with any activity
at the Terminal ("Environmental Statutes"). HOLT shall obtain all permits,
licenses, or approvals and shall make all notifications and registrations
required by Environmental Statutes with respect to operation of the Terminal and
its activities at the Terminal. PRPA shall cooperate with HOLT in obtaining such
permits, licenses or approvals; such cooperation shall include the provision to
HOLT of information in PRPA's control or possession. HOLT shall at all times
comply with the terms and conditions of any such permits, licenses, approvals,
notifications, or registrations.
(b) HOLT shall provide to PRPA copies of all of the following, to
the extent they pertain to HOLT's operation of or its activities at the
Terminal:
98
<PAGE>
(i) applications or other materials submitted to any
governmental agency in compliance with Environmental Statutes;
(ii) any notification submitted to any person pursuant to
Environmental Statutes;
(iii) any permit, license, approval, or amendment or
modification thereto granted pursuant to Environmental Statutes;
(iv) any record or manifest required to be maintained
pursuant to Environmental Statutes; and
(v) any correspondence, notice of violation, summons, order,
complaint, or other document received by HOLT pertaining to
compliance with Environmental Statutes.
(c) HOLT shall promptly comply with any request by PRPA that HOLT:
(i) provide information or access to the Terminal reasonably
necessary to enable PRPA to demonstrate to a third person or
governmental agency that no violation of Environmental Statutes
or contamination as defined in this Article X has existed or does
exist at the Terminal; or
(ii) provide signatures, acknowledgments, affidavits, or
otherwise cooperate in a reasonable manner to reasonable requests
by PRPA to obtain any governmental approvals necessary under
Environmental Statutes to transfer any interest in the Terminal
or to transfer any permit or approval held by PRPA under
Environmental Statutes.
99
<PAGE>
10.3 Site Contamination.
(a) HOLT shall not cause or suffer contamination of the Terminal,
provided, however, that nothing herein shall be deemed to create an obligation
on the part of HOLT with respect to (i) contamination already existing before
the applicable HOLT Possession Date; or (ii) contamination caused by PPC or PRPA
or their respective agents, licensees, lessees or invitees (other than HOLT and
Portside) after the applicable HOLT Possession Date. HOLT shall at all times
handle hazardous substances and cause hazardous substances to be handled in a
manner which will not cause an undue risk of contamination of the Terminal or
the surrounding waters.
(b) For purposes of this Article X and the Agreement, the term
"contamination" shall mean the uncontained presence of hazardous substances at
the Terminal, or arising from the Terminal which may require remediation under
any applicable law.
(c) For purposes of this Article X and the Agreement, "hazardous
substances" shall mean "hazardous substances" as defined pursuant to the federal
Comprehensive Environmental Response, Compensation and Liability Act, "regulated
substances" within the meaning of Title I of the federal Resource Conservation
Recovery Act, "hazardous substances" or "contaminants" as defined pursuant to
the Pennsylvania Hazardous Sites Cleanup Act, "hazardous waste" as defined
pursuant to the Pennsylvania Solid Waste Management Act,
100
<PAGE>
or any other substances which may be the subject of liability pursuant to the
Pennsylvania Clean Streams Law.
10.4 Other Hazardous or Toxic Material. HOLT shall not handle or permit
the introduction of polychlorinated biphenyls ("PCBs"), as defined pursuant to
the federal Toxic Substances Control Act, substances containing PCBs, asbestos,
or materials containing asbestos, on or onto the Terminal. Should HOLT discover
the presence of asbestos or PCBs which were not present prior to the applicable
HOLT Possession Date, HOLT shall take all steps necessary promptly to remove and
to dispose of those materials in compliance with law. Should HOLT discover the
presence of asbestos or PCBs on the Terminal which were present prior to the
applicable HOLT Possession Date, it shall notify PRPA and the parties shall
reach agreement on a remediation plan. PRPA shall bear the cost of implementing
any such remediation plan.
10.5 Disposal and Removal of Waste. HOLT shall, at its sole cost,
through its own forces (if no license is required or if HOLT is properly
licensed) or through contract with a reputable, private licensed refuse removal
firm, remove and dispose of any waste generated at the Terminal, and for which
HOLT is responsible under this Article X, in accordance with all Environmental
Statutes.
10.6 Indemnification by HOLT. HOLT hereby agrees to indemnify, defend
and hold PRPA and PPC harmless of, from, and against any and all expense, loss,
or liability suffered by PRPA
101
<PAGE>
or PPC by reason of (a) HOLT's generation, manufacture, introduction, use,
handling, transportation or disposal of hazardous substances, or (b) HOLT's
breach of any of the provisions of this Article X, including (but not limited
to) (i) any and all expenses that PRPA of PPC may incur to comply with any
Environmental Statutes; (ii) any and all costs that PRPA or PPC may incur in
studying or remedying any contamination at or arising from the Terminal; (iii)
any and all costs that PRPA or PPC may incur in studying, removing, disposing,
or otherwise addressing any materials which are the subject of this Article X;
(iv) any and all fines, penalties, judgments or other sanctions assessed upon
PRPA or PPC by reason of a failure of HOLT to have complied with Environmental
Statutes; (v) any and all loss of value of the Terminal by reason of (A) a
failure of HOLT to have ensured compliance with Environmental Statutes, (B)
contamination of the Terminal, or (C) the presence on the Terminal of any other
hazardous or toxic materials which are the subject of this Article X; and (vi)
any and all legal and professional fees and costs incurred by PRPA or PPC in
connection with the foregoing.
10.7 PRPA Responsibilities. PRPA hereby agrees to be responsible for
and, if required by the Environmental Statutes referred to in Subsections
10.2(a)(iii)-(v) or if it unreasonably interferes with HOLT's use or operation
of the Terminal, to promptly remedy (a) any failure by any party to have
complied with any Environmental Statutes at or with respect to the Terminal
before the applicable HOLT Possession Date, (b) the
102
<PAGE>
disposal of hazardous substances by or on behalf of PRIPA or PPC, (c)
contamination of the Terminal which existed prior to the applicable HOLT
Possession Date, and (d) contamination of the Terminal caused after the HOLT
Possession Date by or on behalf of PRPA or PPC. In addition, PRPA agrees that in
connection with all new construction and all repairs for which it is
responsible, it shall comply with all Environmental Statutes. In the event PRPA
breaches the covenants set forth in the Section 10.7, HOLT may, in addition to
other damages to which it may be entitled, recover its reasonable attorney's
fees attributable to such breach.
10.8 Inspections. PRPA and the Commonwealth and their agents may, at
reasonable times but without the necessity of notice, enter the Terminal to
conduct reasonable inspections, tests, samplings, or other investigations to
satisfy itself that HOLT has complied with the provisions of this Article X.
10.9 Remedies.
(a) Upon material breach by HOLT of any provision of this Article X, or
upon a pattern of less significant breaches, PRPA may at its sole discretion
terminate this Agreement by written notice to HOLT, whereupon HOLT shall
immediately vacate the Terminal. No breach of any provision of this Article X
shall be grounds for termination of this Agreement unless (i) HOLT has received
notice of said breach and (ii) after such notice, HOLT is not proceeding in good
faith with all due
103
<PAGE>
diligence to bring itself into compliance with this Agreement and to cure any
past noncompliance.
(b) The parties recognize that no adequate remedy at law may exist for
a breach of this Article X. Accordingly, PRPA may obtain specific performance of
any provision of this Article X.
(c) This paragraph shall not be construed to limit any other remedies
which PRPA may have against HOLT hereunder, at law or in equity for a breach of
this Article X.
10.10 Survival. The provisions of this Article X shall survive the
expiration or termination of this Agreement. No subsequent modification or
termination of this Agreement by agreement of the parties or otherwise shall be
construed to waive or to modify any provisions of this Article X unless the
termination or modification agreement or other document expressly states in
writing.
ARTICLE XI
ASSIGNMENT AND LICENSING
11.1 Assignment and Subleasing: Transfers of Stock.
(a) HOLT shall not assign, hypothecate, encumber or transfer this
Agreement or any interest herein, in whole or in part, or sublease its interest
in the Terminal, in whole or in part (each a "Transfer"), to any person or
entity (each a
104
<PAGE>
Transferee"), nor shall HOLT effect or permit the shareholders of HOLT to
effect an issuance, trade, sale, pledge, hypothecation, assignment, or transfer
of the capital stock of HOLT (each such transaction is herein call a "Stock
Transaction") except as specifically permitted hereunder. Except as provided in
Section 11.1(d), no Transfer shall be permitted if the Transferee is, and no
Stock Transaction shall be permitted if, as a result thereof, the holder of any
capital stock of HOLT would be, one or more of the following:
(1) a reputed member of or associated with organized crime or a
criminal syndicate, a convicted felon, a racketeer, or similar disreputable
persons or entities which in PRPA's reasonable opinion would tend to cause
a substantial number of persons not to want to deal with PRPA or use the
Terminal;
(2) a party that has breached a material obligation with PRPA, PPC, or
the Commonwealth;
(3) a person or entity with which the Commonwealth declines to deal as
a matter of an authorized Commonwealth public policy as a result of such
person's or entity's affiliation with a foreign government; or
(4) in the reasonable opinion of PRPA, as to Transferees only:
(A) not financially and otherwise capable of carrying out in a
satisfactory and timely manner all of HOLT's obligations hereunder,
105
<PAGE>
(B) suspect in its capability, willingness or desire to conduct
its operations at the Terminal in such a fashion as to maximize the
use of the Terminal as set forth in Section 1.6 hereof.
(b) HOLT shall not effect or permit to be effected any Transfer or
Stock Transaction without providing PRPA with prior written notice thereof. No
such Transfer or Stock Transaction may be effected during the twenty (20) day
period following the giving of such notice. If at or before the end of the
twenty (20) day period PRPA informs HOLT that, in PRPA's opinion, such Transfer
or Stock Transaction will not violate the requirements set forth above, or if
PRPA fails to notify HOLT at the end of such twenty (20) day period that such
Transfer or Stock Transaction, in PRPA's opinion, would violate such
requirements, then HOLT may close the Transfer or Stock Transaction within the
next one hundred twenty (120) or one hundred eighty (180) days, respectively. If
the Transfer or Stock Transaction is not closed within such one hundred twenty
(120) or one hundred eighty (180) day period, as the case may be, then HOLT
shall be required to comply in full with the provisions of this Section prior to
closing such Transfer or Stock Transaction. If PRPA notifies HOLT on or before
the end of the twenty (20) day period that the intended Transfer or Stock
Transaction, as the case may be, in PRPA's opinion, would violate such
requirements along with the reason therefor, then HOLT will not close or permit
the closing of the Transfer or Stock
106
<PAGE>
Transaction for an additional ten (10) days following such notice from PRPA.
Nothing herein contained shall be deemed to give PRPA the right to prohibit the
closing of any intended Transfer or Stock Transaction which satisfies all of the
requirements and other provisions of this Section 11.1.
(c) Notwithstanding that one or more permitted Transfers or Stock
Transactions may have occurred, if the Terminal shall cease to be managed by
Holt Management at any time during the Term hereof, such an event shall
constitute a material breach of this Agreement. As used in this Section "Holt
Management" shall mean:
(1) for so long as he is in good health and sixty-five (65)
years of age or less, Thomas J. Holt; or
(2) one or more of Thomas J. Holt, Jr. and Leo Holt or such
other member of the immediate family of Thomas J. Holt which
other member may be approved for such purpose by PRPA by entering
into a formal amendment to this Agreement; or
(3) an adequate, competent staff of other management
personnel which in PRPA's reasonable judgment is comparable in
knowledge and skill to the existing management personnel of HOLT
at the execution of this Agreement.
(d) The provisions of this Section 11.1 shall not apply to (i) any
Stock Transaction which is incident to a sale of any of the common stock of HOLT
to not less than 100 purchasers in a public offering pursuant to a registration
statement filed
107
<PAGE>
with the Securities and Exchange Commission and any subsequent resales of such
stock on a public market or exchange, or sales of common stock permitted by Rule
144 or any comparable rule of the Securities and Exchange Commission promulgated
under the Securities Act of 1933, as amended, or (ii) any Stock Transaction
involving securities which are non-voting (except as a class in matters required
by law to be voted upon by the class, and except for voting rights permitted
upon the occurrence of a certain event or set of facts which constitute a
failure of HOLT to meet certain financial obligations).
(e) HOLT has in formed PRPA that it contemplates assigning all of
its interest in, to and under this Agreement to Portside or another designee
selected by HOLT. In the event HOLT desires to so transfer its interest, HOLT
agrees that it shall, in addition to the other requirements of this Section
11.1, guarantee and become a surety to PRPA, under terms and conditions
acceptable to PRPA, for the performance by Portside or such other designee of
all of the agreements, covenants and obligations hereunder. Such guarantee by
HOLT of all obligations of Portside or such other designee shall be deemed to
satisfy the requirements of Subsection 1-1.1(a)(4)(A) with respect to such
party.
(f) HOLT has informed PRPA that it intends to sublease the
Refrigerated Warehouse to Portside effective as of the Effective Date. PRPA
consents to such sublease, provided
108
<PAGE>
that such sublease shall not diminish in any respect HOLT's obligations
hereunder.
11.2 PRPA's Assignment and Successors. PRPA shall have the right to
assign, hypothecate, or transfer this Agreement, its interest in and to the
Terminal, or any interest in either of the foregoing in whole or in part.
ARTICLE XII
SIGNS AND PUBLICITY
12.1 Signs. No signs or placards of an advertising or promotional
nature shall be painted, inscribed or placed in or on the Terminal or any
building or structure located thereon without the prior written consent of PRPA,
which shall not be unreasonably withheld. HOLT shall be permitted to paint, at
its cost and expense, the HOLT logo and corporate name, along with PRPA's logo
and corporate name, on the roofs of the sheds, on the gatehouse, and on the
Cranes. PRPA agrees promptly to remove or repaint at its cost any sign (other
than a sign painted on or attached to a roof of any building, the gatehouse or
any Crane at the Terminal) not painted over by HOLT. HOLT agrees to remove
promptly and to the satisfaction of PRPA, at the cost and expense of HOLT, upon
the expiration or the earlier termination of this Agreement, any and all signs
and placards placed by it upon the
109
<PAGE>
Terminal. PRPA agrees that HOLT may display the sign currently located on the
Gatehouse.
12.2 Publicity. HOLT and PRPA agree to cooperate with each other in
advertising, promotion and marketing activities for the Terminal and the Port of
Philadelphia.
ARTICLE XIII
DAMAGE TO THE TERMINAL
13.1 Damage and Destruction.
(a) In the event the Terminal or any part thereof, or any PRPA
Crane, is damaged or destroyed by fire or other casualty, provided that HOLT is
not in default of this Agreement and that no event, occurrence, action or
inaction which with the passage of time or giving of notice, or both, would
render HOLT in default of this Agreement has occurred and is continuing, PRPA
shall, promptly and diligently restore, rebuild and repair the Terminal or the
PRPA Crane, as the case may be, to the extent of available insurance proceeds,
as nearly as practicable to the condition existing immediately prior to such
casualty.
(b) Intentionally omitted.
(c) In the event one of the HOLT Cranes, or any part thereof is
damaged or destroyed by fire or other casualty, HOLT shall, with reasonable
promptness and diligence, restore,
110
<PAGE>
rebuild and repair the damaged HOLT Crane to the extent of available insurance
proceeds in such a manner to enable the HOLT Crane to operate substantially the
same as it operated immediately prior to such damage or destruction.
(d) and (e) Intentionally omitted.
(f) HOLT shall be entitled to an equitable reduction of the Base
Compensation during any period in which the Cranes or the Terminal or any
portion thereof is not useable by HOLT due to damage or destruction caused by a
fire or casualty to which this Article XIII applies.
ARTICLE XIV
CONDITION OF TERMINAL AND PRPA CRANES
14.1 Condition and Surrender of Terminal. Except to those items of
repair and construction that PRPA herein expressly agrees to undertake, and
except as to latent structural defects, HOLT accepts PAMT in its "as is"
condition, without any representation or warranty by PRPA. HOLT has conducted
such inspections of the Additional Parcels and the DRPA Parcel as HOLT deems
necessary or advisable and PRPA has provided to HOLT a copy of a report
regarding the Additional Parcels, and HOLT has elected to occupy and accept the
Additional Parcels and the DRPA Parcel in their "as is" condition without any
warranty or representation whatever by PRPA with respect to the condition
111
<PAGE>
thereof (including but not limited to warranties or representations with respect
to latent structural defects, as to which HOLT agrees that PRPA shall have no
liability or responsibility). PRPA represents and warrants as of April 1, 1989
that there had been no material adverse changes to the condition of PAMT
(excluding the Refrigerated Warehouse and Berth 6) from that condition shown in
the report prepared by Day and Zimmerman, Inc. and previously delivered to HOLT.
PRPA agrees to complete the deferred maintenance items to the Terminal set forth
on Exhibit N hereto, within the times set forth therein. HOLT and PPC caused to
be completed a joint survey of PAMT (other than the PRPA Cranes, Berth 6 and the
Refrigerated Warehouse) on April 1 and 2, 1989, which survey reflects the state
and condition of such portions of PAMT, including the improvements, at the
inception of the PPC-Holt Agreement. Holt and PPC caused a videotape of such
survey to be prepared by Lawyers' Video Service Inc. HOLT covenants and agrees
that at the expiration of the Term or earlier termination of this Agreement, it
will quit and surrender the Terminal with all the improvements thereon in as
good state and condition as the same were on the applicable HOLT Possession
Date, excepting reasonable wear and tear.
112
<PAGE>
ARTICLE XV
WAIVER
15.1 Waivers. No waiver by either party at any time of any of the
terms, conditions, covenants or agreements of this Agreement shall be deemed or
taken as a waiver at any time thereafter of the same or any other term,
condition, covenant or agreement herein contained, nor of the strict and prompt
performance thereof by the proper party. No delay, failure or omission of either
party to exercise any right, power, privilege or option arising from any
default, nor subsequent acceptance of guarantee then or thereafter accrued,
shall impair any such right, power, privilege or option, or be construed to be a
waiver of any such default or relinquishment thereof, or acquiescence therein,
and no notice by either party shall be required to restore or revive time as of
the essence hereof after waiver by the other party of default in one or more
instances. No option, right, power, remedy or privilege of either party shall be
construed as being exhausted or discharged by the exercise thereof in one or
more instances. It is agreed that each and all of the rights, powers, options or
remedies given to PRPA or HOLT by this Agreement are cumulative, and no one of
them shall be exclusive of the other or exclusive of any remedies provided by
law, and that the exercise of one right, power, option or remedy by PRPA or HOLT
shall not impair its rights to any other right, power, option or remedy.
113
<PAGE>
ARTICLE XVI
WAIVER OF CLAIMS; TERMINATION BY
REGULATORY AGENCY OR COURT DECREE
16.1 Waiver of Claims. HOLT hereby waives any claim against PRPA, the
Commonwealth, PPC and their officers, attorneys, agents or employees for damage
or loss caused by any suit or proceedings initiated by any third parties
directly or indirectly attacking the validity of the PPC-Holt Agreement or this
Agreement, or any part thereof, or by any judgment or award in any suit or
proceedings declaring the PPC-Holt Agreement or this Agreement null, void or
voidable, or preventing or delaying the same, or any part thereof, from being
carried out. PRPA and HOLT agree to cooperate in good faith in the defense of
any such suit or proceeding. Nothing contained in the foregoing shall be deemed
to permit any breach by PRPA of its representation and warranty in the first two
sentences of Section 1.7.
16.2 Termination by Regulatory Agency or Court Decree. If a regulatory
agency or a court of competent jurisdiction renders a decision which has become
final and which will prevent the performance by PRPA or by HOLT of their
respective material obligations under this Agreement (other than any obligation
of HOLT relating to the Gloucester Cranes or to HOLT's customers currently
calling at the Gloucester Terminal), then either PRPA
114
<PAGE>
or HOLT may terminate this Agreement by written notice; thereafter all rights
and obligations hereunder (with the exception of any undischarged rights and
obligations that accrued prior to the effective date of termination and except
as otherwise stated herein) shall terminate.
ARTICLE XVII
FORCE MAJEURE
17.1 Force Majeure.
(a) Neither party hereto shall be deemed to be in breach of this
Agreement by reason of failure to perform any of its obligations hereunder, if
and to the extent that such failure is caused by a force majeure, which is a
cause beyond the control of such party, such as an act of God, fire, flood,
explosion, acts of war, riot, civil disorder, casualty caused by third parties
not under the control of the party seeking to invoke the application of this
Section, strikes or work stoppages (except such strikes or work stoppages
resulting from such party's "unfair labor practices," as that term is used in
the National Labor Relations Act) or governmental action. (Strikes or work
stoppages shall be deemed not to have resulted from a party's unfair labor
practices until such time, if any, that there is a final administrative or
judicial determination, and no appeal is pending and the time for any such
appeal has expired, that the
115
<PAGE>
conduct that caused such strike or work stoppage was an unfair labor practice,
in which event any reduction in Base Compensation pursuant to Subsection 17.1(b)
attributable to the strike or work stoppage caused by such unfair labor practice
shall be paid by HOLT to PRPA within thirty (30) days of such determination. If
the parties cannot agree upon the amount due pursuant to the preceding sentence,
the matter shall be submitted to the Arbitrators, whose decision shall be
binding.)
(b) The amount of Base Compensation payable by HOLT hereunder and
HOLT's Container Pick Guarantees and Breakbulk Guarantee shall not be affected
by an event of force majeure except that if and to the extent that an event of
force majeure materially adversely affects the ability of HOLT to conduct
maritime operations at the Terminal or the ability of a normal volume of vessels
to use the Terminal, the Container Pick Guarantees and the Breakbulk Guarantee
shall be equitably reduced and, in recognition of PRPA's reliance on the payment
of such sums to meet its operating budget, the Base Rent and Base Rent Surcharge
shall be reduced by fifty percent (50%) of what would, in the absence of this
Subsection, be an equitable reduction. If the parties cannot agree upon the
reductions, if any, pursuant to this Subsection, the matter shall be submitted
to the Arbitrators, whose decision shall be binding.
116
<PAGE>
ARTICLE XVIII
HOLT'S COVENANTS
18.1 HOLT's Further Covenants. HOLT further covenants that HOLT shall:
(a) Conduct all operations of HOLT at the Terminal in accordance
with Section 1.4, including without limitation, the guidelines of the United
States Coast Guard, if any, and the Fire Department of the City of Philadelphia;
(b) Cause a boiler and machinery inspection service approved by the
agency having jurisdiction over same, to make such inspections and
certifications as are required by the Boiler and Unfired Pressure Vessel
Regulations of the Pennsylvania Department of Labor and Industry, and furnish
all reports of such inspections and all certifications resulting therefrom to
PRPA;
(c) Not remove, attempt or manifest any intention to remove any
property from the Terminal other than in the ordinary course of business;
(d) Not vacate or permit the Terminal (other than the Additional
Parcels pending approval of a Proposed Master Plan) to be abandoned, nor cease
operation of its business at the Terminal (other than the Additional Parcels
pending approval of a Proposed Master Plan); and
(e) Not permit to remain, and promptly discharge (in no event later
than thirty (30) days following the earlier of
117
<PAGE>
notice of filing by lien or any notice from PRPA), at its cost and expense, all
liens and charges upon the Terminal or any part thereof arising by reason of any
labor or materials furnished or claimed to have been furnished to or on behalf
of HOLT (except if furnished by PRPA), its employees, agents, contractors,
invitees or licensees (except other stevedoring companies) or by reason of any
construction, alteration, addition, repair or demolition of any part of the
Terminal by or at the direction of HOLT, its employees, agents, contractors,
invitees, or licensees. PRPA shall have, and is hereby given, authority to enter
upon the Terminal at any reasonable time to post any notices in a reasonable
manner and at reasonable places which in its opinion shall be necessary to hold
PRPA and the Commonwealth harmless from any claim or liability arising out of
any work done on the Terminal by HOLT or at HOLT's direction. Notice is hereby
given that PRPA and the Commonwealth will not be liable for any labor, services
or materials furnished or to be furnished by HOLT, or to any one holding the
Terminal through or under HOLT, and that no mechanic's or other such lien for
any such labor or materials shall attach to or affect the interest of PRPA in
and to the Terminal.
18.2 Conditions. All of HOLT's covenants, agreements and provisions
contained in this Agreement shall be deemed to be conditions of this Agreement,
subject to applicable periods of grace and for cure.
118
<PAGE>
ARTICLE XIX
REMEDIES: ARBITRATION
19.1 PRPA's Remedies. If HOLT fails to pay in full when due any
installment of Base Compensation or any other charge, expense or cost to be paid
by HOLT under this Agreement, or otherwise fails to perform, violates or
otherwise breaches any covenant or condition of HOLT in this Agreement, or fails
to comply with any notice given under the terms of this Agreement, then, subject
to Section 19.1(d) below:
(a) This Agreement, and the term hereby created, shall at the
option of PRPA terminate and become absolutely void without any right on the
part of HOLT to save the forfeiture by payment of Base Compensation due, or by
other performance of the condition violated. When the Agreement shall be so
determined, and also, when and as soon as the term hereby created shall have
expired, shall be lawful for any attorney, as attorney for HOLT, to sign an
agreement for entering in any competent court an amicable action and judgment in
ejectment, without any stay of execution or appeal, against HOLT and all persons
claiming under HOLT for the recovery by PRPA of possession of the Terminal, for
which this Agreement or a copy hereof shall be a sufficient warrant, whereupon,
if PRPA so desires a writ of possession may issue forthwith without any prior
writ or proceedings whatsoever. And, if for any reason after such action has
been commenced, the
119
<PAGE>
same shall be discontinued and possession of the Terminal remain in or be
restored to HOLT, PRPA shall have the right in any subsequent defaults to bring
one or more further amicable actions in the manner and form as hereinbefore set
forth, to recover possession of the Terminal for such subsequent default. No
such termination of this Agreement nor recovering possession of the Terminal
shall deprive PRPA of any remedies or action against HOLT for all arrears of
Base Compensation or for damages for the breach of any covenant herein
contained, nor shall the bringing of any such action for Base Compensation, or
breach of covenant, nor the resort to any other remedy herein provided for the
recovery of Base Compensation and of other monies due hereunder or for damages
for breach of covenant be construed as a waiver of the right to insist upon the
forfeiture and to obtain possession in the manner herein provided.
(b) PRPA may, at its option, sublease the Terminal as agent of HOLT
for the balance of the Term of this Agreement and receive the Base Compensation
therefor and apply the same to the payment of any Base Compensation or damage
for breach of covenant due by HOLT to PRPA under the terms hereof.
(c) In addition to the foregoing remedies, PRPA cumulatively shall
have all rights, remedies, powers and privileges afforded from time to time by
law or in equity.
(d) in the event of any default or breach of covenant by HOLT, PRPA
shall, except as provided in the following sentence, give written notice thereof
to HOLT, and HOLT shall
120
<PAGE>
have a period of ten (10) days after receipt of such written notice to cure any
monetary breach, including but not limited to replenishment of the Letter of
Credit or the Security Deposit, and HOLT shall have a period of thirty (30) days
after receipt of such written notice to cure any other alleged default or breach
of this Agreement. PRPA agrees that it will not exercise any remedy for default
or breach hereunder, including applying any portion of the Letter of Credit or
the Security Deposit described in Section 3.2 hereof in respect thereof, until
after the expiration of the appropriate period, and further agrees that it will
not exercise any such remedy against HOLT if within the appropriate period HOLT
(i) cures the default or breach, or (ii) with respect to defaults or breaches
other than the nonpayment of Base Compensation and the failure to replenish the
Letter of Credit or the Security Deposit, commences action in good faith within
said thirty (30) day period to cure the default or breach of covenant and
proceeds diligently and within a reasonable period of time to effect and
complete a cure; provided, however, that PRPA shall not be required to provide
any notice or cure period for monetary default more than three (3) times in any
twelve (12) month period.
(e) In exercising any power conferred under this Agreement, either
by the entry of an appearance, amicable action or by the entry of judgment in
ejectment by confession, HOLT agrees that if a true and correct copy of this
Agreement be filed in such proceeding, it shall not be necessary to file the
121
<PAGE>
original as a warrant of attorney, any law or rule of court to the contrary
notwithstanding.
(f) Any power herein given to enter an amicable action or to appear
for and confess and enter judgment in ejectment against HOLT shall be
exercisable any number of times and shall not, under any circumstances, be
exhausted by one or more uses thereof. Such power may be exercisable on behalf
of any assignee of PRPA.
(g) HOLT hereby waives, to the extent any such right may be
applicable, the right to three (3) months and fifteen (15) or thirty (30) days
notice required under certain circumstances by the Pennsylvania Landlord and
Tenant Act of 1951, as amended, and the benefit of all laws now or hereafter in
force with respect to notices to be provided under this Agreement and hereby
agrees that the respective notice periods provided for in this Agreement shall
be sufficient in any such case.
(h) In creating the warrant of attorney to confess judgment in
ejectment, HOLT represents and warrants that it knowingly, intentionally and
voluntarily, and on the advice of its separate counsel, has agreed to such
remedy and any rights granted thereby to PRPA.
(i) For purposes of the remedies under this Agreement, the term
"amicable action" shall include the procedure for complaint in confession of
judgment in ejectment and other procedures for entering judgment by confession
in ejectment under Pennsylvania Rules of Civil Procedure.
122
<PAGE>
(j) If at such time, if any, that PRPA elects to exercise any right
that it may have to terminate this Agreement PRPA owes to HOLT any reimbursement
amounts pursuant to Section 7.6(e), PRPA shall, as a condition to HOLT's
vacating (either voluntarily following such termination or as a result of
judicial process) the Terminal as a result of such termination, at PRPA's option
either pay HOLT such reimbursement amounts, less any amounts due to PRPA
hereunder, or deliver to HOLT a letter of credit issued by a bank and in a form
reasonably acceptable to HOLT in an amount equal to the reimbursement amounts
outstanding and owing by PRPA to HOLT, less any amounts due to PRPA hereunder.
In the event that the parties cannot agree on a bank or the form of the letter
of credit, the issue shall be submitted for decision to a commercial arbitrator
selected by the American Arbitration Association under the then prevailing rules
of such Association. Following PRPA's termination of this Lease and HOLT's
vacation and surrender of the Terminal, PRPA, if it has delivered a letter of
credit rather than paying in cash the reimbursement amounts discussed above,
shall pay to HOLT the Section 7.6(e) reimbursement amounts outstanding and owing
by PRPA to HOLT, less any amounts due to PRPA hereunder, in twelve equal
consecutive monthly installments. In the event PRPA fails to make such a monthly
installment by the tenth day of any month, then HOLT, after notice and
opportunity to cure, may draw on the letter of credit referred to in first
sentence of this Subsection 19.1(j) to the extent of such missed installment.
123
<PAGE>
19.2 Remedies Cumulative. All of the remedies herein given to PRPA and
all rights and remedies given to it by law, shall be cumulative and concurrent.
No termination of this Agreement or the taking or recovering of the Terminal
shall deprive PRPA of any of its remedies or actions against HOLT for all
arrears of Base Compensation or for damages, or for the breach of any covenant
herein contained, nor shall the bringing of any action for arrears of Base
Compensation or breach of covenant, or the resort to any other remedy herein
provided for the recovery of arrears of Base Compensation be construed as a
waiver of the right to obtain possession of the Terminal.
19.3 Expedited Proceedings. Each of PRPA and HOLT agree that, if any
action is commenced under this Agreement, it will join with the other party in a
motion for the imposition of expedited schedules, including without limitation
expedited discovery not subject to the customary time periods for responding to
discovery requests and for an expedited hearing on the merits, and that it will
not oppose any motion by the other party for the imposition of expedited
schedules for the disposition of the action, provided that all substantive
rights shall be retained.
19.4 Notice and Grace Period.
(a) In the event of any default or breach of covenant or condition
of this Agreement by PRPA, HOLT shall give written notice thereof to PRPA, and
PRPA shall have a period of ten (10) days after receipt of such written notice
to cure any
124
<PAGE>
monetary breach, and PRPA shall have a period of thirty (30) days after receipt
of such written notice to cure any other alleged default or breach of this
Agreement. HOLT agrees that it will not exercise any remedy for default or
breach of this Agreement by PRPA until after the expiration of the appropriate
period, and further agrees that it will not exercise any remedy against PRPA if
within the appropriate period PRPA (i) cures the default or breach, or (ii) with
respect to defaults or breaches other than the nonpayment of money, commences
action in good faith within said thirty (30) day period to cure the default or
breach and proceeds diligently and within a reasonable period of time to effect
and complete a cure; provided, however, that HOLT shall not be required to
provide any notice or cure period for monetary default more than three (3) times
in any twelve (12) month period, and provided further that, notwithstanding
anything to the contrary in this Section 19.4(a), notices to PRPA and
opportunities to cure in the event of certain wrongful evictions of HOLT by PRPA
shall be governed by Section 19.4(b).
(b) In the event of wrongful eviction of HOLT from all or a portion
of the Terminal by reason of (i) the willful act of PRPA, or (ii) the quality of
PRPA's title in and to the Terminal being other than as set forth in this
Agreement, notices to PRPA and opportunities to cure shall be governed by this
Section 19.4(b). In the event of such a wrongful eviction, HOLT agrees that it
shall not terminate this Agreement unless PRPA, within thirty days after notice,
fails to cure or, in the
125
<PAGE>
event of a wrongful eviction that does not materially interfere with HOLT's
operations at the Terminal, commence and proceed diligently and within a
reasonable period of time to effect and complete a cure. In the event PRPA
willfully and wrongfully evicts HOLT from the entire Terminal or substantially
the entire Terminal, HOLT may pursue all remedies available to it (other than
termination, which is subject to the second sentence of this Section 19.4(b)),
provided HOLT has given PRPA prior or concurrent telephonic notice. In the event
of any other wrongful eviction described in the first sentence of this Section
19.4(b), HOLT may pursue all remedies available to it (other than termination,
which is subject to the second sentence of this Section 19.4(b)), provided HOLT
has given PRPA not less than two (2) hours prior telephonic notice.
19.5 Arbitration.
(a) For disputes subject to arbitration under this Agreement that
are not resolved by the parties within five (5) days after either party gives
notice to the other of its desire to arbitrate such dispute, the dispute shall
be submitted to a panel of three independent individuals knowledgeable in the
operation of a marine terminal facility (the "Arbitrators"). Within thirty (30)
days of the Effective Date HOLT and PRPA shall each submit to the other the name
and address of the person designated by it to act as an Arbitrator. The two
Arbitrators so chosen shall promptly following the submission of a dispute to
them select a third Arbitrator. In the event that they are
126
<PAGE>
unable to agree upon such appointment within thirty (30) days, or in the case of
a dispute which must be decided within thirty (30) days of its submission
pursuant to the terms of this Agreement, within five (5) days after the
submission of such dispute, then either party, on notice to the other, may
request such appointment by the American Arbitration Association (or any
organization successor thereto) in accordance with its rules then prevailing, or
if the American Arbitration Association (or such successor organization) shall
fail to appoint said third arbitration within fifteen (15) days after such
request is made, then either party may apply, on notice to the other, to the
president judge of the Court of Common Pleas of Philadelphia (or any other court
having jurisdiction or exercising functions similar to those now exercised by
said court) for the appointment of such third Arbitrator. Any dispute submittee
to the Arbitrators shall be settled by binding arbitration in accordance with
the then prevailing rules of the American Arbitration Association. The decisions
and determinations of the Arbitrators shall be binding upon the parties, and may
be enforced by appropriate judicial action. Neither party shall challenge any
decision or determination of the Arbitrators in any judicial or administrative
forum, including without limitation the FMC, either by complaint, petition for
investigation or otherwise.
(b) In deciding any issues presented to them, the Arbitrators shall
obtain such information as they deem necessary to determine the question at
issue, pursuant to such rules and
127
<PAGE>
procedures as the Arbitrators shall determine with respect to such question
(provided that such rules and procedures are not inconsistent with the then
prevailing rules of the American Arbitration Association), on a case by case
basis. In addition, the Arbitrators shall obtain such information and consider
such factors as required pursuant to other provisions of this Agreement which
discuss specific issues being submitted to the Arbitrators. In deciding any
issues presented to them, the Arbitrators shall consider the positions of both
parties, and may hear such testimony and argument as they deem advisable and may
request written submissions from the parties. The Arbitrators shall determine
each such questions submitted to them with all possible speed, and in any event
within thirty (30) days following submission to them of such dispute or, within
such shorter period of time as may be required pursuant to other provisions of
this Agreement, and shall give written notice to the parties of such
determination. The arbitration hearings shall be held in Philadelphia,
Pennsylvania as frequently as necessary to arrive at a decision within thirty
(30) days from the date on which such dispute is submitted to the Arbitrators
(or such shorter period as may be required under this Agreement).
(c) Each party shall pay the fees and expenses of the Arbitrator
appointed by such party and the fees and expenses of the third Arbitrator and
all other expenses (not including attorney fees, witness fees and similar
expenses of the parties
128
<PAGE>
which shall be borne separately by each of the parties) of the arbitration shall
be borne by the parties equally.
(d) Either party may appoint a successor or replacement Arbitrator
for such party upon ten days prior written notice to the other party; provided,
however, that unless the Arbitrator such replacement Arbitrator replaces has
resigned or is unable to participate, no such successor or replacement
Arbitrator shall participate in any matter or dispute which is then currently
before the Arbitrators for decision. In the event the third appointed Arbitrator
resigns or is otherwise unable to participate in future arbitrations, a
replacement third Arbitrator shall be selected in the same manner as provided
for the selection of the initial third Arbitrator. Any arbitrator shall be an
independent party not affiliated in any way with either HOLT or PRPA.
(e) Any fee, obligation or determination of fact dispute decided by
the Arbitrators shall relate back to the date determined by the Arbitrators.
ARTICLE XX
CONDEMNATION
20.1 Condemnation.
(a) If the entire Terminal is permanently taken under the power of
eminent domain, each of PRPA and HOLT shall be
129
<PAGE>
entitled to that portion of payment or award, whether in condemnation or
amicable proceeding in lieu of condemnation, allocated to their respective
leasehold interests, and each shall be entitled to its respective relocation
benefits. Subject to the preceding sentence, either party may terminate this
Agreement upon a total taking of the Terminal.
(b) If a portion of the Terminal is permanently taken under the
power of eminent domain, and upon such partial taking, the Terminal is
unsuitable for use as a marine terminal, either party may terminate this
Agreement upon such taking. if neither party terminates under the immediately
preceding sentence, or if upon such partial taking the Terminal remains suitable
for use as a marine terminal, then the Base Compensation shall be equitably
adjusted by HOLT and PRPA and HOLT and PRPA shall further modify this Agreement
as appropriate. Disputes under this Subsection 20.1(b) shall be submitted to the
Arbitrators.
(c) Promptly after the execution of this Agreement, PRPA and HOLT
agree to use their best efforts to have the Commonwealth agree to value for
purposes of condemnation HOLT's leasehold interest under this Agreement
independent and separate from PRPA's leasehold interest in the Commonwealth Area
and Shed C, as though HOLT's leasehold interest under this Agreement had been
created pursuant to a direct lease between the fee owners of the Terminal and
HOLT, and that upon any
130
<PAGE>
condemnation HOLT shall be entitled to an award based upon such value.
(d) PRPA hereby waives its right to condemn HOLT's interest in the
Terminal.
ARTICLE XXI
RAILROADS
21.1 Railroad Tracks.
(a) HOLT and PRPA agrees that any railroad tracks upon the Terminal
shall be operated on the Belt Line principle, i.e., all railroads shall have the
right to deliver and receive cars to and from the Terminal.
(b) HOLT shall permit railroad service to and from any adjacent or
proximate intermodal container transfer terminal ("ICTF") over and through the
Terminal; provided, however, that (i) HOLT shall cooperate in the scheduling of
such service with shippers and the operator of the ICTF, and (ii) no such
railroad service shall unreasonably interfere with HOLT's operations on the
Terminal.
131
<PAGE>
ARTICLE XXII
EMPLOYMENT PRACTICES: INTEGRITY
22.1 Fair Employment Practices.
(a) HOLT agrees to provide equal employment opportunities in
connection with the operation of the Terminal. HOLT further agrees to comply
with PRPA's nondiscrimination and integrity policies attached hereto and made a
part hereof as Exhibit J.
(b) HOLT agrees that any failure to comply with any of the
foregoing requirements shall constitute a substantial breach of this Agreement.
ARTICLE XXIII
OPINION OF COUNSEL
23.1 Opinion of HOLT's Counsel. At the time of the execution of this
Agreement, and as a condition to PRPA's obligations hereunder, HOLT shall
deliver to PRPA an opinion of John Evans, Esquire, or other counsel acceptable
to PRPA, stating that HOLT is a corporation duly organized, validly existing and
in good standing under the laws of the State of Delaware, is duly qualified and
in good standing to do business in the Commonwealth of Pennsylvania, and that
this Agreement has been duly authorized, executed and delivered by HOLT. In
addition, at the
132
<PAGE>
request of PRPA HOLT shall deliver to PRPA an opinion of John Evans, Esquire, or
other counsel acceptable to PRPA, to the effect that any sale of equipment to
PRPA or transfer of equipment to the Terminal as contemplated herein shall not
violate any agreement, other instrument, judgment, or decree to which HOLT is a
party or by which it or such equipment is bound, and that HOLT's performance in
connection therewith shall not in any way interfere with the performance of its
obligations hereunder.
23.2 Opinion of PRPA's Chief Counsel. At the time of the execution of
this Agreement, and as a condition to HOLT's obligations hereunder, PRPA shall
deliver to HOLT an opinion of counsel stating that PRPA is a body politic and
instrumentality of the Commonwealth of Pennsylvania, and that this Agreement has
been duly authorized, executed and delivered by PRPA.
ARTICLE XXIV
ADDITIONAL PROPERTY
24.1 Delaware Avenue Parcel. PRPA will support the efforts of Railport
Inc. ("Railport"), a Pennsylvania corporation, to lease certain land along
Delaware Avenue in the City of Philadelphia (the "Delaware Avenue Parcel"),
owned by the Commonwealth (Department of Transportation), the City and others,
in connection with Railport's construction thereon of an interim
133
<PAGE>
regional intermodal transfer facility, provided that such lease will provide
access acceptable to PRPA in its reasonable discretion over and across the
Delaware Avenue Parcel for ingress and egress by all transportation modes to and
from the Terminal and other maritime facilities by PRPA, its lessees, licensees,
the owners and occupiers of such other maritime facilities, and its and their
invitees. PRPA agrees to consult with HOLT concerning the adequacy of such
access. In no event shall PRPA have any obligations as to the lease,
construction, maintenance or repair of such interim regional intermodal transfer
facility, and nothing contained in this Agreement shall prohibit PRPA from
participating in the development, construction or operation of an intermodal
transfer facility. If PRPA develops such a facility, PRPA shall provide Railport
with an opportunity to negotiate with PRPA concerning the operation of such
facility on an equal basis with other prospective operators. PRPA acknowledges
and agrees that in no event shall its participation in the development,
construction or operation of any such facility cause a delay or reduction in any
financial commitment by PRPA with respect to the Capital Improvements or
deferred maintenance items described on Exhibits H, I or N. PRPA agrees that
during the ten-year period commencing on the Effective Date it shall not lease
or attempt to lease the Delaware Avenue Parcel without the prior written consent
of either HOLT or Railport. The Delaware Avenue Parcel refers to that area of
land extending generally from the southerly boundary of the Packer Avenue Marine
Terminal north to
134
<PAGE>
the boundary of the northerly side of Porter Street and extending one hundred
fifty (150) feet west from the existing fence lines of those properties along
Old Delaware Avenue for the entire length of the area as described.
24.2 Additional Parcels.
(a) (i) As of the Effective Date, Pier 96 South, Pier 98 South, and
Pier 100 South (the "Additional Parcels"), as described on Exhibit M hereto,
shall be included in and shall become a part of the Terminal, subject to the
terms and conditions of this Agreement and subject to PRPA's termination rights
as to the Additional Parcels as set forth below in Section 24.2(b).
(ii) HOLT acknowledges that PRPA has advised HOLT that the
Additional Parcels are subject to the leases and other agreements set forth on
Exhibit K, copies of which have been provided to HOLT. HOLT agrees that all rent
and other payments due to PRPA under such agreements shall continue to be paid
to PRPA directly, that HOLT shall not attempt to exercise any rights of landlord
under any of such agreements, that HOLT shall conduct all of its operations on
the Additional Parcels in conformity with and so as not to violate any of the
provisions of any of such agreements or the rights of any tenants or licensees
thereunder, and that HOLT shall indemnify, defend and hold PRPA harmless from
and against any and all expense, loss, claim, suit or liability suffered by PRPA
as a result of HOLT's failure to comply with the covenants contained in this
Section.
135
<PAGE>
(iii) During the Term hereof, PRPA may lease to third parties all
or part of any Additional Parcel for a term of six (6) months or less (assuming
that all rights to renew or extend are exercised), upon HOLT's prior consent,
which such consent may not be unreasonably withheld, and for a term of more than
six (6) months (assuming that all rights to review or extend are exercised),
upon HOLT's prior written consent, which such consent HOLT may grant or deny in
its sole discretion. Any rents or other revenues generated by any such lease
shall be for the account of PRPA.
(iv) Upon HOLT's request and the demonstration by HOLT to PRPA of a
commercial need by HOLT to have any part of the Additional Parcels free of any
leasehold or licensed interests (other than HOLT's), PRPA shall terminate each
lease, license or other arrangement affecting such part of the Additional
Parcels (other than this Agreement) to the extent permitted thereby or, if
permitted by such lease, license or arrangement, relocate such tenant. In the
event PRPA relocates any tenant under any such lease, license or arrangement, or
terminates any such lease, license or arrangement at HOLT's request, then HOLT
shall pay to PRPA an annual fee (the "Additional Parcel Fee") equal to the
difference between yearly rent that the tenant under such lease, license or
arrangement, would have been obligated to pay to PRPA as provided in such lease,
license or arrangement and the yearly rent, if any, that PRPA will receive from
such tenant. HOLT shall not be liable for
136
<PAGE>
any damages or injury to or caused by the Mummers using the shed located on Pier
98 ("Shed 98") unless caused by HOLT's negligence.
(v) PRPA shall not have any maintenance or repair obligations
whatsoever to HOLT in respect of the Additional Parcels. PRPA has informed HOLT
that PRPA intends to close Shed 98. HOLT may not enter or use Shed 98 or the
shed on Pier 96 ("Shed 96") unless, prior to any such entry or use thereof by
HOLT, HOLT, at its sole cost and expense and in accordance with the provisions
of Section 7.6, shall have caused such shed or sheds to be brought into full
compliance with all applicable governmental laws, rules, codes, ordinances,
orders and regulations (other than the Environmental Statutes referred to in
Subsections 10.2(a)(iii)-(v)). In the event any remediation of any environmental
condition present in Shed 98 or Shed 96 is required under the Environmental
Statutes referred to in Subsections 10.2(a)(iii)-(v) as a condition to the use
thereof by HOLT, HOLT shall perform such remediation and PRPA shall reimburse
HOLT for fifty percent (50%) of the actual costs incurred by HOLT in connection
therewith up to a maximum reimbursement of One Hundred Thousand Dollars
($100,000), whereupon PRPA shall not have any other obligation whatsoever in
respect thereto.
(vi) Any fees or revenues received by HOLT in connection with the
use of the Additional Parcels shall be for the account of HOLT. Cargo, either
breakbulk or container,
137
<PAGE>
handled at the Additional Parcels shall not be counted toward the fulfillment by
HOLT of the Container Pick Guarantee or the Breakbulk Guarantee, nor shall
Container Pick Fees or Breakbulk Fees be charged with respect thereto unless
such charges are due with respect to the handling of such cargo at portions of
the Terminal other than the Additional Parcels.
(vii) PRPA and HOLT agree to consult concerning any funds available
to PRPA through the capital budget of the Commonwealth with respect to the
Additional Parcels.
(b) (i) PRPA grants to HOLT, as of the Effective Date, and
continuing during the initial Term, subject to the provisions of Section 7.6
hereof, the exclusive right to develop Pier 98 South and Pier 100 South in
accordance with the provisions of this Agreement. PRPA shall grant to HOLT,
subject to the provisions of Section 7.6, the exclusive right during the
initial Term, and the non-exclusive right thereafter, to develop Pier 96
South at such time that Pasha Auto Warehousing, Inc. ("PASHA") either has
consented to such grant or no longer has any rights with respect to Pier 96
South. During the Term, PRPA shall not, as to Pier 96, extend the term of
PASHA's lease beyond the term under PASHA's current lease, increase the size of
the property demised to PASHA or permit any use not currently permitted under
PASHA's current lease without HOLT's prior written consent. During the Renewal
Periods HOLT shall have and enjoy, subject to the provisions of Section 7.6 and
this Subsection 24.2(b), a non-exclusive right to develop the
138
<PAGE>
Additional Parcels. In consideration of the foregoing development rights, HOLT
shall pay to PRPA on the Effective Date of and on each anniversary of the
Effective Date, until such time as HOLT and PRPA enter into a Lease and
Development Agreement with respect to the Additional Parcels or HOLT's rights
with respect thereto are terminated, a development fee equal to Twenty-Five
Thousand Dollars ($25,000) (the "Development Fee"). In the event HOLT is
substantially unable to use Pier 96 South due to the rights enjoyed by PASHA,
the Development Fee shall be reduced to and be $8,333.33 until such time that
HOLT can so use Pier 96 South. The amount of the Development Fee for each
Renewal Period may be determined by the Arbitrators, subject to Section 2.3(c).
(ii) During the Renewal Periods PRPA, if it has not previously
approved a Proposed Master Plan (as hereinafter defined), may terminate HOLT's
interests in and to the Additional Parcels and HOLT's non-exclusive development
rights with respect thereto upon ninety (90) days prior written notice, provided
that at such time that PRPA intends either by itself or by a third party to
develop and use the Additional Parcels for a use other than the then current
use.
(c) (i) HOLT may, at its sole cost and expense, and subject to the
provisions of Section 7.6, fill the water area between Pier 98 South and Pier
100 South, and, subject to the immediately following sentence, the water area
between Pier 96 South and Pier 98 South. HOLT shall not fill the water area
139
<PAGE>
between Pier 96 South and 98 South until PRPA has advised HOLT in writing that
all required consents relating thereto, if any, have been obtained from Pasha
Auto Warehousing, Inc. PRPA will cooperate with and support HOLT with respect to
such fill projects at no cost or expense to PRPA.
(ii) In the event that PRPA exercises its termination rights set
forth in Section 24.2(b), PRPA shall, on or before the date on which HOLT's
rights to the Additional Parcels terminate ("Additional Parcels Termination
Date"), reimburse HOLT for HOLT's actual costs incurred to such date in
obtaining the governmental permits necessary for, and, to the extent that it has
done so, in undertaking and constructing, the fill project, up to a maximum of
Eight Million Dollars ($8,000,000) if the fill project encompasses Piers 96-100
and up to Four Million Dollars ($4,000,000) if the fill project encompasses only
Pier 98 South and Pier 100 South (the "Fill Project Reimbursement Amount"). PRPA
agrees and acknowledges that any Fill Project Reimbursement Amount may include
the cost of remediating environmental problems affecting the fill project and of
constructing retaining walls related thereto. The Fill Project Reimbursement
Amount shall be paid by PRPA to HOLT as follows: (A) on the Additional Parcels
Termination Date PRPA shall pay to HOLT the sum of Five Million Dollars
($5,000,000) or, if the Fill Project Reimbursement Amount is less than
$5,000,000, the total amount thereof; and (B) if the Fill Project Reimbursement
Amount is greater than $5,000,000, the remaining
140
<PAGE>
portion thereof in fifty-nine (59) equal consecutive monthly installments of
principal (based upon a ten year amortization schedule), together with interest
thereon at a rate that is equal to and changes with the prime rate of interest
(the "Interest Rate") published from time to time by Provident National Bank, or
its successor, in Philadelphia, Pennsylvania, and a final monthly payment on the
next succeeding month of all outstanding and unpaid principal and interest. PRPA
shall be permitted to pay the unpaid portion of the Fill Project Reimbursement
Amount in full at any time without penalty.
(iii) If on the Additional Parcel Termination Date aggregate future
Base Compensation projected to be owed by HOLT to PRPA over the remaining length
of the then current Renewal Period is less than the amount of the Fill Project
Reimbursement Amount remaining to be paid by PRPA (after PRPA has reimbursed
HOLT $5,000,000), then PRPA shall not later than and as a condition to HOLT's
surrender of the Additional Parcels cause a letter of credit (the "PRPA Letter
of Credit" ) to be issued by a bank acceptable to HOLT, in form and substance
reasonably acceptable to HOLT, naming HOLT as beneficiary, in an amount equal at
all times to an amount not less than the difference from time to time between
the projected aggregate future Base Compensation and the Fill Project
Reimbursement Amount remaining to be paid by PRPA to HOLT. Upon payment in full
by PRPA to HOLT of the Fill Project Reimbursement Amount, HOLT shall return to
PRPA the PRPA Letter of Credit.
141
<PAGE>
(iv) HOLT shall provide to PRPA quarterly statements certified by
HOLT's architect or engineer and an officer of HOLT as to the progress and
status of the fill project and the itemized costs incurred to such date by HOLT
in connection therewith. On the Additional Parcel Termination Date HOLT shall,
if requested by PRPA and if PRPA has complied with Subsections 24.2(c)(ii) and
(iii) with respect to the Fill Project Reimbursement Amount, assign and transfer
to PRPA all of HOLT's right, title and interest in and to any permits, contracts
or warranties relating to the fill project.
(d) (i) At any time prior to PRPA's notice of its election to
exercise its termination rights, HOLT may, at its cost, submit to PRPA for its
approval five (5) copies of HOLT's plan for the Major Development of the
Additional Parcels (the "Proposed Master Plan") which shall be prepared by a
registered architect and shall include a detailed description of the
improvements to be constructed by HOLT on the Additional Parcels (the "Major
Improvements") and all of the following (all scales shown are minimal):
(A) illustrative Site Plan (1" = 100') showing various levels,
the locations of all proposed structures, and maximum height and bulk of all
proposed structures and all proposed land uses;
(B) Area Tabulation for each use type;
142
<PAGE>
(C) Schematic Drawings of each proposed structure including
exterior elevations and sketches of the proposed structures;
(D) A North-South Section (1" = 100') for each proposed
structure and the overall site;
(E) An East-West Section (1" = 100') for each proposed
structure and the overall site;
(F) A written statement describing all proposed structures and
the intended uses thereof;
(G) A proposed schedule of construction, including a completion
date, for each proposed Major Improvement; and
(H) Such other plans, drawings or designs that PRPA may
reasonably require.
(ii) PRPA agrees to examine the Proposed Master Plan promptly upon
receipt and to notify HOLT in writing within sixty (60) days thereafter of
PRPA's approval or disapproval of the Proposed Master Plan. Any notice of
disapproval by PRPA shall set forth PRPA's reasons for not approving the
Proposed Master Plan. If PRPA has notified HOLT of PRPA's disapproval of any
aspect of the Proposed Master Plan, and HOLT elects to submit a revised Proposed
Master Plan in order to meet PRPA's stated objection, then PRPA agrees to
examine such revised Proposed Master Plan promptly upon receipt thereof and
within thirty (30) days thereafter to notify HOLT of PRPA's approval or
disapproval thereof. Any notice of disapproval by
143
<PAGE>
PRPA shall set forth PRPA's reasons for not approving the Proposed Master Plan.
HOLT shall have the right to continue this procedure until the earlier of the
date PRPA's approval is obtained and the date on which HOLT received PRPA's
notice of its election to exercise its termination rights set forth in Section
24.2(b). If not approved by PRPA in whole, no Proposed Master Plan shall be
deemed approved. (The Proposed Master Plan as ultimately approved by PRPA is
hereinafter called the "Master Plan").
(iii) Notwithstanding anything to the contrary contained herein,
PRPA may disapprove any aspect of any Proposed Master Plan which PRPA in its
sole discretion determines does not promote the goals and objectives of PRPA or
will conflict with or compete with any existing or planned PRPA facility. Any
proposed Major improvement must be for an intended use that is permitted under
Section 1.4 of this Agreement.
(iv) As a condition to PRPA's approving any Proposed Master Plan,
PRPA and HOLT (or an entity designated by HOLT provided that HOLT guarantees
such entity's obligations thereunder and that HOLT would be permitted to
undertake a Transfer to such entity pursuant to the provisions of Section 11.1
shall have executed a separate lease and operating agreement for the Additional
Parcels providing for: (A) the construction by HOLT of the Major Improvements in
accordance in all material respects with the Master Plan; (B) a preliminary
lease term (the "Preliminary Lease Term") to terminate upon the substantial
144
<PAGE>
completion of the Major Improvements; (C) a lease term to commence immediately
following the termination of the Preliminary Lease Term, for a duration equal to
the length of the remaining Term of this Agreement; (D) two ten (10) year
renewal options, each exercisable only if HOLT is not in default at such time
and only if HOLT concurrently exercises its option to renew under this
Agreement; (E) cross-defaulting between this Agreement and such lease; (F) the
termination of the lease upon HOLT's failure to construct the Major Improvements
in accordance with the Master Plan and the terms of such Lease; and (G) such
other terms and conditions agreed to by PRPA and HOLT, including but not limited
to the compensation to be paid by HOLT to PRPA with respect thereto. Upon
entering into such new lease and operating agreement, the parties shall execute
an amendment to this Agreement effective as of the effective date of such new
lease and operating agreement, and the parties shall cause such new lease and
operating agreement and such amendment to be filed with the FMC.
(e) HOLT shall be granted additional rights to renew this Agreement
pursuant to Section 2.3(b) hereof at such time that a Master Plan is approved by
PRPA. For the purposes of this Agreement, the "Major Development" is a
development (other than the fill project referred to in Section 24.2(c))
proposed by HOLT and approved by PRPA as set forth above which, in the
reasonable opinion of PRPA, will require HOLT to expend not less than Eighteen
Million Dollars ($18,000,000) of which up to Eight
145
<PAGE>
Million Dollars ($8,000,000) may be attributable to the fill project, or, in the
event HOLT is unable to develop Pier 96 South due to the rights thereto enjoyed
by PASHA, Six Million Dollars ($6,000,000) of which up to Two Million Six
Hundred Sixty-Six Thousand Dollars ($2,666,000) may be attributable to the fill
project, and which, in the reasonable opinion of PRPA, will, when completed,
substantially enhance the ability of the Terminal to attract and service
additional cargoes.
ARTICLE XXV
PRPA'S RIGHT OF ACCESS TO THE TERMINAL
25.1 Visitors. PRPA shall have the right of access to the Terminal for
the purposes of showing the Terminal to visitors and invitees upon reasonable
notice to HOLT; provided, however, that such entry shall not unreasonably
interfere with HOLT's operations and that PRPA shall take reasonable precautions
in order to protect the safety of such visitors and invitees.
25.2 Property and Cargo Under HOLT's Control. PRPA reserves the right,
but shall have no responsibility or obligation, to inspect the Terminal as to
fire hazards and other hazards of a like kind or nature. PRPA assumes no
responsibility or liability for loss or damage to the property of HOLT or
property under the control of HOLT, whether caused by fire, water or otherwise
except as otherwise provided by this Agreement, nor
146
<PAGE>
does PRPA assume responsibility for any shortages of cargo handled by HOLT at
the, as to which HOLT hereby releases PRPA. The right of inspection reserved to
PRPA hereunder shall impose no obligation on PRPA to make inspections to
ascertain the condition of the Terminal, and shall impose no liability upon PRPA
for failure to make such inspections, but nothing contained in this sentence
shall reduce PRPA's obligations under other provisions hereof.
25.3 Utility Lines and Easements. Subject to the giving of reasonable
written notice to HOLT, PRPA reserves to itself and others the right to locate,
construct, install and maintain sewers, utilities and pipelines upon or across
the Terminal at locations which do not unreasonably interfere with HOLT's use of
the Terminal, provided that the work related thereto shall not unreasonably
interfere with HOLT's use of the Terminal, and that PRPA shall cause the
Terminal to be restored following such work. With respect to any such work, PRPA
shall consult with HOLT as to the location of such sewers, utilities and
pipelines. HOLT shall cooperate with PRPA or its designees in order that the
work can be accomplished in the shortest possible time.
25.4 Commonwealth. The Commonwealth, its contractors, agents, and
employees shall have the right, but no obligation, of access to the Terminal to
inspect the Terminal to determine the state of maintenance, repair and condition
of the Terminal, provided, however, that such entry shall not unreasonably
147
<PAGE>
interfere with HOLT's operations and that the Commonwealth take reasonable
precautions in order to protect its safety.
ARTICLE XXVI
PUBLICKER PROPERTY
26.1 Publicker Site. HOLT shall not construct any improvements or
perform any operations which integrate or connect the Terminal and the Publicker
Property adjacent to the Terminal without the prior written consent of PRPA,
which PRPA may grant or deny in its sole discretion. PRPA shall support any
application made or filed by HOLT to repair or restore or fill-in the river
bounded edge of the Publicker Property by landfill.
ARTICLE XXVII
REPRESENTATIONS AND WARRANTIES OF HOLT AND PRPA
27.1 Authorization. Each party hereby represents and warrants to the
other that it has the requisite power and authority to make and perform its
obligations under this Agreement, and the execution of this Agreement has been
duly authorized by all requisite corporate action.
27.2 Non-Conflict. Each party hereby represents and warrants to the
other that, except as set forth in the following
148
<PAGE>
sentence, the execution, delivery and performance of this Agreement will not
violate any provision of, nor conflict with, nor result in a breach of, any of
the terms, conditions, or provisions of, nor constitute a default under, any
agreement, indenture or instrument to which it is a party. HOLT has advised PRPA
that consents from the New Jersey Economic Development Authority, bondholders,
trustees, credit facility issuers and/or providers of other financing for the
benefit of HOLT for certain project costs associated with the Gloucester
Terminal may be required in order for HOLT to move the Gloucester Cranes.
27.3 Crane Relocation. Holt hereby represents and warrants that,
except as set forth in the last sentence of Section 27.2: (i) no legal or other
impediment exists which may prevent HOLT from causing the Gloucester Cranes to
be moved from the Gloucester Terminal to the Terminal; (ii) it has all legal
right, power and authority necessary to cause the Gloucester Cranes to be moved
from the Gloucester Terminal to the Terminal; and (iii), it has provided to
PRPA, prior to the date hereof, access to true, accurate and complete copies of
all agreements, documents and instruments relating to or affecting the
Gloucester Cranes.
149
<PAGE>
ARTICLE XXVIII
MISCELLANEOUS
28.1 Notices. Any notice permitted or required to be sent hereunder by
either party to the other party shall be in writing, and shall be deemed to have
been given when served in person on the addressee, or sent by certified mail,
return receipt requested, or by overnight delivery service, postage prepaid,
addressed as follows:
If to PRPA:
Philadelphia Regional Port Authority
210 W. Washington Square - 8th Floor
Philadelphia, PA 19106
Attention: John P. LaRue, Executive Director
with a copy to:
Chief Counsel
Philadelphia Regional Port Authority
210 W. Washington Square - 8th Floor
Philadelphia, PA 19106
If to HOLT:
Holt Cargo Systems, Inc.
701 North Broadway
Gloucester City, New Jersey 08030
Attention: Thomas J. Holt, President
with a copy to:
Daniel Promislo, Esquire
Wolf, Block, Schorr and Solis-Cohen
15th and Chestnut Streets
Philadelphia, PA 19102
150
<PAGE>
and with a further copy to:
John Evans, Esquire
Holt Cargo Systems, Inc.
701 North Broadway
Gloucester City, NJ 08030
or at such other place and to such other persons as the parties hereto may from
time to time designate. In the event of an emergency requiring prompt attention
in order to prevent danger to life or serious property damage which does not
occur during traditional business hours, in addition to the foregoing notice
requirements, notice shall be in writing and sent via telephonic transmission
and hand delivery to such telecopier numbers and non-office addresses as the
parties may provide to one another from time to time.
28.2 Captions. The use of "Article" or "Section" headings or captions
in this Agreement is solely for the purpose of convenience, and the same shall
be entirely disregarded in construing any portion of this Agreement.
28.3 Terms Binding on Successors. All the terms, covenants and
conditions of this Agreement shall inure to the benefit of and be binding upon
the successors, assigns and Transferees of the parties hereto. The provisions of
this Section 28.3 shall not be deemed as a waiver of any of the conditions
limiting Transfers by HOLT set forth herein.
28.4 Applicable Law. This Agreement and all questions arising
thereunder shall be construed according to the laws of
151
<PAGE>
the Commonwealth of Pennsylvania, except with respect to the requirements of the
Shipping Act of 1984 and any other federal laws or procedures which may be
applicable.
28.5 Consent to Jurisdiction. Service and Venue. For the purpose of
enforcing payment of the compensation due hereunder and performance of its
obligations hereunder or otherwise in connection herewith, HOLT hereby consents
to the jurisdiction and venue of the Court of Common Pleas for Philadelphia
County and the Commonwealth Court (to the extent each may have subject matter
jurisdiction) or of the United States District Court for the Eastern District of
Pennsylvania, and appoints and constitutes Messrs. Wolf, Block, Schorr and
Solis-Cohen as its agent for all service of process in connection with any such
matter; provided, however, that nothing contained herein shall be or deemed to
be a waiver of any right HOLT may have to remove any action from state court to
an appropriate federal court as long as any such removal will not operate to
prevent PRPA from exercising and enjoying any of its remedies set forth in
Section 19.1, including without limitation, the remedy of confession of judgment
in ejectment. The provisions of this Section 28.5 shall not limit or otherwise
affect the right of PRPA to institute and conduct action in any other
appropriate manner, jurisdiction or court.
28.6 Limit on PRPA's Liability. Notwithstanding anything to the
contrary contained herein, the liability of the PRPA hereunder shall be limited
to its interest in and to the
152
<PAGE>
Terminal and to the revenues and other intangible assets of the PRPA. Any
judgment against PRPA hereunder shall be enforceable solely against the
foregoing assets of PRPA, and any such judgment shall contain a specific
notation that such judgment is not a lien upon and may not be enforced against
any real property interests, including leaseholds, of PRPA other than its fee
and leasehold interests with respect to the Terminal.
28.7 Certain Certificates. Upon HOLT's request, made in connection with
any loan to be secured by any equipment owned or leased by HOLT for use at the
Terminal, including without limitation the HOLT Cranes, PRPA will deliver to
HOLT or the lender making such loan, such certificates, instruments and
documents as the lender reasonably may request, which certificates, instruments,
and documents shall confirm that PRPA has no landlord's lien on, security
interest in, distress or distraint right or any other right whatsoever with
respect to any such equipment, and agree not to assert any claim against or
permit any lien in favor of PRPA to be filed against any such equipment, other
than PRPA's option to purchase the HOLT Cranes as provided herein. HOLT shall
pay any costs incurred by PRPA (including reasonable attorneys' fees) in
connection with any such certificates, instruments and documents.
28.8 Time of Essence. Time shall be of the essence of this Agreement.
28.9 Severability. If any provision hereof is found by a court of
competent jurisdiction or by a regulatory agency to be
153
<PAGE>
prohibited or unenforceable, it shall be ineffective only to the extent of
such prohibition or unenforceability, and such prohibition or unenforceability
shall not invalidate the balance of such provision to the extent it is not
prohibited or unenforceable, nor invalidate the other provisions hereof.
28.10 Entire Agreement. This Agreement sets forth all the promises,
agreements, conditions and understandings between PRPA and HOLT relative to the
Terminal, and there are no promises, agreements, conditions or understandings,
either oral or written, between them other than are herein set forth. Except as
otherwise provided herein, no subsequent alteration, amendment, change or
addition to this Agreement shall be binding upon PRPA or HOLT unless made in
writing and signed by both parties hereto and filed with the FMC.
28.11 No Third Party Beneficiaries. This Agreement and all of the
provisions hereof are for the benefit of the parties executing this Agreement,
PPC for the limited extent set forth in Article X and Section 28.13, and the
Commonwealth to the limited extent set forth on the signature page, only, and no
provisions of this Agreement shall be deemed or construed to grant to any other
person or entity any right, power or privilege, or any entitlement to any
benefit, claim or interest under this Agreement, and no other person or entity
is to have any right of action hereunder, except only as set forth in Section
28.3.
28.12 Certain Payments at End of Term. At the expiration or termination
of this Agreement, including any
154
<PAGE>
Renewal Periods, either party may set off amounts owed to it hereunder against
amounts owed by it hereunder.
28.13 Releases. (a) The parties acknowledge that the PPC-Holt Agreement
remains in full force and effect in its current form and governs and controls
the duties and obligations of the parties with respect to the subject matter
thereof until the amendment thereof on the Effective Date by this Amended and
Restated Lease and Operating Agreement. HOLT and PRPA acknowledge and agree that
HOLT has paid to PRPA all base compensation due and payable under the PPC-Holt
Agreement through and including December 15, 1990. Payments of base compensation
due and payable under the PPC-Holt Agreement which are based on activity levels
of HOLT during the current lease year thereunder through the Effective Date
hereof shall be paid by HOLT to PRPA on or before the thirtieth (30) day
following the Effective Date. Effective as of the Effective Date and subject to
HOLT's payments to PRPA as provided in the preceding sentence, PRPA and PPC
(which shall join in this Agreement for the limited purpose of this Section
28.13) hereby release HOLT, and, effective as of the Effective Date, HOLT
hereby releases PRPA and PPC, from any and all liabilities and obligations
arising under the PPC-Holt Agreement through the date hereof, except for such
party's indemnification obligations thereunder, and for any and all other
contractual, common law or statutory claims, including but not limited to claims
arising under the Shipping Act of 1984. Such release shall not prevent or
preclude HOLT from impleading PRPA
155
<PAGE>
or PPC, filing a cross-claim against PRPA or PPC, or joining or seeking
contribution from PRPA or PPC, in any action or suit brought by a third party,
nor prevent or preclude PRPA or PPC, as the case may be, from impleading HOLT,
filing a cross-claim against HOLT, joining or seeking contribution from HOLT,
in any action brought by a third party.
(b) Immediately prior to the filing of this Agreement with the FMC,
the parties shall cause to be filed with the FMC a Termination of License
Agreement terminating the Portside License.
28.14 Review of Operations. Not less frequently than quarterly, on such
dates and at such times and locations as PRPA may reasonably designate,
representatives of PRPA and HOLT shall meet to review the operations at the
Terminal, the need for the dredging of the berths to particular depths, and the
performance of both parties hereunder.
28.15 Transfer Taxes. HOLT shall pay any and all realty transfer taxes
that may be due and payable in connection with the execution and delivery of
this Agreement.
28.16 Refrigerated Warehouse Release. HOLT hereby releases and agrees
to indemnify, defend and hold PRPA harmless from any and all liability arising
from or caused by a breakdown of the refrigeration system of the Refrigerated
Warehouse or such system's being out of service for any reason whatsoever,
except for willful misconduct by PRPA, its agents or employees.
156
<PAGE>
28.17 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original as against any
party whose signature appears thereon, and all of which shall constitute one and
the same instrument. This Agreement shall become binding when any one or more
counterparts hereof individually or taken together shall bear the signatures of
PRPA and HOLT.
156(a)
<PAGE>
IN WITNESS WHEREOF, the parties have executed this Agreement the day
and year first above written.
[Corporate Seal] HOLT CARGO SYSTEMS, INC.
Attest: /s/ John Evans By: /s/ Thomas J. Holt
------------------------- ---------------------------------
[Seal] PHILADELPHIA REGIONAL PORT AUTHORITY
Attest: /s/ [illegible] By: /s/ John P. LaRue
------------------------- ---------------------------------
Approved as to Form and Legality
By: /s/ Ronald G. Henry
---------------------------------
Ronald G. Henry, Chief Counsel
Philadelphia Regional
Port Authority
Title:
---------------------------------
Office of the Attorney General
of the Commonwealth of
Pennsylvania
Approved as to Propriety and
Sufficiency of Funds
By: /s/ Paul D. Sariego
---------------------------------
Paul D. Sariego, Comptroller
Philadelphia Regional
Port Authority
157
<PAGE>
JOINDER BY PHILADELPHIA PORT CORPORATION
The Philadelphia Port Corporation joins in this Agreement solely for
the purpose of granting to HOLT a release pursuant to Section 28.13.
PHILADELPHIA PORT CORPORATION
By:
---------------------------------
<PAGE>
JOINDER BY COMMONWEALTH OF PENNSYLVANIA
The Commonwealth of Pennsylvania joins in this Agreement solely for
the purpose of granting non-disturbance to HOLT pursuant to Section 1.8,
consenting to repairs, restorations, alterations and demolition by HOLT which
PRPA may from time to time approve under Section 7.6 and filling of berths by
HOLT which PRPA may from time to time approve under Section 24.2, consenting to
the construction, reconstruction and demolition by or on behalf of PRPA of
certain improvements described in Section 7.7, and consenting to the
reconstruction and rehabilitation of the Terminal and the Cranes upon a
casualty, and to the use of insurance proceeds for such purpose, as set forth in
Section 13.1.
THE COMMONWEALTH OF PENNSYLVANIA
---------------------------------
---------------------------------
SUBLEASE
THIS SUBLEASE is made as of the 14th day of June, 1991 between ASTRO
HOLDINGS, INC. (the "Sublessor") and HOLT CARGO SYSTEMS, INC. (the
"Sublessee").
The Sublessor is presently under an Amended and Restated Lease and
Operating Agreement (the "Prime Lease") dated December 30, 1990 wherein the
Philadelphia Regional Port Authority is Lessor. A true copy of the Prime Lease
is annexed to this Sublease and made a part hereof. A copy of the Prime Lease
has been initialed by both parties to this Sublease.
The Sublessor and Sublessee have agreed to a subletting of the Packer
Avenue Marine Terminal as more fully described on Exhibit A of the Prime Lease
upon the terms and conditions specified in this Sublease.
Except as specifically otherwise stated as follows, all covenants,
terms and conditions of the Prime Lease shall be binding upon the parties to
this Sublease, their heirs, representatives, successors and assigns:
1) Paragraph 24.2 "Additional Parcels" of the Prime Lease shall NOT
apply to this Sublease.
2) The annual rental to be paid by Sublessee to Sublessor hereunder
shall be equivalent to the rental to be paid by Sublessor as Assignee under the
Prime Lease ("Prime Rent"), plus
<PAGE>
an additional sum equal to Fifteen (15%) Percent of the Prime Rent, and shall be
paid in the manner and at the times as stated in the Prime Lease.
IN WITNESS WHEREEOF, the parties hereto have set their hands and seals
the day and year first above written.
ASTRO HOLDINGS, INC.
BY: Thomas J. Holt, Jr.
-------------------------------
President
ATTEST:
John Evans
- -------------------------------
HOLT CARGO SYSTEMS, INC,
BY: Bernard Gelman
-------------------------------
V.P.
ATTEST:
John Evans
- -------------------------------
2
ASSIGNMENT OF LEASE
THIS ASSIGNMENT OF LEASE (the "Agreement") is made as of this 14th day
of June, 1991 between HOLT CARGO SYSTEMS, INC. (the "Assignor") and ASTRO
HOLDINGS, INC. (the "Assignee").
WHEREAS, by an Amended and Restated Lease and Operating Agreement dated
December 30, 1990 (the "Lease") between the Philadelphia Regional Port Authority
(the "PRPA") and the Assignor, the premises commonly known as the Packer Avenue
Marine Terminal and Piers 96, 98 and 100, which premises are more fully
described in the Lease (collectively the "Premises"), were leased to Assignor
for the term of ten (10) years from the effective date of the Lease, March 5,
1991, at an annual rental as set forth in Article III, Compensation, of the
Lease and subject to the covenants, conditions and stipulations therein
contained.
NOW, THEREFORE, in consideration of the sum of Fifty Thousand
($50,000.00) Dollars by the Assignee to Assignor, the receipt whereof is hereby
acknowledged, and assumption by Assignee of Assignor's obligations under the
Lease, Assignor assigns to Assignee all Assignor's right, title and interest in
and to the Lease for the unexpired term of said Lease and all renewal options
subject to the payment of rent and performance of the covenants, conditions and
stipulations in said Lease.
<PAGE>
Assignee covenants that, during the continuance of the unexpired term
of the Lease and renewal options, to pay the rents as provided for therein, and
to perform the covenants, conditions and stipulations in said Lease to be
performed by Assignor, and to keep Assignor indemnified against all actions,
claims and demands whatsoever in respect of said rents, covenants, conditions or
anything relating thereof.
IN WITNESS WHEREOF, the parties hereto have set their hands and seals
as of the day and year first above written.
HOLT CARGO SYSTEMS, INC,
BY: Bernard Gelman
------------------------------
V.P.
(Assignor)
ATTEST:
John Evans
- -----------------------------
ASTRO HOLDINGS, INC.
BY: Thomas J. Holt Jr.
------------------------------
President
(Assignor)
ATTEST:
John Evans
- -----------------------------
2
THIRD MODIFICATION OF LOAN AND SECURITY AGREEMENT
Modification made as of July 1, 1995 between HOLT CARGO SYSTEMS, INC.
("Holt Cargo"), ("Borrower") and PNC BANK, NATIONAL ASSOCIATION (successor in
interest to BANK LEUMI LE-ISRAEL, B.M.) ("Bank").
BACKGROUND
A. Borrower and Bank are party to a Loan and Security Agreement dated
as of August 8, 1989 (as amended December 20, 1989, November 13, 1992, and as of
December 31, 1992, the ("Loan Agreement") pursuant to which Bank, inter alia,
(i) extended a line of credit in favor of Borrower in the maximum amount of
$3,500,000 ("Line of Credit"), (ii) issued letters of credit for the account of
Borrower and Holt Hauling and Warehousing System, Inc. ("Holt Hauling"), and
(iii) extended a real estate (term) loan in the original principal amount of
$3,500,000 ("Real Estate Loan").
B. Borrower and Bank now wish to further modify the Loan Agreement to
extend the term of the Line of Credit and the Real Estate Loan and to amend
certain covenants and conditions set forth in the Loan Agreement, all of which
Bank has agreed to do on the terms and conditions set forth in this
Modification.
C. All capitalized terms used but not defined in this Modification
shall have the meaning given to such terms in the Loan Agreement.
<PAGE>
AGREEMENTS
Borrower and Bank, intending to be legally bound, agree as follows:
1. Amendments to Loan Agreement.
(a) Effective as of December 31, 1994:
(i) The definition of the term "Real Estate Note" shall be
amended by adding the following phrase thereto: ", as the same may be amended,
substituted, extended or replaced from time to time."
(ii) Section 2.6.2. of the Loan Agreement (added by the
December 20, 1989 modification) is deleted and the following substituted in its
place:
"2.6.2. Maturity/Repayment Schedule. The Real Estate Loan
shall be repaid as follows:
2.6.2.1. Interest shall be payable in arrears at the
interest rate provided in paragraph 2.6.1 hereof on the
outstanding principal balance of the Real Estate Loan,
commencing January 1, 1995 and on the first day of each month
thereafter until the entire principal balance of the Real
Estate Loan shall have been paid in full; and
2.6.2.2. Principal shall be payable in six (6) equal
consecutive monthly installments of $38,888.88 each
commencing July 1, 1995 and payable on the first day of each
month thereafter through and including December 1, 1995.
Thereafter, principal shall be payable in 48 equal
consecutive monthly installments of $19,444.44 each,
commencing January 1, 1996 and on the first day of each month
thereafter through and including December 1, 1999. A final
installment of the entire unpaid balance of principal and the
accrued and unpaid interest due thereon, as well as any other
sums due
-2-
<PAGE>
under or with respect to the Real Estate Loan, shall be
payable on December 31, 1999."
(b) Effective as of the date hereof:
(i) Murphy Marine Services, Inc. shall be added to the
definition of the term "Corporate Guarantor".
(ii) Sections 6.1.12.1, 6.1.12.2 and 6.1.12.5 of the Loan
Agreement are deleted in their entirety and the following substituted in their
place:
"16.1.12.1. Maintain a ratio of Debt to Tangible Net
Worth of not more than 3.0 to 1 as of December 31, 1994 and
as of each fiscal quarter thereafter.
6.1.12.2. Maintain Tangible Net Worth of not less than
$41,000,000 as of December 31, 1994 and as of each fiscal
quarter thereafter.
6.1.12.5. Maintain a ratio of (A) net income after
taxes, plus depreciation to (B) current maturities of long
term debt (excluding the outstanding principal balance of
amounts due to Meridian Bank under that certain Loan
Agreement dated October 19, 1994 between, inter alia,
Borrower and Meridian Bank) for the immediately prior fiscal
year, plus current maturities of Capital Lease obligations
for the immediately prior fiscal year, plus capital
expenditures for the fiscal year, less in each case, balloon
payments classified as current liabilities, of not less than
1.0 to 1 as of December 31, 1994 and as of each December 31
thereafter."
(iii) A new Section 7.1.2.6 is added to the Loan
Agreement and shall read as follows:
"7.1.2.6. Sell, lease, assign or otherwise dispose of
and shall not permit any Corporate Guarantor to sell, lease,
assign or otherwise dispose of, in any fiscal year any
assets valued in the aggregate in excess of 10% of the
Combined total assets of Borrower and Corporate Guarantors;
provided, however,
-3-
<PAGE>
Bank shall not unreasonably withhold its consent to any
sale, lease, assignment or other disposition in excess of
the amounts set forth herein."
(c) Effective as of May 31, 1995, the "Termination Date" of the
Line of Credit shall be extended to May 31, 1996.
(d) The following phrase shall be added to the end of Section
7.1.1.1. of the Loan Agreement:
"...provided, however, the foregoing restriction shall only
apply (a) while there shall be any amounts available to be
drawn under the Initial Letter of Credit and/or the Second
Letter of Credit or Borrower and/or Holt Hauling shall have
any obligation to Bank in connection therewith, and/or (b)
while Borrower shall have any obligation to Bank in
connection with the Cash Line and/or the Cash Line shall not
have been terminated, regardless of whether any amounts
shall be outstanding thereunder."
(e) Section 8.1.4. of the Loan Agreement is deleted in its
entirety and the following substituted in its place;
"8.1.4. So long as (a) there shall be any amounts
available to be drawn under the Initial Letter of Credit
and/or on the Second Letter of Credit or Borrower and/or
Holt Hauling shall have any obligation to Bank in connection
therewith, and/or (b) Borrower shall have any obligation to
Bank in connection with the Cash Line and/or the Cash Line
shall not have been terminated, regardless of whether any
amounts shall be outstanding thereunder, failure of Borrower
to timely and completely perform and comply with each of the
covenants set forth in Paragraph 6.1.12 hereof."
(f) The following sentence shall be added to the end of Section
8.1.3. of the Loan Agreement:
-4-
<PAGE>
"Borrower shall provide Bank with written notice of any
such default by Borrower within three (3) days after the
occurrence thereof."
2. Conditions Precedent. The obligation of Bank to effect the
modifications contained in this Modification is subject to the condition
precedent that Bank shall have received all of the following documents,
each of which shall be in form and substance satisfactory to Bank:
(a) An agreement by which Murphy Marine Services, Inc.
("Murphy") and Wilmington Stevedores, Inc. ("Wilmington") each becomes surety
for all liabilities of Borrower and Holt Hauling to Bank ("New Surety
Agreements").
(b) Modification of the Real Estate Note reflecting the
extension and modification of the terms thereof as set forth herein ("Note
Modification").
(c) Copies of resolutions of the boards of directors of Borrower
and Corporate Guarantors authorizing the execution, delivery and performance of
this Modification and all other documents and instruments required hereby
(including without limitation the Note Modification and the New Surety
Agreements), certified by the secretary or an assistant secretary of Borrower or
Corporate Guarantors, as the case may be.
(d) A written certificate of the secretary or an assistant
secretary of Borrower and Corporate Guarantors as to the names and true
signatures of the officers of Borrower and Corporate Guarantors, as the case may
be, authorized to sign this Modification and all other documents and instruments
required
-5-
<PAGE>
hereby (including without limitation the Note Modification and the New Surety
Agreements).
(e) Certified copies of the Articles of Incorporation and
By-laws of Murphy and Wilmington, together with evidence that the Articles of
Incorporation and By-laws of Borrower and the other Corporate Guarantors have
not been modified or amended (or if so, the nature and extent thereof) since
December 31, 1992 and are in full force and effect.
(f) Good Standing certificates (dated not more than 15 days
prior to the date hereof) for each of Borrower, Holt Hauling, Murphy, Wilmington
and Broadway Equipment Leasing Corp.
(g) Title search, to be obtained at Borrower's sole cost and
expense, of the property subject to the 1984 Mortgage and 1989 Mortgage
indicating no liens or encumbrances except as may appear in Chicago Title
Insurance Company's Mortgagee Title Policy No. 31-0041-02- 006389.
(h) Updated appraisal of the property covered by the 1984
Mortgage and the 1989 Mortgage prepared by an appraiser and on terms
satisfactory to Bank showing an appraised value in an amount satisfactory to
Bank.
(i) A favorable opinion of counsel to Borrower and Affiliates as
to the matters mentioned in Paragraphs 3(a), (b) and (c) herein.
(j) Such other documents or instruments as Bank may have
requested under the terms of this Modification or otherwise.
-6-
<PAGE>
3. Representations and Warranties. In order to induce Bank to enter
into this Modification, Borrower represents and warrants to Bank as follows:
(a) The execution, delivery and performance by Borrower and
Corporate Guarantors of this Modification and any other documents and
instruments required by Bank for the implementation of this Modification
(including without limitation the Note Modification and the New Surety
Agreements) have been duly authorized by all necessary corporate action and do
not and will not violate any provision of law or of the charter or by-laws of
Borrower or any Corporate Guarantor or any agreement, trust or other indenture
or instrument to which Borrower or any Guarantor is a party, or by which any of
its or their properties may be bound or affected; provided, however, that this
representation does not apply to Holt Cargo Systems of California, Inc., Holt
Warehousing Company, Marine Information Technology, Inc. or T&L Leasing Corp.
(b) This Modification constitutes and the other documents and
instruments required hereby (including without limitation the Note Modification
and the New Surety Agreements) when executed and delivered will constitute the
legal, valid and binding obligations of Borrower and Guarantors, enforceable in
accordance with their terms; provided, however, that this representation does
not apply to Holt Cargo Systems of California, Inc., Holt Warehousing Company,
Marine Information Technology, Inc. or T&L Leasing Corp.
-7-
<PAGE>
(c) No authorization, consent, approval, license, exemption or
any other action by and no registration, qualification or filing with any
governmental agency or authority is or will be necessary in connection with the
execution, delivery and performance of this Modification or the other documents
and instruments required hereby (including without limitation the Note
Modification and the New Surety Agreements).
(d) The Combined balance sheet and profit and loss and surplus
statements of Borrower and Corporate Guarantors as of December 31, 1994,
certified by B.D.O. Seidman, and the Combined balance sheet and profit and loss
and surplus statements of Borrower and Corporate Guarantors as of March 31,
1995, prepared by Borrower copies of all of which have been furnished to Bank,
are complete and correct, show all material liabilities, direct and contingent,
and present fairly the financial position, the results of operations and charges
in Combined financial position of Borrower and Corporate Guarantors at such
dates and for the period ended on such dates, all in accordance with generally
accepted accounting principals consistently applied. Since March 31, 1995, there
has been no material adverse change in such financial position or such results
of operations.
(e) On and as of the date of this Modification, there has
occurred no Event of Default and no event which with notice or lapse of time or
both would, if unremedied, be an Event of Default.
-8-
<PAGE>
(f) Except with respect to the good standing of Holt Cargo
Systems of California, Inc., Holt Warehousing Company, Marine Information
Technology, Inc., and T & L Leasing Corp., the representations and warranties
made by Borrower to Bank in the Loan Agreement are true and correct as though
made on and as of the date of this Modification.
(g) The Loan Agreement is in full force and effect. As of the
date of this Modification, the principal amount due under the Cash Note is
$3,500,000, and the principal amount due under the Real Estate Note is
$2,352,778.04. All interest under the Cash Note and the Real Estate Note has
been paid in full through May 31, 1995. Borrower has no defense, set-off or
counterclaim to its performance under the Loan Agreement, Cash Note, Real Estate
Note, or any document or instrument executed in connection with any of the
foregoing.
4. Release. In consideration for Bank's agreement to consent to the
modifications set forth herein, Borrower hereby waives and releases and forever
discharges Bank and its officers, directors, attorneys, agents, and employees
from any liability, damage, claim, loss or expense of any kind that they may
have now or hereafter against Bank or any of them arising out of or relating to
the Indebtedness. Borrower further states that it has carefully read the
foregoing release, knows the contents thereof and grants the same as its own
free act and deed.
-9-
<PAGE>
5. Miscellaneous.
(a) This Modification shall be deemed, to the extent
inconsistent therewith, a modification of the Loan Agreement and all other
instruments and documents executed by Borrower in connection with the Loan
Agreement (the "Collateral Documents"). Subject to the foregoing, the terms and
conditions of the Loan Agreement and the Collateral Documents are ratified and
confirmed, shall remain in full force and effect and Borrower acknowledges and
agrees that the same shall secure all of Borrower's liabilities to Bank under
the Loan Agreement.
(b) This Modification shall be governed by and construed in
accordance with the law of the Commonwealth of Pennsylvania.
(c) Borrower shall pay on demand all costs and expenses of Bank
in connection with the preparation, execution, delivery, administration and
enforcement of this Modification and the other documents and instruments
required hereby (including the fees and out of pocket costs of counsel with
respect thereto). The agreement set forth in this paragraph 5(c) shall survive
the repayment of the Loans and the cancellation or expiration of the Initial
Letter of Credit and the Second Letter of Credit.
(d) Paragraph headings used in this Modification are for
convenience only and shall not affect the construction of this modification.
-10-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed this Modification
as of the date written above.
Attest: HOLT CARGO SYSTEMS, INC.
/s/ John Evans By: /s/ Bernard Gelman
- ----------------------------- -------------------------------
Vice President
PNC BANK, NATIONAL ASSOCIATION
By: /s/ William R.
------------------------------
Vice President
-11-
<PAGE>
CONSENT
Each of the undersigned, surety for all obligations of Borrower to Bank
pursuant to its Surety Agreement dated August 8, 1989 and November 13, 1992,
and, as to Murphy Marine Services, Inc. ("Murphy") and Wilmington Stevedores,
Inc. ("Wilmington") as of the date hereof, hereby consents to the foregoing
Modification and the other documents and instruments referred to therein, joins
in and consents to the Release set forth in Paragraph 4 above as if set forth at
length herein, and ratifies, affirms and agrees that its Surety Agreement shall
continue in full force and effect.
In addition to the foregoing, in order to induce Bank to enter into the
foregoing Modification, Murphy and Wilmington each represents, warrants and
agrees, with the intent to be legally bound:
1. All of the representations and warranties in the Loan Agreement
applicable to it as a Corporate Guarantor are true and correct as if made by it.
2. It shall comply fully with all covenants contained in the Loan
Agreement applicable to it as a Corporate Guarantor as if it were a party to the
Loan Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Consent as of
July 1, 1995.
Witness:
/s/ John Evans /s/ Thomas J. Holt
- ----------------------------- ---------------------------------------
THOMAS J. HOLT
HOLT HAULING AND WAREHOUSING SYSTEM, INC.
BROADWAY EQUIPMENT LEASING CORP.
REFRIGERATED DISTRIBUTION CENTER, INC.
OREGON AVENUE ENTERPRISES, INCORPORATED
PATTISON AVENUE WAREHOUSING CORP.
TRIPLE SEVEN ICE, INC.
HOLT CARGO SYSTEMS OF CALIFORNIA
THE RIVERFRONT DEVELOPMENT CORPORATION
777 PATTISON AVENUE, INC.
HOLT WAREHOUSING COMPANY
MARINE INFORMATION TECHNOLOGY, INC.
B.H. SOBELMAN & CO., INC.
T. & L. LEASING CORP.
CRT, INC.
REFRIGERATED ENTERPRISES, INC.
DOCKSIDE INTERNATIONAL FISH CO., INC.
MURPHY MARINE SERVICES, INC.
WILMINGTON STEVEDORES, INC.
Attest:
/s/ John Evans By (as to all): /s/ Bernard Gelman
- ----------------------------- -----------------------
Vice President
-12-
<PAGE>
STATE OF NEW JERSEY :
: SS
COUNTY OF CAMDEN :
On this 31st day of July, 1995, before me, a Notary Public, personally
appeared Thomas J. Holt, who acknowledged himself to be the person who executed
the foregoing Consent dated as of July 1, 1995, for the purposes therein
contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Stephen A. Genovese
-------------------------------
Notary Public
STEPHEN A GENOVESE
NOTARY PUBLIC - STATE OF NEW JERSEY
My Commission Expires May 30, 2000
-13-
<PAGE>
STATE OF NEW JERSEY :
: SS
COUNTY OF CAMDEN :
On this 31st day of July, 1995, before me, a Notary Public, personally
appeared Bernard Gelman, who acknowledged himself to be the vice president of
Holt Cargo Systems, Inc., Holt Hauling and Warehousing System, Inc., Broadway
Equipment Leasing Corp., Refrigerated Distribution Center, Inc., Oregon-Avenue
Enterprises, Inc., Pattison Avenue Warehousing Corp., Triple Seven Ice, Inc.,
Holt Cargo Systems of California, Riverfront Development Corporation, 777
Pattison Avenue, Inc., Holt Warehousing Company, Marine Information Technology,
Inc., B.H. Sobelman & Co., Inc., T. & L. Leasing Corp., CRT, Inc., Refrigerated
Enterprises, Inc., Dockside International Fish Co., Inc., Murphy Marine
Services, Inc., and Wilmington Stevedores, Inc. corporations, and that he as
such officer being authorized to do so, executed the foregoing document dated as
of July 1, 1995 for the purposes therein contained by signing the name of the
corporations by himself as such officer.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Stephen A. Genovese
------------------------------------
Notary Public
STEPHEN A GENOVESE
NOTARY PUBLIC - STATE OF NEW JERSEY
My Commission Expires May 30, 2000
-14-
================================================================================
LOAN AGREEMENT
Between
HOLT CARGO SYSTEMS, INC.
HOLT HAULING AND WAREHOUSING SYSTEM, INC.
BROADWAY EQUIPMENT LEASING CORP.
REFRIGERATED DISTRIBUTION CENTER, INC.
TRIPLE SEVEN ICE, INC.
HOLT CARGO SYSTEMS OF CALIFORNIA, INC.
THE RIVERFRONT DEVELOPMENT CORPORATION
777 PATTISON AVE, INC.
HOLT WAREHOUSING COMPANY
MARINE INFORMATION TECHNOLOGY, INC.
B.H. SOBELMAN & CO., INC.
T. AND L. LEASING CORP.
CRT, INC.
REFRIGERATED ENTERPRISES, INC.
OREGON AVENUE ENTERPRISES, INCORPORATED
PATTISON AVENUE WAREHOUSING CORP.
MURPHY MARINE SERVICES, INC.
DOCKSIDE INTERNATIONAL FISH CO., INC.
WILMINGTON STEVEDORES, INC.
and
MERIDIAN BANK
Dated: July 20, 1995
================================================================================
<PAGE>
ARTICLE I .......................... -1-
DEFINITIONS AND ACCOUNTING TERMS .................... -1-
SECTION 1.01. Certain Defined Terms ................ -1-
SECTION 1.02. Accounting Terms ..................... -8-
ARTICLE Il ......................... -9-
THE REVOLVING LOANS ................................. -9-
SECTION 2.01. The Commitment ....................... -9-
SECTION 2.02. Making the Revolving Loans ...........-11-
SECTION 2.03. The Revolving Note ...................-12-
SECTION 2.04. Unused Commitment Fee ................-12-
SECTION 2.05. Repayment of Revolving Loans .........-12-
SECTION 2.06. Extension of Commitment Termination
Date ...............................-13-
ARTICLE III ........................-13-
THE TERM LOAN .......................................-13-
SECTION 3.01. The Term Loan; The Term Note .........-13-
SECTION 3.02. Repayment of Term Loan ...............-14-
SECTION 3.03. Prepayments ..........................-14-
ARTICLE IV .........................-15-
PROVISIONS APPLICABLE TO ALL LOANS...................-15-
SECTION 4.01. Interest; Issuance Fees ..............-15-
SECTION 4.02. Computation of Interest and Unused
Commitment Fee .....................-16-
SECTION 4.03. Payments..............................-16-
SECTION 4.04. Payment on Non-Business Days .........-16-
SECTION 4.05. Late Charges .........................-16-
ARTICLE V ..........................-17-
STANDBY LETTERS OF CREDIT ...........................-17-
SECTION 5.01. Standby Letters of Credit ............-17-
SECTION 5.02. Letter of Credit Fee .................-17-
SECTION 5.03. Reimbursement ........................-17-
ARTICLE VI .........................-17-
PROVISIONS APPLICABLE TO ALL LETTERS OF CREDIT ......-18-
SECTION 6.01. Other Payments .......................-18-
SECTION 6.02. Interest .............................-20-
SECTION 6.03. Place and Manner of Payment ..........-20-
SECTION 6.04. Computation of Letter of Credit Fee
and Interest .......................-20-
SECTION 6.05. Pre-Existing Letters of Credit .......-20-
ARTICLE VII ........................-21-
COLLATERAL ..........................................-21-
SECTION 7.01. Security Interests ...................-21-
SECTION 7.02. Financing Statements .................-22-
SECTION 7.03. Landlords' Waivers; Mortgagees'
Disclaimers ........................-22-
<PAGE>
SECTION 7.04. Insurance ............................-22-
SECTION 7.05. Places of Business; Location of
Collateral .........................-23-
SECTION 7.06. Borrower's Name and Organizational
Structure ..........................-23-
SECTION 7.07. Accounts .............................-24-
SECTION 7.08. Inventory ............................-25-
SECTION 7.09. Records and Reports ..................-25-
SECTION 7.10. Bank's Rights Upon Event of
Default ............................-26-
SECTION 7.11. Expenses of Bank .....................-27-
SECTION 7.12. Notices ..............................-28-
SECTION 7.13. Insurance; Discharge of Taxes, etc. ..-28-
SECTION 7.14. Waiver and Release by Borrower .......-28-
SECTION 7.15. Perfection ..........................-29-
SECTION 7.16. Release of Liens .....................-29-
ARTICLE VIII .......................-30-
CONDITIONS OF LENDING ...............................-30-
SECTION 8.01. Conditions Precedent to the Initial
Loan or Letter of Credit ...........-30-
SECTION 8.02. Conditions Precedent to All Loans
and Letters of Credit ..............-32-
ARTICLE IX ........................-33-
REPRESENTATIONS AND WARRANTIES ......................-33-
SECTION 9.01. Existence ............................-33-
SECTION 9.02. Authorization ........................-33-
SECTION 9.03. Validity of Agreement and Other
Documents...........................-33-
SECTION 9.04. Financial Information ................-34-
SECTION 9.05. Litigation ...........................-35-
SECTION 9.06. Contingent Liabilities -35-
SECTION 9.07. Taxes ................................-35-
SECTION 9.08. Encumbrances .........................-35-
SECTION 9.09. Consents .............................-35-
SECTION 9.10. ERISA ................................-36-
SECTION 9.11. Environmental Matters ................-36-
SECTION 9.12. Margin Stock .........................-37-
SECTION 9.13. Excluded Companies ...................-37-
ARTICLE X ..........................-38-
COVENANTS OF BORROWER ...............................-38-
SECTION 10.01. Use of Proceeds ......................-38-
SECTION 10.02. Financial Information ................-38-
SECTION 10.03. Insurance ............................-40-
SECTION 10.04. Taxes ................................-41-
SECTION 10.05. Encumbrances .........................-41-
SECTION 10.06. Negative Pledge ......................-42-
SECTION 10.07. Current Ratio ........................-42-
SECTION 10.08. Indebtedness .........................-42-
<PAGE>
SECTION 10.09. Tangible Net Worth ...................-43-
SECTION 10.10. Interest .............................-44-
SECTION 10.11. Fixed Charge Coverage ................-44-
SECTION 10.12. Disposal of Assets ...................-45-
SECTION 10.13. Guarantees, etc ......................-45-
SECTION 10.14. Loans and Investments ................-45-
SECTION 10.15. Retained Profits .....................-46-
SECTION 10.16. Compliance with Laws .................-46-
SECTION 10.17. Maintenance of Property ..............-46-
SECTION 10.18. Net Income ...........................-46-
SECTION 10.19. Borrowing ............................-46-
SECTION 10.20. Reports ..............................-47-
SECTION 10.21. ERISA ................................-48-
SECTION 10.22. Merger ...............................-48-
SECTION 10.23. Nature of Business ...................-48-
SECTION 10.24. Deposit Accounts .....................-48-
SECTION 10.25. Environmental Matters ................-49-
SECTION 10.26. Covenants ............................-49-
SECTION 10.27. Packer Avenue Lease ..................-50-
SECTION 10.28. Prepaid Assets .......................-51-
SECTION 10.29. Inspection by Bank ...................-51-
SECTION 10.30. Additional Borrowers .................-52-
SECTION 10.31. Accounts .............................-52-
ARTICLE XI .........................-52-
DEFAULT .............................................-52-
SECTION 11.01. Events of Default ....................-52-
SECTION 11.02. Termination of Commitment;
Acceleration .......................-57-
ARTICLE XII ........................-58-
MISCELLANEOUS .......................................-58-
SECTION 12.01. No Waiver; Cumulative Remedies .......-58-
SECTION 12.02. Set-Off ..............................-58-
SECTION 12.03. Amendments and Waivers ...............-59-
SECTION 12.04. Notices ..............................-59-
SECTION 12.05. Costs and Expenses ...................-59-
SECTION 12.06. Litigation ...........................-61-
SECTION 12.07. WARRANT OF ATTORNEY ..................-62-
SECTION 12.08. Liability of Bank for Acts or
Omissions ..........................-62-
SECTION 12.09. Records ..............................-62-
SECTION 12.10. Absolute Nature of Borrower's
Obligations ........................-63-
SECTION 12.11. Indemnification -64-
SECTION 12.12. Liability for Acts and Omissions .....-67-
SECTION 12.13. Capital Adequacy .....................-68-
SECTION 12.14. Agent's Fee ..........................-69-
SECTION 12.15. Governing Law ........................-70-
SECTION 12.16. Headings .............................-70-
<PAGE>
LOAN AGREEMENT dated as of July 20, 1995, between HOLT CARGO SYSTEMS,
INC., ("Holt Cargo") and HOLT HAULING AND WAREHOUSING SYSTEM, INC. ("Holt
Hauling"), BROADWAY EQUIPMENT LEASING CORP., REFRIGERATED DISTRIBUTION CENTER,
INC., TRIPLE SEVEN ICE, INC., HOLT CARGO SYSTEMS OF CALIFORNIA, INC., THE
RIVERFRONT DEVELOPMENT CORPORATION, 777 PATTISON AVE., INC., HOLT WAREHOUSING
COMPANY, MARINE INFORMATION TECHNOLOGY, INC., B. H. SOBELMAN & CO., INC., T. AND
L. LEASING CORP., CRT, INC., REFRIGERATED ENTERPRISES, INC., OREGON AVENUE
ENTERPRISES, INCORPORATED, PATTISON AVENUE WAREHOUSING CORP., MURPHY MARINE
SERVICES, INC., DOCKSIDE INTERNATIONAL FISH CO., INC., and WILMINGTON
STEVEDORES, INC. (collectively, "Borrower") and MERIDIAN BANK ("Bank").
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.01. Certain Defined Terms. As used in this Agreement, the
following terms shall have the following meanings (such meanings to be equally
applicable to both the singular and plural forms of the terms defined):
"Acceptance" has the meaning given to such term in Section 2.01(B)
hereof.
"Acceptance Fee" has the meaning given to such term in Section 4.01(C)
hereof.
<PAGE>
"Account" and "Account Debtor" have the respective meanings given to
such terms in the UCC. "Account" includes a Contract Right.
"Business Day" means a day other than a Saturday, Sunday or other day
on which commercial banks are authorized or required to close under the laws of
Pennsylvania.
"Chattel Paper" has the meaning given to such term in the UCC.
"Code" means the Internal Revenue Code of 1986, as amended from time to
time.
"Collateral" means all of the property described in Section 7.01
hereof.
"Commitment" has the meaning given to such term in Section 2.01 hereof.
"Commitment Termination Date" means the earlier of (A) May 31, 1997 (or
such later date to which it may be extended pursuant to Section 2.06 herein) or
(B) the occurrence of an Event of Default hereunder, or (C) May 31, 1996 if Bank
shall terminate the Commitment pursuant to Section 2.01(D) or 2.01(E) hereof.
"Combined" refers to the combination of the accounts of Borrower in
accordance with generally accepted accounting principles, including principles
of combination, applied in a manner consistent with the application of such
principles in the preparation of the audited financial statements mentioned in
Section 9.04 hereof.
-2-
<PAGE>
"Contract Right" means any right to payment under a contract not yet
earned by performance and not evidenced by an Instrument or Chattel Paper.
"Current Assets" means all assets of Borrower which would, in
accordance with generally accepted accounting principles consistently applied,
be classified as current assets of Borrower.
"Current Liabilities" means all liabilities of Borrower which would, in
accordance with generally accepted accounting principles consistently applied,
be classified as current liabilities of Borrower.
"Current Ratio" has the meaning given to such term in Section 10.07
hereof.
"Date of Issuance" means the date on which any Letter of Credit is
issued.
"Dockside" means Dockside International Fish Co., Inc.
"Documents" has the meaning given to such term in the UCC.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time.
"Event of Default" has the meaning given to such term in Section 11.01
hereof.
"Excluded Companies" means Holt Cargo Systems of California, Inc., Holt
Warehousing Company, Marine Information Technology, Inc. and T&L Leasing Corp.
-3-
<PAGE>
"General Intangibles" has the meaning given to such term in the UCC.
"Guaranteed Bond Indebtedness" has the meaning given to such term in
section (d) of the definition of Indebtedness contained herein.
"Hazardous Substances" and "Hazardous Wastes" have the respective
meanings given to those terms in (A) the Comprehensive Environmental Response,
Compensation and Liability Act, 42 U.S.C. ss.9601 et seg., (B) the Resource
Conservation and Recovery Act, 42 U.S.C. ss.6901 et seq., (C) any applicable
state or local law and (D) any regulations issued pursuant to any of the
foregoing.
"Indebtedness" means:
(a) all items which in accordance with generally accepted accounting
principles consistently applied would be included in determining total
liabilities as shown on the liability side of the balance sheet as at the date
as of which Indebtedness is to be determined; plus
(b) to the extent not included in the foregoing, all indebtedness,
obligations, and liabilities secured by any mortgage, pledge, lien, conditional
sale or other title retention agreement or other security interest to which any
property or asset is subject, whether or not the indebtedness, obligations or
liabilities secured thereby shall have been assumed; plus
(c) to the extent not included in the foregoing, all indebtedness,
obligations, and liabilities of others which any Borrower has directly or
indirectly guaranteed, endorsed (other
-4-
<PAGE>
than for collection or deposit in the ordinary course of business), discounted,
sold with recourse or for less than face value or agreed (contingently or
otherwise) to purchase or repurchase or otherwise acquire or in respect of which
there is an agreement to supply or advance funds (whether by way of loan, stock
purchase, capital contribution or otherwise) or otherwise to become directly or
indirectly liable; plus.
(d) all amounts of any type whatsoever (whether lease payments, bond
payments, installment sale payments or otherwise), guaranteed by any Borrower in
connection with (i) the Camden County Improvement Authority Lease Revenue Bonds
(Dockside Refrigerated Warehouses, Inc.) Series 1994 in the aggregate original
principal amount of $18,500,000 or (ii) any other bond indebtedness regardless
of the identity of the issuer ("Guaranteed Bond Indebtedness").
"Indebtedness Ratio" has the meaning given to such term in Section
10.08 hereof.
"Instruments" has the meaning given to such term in the UCC.
"Inventory" has the meaning given to such term in the UCC.
"Issuance Fee" has the meaning given to such term in Section 4.01(B)
hereof.
"Letter of Credit Fee" has the meaning given to such term in Section
5.02 hereof.
-5-
<PAGE>
"Letters of Credit" means Transactional Letters of Credit and Standby
Letters of Credit.
"Loans" means the Revolving Loans and the Term Loan.
"National Commercial Rate" means a floating annual rate of interest
designated from time to time by Bank as its "National Commercial Rate" and used
by Bank as a reference base with respect to different rates of interest charged
to borrowers. The rate of interest payable by Borrower under this Agreement and
the Notes shall change simultaneously and automatically upon Bank's designation
of any change in such referenced rate. Bank's determination and designation of
such referenced rate from time to time shall not in any way preclude Bank from
making loans to other borrowers at rates which are higher or lower than, or
different from, such referenced rate.
"Net Income" means net income as determined in accordance with
generally accepted accounting principles consistently applied.
"Notes" means the Revolving Note and the Term Note.
"Packer Avenue Lease" means the Lease dated December 30, 1990 between
Holt Cargo and the Philadelphia Regional Port Authority relating to the Packer
Avenue Marine Terminal in Philadelphia, PA, as the same may be amended or
renewed from time to time, and as the same was assigned Astro Holdings, Inc. on
June 14, 1991 and subleased back to Holt Cargo on the same date.
"Participant" means each bank or other entity to which Bank has granted
or hereafter grants a participation in the Loans
-6-
<PAGE>
or any Letter of Credit, including drawings thereunder, and in any of the
rights, benefits and obligations of Bank under this Agreement.
"Plan" means an employee benefit plan or other plan maintained for
employees of Borrower and covered by Title IV of ERISA.
"Reportable Event" has the meaning given to such term in Section
4043(b) of ERISA or regulations issued thereunder.
"Revolving Loans" has the meaning given to such term in Section 2.01
hereof.
"Revolving Note" has the meaning given to such term in Section 2.03
hereof.
"Standby Letters of Credit" has the meaning given to such term in
Section 5.01 hereof and includes Bank's Letter of Credit No. 600390 dated June
28, 1989 issued for the benefit of National Union Fire Insurance Company of
Pittsburgh, PA, as amended.
"Surety" means Thomas J. Holt.
"Suretyship Agreement" has the meaning given to such term in Section
8.01 hereof.
"Tangible Net Worth" means all assets (net of reserves for
uncollectible accounts, depreciation, amortization, obsolescence and the like)
properly appearing on a Combined balance sheet of Borrower, less:
(a) all Indebtedness of Borrower (other than Guaranteed Bond
Indebtedness); and
-7-
<PAGE>
(b) to the extent reflected as an asset in such Combined balance sheet,
(i) the book amount of all assets which would be treated as intangibles under
generally accepted accounting principles, including without limitation such
items as goodwill, trademarks, tradenames, service marks, brand names,
franchises, copyrights, patents, licenses, rights with respect to the foregoing
and unamortized debt discount and expense, (ii) all deferred charges, (iii) any
write-up in the book value of any asset resulting from a revaluation thereof
subsequent to the acquisition thereof, (iv) the amount, if any, at which
inventories or securities appearing on the asset side of such balance sheet
exceed the lower of current market value thereof or the price at which such
inventories or securities are to be sold and (v) the book amount of any asset
which is subject to a pledge, lien, encumbrance or charge (including any escrow
or similar deposit) to secure the payment of any obligation or indemnity to the
extent that the amount of such obligation or indemnity does not constitute
Indebtedness of any of Borrower to the extent that the amount of such obligation
or indemnity cannot be ascertained.
"Term Loan" has the meaning given to such term in Section 3.01 hereof.
"Term Note" has the meaning given to such term in Section 3.01 hereof.
"Transactional Letter of Credit" has the meaning given to such term in
Section 2.01(B) hereof.
-8-
<PAGE>
"Unused Commitment Fee" has the meaning given to such term in Section
2.04 hereof.
"UCC" means the Uniform Commercial Code as amended from time to time.
SECTION 1.02. Accounting Terms. All accounting terms not specifically
defined herein shall be construed, and all financial data submitted pursuant to
this Agreement shall be prepared, in accordance with generally accepted
accounting principles and practices applied in a manner consistent with the
application of such principles and practices in the preparation of the audited
financial statements mentioned in Section 9.04 hereof.
ARTICLE II
THE REVOLVING LOANS; TRANSACTIONAL LETTERS OF CREDIT
SECTION 2.01. The Commitment.
(A) subject to the terms and conditions hereinafter provided, including
without limitation Sections 2.01(C), (D) and (E) below, Bank agrees to lend
Borrower, from time to time during the period from the date hereof to and
including the Commitment Termination Date, such sums (the "Revolving Loans") as
Borrower may request in an aggregate principal amount not to exceed at any time
outstanding the amount of $28,500,000, as such amount may be reduced pursuant to
Section 2.01(C) hereof, (such amount being the "Commitment"). Within the limits
of the Commitment and prior to the Commitment Termination Date, Borrower may
borrow, repay and reborrow pursuant to this Section 2.01.
-9-
<PAGE>
(B) Subject to the terms and conditions of this Agreement, Bank shall
from time to time on or before the Commitment Termination Date, (i) upon
Borrower's request, issue transactional, international letters of credit for the
account of Borrower and relating to the purchase of Inventory, all of which
shall be in form and substance satisfactory to Bank ("Transactional Letters of
Credit") and (ii) accept one or more drafts having a maximum maturity of sixty
(60) days and drawn under Transactional Letters of Credit ("Acceptances");
provided, however, at no time shall the aggregate amount (x) available to be
drawn under Transactional Letters of Credit plus (y) of the principal amount of
outstanding Acceptances, exceed $1,000,000, nor shall the expiration date of any
Transactional Letter of Credit extend more than ninety (90) days from its Date
of Issuance. In the event Bank issues any Transactional Letters of Credit or
creates any Acceptances, the amount available to Borrower under the Commitment
as Revolving Loans shall be reduced by the amount available to be drawn under
Transactional Letters of Credit and/or the amount of the Acceptance.
(C) Notwithstanding the foregoing to the contrary, if Charter Cargo
Corporation shall not repay to Holt Cargo on or before April 15, 1996 the sum of
$8,000,000 due to Holt Cargo pursuant to the Agreement dated as of April 15,
1994 between Holt Cargo and Charter Cargo Corporation, the Commitment shall
automatically, irrevocably, and without notice, as of April 15, 1996, be reduced
to $20,500,000.Immediately upon such
-10-
<PAGE>
reduction, Borrower shall repay an aggregate principal amount of the Revolving
Loans in an amount equal to the amount, if any, by which the aggregate then
unpaid principal amount of the Revolving Loans exceeds the Commitment as then so
reduced.
(D) Notwithstanding anything contained herein to the contrary,
following Bank's receipt and review of the initial accountant's letter and
copies of Borrower's Accounts confirmations required by Section 10.02(I) below,
Bank may terminate the Commitment in its entirety on May 31, 1996 if Bank shall,
in the exercise of its sole discretion, be dissatisfied with the information
contained in such certification.
(E) Notwithstanding anything contained herein to the contrary, if Bank
shall not have entered into a Participation Agreement in form and substance
satisfactory to Bank with a Participant acceptable to Bank whereby such
Participant purchases a participation interest in the Loans and Letters of
Credit of at least $8,000,000 by May 31, 1996, Bank may, in the exercise of its
sole discretion, terminate the Commitment in its entirety on May 31, 1996.
SECTION 2.02. Making the Revolving Loans; Issuing Transactional Letters
of Credit.
(A) Borrower shall give Bank notice of each proposed Revolving Loan on
or before 12:00 p.m. of the day on which such Revolving Loan is requested,
specifying the amount thereof. Provided all of the conditions precedent for
making a Revolving Loan shall have occurred, Bank shall make the proceeds of
such
-11-
<PAGE>
Revolving Loan available to Borrower by crediting the amount thereof to Holt
Cargo's deposit account with Bank.
(B) Borrower shall request each Transactional Letter of Credit
specifying the amount thereof, the beneficiary, and such additional information
as Bank may require. Provided all of the conditions precedent for issuing a
Transactional Letter of Credit shall have occurred, Bank shall issue such
Transactional Letter of Credit within two (2) Business Days after such request.
SECTION 2.03. The Revolving Note. The obligation of Borrower to repay
the Revolving Loans shall be evidenced by a promissory note of Borrower (the
Revolving "Note"), dated the date of this Agreement, payable to the order of
Bank in a principal amount equal to the Commitment and otherwise in form
satisfactory to Bank.
SECTION 2.04. Unused Commitment Fee. Borrower shall pay to Bank an
unused commitment fee computed at the rate of one-quarter of one percent (.25%)
a year on the average daily unused portion of the Commitment from the date of
this Agreement to and including the Commitment Termination Date and payable in
arrears (A) on October 1, 1995 for the period then ending, (B) quarterly on the
first day of January, April, July and October in each year during the term of
the Commitment, commencing January 1, 1996 and (C) on the Commitment Termination
Date. The fee payable under this Section 2.04 is hereinafter called the "Unused
Commitment Fee."
-12-
<PAGE>
SECTION 2.05. Repayment of Revolving Loans; Reimbursement.
(A) Except as otherwise provided in Section 10.27 hereof, Borrower
shall repay the unpaid principal amount of all Revolving Loans then outstanding
(i) on the Commitment Termination Date, or (ii) if Bank shall have notified
Borrower pursuant to Section 2.06 hereof that it will not extend the Commitment
Termination Date then in effect, on or before 60 days following the earlier of
(x) the Commitment Termination Date or (y) the date on which Bank shall have
given Borrower notice that it will not extend the Commitment Termination Date.
No provision of this Agreement shall be construed to restrict the right of Bank,
in the exercise of its sole discretion, to demand payment in full at any time of
all amounts due under the Revolving Loans upon the occurrence of an Event of
Default.
(B) After payment by Bank of any draft drawn under any Transactional
Letter of Credit Borrower will pay to Bank on demand a sum equal to the amount
so paid by Bank.
SECTION 2.06. Extension of Commitment Termination Date. Provided that
on or before the April 30 prior to the then current Commitment Termination Date,
Borrower shall have provided Bank with the annual financial statements and
projections of Borrower and Affiliates required by Section 10.02 hereof together
with such other information and reports as Bank may reasonably request, on or
before the then current Commitment Termination Date, Bank will notify Borrower
whether it will extend the
-13-
<PAGE>
Commitment Termination Date then in effect. A failure of Bank to notify Borrower
that it has elected to extend the Commitment Termination Date then in effect
shall be deemed to be an election not to extend the Commitment Termination Date.
ARTICLE III
THE TERM LOAN
SECTION 3.01. The Term Loan; The Term Note. Subject to the terms and
conditions hereinafter provided, Bank agrees to lend Borrower forthwith the sum
of $4,482,320 (the "Term Loan"). The obligation of Borrower to repay the Term
Loan shall be evidenced by a promissory note of Borrower, dated the date of this
Agreement, payable to the order of Bank in the principal amount of the Term Loan
and otherwise in form satisfactory to Bank (the "Term Note").
SECTION 3.02. Repayment of Term Loan. Except as provided in the
immediately following sentence, Borrower shall repay the principal amount of the
Term Loan in 27 equal monthly installments on the fifteenth day of each month
commencing August 15, 1995. The first 26 of such installments shall be in the
amount of $57,520 each, and the last of such installments shall be in the amount
necessary to repay in full the principal amount of the Term Loan.
Notwithstanding the foregoing to the contrary, Borrower shall repay the
principal amount of the Term Loan then outstanding concurrently with the
repayment in full of
-14-
<PAGE>
the Revolving Loans pursuant to Section 2.05 above on, or following, the
Commitment Termination Date, as the case may be.
SECTION 3.03. Prepayments. Borrower may prepay the Term Note in whole
at any time or in part from time to time, without penalty or premium but with
accrued interest to the date of such prepayment on the amount prepaid. Each
partial prepayment shall be in the amount of $1,000 or an integral multiple
thereof and shall be applied to the principal installments payable under Section
3.02 hereof in the inverse order of their maturities.
ARTICLE IV
PROVISIONS APPLICABLE TO ALL LOANS
SECTION 4.01. Interest; Issuance Fees.
(A) Borrower shall pay interest on the unpaid principal amounts of the
Loans, from the respective dates on which such Loans are made until such
principal amounts have been repaid in full, payable (i) on August 15, 1995 for
the period ending August 10, 1995, (ii) monthly on the fifteenth day of each
month during the term of the Notes commencing September 15, 1995 and (iii) on
the date of payment in full, at an annual rate equal to the National Commercial
Rate plus .50% The rate of interest payable on the Loans shall change
simultaneously with each change in the National Commercial Rate.
(B) Borrower shall pay to Bank a fee ("Issuance Fee") in connection
with the establishment of each Transactional Letter
-15-
<PAGE>
of Credit equal to the greater of (x) 0.25% of the amount drawn under such
Transactional Letter of Credit, or (y) $60.00 (or such other amount as shall be
established from time to time as Bank's minimum negotiation fee). The Issuance
Fee shall be payable concurrently with the application for the Transactional
Letter of Credit to which it relates.
(C) Borrower shall pay to Bank a fee (the "Acceptance Fee") at the
time each Acceptance is created, equal to the greater of (x) 1.50% of the amount
of such Acceptance, or (y) $60.00 (or such other amount as shall be established
from time to time as Bank's minimum acceptance fee).
SECTION 4.02. Computation of Interest and Unused Commitment Fee.
Interest on the Loans and the Unused Commitment Fee shall be computed on the
basis of a year of 360 days but shall be computed for the actual number of days
elapsed.
SECTION 4.03. Payments. All payments and prepayments of principal of
and interest on the Loans, payments of Unused Commitment Fee, late charges and
all other payments of any kind to be made by Borrower to Bank hereunder shall be
made by Bank charging Holt Cargo's deposit account with Bank therefore or, if
there are insufficient funds in such account, the deposit account of any other
entity comprising Borrower, or, if there are insufficient funds in any such
account, by Borrower to Bank at One Liberty Place, 1650 Market Street,
Philadelphia, PA 19103 (or at such other address as shall be designated by
Bank), in funds immediately available to Bank.
-16-
<PAGE>
SECTION 4.04. Payment on Non-Business Days. Whenever any payment to be
made hereunder or under any Note is stated to be due on a day which is not a
Business Day, such payment may be made on the next succeeding Business Day, and
such extension of time shall in such case be included in the computation of
payment of interest hereunder or under the Notes or the Unused Commitment Fee,
as the case may be.
SECTION 4.05. Late Charges. If any amount payable by Borrower under
this Agreement is not paid when due, in addition to and not in limitation of any
other rights and remedies of Bank, Borrower shall pay Bank a late charge
computed at the rate of 5% for each dollar (or part thereof) of the amount not
paid.
ARTICLE V
STANDBY LETTERS OF CREDIT
SECTION 5.01. Standby Letters of Credit. Bank shall from time to time
on or before the Commitment Termination Date, upon Borrower's request, issue
stand-by letters of credit for the account of Borrower, all of which shall be in
form and substance satisfactory to Bank ("Standby Letters of Credit") and shall
be issued for the purposes set forth in Section 10.01 below only; provided,
however, at no time shall the aggregate amount available to be drawn under
Standby Letters of Credit exceed $5,000,000.
SECTION 5.02 Letter of Credit Fee. Borrower shall pay to Bank a fee
(the "Letter of Credit Fee") in connection with
-17-
<PAGE>
each Standby Letter of Credit computed from the Date of Issuance at the rate of
1.50% per annum of the amount available to be drawn under such Standby Letter of
Credit. The Letter of Credit Fee shall be payable annually in advance (A) on the
Date of Issuance and (B) on the anniversary date of the Date of Issuance, pro
rata, if applicable, at all times during which such Standby Letter of Credit is
outstanding.
SECTION 5.03. Reimbursement. After payment by Bank of any draft drawn
under any Standby Letter of Credit, Borrower will pay to Bank on demand a sum
equal to the amount so paid by Bank.
ARTICLE VI
PROVISIONS APPLICABLE TO ALL LETTERS OF CREDIT
SECTION 6.01. Other Payments.
(A) Borrower shall pay to Bank on demand (1) upon the issuance of each
Letter of Credit, an amount equal to Bank's customary charge then in effect for
the issuance of a letter of credit, (2) upon each transfer of any Letter of
Credit, an amount equal to Bank's customary charge then in effect for a
transfer of a letter of credit plus such amount as is necessary to cover the
reasonable and necessary costs and expenses of Bank incurred in connection with
such transfer of the Letter of Credit in accordance with its terms, (3) upon
each drawing under any Letter Of Credit, an amount equal to Bank's customary
charge then in effect for a drawing under a letter of credit and (4) any and all
-18-
<PAGE>
reasonable expenses whenever incurred or paid by Bank in connection with the
preparation, execution, delivery and administration of this Agreement, the
Letters of Credit and any other documents to be delivered by Borrower or Bank in
connection with this Agreement, including (without limitation) the reasonable
fees and expenses of counsel for Bank with respect thereto, with respect to
advising Bank as to its rights and responsibilities under this Agreement with
respect to the Letters of Credit and with respect to representing Bank in any
legal proceeding in which (a) any beneficiary seeks to enforce payment by Bank
under any Letter of Credit, (b) Borrower, or any successor in interest to
Borrower, seeks to have Bank restrained from making payment under any Letter of
Credit or (c) Bank seeks to enforce any or all of its rights and remedies
against Borrower under and in accordance with this Agreement.
(B) If any law or regulation or the interpretation thereof by any court
or administrative or governmental authority charged with the administration
thereof shall either (1) impose, modify or deem applicable any reserve, special
deposit or similar requirement against letters of credit issued by Bank or any
Participant or (2) impose on Bank or any Participant any other condition
regarding this Agreement or the Letters of Credit or any payments thereunder or
any participation therein, and the result of any event referred to in either of
the foregoing clauses (1) or (2) shall be to increase the cost to Bank or any
Participant of issuing or maintaining the Letters of Credit or
-19-
<PAGE>
making payments thereunder or participating therein, which increase in cost
shall be the result of the reasonable allocation by Bank or such Participant of
the aggregate of such cost increases resulting from such events, then, upon
demand by Bank or such Participant, Borrower shall immediately pay to Bank or
such Participant, from time to time as specified by Bank or such Participant,
such additional amounts as are necessary to compensate Bank or such Participant
(on an after-tax basis) for such increased cost incurred by Bank or such
Participant from the date of such change. A certificate as to such increased
cost incurred by Bank or such Participant as a result of any event mentioned in
either of clauses (1) and (2) of this Section 5.04(B) shall be submitted by Bank
or such Participant to Borrower and shall be deemed conclusive (absent
manifest error) as to the amount thereof.
SECTION 6.02. Additional Fee. If any amount payable by Borrower under
Sections 2.05(B), 4.01(B), 4.01(C), 5.02 and 5.03 hereof is not paid when due,
Borrower shall pay to Bank on demand interest on such unpaid amount from the
date on which payment was due to the date of payment in full at an annual rate
equal to the sum of the National Commercial Rate plus 2%. The rate of interest
payable on any such unpaid amount shall change as of the opening of business on
each day on which the National Commercial Rate changes.
SECTION 6.03. Place and Manner of Payment. All amounts payable to Bank
by Borrower under Article V above shall
-20-
<PAGE>
be made by Bank charging Holt Cargo's deposit account with Bank therefore, or,
if there are insufficient funds, by Borrower to Bank at Eleven Penn Center,
Philadelphia, PA, or at such other address as may be designated by Bank, in
funds immediately available to Bank.
SECTION 6.04. Computation of Letter of Credit Fee and Interest. The
Letter of Credit Fee and all interest payable hereunder shall be computed on the
basis of a year of 360 days but shall be computed for the actual number of days
elapsed.
SECTION 6.05. Pre-Existing Letters of Credit. All of the terms of (A)
the Amended and Restated Loan and Security Agreement between Bank, Holt Cargo
and Holt Hauling dated April 12, 1989, as amended, the Revolving Credit and
Security Agreement between Holt Hauling, Holt Cargo and Bank dated June 16,
1992, as amended, and the Loan Agreement between Bank, Holt Cargo and Holt
Hauling dated October 19, 1994, as amended and/or (B) the Letter of Credit
Agreement between Bank and Dockside dated October 1, 1992, as amended, and Loan
Agreement between Bank and Dockside dated March 21, 1995, as amended, and all
documents and instruments executed in connection with any of the foregoing,
pertaining in any way to any Letter of Credit or Acceptance issued prior to the
date hereof, to the extent not inconsistent with the terms hereof, are hereby
ratified and confirmed as if set forth in full herein.
-21-
<PAGE>
ARTICLE VII
COLLATERAL
SECTION 7.01. Security Interests. As security for the performance of
this Agreement and the payment of the Notes and all other liabilities of
Borrower to Bank (whether absolute or contingent, matured or unmatured, direct
or indirect, sole, joint, several or joint and several, similar or dissimilar,
related or unrelated, due or to become due or heretofore or hereafter contracted
or acquired), Borrower hereby grants to Bank a security interest in the
following:
(A) All Accounts, Contract Rights, Inventory, Instruments arising
out of or relating to any Account, and Documents, all as now owned or hereafter
acquired by Borrower.
(B) All General Intangibles relating to or arising out of the property
described in Section 7.01(A) above including without limitation any maritime or
other liens and/or enforcement and collection rights with respect thereto.
(C) All proceeds and products of the property described in the
foregoing subsections of this Section 7.01, including insurance thereon.
SECTION 7.02. Financing Statements.
(A) Borrower shall join with Bank in executing such financing
statements and continuation statements (in form satisfactory to Bank) under the
UCC as Bank may specify, and shall pay the cost of filing the same in such
public offices as Bank shall designate.
-22-
<PAGE>
(B) A carbon, photographic or other reproduction of this Agreement or
any financing statement signed by Borrower may be filed as a financing
statement.
SECTION 7.03. Landlords' Waivers. Borrower shall cause the owners of
all premises occupied by Borrower (if a person or entity other than a Borrower)
to execute and deliver to Bank instruments (in form satisfactory to Bank) by
which such owners waive their right to distrain on or lien any of the
Collateral.
SECTION 7.04. Insurance. In addition to the requirements of Section
10.03 hereof, Borrower shall maintain insurance, in such amounts and with such
insurance companies as are acceptable to Bank, insuring the Collateral against
such risks as are specified by Bank, including without limitation the risk of
spoiled or bad Inventory. Each policy of insurance covering any of the
Collateral shall (A) show Bank's security interest therein in such manner that
all payments for damage thereto or loss thereof shall be paid to Bank and (B)
provide that it shall not be terminated without at least 30 days' prior written
notice to Bank. Borrower shall deliver to Bank satisfactory evidence of
compliance with this Section 7.04.
SECTION 7.05. Places of Business; Location of Collateral.
(A) Borrower represents that its chief place of business, its chief
executive office and the place where it keeps its records concerning its
Accounts and General Intangibles are at 701 North Broadway, Gloucester City, NJ
and its Inventory is
-23-
<PAGE>
kept at such place and at the other places of business listed in Exhibit 7.05
attached hereto.
(B) Borrower shall promptly notify Bank of (1) any change in the
location of Borrower's chief place of business or chief executive office, (2)
any change in the places where it keeps its Inventory and its records concerning
its Accounts and General Intangibles and (3) the establishment of any new or the
discontinuance of any existing place of business.
(C) Borrower shall not permit any of its Inventory to be removed from
the places mentioned in subsection (A) of this Section 7.05, except in the
ordinary course of business.
SECTION 7.06. Borrower's Name and Organizational Structure.
(A) Borrower represents that no Borrower has (1) used any name other
than as stated in the preamble to this Agreement or (2) owned property or
conducted business as any kind of legal entity other than as stated in Section
9.01 hereof.
(B) Borrower shall promptly notify Bank of any change in Borrower's
name, identity or corporate structure.
SECTION 7.07. Accounts. (A) With respect to each of its Accounts,
Borrower represents that: (1) it is not evidenced by a judgment, an instrument
or chattel paper (except such judgment as has been assigned, and such instrument
or chattel paper as has been endorsed and delivered, to Bank) and represents a
bona fide transaction; (2) the amount shown on Borrower's books and on any list,
invoice or statement furnished to Bank is owing to Borrower; (3) the title of
Borrower to the Account and, except
-24-
<PAGE>
as against the Account Debtor, to any goods represented thereby is absolute; (4)
the Account has not been transferred to any other person, and no person except
Borrower has any claim thereto or, with the sole exception of the Account
Debtor, to the goods represented thereby; (5) no partial payment has been made
by anyone; and (6) unless it is a Contract Right, such Account represents a
completed transaction, no setoff or counterclaim to such Account exists, and no
agreement has been made with any person under which any deduction or discount
may be claimed, except regular discounts allowed by Borrower for prompt
payments.
(B) Borrower shall (1) collect its Accounts only in the ordinary course
of business and (2) immediately notify Bank if any of Borrower's Accounts arise
out of contracts with the United States or any department, agency or
instrumentality thereof, furnish Bank with copies of each such contract and
execute any instruments and take any steps required by Bark in order that all
moneys due and to become due under any such contract shall be assigned to Bank
and notice given under the Federal Assignment of Claims Act.
(C) Borrower shall, if requested by Bank, (1) inform Bank immediately
of the rejection of any goods represented by an Account, any delay in delivery
or performance by Borrower or claims made in regard to any Account; and (2) pay
Bank the amount of any Account where the goods represented thereby are returned
by the Account Debtor
SECTION 7.08. Inventory.
-25-
<PAGE>
(A) Borrower represents that it is the absolute owner of its Inventory,
subject only to the security interests created hereby.
(B) Borrower shall sell its Inventory only in the ordinary course of
business.
SECTION 7.09. Records and Reports. Borrower shall keep accurate and
complete records of its Accounts, General Intangibles and Inventory and furnish
Bank such information about Borrower's Accounts, General Intangibles and
Inventory as Bank may reasonably request, including without limitation (A)
within 15 days after the end of each fiscal quarter, an aged trial balance of
Borrower's Accounts including name, amount and month billed, addresses (in the
case of the balance submitted in January of each year), and otherwise in form
satisfactory to Bank and (B) within 15 days after the end of each fiscal
quarter, a report showing Borrower's Inventory in the Form of Exhibit 7.09(B)
hereof.
SECTION 7.10. Bank's Rights Upon Event of Default. If any Event of
Default shall occur and be continuing:
(A) If requested by Bank, Borrower shall: (1) deliver to Bank a list of
Borrower's Accounts, showing the names and addresses of Account Debtors and the
amounts owed by them respectively; (2) deliver to Bank a copy, with such
duplicate copies as Bank may request, of the invoice applicable to each Account
of Borrower, bearing a statement that such Account has been assigned to Bank;
(3) deliver to Bank all such information
-26-
<PAGE>
as shall be required by Bank with respect to any maritime lien arising out of
any of Borrower's Accounts and/or any bond posted with respect thereto, (4)
receive as the sole property of and hold as trustee for Bank all instruments for
the payment of money representing the proceeds of any Collateral which come into
the possession of Borrower and immediately deliver to Bank all such instruments
in the exact form received by Borrower; and (5) assemble Borrower's Inventory
and tangible material relating to its Accounts and General Intangibles and make
it available to Bank at a place designated by Bank that is reasonably convenient
to Bank and Borrower.
(B) Bank shall have the right, without notice to Borrower, to (1)
endorse in Borrower's name all instruments for the payment of money representing
the proceeds of any Collateral that comes into the possession of Bank; (2)
notify Account Debtors that Borrower's Accounts have been assigned to Bank and
forward invoices to Account Debtors, directing them to make payments to Bank;
(3) collect Borrower's Accounts in Bank's or Borrower's name, and take control
of any cash or non-cash proceeds of Collateral; (4) take any and all actions on
behalf of, and in the name of, Borrower with respect to the establishment,
enforcement, prosecution or collection of any maritime lien arising out of any
of Borrower's Accounts or to which Borrower shall be entitled and/or any bond
posted with respect thereto, including without limitation notifying any bonding
company that the rights of Borrower with respect to a
-27-
<PAGE>
bond have been assigned to Bank and directing such company to pay the proceeds
of any bond to Bank, and any such bonding company shall be entitled to rely on
any such direction from Bank as if it had been made by Borrower; (5) compromise,
extend, or renew any of Borrower's Accounts or deal with any of them as Bank may
deem advisable; and (6) exercise all of the rights of a secured party under the
UCC.
SECTION 7.11. Expenses of Bank. Borrower shall reimburse Bank on demand
for all expenses (including the reasonable fees and expenses of legal counsel
for Bank) incurred in connection with (A) the protection, exercise or
enforcement of Bank's rights with respect to the Collateral, including (without
limitation) Bank's rights to (i) collect or take possession of the Collateral
and the proceeds thereof, (ii) hold the Collateral, (iii) prepare the Collateral
for sale or other disposition and (iv) sell or otherwise dispose of the
Collateral and (B) the assertion, protection, exercise or enforcement of Bank's
rights in any proceeding under the United States Bankruptcy Code, including
(without limitation) the preparation, filing and prosecution of (i) proofs of
claim, (ii) motions for relief from the automatic stay, (iii) motions for
adequate protection and (iv) complaints, answers and other pleadings in
adversary proceedings by or against Bank or relating in any way to any of the
Collateral.
SECTION 7.12. Notices. If notice of sale, disposition or other intended
action by Bank with respect to the Collateral is required by the UCC or other
applicable law, any notice thereof
-28-
<PAGE>
sent to Borrower at its address specified on the signature pages of this
Agreement, or such other address as may hereafter be designated by Borrower in a
notice complying with Section 12.04 hereof, at least five days prior to such
action shall constitute reasonable notice to Borrower.
SECTION 7.13. Insurance; Discharge of Taxes, etc. Bank shall have the
right at any time and from time to time, if Borrower fails to do so following
notice from Bank, to (A) obtain insurance covering any of the Collateral if
Borrower fails to do so, (B) discharge taxes, liens, security interests or
other encumbrances at any time levied or placed on any of the Collateral and
(C) pay for the maintenance and preservation of any of the Collateral. Borrower
shall reimburse Bank, on demand, for any payment made, or any expense incurred,
by it pursuant to this authorization. Borrower assigns to Bank all right to
receive the proceeds of insurance covering the Collateral, directs any insurer
to pay all such proceeds directly to Bank and authorizes Bank to endorse in the
name of Borrower any draft for such proceeds.
SECTION 7.14. Waiver and Release by Borrower. Borrower (A) waives
protest of all commercial paper at any time held by Bank on which Borrower is in
any way liable, notice of nonpayment at maturity of any and all of Borrower's
Accounts and, except where required hereby or by law, notice of action taken by
Bank and (B) releases Bank from all claims for loss or damage caused by any
failure to collect any Account or by any act or omission on the
-29-
<PAGE>
part of Bank or its officers, agents and employees, except wilful misconduct or
gross negligence.
SECTION 7.15. Perfection. Upon (A) the filing of Uniform commercial
Code financing statements with the filing officers listed on Exhibit 7.15
attached hereto, and (B) Bank's taking possession of all Documents and
Instruments, Bank will have a valid perfected first priority security interest
in and to the Collateral.
SECTION 7.16. Release of Liens.
(A) Bank shall release the liens granted to it pursuant to this Article
VII at such time as all of the following conditions shall have been met:
(i) No Event of Default or event which with the giving of notice or
passage of time or both would be an Event of Default shall have occurred;
(ii) The aggregate amount of all lines of credit (including the
Commitment), term loans (including the Term Loan), letters of credit (including
the Letters of Credit) issued for the account of Borrower and other loan
facilities available to Borrower, whether extended by Bank or by any other bank
or lender, shall not exceed $15,000,000;
(iii) Borrower shall have complied with the following covenants,
all as evidenced by an audited financial statement of Borrower:
(a) Borrower shall attain a Current Ratio of not
less than 1.1 to 1;
-30-
<PAGE>
(b) Borrower shall attain an Indebtedness Ratio of not more
than 2.75 to 1;
(c) Borrower shall attain Combined Tangible Net Worth of not
less than an amount equal to Borrower's Combined Tangible Net Worth as of the
immediately preceding December 31 plus 50% of Borrower's Combined Net Income
for the current fiscal year through the time of calculation. In addition to the
foregoing, Borrower's Combined Tangible Net Worth shall increase by at least
$2,500,000 as of December 31 of each year; and
(d) Borrower shall attain a ratio of (i) Combined Net Income
after taxes, plus depreciation, to (ii) Combined current maturities of long term
debt (including the current portion of the Term Loan) for the immediately prior
fiscal year, plus Combined current maturities of capital lease obligations for
the immediately prior fiscal year, plus unfunded capital expenditures for the
fiscal year, plus the average outstanding principal balance of the Revolving
Loans for such fiscal year of not less than 1.15 to 1; and
(B) Bank agrees that following the release of the Collateral pursuant
to this Section 7.16, Bank shall have no further security interest in and to the
Collateral unless Borrower shall grant a new security interest to Bank in such
Collateral.
-31-
<PAGE>
ARTICLE VIII
CONDITIONS OF LENDING
SECTION 8.01. Conditions Precedent to the Initial Loan or Letter
of Credit. The obligation of Bank to make the initial Loan or issue the initial
Letter of Credit is subject to the conditions precedent that Bank shall have
received on or before the day on which such initial Loan is to be made or Letter
of Credit to be issued all of the following, in form and substance satisfactory
to Bank:
(A) The Notes.
(B) International Facilities Agreement relating to Letters of
Credit.
(C) Agreement (the "Suretyship Agreement") by which Surety becomes
surety for all liabilities of Borrower to Bank.
(D) Acknowledgement of Confessions of Judgment.
(E) The documents required by Section 7.01 and 7.03 hereof.
(F) Acknowledgement of affiliate relationship among the entities
comprising Borrower.
(G) Payment of Bank's $100,000 commitment fee.
(H) A copy, certified in writing by the secretary or an assistant
secretary of Borrower, of (1) resolutions of its boards of directors
evidencing approval of this Agreement, the Notes and other matters
contemplated hereby and (2) each document evidencing
-32-
<PAGE>
other necessary action and approvals, if any, with respect to this Agreement,
the Notes and other matters contemplated hereby.
(I) A written certificate by the secretaries or assistant secretaries
of Borrower as to the names and signatures of its officers who are authorized to
sign this Agreement, the Notes and the other documents or certificates to be
executed and delivered by it pursuant hereto. Bank may conclusively rely on such
certificate until it receives a further certificate by the secretary or an
assistant secretary of Borrower amending the prior certificate.
(J) Articles of Incorporation and By-laws of Wilmington Stevedore, Inc.
(K) Good Standing Certificate for each entity comprising Borrower.
(L) A schedule listing each entity comprising Borrower, its primary
business and its shareholders (showing number of shares owned).
(M) A favorable opinion of counsel for Borrower as to the matters
mentioned in Sections 7.15, 9.01, 9.02, 9.03, 9.05 and 9.09 hereof and as to
such other matters as Bank may reasonably request.
SECTION 8.02. Conditions Precedent to All Loans and Letters of Credit.
The obligation of Bank to make any Loan (including the initial Revolving Loan)
or to issue any Letter of
-33-
<PAGE>
Credit (including the initial Letter of Credit) is subject to the further
conditions precedent that:
(A) The representations and warranties contained in Sections 7.05,
7.06, 7.07, 7.08 and 7.15 hereof, and in Article IX hereof shall be correct and
accurate on and as of the date of such Loan or the issuance of such Letter of
Credit as though made on and as of such date.
(B) No Event of Default shall have occurred and be continuing or will
result from the making of such Loan or issuing of such Letter of Credit, and no
event shall have occurred and be continuing which with notice or lapse of time
or both would, if unremedied, be an Event of Default.
(C) In the event of the issuance of a Letter of Credit, Borrower shall
have executed and delivered to Bank an application therefore and paid all fees
required in connection with the issuance of the same.
ARTICLE IX
REPRESENTATIONS AND WARRANTIES
Borrower represents and warrants to Bank as follows:
SECTION 9.01. Existence. Each Borrower is a corporation duly
incorporated, validly existing and in good standing under the laws of its
jurisdiction of incorporation as set forth on Exhibit 9.01 hereof. Borrower has
all requisite power and authority, corporate and otherwise, to conduct its
respective business and to own its respective properties and,
-34-
<PAGE>
other than the Excluded Companies, is duly qualified as a foreign corporation in
good standing in all jurisdictions in which its failure so to qualify could have
a material adverse effect on its financial condition or business.
SECTION 9.02. Authorization. The execution, delivery and performance by
Borrower of this Agreement, the Notes and all other documents and instruments
required hereby, have been duly authorized by all necessary corporate action and
do not and will not violate any provision of law or of the charter or by-laws of
Borrower or result in a breach of or constitute a default under any agreement,
indenture or instrument to which it is a party or by which it or its properties
may be bound or affected; provided, however, that this representation does not
apply to the Excluded Companies.
SECTION 9.03. Validity of Agreement and Other Documents. This Agreement
constitutes, and the Notes and other documents and instruments required hereby
when duly executed and delivered will constitute, valid and legally binding
obligations of Borrower, enforceable in accordance with their respective terms,
except as such enforceability may be limited by bankruptcy, insolvency or other
similar laws affecting the enforcement of creditors' rights generally; provided,
however, that this representation does not apply to the Excluded Companies. The
Suretyship Agreement, when duly executed and delivered will constitute a valid
and enforceable obligation of Surety, enforceable in accordance with its terms,
except as such
-35-
<PAGE>
enforceability may be limited by bankruptcy, insolvency or other similar laws
affecting the enforcement Of creditors' rights generally.
SECTION 9.04. Financial Information. The Combined balance sheet and
profit and loss and surplus statement of Borrower as of December 31, 1994
certified by BDO Seidman, and the combined balance sheet and profit and loss and
surplus statement of Borrower as of March 31, 1995, certified by Borrower's
chief financial officer, copies of which have been furnished to Bank, are
complete and correct, show all material liabilities, direct and contingent, and
present fairly the financial position, the results of operations and changes in
Combined financial position of Borrower at such dates and for the periods ended
on such dates, all in accordance with generally accepted accounting principles
consistently applied. Since March 31, 1995 there has been no material adverse
change in such financial position or such results of operations.
SECTION 9.05. Litigation. There are no actions, suits or proceedings
pending or, to the knowledge of Borrower, threatened against Borrower or Surety
or any of its or their properties before any court or governmental department,
commission, board, bureau, agency or instrumentality (domestic or foreign)
which, if determined adversely to Borrower or Surety, would have a material
adverse effect on the financial condition or operations of Borrower on a
Combined basis or on the financial condition or operations of Surety.
-36-
<PAGE>
SECTION 9.06. Contingent Liabilities. Except as set forth on Exhibit
9.06 hereto, there are no suretyship agreements, guarantees or other contingent
liabilities of Borrower or Surety which are not disclosed by the financial
statements mentioned in Section 9.04 above.
SECTION 9.07. Taxes. Borrower and Surety has each filed all tax returns
and reports required to be filed before the date of this Agreement and has paid
all taxes, assessments and charges imposed upon it or its property, or which it
is required to withhold and pay over, to the extent that they were required to
be paid before the date of this Agreement.
SECTION 9.08. Encumbrances. The property and assets of Borrower and
Surety are not subject to any lien, encumbrance or security interest which has
arisen other than in the normal course of business.
SECTION 9.09. Consents. No authorization, consent, approval, license,
exemption by or filing or registration with any court or governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, is or will be necessary to the valid execution, delivery or performance
by Borrower of this Agreement, the Notes or any other documents or instruments
required hereby or by Surety to the Suretyship Agreement.
SECTION 9.10. ERISA. Each Plan maintained for employees of Borrower or
any Affiliate and covered by Title IV of ERISA is in good standing. No
Reportable Event or failure of
-37-
<PAGE>
compliance with the Code as required by Section 10.21 hereof has occurred and is
continuing with respect to any Plan.
SECTION 9.11. Environmental Matters.
(A) Neither Borrower nor Surety has generated, stored, treated,
discharged or disposed of any Hazardous Substances or Hazardous Wastes in
violation of any applicable law or regulation nor is Borrower aware of any
allegations that any such violations have occurred.
(B) Other than the Report of Environmental Site Inspection of EEC
Environmental, Inc. dated January 27, 1992 relating to Borrower's Gloucester
City, NJ premises and the Phase I Environmental Site Assessment of the Holt
Marine Terminal dated March 7, 1994 prepared by Pennoni Associates, Inc. (the
"Site Assessments"), Borrower is not aware of any claim, investigation,
litigation or administrative proceeding, whether actual or threatened, against
Borrower or Surety relating to any environmental contamination of any real
property owned, used or leased by Borrower or Surety or arising out of any
alleged violation of any environmental law or regulation.
(C) To the best of Borrower's knowledge after due investigation, other
than as revealed by the Site Assessments, no real property owned, used or leased
by Borrower or Surety has ever been used by previous owners and/or operators to
generate, manufacture, refine, transport, treat, store, handle or dispose of
Hazardous Substances or Hazardous Wastes under circumstances that cause, or
reasonably should cause, Borrower or Surety to
-38-
<PAGE>
believe that such prior use is likely to subject Borrower or Surety to liability
to any person or persons.
(D) Neither Borrower nor Surety intends to use any real property owned,
used or leased by it to generate, manufacture, refine, transport, treat, store,
handle or dispose of Hazardous Substances or Hazardous Wastes.
SECTION 9.12. Margin Stock. Borrower is not engaged in, nor does it
have as one of its substantial activities, the business of extending or
obtaining credit for the purpose of purchasing or carrying "margin stock" (as
that term is defined in Regulation U of the Board of Governors of the Federal
Reserve System) and no proceeds of the Loans will be used for such purpose or
for the purpose of purchasing or carrying any shares of margin stock.
SECTION 9.13. Excluded Companies. Each of the Excluded Companies is
non-operational and owns no assets.
ARTICLE X
COVENANTS OF BORROWER
So long as any Note remains unpaid, any Letter of Credit remains
outstanding or Bank has any Commitment hereunder, unless Bank otherwise consents
in writing:
SECTION 10.01. Use of Proceeds. Subject to the provisions of Section
10.14 below, the proceeds of the Loans shall be used by Borrower (other than the
Excluded Companies) to repay an existing line of credit from Merrill Lynch in
the amount
-39-
<PAGE>
of $2,500,000, to repay an existing line of credit from PNC Bank in the amount
of $3,500,000, to repay all amounts due by Dockside to Bank in connection with
the line of credit established pursuant to the Loan Agreement dated March 21,
1995 between Bank and Dockside, and for working capital in connection with the
operation of their businesses as they exist on the date of this Agreement. The
Standby Letters of Credit shall be requested only in connection with Borrower
posting collateral for its self-insured worker's compensation insurance. The
Transactional Letters of Credit shall be requested only in connection with
Borrower's importation and/or acquisition of Inventory in the ordinary course of
business.
SECTION 10.02. Financial Information. Borrower shall furnish to Bank
(A) a Combined and Combining balance sheet and profit and loss and surplus
statement of Borrower within 60 days after the close of each of the first three
quarters of each fiscal year, (B) a Combined and Combining balance sheet and
profit and loss and surplus statement of Borrower, within 120 days after the
close of each fiscal year, (C) Combined annual projections (prepared on a
monthly basis) for Borrower, within 120 days after the close of each fiscal
year, (D) the annual personal financial statements of Thomas J. Holt within 120
days after the end of each calendar year, (E) monthly reports within 15 days
after the end of each calendar month in the form of Exhibit 10.02(A) hereto
showing (i) Borrower's accounts receivable and (ii) Borrower's estimated sales
for the
-40-
<PAGE>
immediately preceding calendar month, and (iii) calculations of the ratio set
forth in Section 10.28 below, (F) a monthly activity report within 15 days after
the end of each calendar month, detailing (i) number of vessels calling for such
month, (ii) tonnage handled for such month and (iii) such other information as
Bank may reasonably request, (G) profit and loss statements for each vessel
chartered by B.H. Sobelman and Co., Inc., within 30 days after the completion of
each such charter, (H) a monthly report relating to the chartering business of
B. H. Sobelman & Co., Inc. within 15 days after the end of each calendar month
in the form of Exhibit 10.02(B) attached, appropriately completed, and (I) a
letter from BDO Seidman, or such other independent certified public accountant
acceptable to Bank performing the audit of Borrower's financial condition, as to
the confirmations it has received regarding Borrower's Accounts, in the form of
Exhibit 10.02(C) hereto, together with copies of such confirmations, on or
before April 30 of each year. Combined annual statements shall be audited and
unqualifiedly certified by, and Combining annual statements shall be prepared
by, BDO Seidman or other independent certified public accountants acceptable to
Bank, and all other data, other than that relating to Thomas J. Holt, shall be
certified by the chief financial officer of Borrower. Each quarterly and annual
statement shall be accompanied by a certificate by the chief financial officer
of Borrower substantially in the form of Exhibit 10.02(D) hereof appropriately
completed setting forth the calculations of the
-41-
<PAGE>
financial covenants and stating that he has no knowledge that an Event of
Default has occurred or that any event has occurred which with the passage of
time or the giving of notice or both would, if unremedied, be an Event of
Default.
SECTION 10.03. Insurance. Borrower shall maintain insurance with
responsible and reputable insurance companies in such amounts and covering such
risks as is usually carried by companies engaged in similar businesses and
owning similar properties in the same general areas in which Borrower operates
or owns such properties. In addition, Borrower shall maintain an Employed
Lawyers Professional Liability Policy covering John A. Evans in an amount not
less than $5,000,000 and shall, on or before 15 days prior to the expiration
thereof, provide Bank with evidence satisfactory to Bank of the renewal or
substitution of such policy with a policy satisfactory to Bank.
SECTION 10.04. Taxes. Borrower shall pay when due all taxes,
assessments and charges imposed upon it or its property or which it is required
to withhold and pay over, except where contested in good faith and where
adequate reserves have been set aside.
SECTION 10.05. Encumbrances. Borrower shall not create, incur, assume
or suffer to exist any mortgage, pledge, lien or other encumbrance of any kind
upon, or any security interest in, any of its property or assets, whether now
owned or hereafter acquired, except (A) liens for taxes not yet delinquent or
being contested in good faith and by appropriate proceedings,
-42-
<PAGE>
(B) liens in connection with workmen's compensation, unemployment insurance or
other social security obligations, (C) deposits or pledges to secure bids,
tenders, contracts (other than contracts for the payment of money), statutory
obligations, surety or appeal bonds, and other obligations of like nature
arising in the ordinary course of business, (D) mechanic's, workman's,
materialman's, landlord's, carrier's, or other similar liens arising in the
ordinary course of business with respect to obligations which are not due or
which are being contested in good faith, (E) purchase money encumbrances on
newly-acquired personal property, (F) existing mortgage liens on Borrower's
property located in Gloucester City, NJ, (G) existing mortgage liens on
Refrigerated Enterprises, Inc.'s property located at 777 Pattison Avenue,
Philadelphia, PA, and (H) other encumbrances not materially affecting the value
of the property subject thereto.
SECTION 10.06. Negative Pledge. Borrower shall not enter into any
covenant with any bank or other lending institution or any other person or
entity, whereby Borrower agrees not to pledge, grant a lien upon or security
interest in any of its or their assets.
SECTION 10.07. Current Ratio. At all times prior to the release of the
Collateral by Bank pursuant to Section 7.16 hereof, Borrower shall maintain a
ratio of Combined Current Assets to Combined Current Liabilities (including the
outstanding principal balance of the Revolving Loans and the current portion
-43-
<PAGE>
of the Term Loan) ("Current Ratio") of not less than 1.0 to 1 at December 31,
1994 and as of each fiscal quarter thereafter.
SECTION 10.08. Indebtedness. At all times prior to the release of the
Collateral by Bank pursuant to Section 7.16 hereof, Borrower shall maintain a
ratio of Combined Indebtedness to Combined Tangible Net Worth ("Indebtedness
Ratio") of not more than 3.0 to 1 as of December 31, 1994 and as of each fiscal
quarter thereafter.
SECTION 10.09. Tangible Net Worth. At all times prior to the release of
the Collateral by Bank pursuant to Section 7.16 hereof, Borrower shall maintain
Combined Tangible Net Worth of not less than the following amounts at the
following times:
December 31, 1994 and as of each fiscal quarter thereafter including
September 30, 1995 ... $44,200,000
December 31, 1995 and as of each fiscal quarter thereafter
including September 30, 1996 ... $47,000,000
December 31, 1996: an amount equal to Borrower's Combined Tangible Net
Worth as of December 31, 1995 plus 50% of Borrower's Combined Net
Income for fiscal year 1996.
March 31, 1997: an amount equal to Borrower's Combined Tangible Net
Worth as of December 31, 1996 plus 50% of Borrower's Combined Net
Income for fiscal year 1997 through the time of calculation.
In addition to the foregoing, Borrower's Combined Tangible Net Worth
shall increase by at least $2,500,000 as of December 31 of each year.
SECTION 10.10. Interest.
Borrower shall maintain a ratio of Combined Net Income before interest
and taxes to Combined interest charges for the
-44-
<PAGE>
then current and three prior fiscal quarters of not less than the following
amounts at the following times:
December 31, 1994 ........................ 1.50 to 1
March 31, 1995 and as of each fiscal quarter
thereafter ............................... 1.50 to 1
SECTION 10.11. Fixed Charge Coverage. At all times prior to the release
of the Collateral by Bank pursuant to Section 7.16 hereof, Borrower shall
maintain a ratio of (i) Combined Net Income after taxes plus depreciation to
(ii) Combined current maturities of long term debt (including the outstanding
principal balance of the Revolving Loans and the current portion of the Term
Loan) for the immediately prior fiscal year plus Combined current maturities of
capital lease obligations for the immediately prior fiscal year, plus capital
expenditures for the fiscal year, less, in each case, balloon payments
classified as Current Liabilities, of not less than 1.0 to 1 as of December 31,
1994 and each December 31 thereafter.
SECTION 10.12. Disposal of Assets. Borrower shall not sell, lease,
assign or otherwise dispose of in any fiscal year, any assets valued in the
aggregate in excess of 10% of the Combined total assets of Borrower; provided
however, Bank shall not unreasonably withhold its consent to any sale, lease,
assignment or other disposition in excess of the amounts set forth herein.
SECTION 10.13. Guarantees, etc. Borrower shall not become liable on the
obligation of any person other than
-45-
<PAGE>
Borrower, except by endorsement of negotiable instruments for deposit or
collection in the usual course of business.
SECTION 10.14. Loans and Investments. Borrower shall not make any loan
or investment, except (A) loans or investments (other than to or in Dockside,
B.H. Sobelman and Co., Inc. and/or FastShip Atlantic, Inc.) in an aggregate
amount not exceeding $500,000 outstanding at any one time, provided that if any
such permitted investment is in the capital stock or securities of any entity,
Borrower shall give Bank prior notice thereof, (B) investments in Dockside by
Holt Cargo in an amount not to exceed $1,000,000, which amount shall be used as
working capital, (C) an investment in FastShip Atlantic, Inc. by The Riverfront
Development Corporation in an amount not to exceed $3,800,000, (D) an investment
in or loan or other advance to B. H. Sobelman & Co., Inc. by Holt Cargo for ship
chartering in an amount not to exceed $2,500,000 and (E) investments in direct
obligations of the United States of America and in certificates of deposit or
commercial paper acceptable to Bank.
SECTION 10.15. Retained Profits. Borrower shall retain not less than
50% of its Combined Net Income for each fiscal year.
SECTION 10.16. Compliance with Laws. Borrower shall comply with all
laws and regulations applicable to it in the operation of its business.
SECTION 10.17. Maintenance of property. Borrower shall maintain all of
its property in good condition and repair.
-46-
<PAGE>
SECTION 10.18. Net Income. The combined net income of Borrower shall
not be less than $5,000,000 at December 31, 1994 and at each December 31
thereafter.
SECTION 10.19. Borrowing. Borrower shall not borrow from anyone for
working capital except (A) borrowings secured by purchase money financing on
personal property, (B) borrowings from Bank hereunder, and (C) intercompany
borrowings permitted by Section 10.14 above.
SECTION 10.20. Reports. Borrower shall furnish to Bank:
(A) as soon as possible and in any event within 10 days after Borrower
becomes aware of the occurrence of any Event of Default, or any event which with
notice or passage of time or both would, if unremedied, constitute an Event of
Default, a written statement by the chief executive or chief financial officer
of Borrower setting forth details of such Event of Default or event, stating
whether or not the same is continuing and, if so, the action which Borrower
proposes to take with respect thereto;
(B) immediately after receiving knowledge thereof, notice in writing of
all actions, suits and proceedings before any court or governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign,
affecting Borrower which involves an uninsured amount of $500,000 or more;
(C) as soon as possible and in any event within 30 days after Borrower
knows or has reason to know that any
-47-
<PAGE>
Reportable Event has occurred with respect to any Plan, a written statement by
the chief executive or chief financial officer of Borrower setting forth details
of the Reportable Event and indicating what action, if any, Borrower proposes to
take with respect thereto, together with a copy of any required notice of such
Reportable Event to the Pension Benefit Guaranty Corporation;
(D) as soon as possible and in any event within 5 days after Borrower
becomes aware of the occurrence of a material adverse change in the business,
properties or the operations and condition (financial or otherwise) of Borrower,
a statement by the chief executive or chief financial officer of Borrower
setting forth details of such material adverse change and the action which
Borrower proposes to take with respect thereto; and
(E) such other information respecting the business, properties,
condition and operations (financial or otherwise) of Borrower as Bank may at any
time and from time to time reasonably request be furnished to it.
SECTION 10.21. ERISA. Borrower shall comply with the provisions of
ERISA and the Code with respect to each Plan.
SECTION 10.22. Merger. Borrower shall not enter into any merger or
consolidation except mergers where (A) Borrower is the surviving corporation of
any merger to which it is a party, and (B) after any such merger no event shall
have occurred and be continuing which constitutes an Event of Default or which
with notice or lapse of time or both would, if unremedied, constitute
-48-
<PAGE>
an Event of Default. In any event, Borrower shall give prior written notice to
Bank of any proposed merger.
SECTION 10.23. Nature of Business. Borrower shall not make any material
change in the nature of its business as conducted at the date of this Agreement.
SECTION 10.24. Deposit Accounts. As additional compensation to Bank,
and in consideration of the rate of interest being charged by Bank to Borrower,
Borrower shall maintain its primary deposit and operating accounts with Bank
and, to the extent possible, utilize Bank's cash management services.
SECTION 10.25. Environmental Matters.
(A) If Bank at any time hereafter has reasonable cause to believe that
any Hazardous Substances or Hazardous Wastes have been generated, stored,
treated, discharged or disposed of by Borrower in violation of any applicable
law, then Bank may require such environmental audits as are reasonably
acceptable to Bank.
(B) Borrower shall pay the cost of all inspections, audits and reports
required by this Section 10.25.
(C) Borrower and Bank agree that all reports required by this Section
10.25 are for their sole use and benefit and shall not be disclosed to third
parties except for (1) disclosure to an assignee of Borrower's or Bank's
interest hereunder and (2) such other disclosures as are required by law.
-49-
<PAGE>
(D) Borrower shall comply in all respects with the requirements of
Bank's letter dated March 8, 1994 and the recommendations referred to therein,
all of which are attached hereto as Exhibit 10.25.
SECTION 10.26. Covenants. Borrower shall not enter into any agreement
with any other bank or lending institution pursuant to which Borrower agrees to
any financial covenant or ratio more stringent or restrictive than those
contained herein.
SECTION 10.27. Packer Avenue Lease. Borrower shall provide Bank with
immediate written notice of the termination (whether pursuant to a default or
otherwise) of the Packer Avenue Lease and/or of the cessation of Holt Cargo's
operation of the Packer Avenue Marine Terminal and within 10 days following such
termination or cessation, Borrower and Bank shall use their best efforts to
agree on what changes, if any, are necessary with regard to the Commitment, the
Loans, the Letters of Credit and this Agreement as a result of such termination
or cessation (including without limitation, a reduction in the Commitment,
collateralization for the Loans or termination of the Commitment). In the event
Borrower and Bank are unable, within 30 days after the notice of cessation of
operations referred to herein and after good faith negotiations, to agree on
changes, if any, as set forth herein, Bank shall have the right, in the exercise
of its reasonable business judgment, to declare an Event of Default hereunder.
In the event Borrower and Bank are unable, within 30 days after the notice of
termination of the Packer
-50-
<PAGE>
Avenue Lease referred to herein and after good faith negotiations, to agree on
changes, if any, as set forth herein, (a) Borrower shall repay the unpaid
principal amount of the Loans within 60 days after the expiration of such
30-day period and (b) upon Borrower's failure to repay the Loans within such
60-day period, Bank shall have the right to declare an Event of Default
hereunder.
SECTION 10.28. Prepaid Assets. Borrower shall maintain at the end of
each calendar month a ratio of (A) Accounts plus prepaid assets (as such term is
used in and reflected on Borrower's financial statements required by Section
10.02 herein) in an amount not exceeding $4,000,000, plus 50% of the total of
Dockside's Inventory (i) located at 777 Pattison Avenue, Phila., Pa., or (ii)
shipped on-board a vessel as to which shipment Bank has possession of the
original bill of lading or other Document covering such Inventory and evidence
satisfactory to Bank of insurance covering such Inventory or (iii) covered by a
Transactional Letter of Credit, plus accrued sales (as such term is used in and
reflected on Borrower's financial statements required by Section 10.02 herein),
in an amount not exceeding $3,000,000, to (B) the Loans, plus amounts available
to be drawn under issued and outstanding Transactional Letters of Credit, plus
all other amounts due to lenders other than Bank under lines of credit (whether
now or hereafter existing) of not less than 1.0 to 1.0 and shall provide to
Bank, within 15 days after the end of each calendar month, a
-51-
<PAGE>
certificate with respect thereto in the form of Exhibit 10.28 attached hereto,
appropriately completed. For the purposes of this Section 10.28, all Accounts
deemed "unacceptable" by Bank in the exercise of its sole discretion shall be
excluded from Borrower's Accounts in calculating Borrower's compliance with the
foregoing covenant. The term "unacceptable" shall include, without limitation,
all Accounts where the Account Debtor is delinquent in payment, the Account is
in dispute or the Account is not a trade Account.
SECTION 10.29. Inspection by Bank. Borrower shall permit
representatives of Bank to inspect its property and its books and records and to
make extracts therefrom at all reasonable times.
SECTION 10.30. Additional Borrowers. Upon the acquisition or formation
of any affiliate by Borrower, Borrower shall cause such affiliate to join in
this Aqreement and the Notes and otherwise take all such actions as Bank shall
require to cause such affiliate to be a Borrower hereunder.
SECTION 10.31. Accounts. Borrower's management shall meet with Bank on
or before the 15th day of each October, January, April and July at Bank's office
set forth on the signature page hereto, or such other place as Bank shall
designate for the purpose of discussing Borrower's Accounts and the information
and certifications pertaining thereto provided by Borrower.
-52-
<PAGE>
SECTION 10.32. Covenants Applicable Following Release of Collateral. At
all times following the release of the Collateral by Bank pursuant to Section
7.16 hereof, notwithstanding anything contained in Sections 10.07, 10.08, 10.09
or 10.11 to the contrary, Borrower shall maintain the covenants set forth in
Section 7.16(iii) hereof.
ARTICLE XI
DEFAULT
SECTION 11.01. Events of Default. Each of the following shall be an
event of default ("Event of Default"):
(A) If Borrower fails to pay any principal of or any interest on the
Loans, or reimburse Bank for amounts drawn under any Letter of Credit or to pay
any Commitment Fee, Issuance Fee, Acceptance Fee or Letter of Credit Fee within
ten days after the same shall be due.
(B) If any representation or warranty made in this Agreement or in any
certificate, agreement, instrument, statement or report contemplated hereby or
made or delivered pursuant hereto or in connection herewith, proves to have been
incorrect in any material respect.
(C) If Borrower fails to perform or observe any other term, covenant or
agreement contained in this Agreement on its part to be performed or observed
(other than Section 10.21 hereof), or in any other document or instrument
executed in connection with this Agreement, and any such failure remains
unremedied for 30 days after Borrower has knowledge thereof.
-53-
<PAGE>
(D) If (1) any Reportable Event, or any failure of compliance required
by Section 10.21 hereof, which Bank reasonably determines creates a reasonable
possibility of the termination of any Plan or of the appointment by the
appropriate United States district court of a trustee to administer any Plan has
occurred and is continuing 30 days after written notice to such effect has been
given to Borrower by Bank, or (2) any Plan is terminated, or (3) the plan
administrator of any Plan files with the Pension Benefit Guaranty Corporation a
notice of intention to terminate such Plan, or (4) the Pension Benefit Guaranty
Corporation institutes proceedings to terminate any Plan or to appoint a trustee
to administer any Plan and such proceedings remain undismissed or unstayed for 3
business days and if, in any of the cases described in the foregoing clauses (1)
to (4), Bank further reasonably determines that the amount of the unfunded
guaranteed benefits (within the meaning of Title IV of ERISA) resulting upon
termination of such Plan would have a material adverse effect on the financial
condition, properties or operations of Borrower if a lien against the assets of
Borrower were to result under ERISA.
(E) The occurrence of any "Default" under and as defined in the Notes
and/or Suretyship Agreement.
(F) The declaration of an Event of Default under Section 10.27 herein.
(G) The occurrence of any "Default" or "Event of Default" under any
other loan or credit accommodation (including
-54-
<PAGE>
without limitation reimbursement obligations with respect to letters of credit)
from Bank to Borrower.
(H) The occurrence of a material adverse change in the financial
condition of Borrower which is unacceptable to Bank in its reasonable business
judgment from the condition most recently disclosed to Bank in any manner and
the expiration of a 45-day period after Bank shall have provided Borrower with
notice of such default if Borrower shall have failed, within such 45-day period,
to provide to Bank evidence satisfactory to Bank that such change is not
materially adverse and/or not unacceptable to Bank.
(I) The dissolution, liquidation, reorganization, change of name, sale or
other disposition of substantially all of Borrower's assets, or cessation of
operations, or preparation or attempt to do any of the foregoing, by Borrower.
(J) If Borrower or Surety is adjudicated a bankrupt or insolvent, or
admits in writing its inability to pay its debts as they mature, or makes an
assignment for the benefit of its creditors; or if Borrower or Surety applies
for or consents to the appointment of any receiver, trustee, or similar officer
for it or for all or any substantial part of its property; or if such receiver,
trustee or similar officer is appointed without the application or consent of
Borrower or Surety, and continues undischarged for a period of 30 days; or if
Borrower or Surety institutes (by petition, application, answer, consent or
otherwise) any bankruptcy, insolvency, reorganization,
-55-
<PAGE>
arrangement, readjustment of debt, dissolution, liquidation or similar
proceeding relating to it under the laws of any jurisdiction; or if any such
proceeding is instituted (by petition, application or otherwise) against
Borrower or Surety and an order for relief is entered in such proceeding or such
proceeding remains undismissed for a period of 30 days; or if any judgment,
writ, warrant of attachment or execution or similar process in excess of, or
arising out of an obligation in excess of, $100,000 (or, if there is more than
one, $500,000 in the aggregate) is issued or levied against property of Borrower
(unless expressly permitted in writing by Bank); or if Borrower fails within 30
days to pay or bond or otherwise discharge any judgment in excess of $50,000
which is unstayed pending appeal.
(K) If Borrower expresses an intent to terminate, revoke or challenge
responsibility for the Loans or any obligation arising in connection with the
Letters of Credit, or any material term of any document executed in connection
with any of the foregoing is found or declared to be invalid by a court of
competent jurisdiction and not replaced with other terms acceptable to Bank
within 15 days after Bank shall have provided Borrower with notice of any such
finding or declaration.
(L) If Borrower fails to furnish financial or other information as Bank
may reasonably request within 30 days after Bank's request.
(M) If there is any change in the owners of Holt Cargo or Holt Hauling
which is unacceptable to Bank in the exercise of
-56-
<PAGE>
its reasonable business judgment and/or if Surety ceases to be the Chief
Executive Officer and/or President of Holt Cargo and Holt Hauling.
(N) If Borrower defaults under any other agreement or instrument
applicable to it representing an obligation in excess of $500,000 and such
default is not remedied within any applicable grace period or waived.
(O) If all or any portion of Borrower's property is taken or condemned by
any government authority, the result of which is, in Bank's reasonable business
judgment, a material adverse effect on Borrower's ability to carry on its
business and operations in effect on the date of such taking or condemnation and
the expiration of a 45-day period after Bank shall have provided Borrower with
notice of such default if Borrower shall have failed, within such 45-day
period, to provide to Bank evidence satisfactory to Bank that such condemnation
or taking will not have such a material adverse effect.
SECTION 11.02. Termination of Commitment; Acceleration.
(A) If any Event of Default shall occur and be continuing, Bank may (i)
declare the Commitment to be terminated, whereupon the Commitment and the
obligation of Bank to make Revolving Loans hereunder shall forthwith terminate,
(ii) declare the entire unpaid principal amount of the Notes, all interest
accrued and unpaid thereon and all other amounts payable hereunder to be
forthwith due and payable, whereupon the Notes, all such accrued interest and
all such amounts shall become and
-57-
<PAGE>
be forthwith due and payable, without presentment, demand, protest or further
notice of any kind, all of which are hereby expressly waived by Borrower; and
(iii) demand that Borrower deposit with Bank in a collateral account subject to
the sole control of Bank (the "Cash Account"), an amount equal to the aggregate
of all amounts available to be drawn under Letters of Credit, whereupon such
amount shall become and be immediately due and payable by Borrower.
(B) In addition to the provisions of Section 11.02(A) above, (i) if a
material adverse change in the financial condition of Borrower which is
unacceptable to Bank in its reasonable business judgment from the condition most
recently disclosed to Bank in any manner shall occur, or (ii) if all or any
portion of Borrower's property is taken or condemned by any government
authority, the result of which is, in Bank's reasonable business judgment, a
material adverse effect on Borrower's ability to carry on its business and
operations in effect on the date of such taking or condemnation, Bank may
declare the Commitment to be terminated, whereupon the Commitment and the
obligation of Bank to make Revolving Loans or issue Letters of Credit hereunder
shall terminate.
SECTION 11.03. Cash Account.
(A) Bank may, in its discretion, (i) apply any part or all of the monies
in the Cash Account to the obligations of Borrower to Bank in connection with
the Letters of Credit, (ii) hold any part or all of the monies in the Cash
Account as
-58-
<PAGE>
security for all obligations of Borrower to Bank in connection with Letters of
Credit which are not yet due and payable, or (iii) release to Borrower such
part of the monies in the Cash Account as Bank may elect.
(B) After all obligations of Borrower to Bank under this Agreement and
the Notes shall have been satisfied and there are no Letters of Credit
outstanding, Bank shall pay to Borrower all monies remaining in the Cash
Account.
SECTION 11.04. Default Rate. From the maturity of the obligations
evidenced by the Notes, as well as upon the occurrence of an Event of Default,
until final payment of all sums owed under this Agreement, the Notes or any
other document or instrument pertaining hereto, the outstanding principal
balance and all other sums due hereunder and thereunder shall bear interest at
the rate of the National Commercial Rate plus 5% per annum ("Default Rate").
Notwithstanding the provisions of 42 Pa. C.S. ss.8101 to the contrary, the
Default Rate shall apply to all sums evidenced by the Notes as set forth above,
including after entry of a judgment or judgments against Borrower, and said
judgment or judgments shall bear interest at the Default Rate until satisfied in
full.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. No Waiver; Cumulative Remedies. No failure or delay on the
part of Bank in exercising any right, power or remedy hereunder shall operate as
a waiver thereof; nor
-59-
<PAGE>
shall any single or partial exercise of any such right, power or remedy preclude
any other or further exercise thereof or the exercise of any other right, power
or remedy hereunder. No waiver of any provision hereof shall be effective unless
the same shall be in writing and signed by Bank. The remedies herein provided
are cumulative and not exclusive of any remedies provided by law.
SECTION 12.02. Set-Off. Bank shall have a right of set-off against, a
lien upon and a security interest in all property of Borrower now or at any time
in Bank's possession in any capacity whatever, including, but not limited to,
Borrower's interest in any deposit account, as security for all liabilities of
Borrower to Bank as and when the same may become due and payable, whether by
acceleration or otherwise.
SECTION 12.03. Amendments and Waivers. The provisions of this Agreement
may be modified or amended only by a written agreement entered into by Borrower
and Bank and may be waived only by a written waiver signed by Bank. No such
waiver, modification or amendment shall extend to or affect any obligation not
expressly waived, modified or amended, or impair any right of Bank related to
such obligation.
SECTION 12.04. Notices. All notices, requests, demands and other
communications that this Agreement requires or permits any party to give any
other party shall be in writing and shall be given to such party at its address
specified on the signature pages of this Agreement or at such other address as
-60-
<PAGE>
shall be designated by such party in a notice to each other party complying with
the terms of this Section 12.04. All notices, requests, demands and other
communications provided for hereunder shall be effective (A) if given by mail,
when deposited in the mails, with first class postage prepaid, addressed as
aforesaid or (B) if given by any other means, when delivered at the aforesaid
address.
SECTION 12.05. Costs and Expenses.
(A) Borrower agrees to pay on demand (i) all reasonable costs and
expenses of Bank in connection with the preparation, execution, delivery and
administration of this Agreement, the Notes and the other instruments and
documents to be delivered hereunder (including the reasonable fees and
out-of-pocket expenses of counsel with respect thereto) and (ii) all reasonable
costs and expenses, if any, of Bank in connection with the enforcement of this
Agreement, the Notes and the other instruments and documents to be delivered
hereunder (including the reasonable fees and out-of-pocket expenses of legal
counsel with respect thereto).
(B) In the event that any change in applicable law or regulation or the
interpretation thereof by any governmental authority charged with the
administration thereof or the introduction of any law or regulation subjects
Bank or any Participant to any tax of any kind whatsoever with respect to any
Loan or the Notes, or changes the basis of taxation of payments to Bank or any
Participant on principal of or interest payable
-61-
<PAGE>
with respect to any Loan (except for the imposition of, or changes in the rate
of, a tax based solely on the net income of Bank or a Participant or a surcharge
on such a tax) or results in the imposition, modification or applicability of
any reserve, special deposit or similar requirement against assets held or
deposits in or for the account of, Bank or any Participant or imposes on Bank or
any Participant, directly or indirectly, any other conditions affecting any Loan
or the Notes, and the net aggregate result of any of the foregoing is to
increase the cost to Bank or such Participant of making or maintaining any
Loan, then Borrower will pay to Bank from time to time upon demand by Bank the
additional amount or amounts necessary to compensate Bank or such Participant
(on an after-tax basis) for any such additional cost incurred by Bank or such
Participant. Bank's determination of the amount so due, and a description of the
calculation thereof, shall be set forth in the demand for such amount(s). Bank's
determination and calculation shall be conclusive absent manifest error.
The obligations of Borrower under this Section 12.05 shall survive the
payment of the Loans and all other amounts payable hereunder.
SECTION 12.06. Litigation.
(A) Borrower consents to the in personam jurisdiction of the courts of
the Commonwealth of Pennsylvania and the United States District Court for the
Eastern District of Pennsylvania in connection with any claim or dispute arising
under or in
-62-
<PAGE>
connection with this Agreement, the Notes or any other instrument or document
delivered hereunder. If any action in connection with any such claim is
commenced by Bank against Borrower in any such court, Borrower also agrees that
service of process may be made on Borrower by certified or registered mail
addressed to Borrower at its address specified on the signature pages of this
Agreement or at such other address as may hereafter be designated by Borrower in
a notice complying with the terms of Section 12.04 hereof.
(B) Borrower waives trial by jury and the right to interpose any defense
based on any statute of limitations or claim of laches in any action by or
against Borrower in connection with any claim or dispute arising under or in
connection with this Agreement, the Notes or any other instrument or document
delivered hereunder.
SECTION 12.07. WARRANT OF ATTORNEY. BORROWER HEREBY AUTHORIZES AND
EMPOWERS ANY ATTORNEY OF ANY COURT OF RECORD UPON THE OCCURRENCE OF ANY EVENT OF
DEFAULT TO APPEAR FOR AND CONFESS JUDGMENT AGAINST BORROWER FOR SUCH SUMS AS
SHALL HAVE BECOME DUE UNDER THIS AGREEMENT AND THE NOTES AND ALL OTHER
LIABILITIES OF BORROWER TO BANK, WITH OR WITHOUT DECLARATION, WITH COSTS OF SUIT
AND RELEASE OF ERRORS, WITHOUT STAY OF EXECUTION AND WITH ACTUAL COLLECTION FEES
(BUT NOT LESS THAN $15,000); AND ALSO WAIVES ANY RIGHT TO A HEARING BEFORE
EXECUTION ON ANY SUCH JUDGMENT AND WAIVES AND RELEASES ALL RELIEF FROM ANY AND
ALL APPRAISEMENT, STAY OR EXEMPTION LAW OF ANY STATE NOW IN FORCE OR HEREAFTER
-63-
<PAGE>
ENACTED. IF A COPY OF THIS AGREEMENT, VERIFIED BY AFFIDAVIT OF BANK OR SOMEONE
ON BEHALF OF BANK, SHALL HAVE BEEN FILED IN SUCH ACTION, IT SHALL NOT BE
NECESSARY TO FILE THE ORIGINAL AGREEMENT AS A WARRANT OF ATTORNEY. THE AUTHORITY
AND POWER TO APPEAR FOR AND ENTER JUDGMENT AGAINST BORROWER SHALL NOT BE
EXHAUSTED BY THE INITIAL EXERCISE THEREOF, AND THE SAME MAY BE EXERCISED FROM
TIME TO TIME AND AS OFTEN AS BANK SHALL DEEM NECESSARY OR DESIRABLE AND THIS
AGREEMENT SHALL BE A SUFFICIENT WARRANT.
SECTION 12.08. Liability of Bank for Acts or Omissions. Borrower agrees
that Bank shall not have any liability (in tort or otherwise) for any lost
profits or other consequential damages sustained by Borrower as a result of any
action taken or omitted by Bank or any of its officers, employees or agents in
connection with the making or collection of any Loan or the administration or
enforcement of this Agreement, unless such action was taken or omitted as a
result of willful misconduct or gross negligence of Bank.
SECTION 12.09. Records. The outstanding balance of the Loans, the amount
of the unused Commitment and the unpaid interest and fees accrued thereon or in
connection therewith or with the Letters of Credit shall at all times be
ascertained from records of the Bank, which shall be conclusive absent manifest
error.
SECTION 12.10. Absolute Nature of Borrower's Obligations. The obligations
of Borrower under this Agreement shall be absolute, unconditional and
irrevocable, and shall be
-64-
<PAGE>
performed strictly in accordance with the terms of this Agreement, under all
circumstances whatsoever, including without limitation (A) any lack of validity
or enforceability of any Letter of Credit, or any other agreement or instruments
relating thereto; (B) any amendment or waiver of or any consent to departure
from all or any Letter of Credit, or any other agreement or instruments relating
thereto; (C) the existence of any claim, set-off, defense or other rights which
Borrower may have at any time against any beneficiary or any transferee of any
Letter of Credit (or any persons or entities for whom any such beneficiary or
any such transferee may be acting), Bank or any other person or entity, whether
in connection with this Agreement, any Letter of Credit, or any other agreement
or instruments relating thereto or any unrelated transaction; (D) any demand,
statement or any other documents presented under any Letter of Credit proving to
be forged, fraudulent, invalid or insufficient in any respect or any statement
therein being untrue or inaccurate in any respect whatsoever; (E) payment by
Bank under any Letter of Credit against presentation of a demand, draft or
certificate which does not comply with the terms of such Letter of Credit,
provided that such payment shall not have constituted gross negligence or
willful misconduct of Bank; (F) any delay, extension of time, renewal,
compromise or other indulgence or modification granted or agreed to by Bank,
with or without notice to or approval by Borrower in respect of any of
Borrower's indebtedness to the Bank under this Agreement (except
-65-
<PAGE>
as any variance in Borrower's performance of its obligations may have been
agreed to by Bank in connection with any such delay, extension of time, renewal,
compromise or other indulgence or modification granted or agreed to by Bank);
(G) payment by Bank under any Letter of Credit due to any malfeasance,
unauthorized act or omission by the beneficiary; (H) the surrender or impairment
of any collateral security for the performance or observance by Borrower of any
of the terms of this Agreement; or (I) any other circumstances or happening
whatsoever, whether or not similar to any of the foregoing.
SECTION 12.11. Indemnification.
(A) Borrower hereby indemnifies and holds harmless Bank, each Participant
and each officer, director and employee of Bank and each Participant (the
"indemnified persons") from and against any and all claims, demands, actions,
damages, losses, liabilities including liabilities for penalties), judgments,
costs or expenses whatsoever (including reasonable attorneys' fees) which any of
the indemnified persons incurs (or which may be claimed against any of the
indemnified persons by any person or entity whatsoever) by reason of or in
connection with the execution and delivery or transfer of, or payment or failure
to pay under, any Letter of Credit; provided, however, that Borrower shall not
be required to indemnify any of the indemnified persons for any claims, demands,
actions, damages, losses, liabilities, judgments, costs or expenses to the
extent, but only to the extent, caused by (i) the willful misconduct or gross
negligence
-66-
<PAGE>
of Bank in determining whether a document presented under a Letter of Credit
complied with the terms of such Letter of Credit or (ii) Bank's willful failure
to pay under a Letter of Credit after the presentation to it by the beneficiary
of documents strictly complying with the terms and conditions of such Letter of
Credit, unless the Bank in good faith believed itself to be prohibited by law or
legal authority from making such payment.
(B) If after receipt of any payment of all or any part of the amounts
outstanding hereunder or under the Notes, Bank or any Participant is for any
reason compelled to surrender such payment because such payment is determined
to be void or voidable as a preference, an impermissible set off, or a diversion
of trust funds, or for any other reason, this Agreement, the Notes and other
documents executed in connection herewith shall continue in full force and the
Borrower shall be liable, and shall indemnify and hold Bank and all Participants
harmless for, the amount of such payment surrendered and any fees and expenses
incurred in enforcing this indemnity provision. The provisions of this Section
shall be and remain effective notwithstanding any contrary action which may have
been taken by Bank or any Participant in reliance upon such payment, and any
such contrary action so taken shall be without prejudice to Bank's rights under
this Agreement, the Notes and other documents executed in connection herewith
and shall be deemed to have been conditioned upon such payment having become
final and irrevocable. The provisions of this Section shall survive the
termination and/or
-67-
<PAGE>
payment of this Agreement, the Notes and other documents executed in connection
herewith.
(C) Borrower shall indemnify and hold harmless Bank and each Participant,
and their successors, assigns, officers, directors, shareholders, employees and
agents from any and all liability, damages, costs, claims, losses, suits,
actions, legal or administrative proceedings, interest, expenses and attorneys
fees (including any such fees and expenses incurred in enforcing this indemnity
provision) incurred by any of them arising out of or by reason of any
investigation or litigation or other proceedings (including any threatened
investigation or litigation or other proceedings) relating to any actual or
proposed use by Borrower of the proceeds of the Loans.
SECTION 12.12. Liability for Acts and Omissions. Borrower assumes all
risks of the acts or omissions of any beneficiary. Neither Bank nor any
Participant nor any of their respective officers, directors or employees shall
be liable or responsible for (A) the use which may be made of the Letters of
Credit or for any acts or omissions of the beneficiaries in connection
therewith; (B) the validity, sufficiency or genuineness of documents, or of any
endorsement thereon, even if such documents should in fact prove to be in any or
all respects invalid, insufficient, fraudulent or forged; (C) payment by Bank
against presentation of documents which do not comply with the terms of a Letter
of Credit, including failure of any documents to bear any reference or adequate
reference to a Letter of
-68-
<PAGE>
Credit; or (D) any other circumstances whatsoever in making or failing to make
payment under a Letter of Credit, except only that Borrower shall have a claim
against Bank, and Bank shall be liable to Borrower, to the extent, but only to
the extent, of any direct, as opposed to consequential, damages suffered by
Borrower which Borrower proves were caused by (1) a wrongful payment under a
Letter of Credit resulting from Bank's willful misconduct or gross negligence in
determining whether documents presented under such Letter of Credit comply with
the terms of such Letter of Credit or (2) Bank's willful failure to pay under
any Letter of Credit after the presentation to it by the beneficiary of
documents strictly complying with the terms and conditions of such Letter of
Credit, unless Bank in good faith believed itself to be prohibited by law or
legal authority from making such payment. In furtherance and not in limitation
of the foregoing, Bank may accept documents that appear on their face to be in
order, without responsibility for further investigation, regardless of any
notice or information to the contrary, unless Bank shall have received, prior to
the time that Bank pays any drawing under any Letter of Credit, a written notice
from both the beneficiary and Borrower that such documents do not comply with
such Letter of Credit and should not be honored by Bank. Any reimbursement by
Borrower to Bank pursuant to Section 5.03 hereof shall not limit the liability
of Bank, if any, pursuant to this Section 12.12.
-69-
<PAGE>
SECTION 12.13. Capital Adequacy. If Bank or any Participant determines
that the applicability of any law, rule, regulation or guideline currently in
effect or the adoption after the date hereof of any other law, rule, regulation
or guideline regarding capital adequacy, or any change in any of the foregoing
by any government authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by Bank (or any lending
office of Bank) or Bank's holding company or by any Participant (or any lending
office of any Participant) or any Participant's holding company with any request
or directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on Bank's or any Participant's capital or
on the capital of Bank's or any Participant's holding company as a consequence
of this Agreement or the Loans made pursuant hereto to a level below that which
Bank or Bank's holding company or any Participant or such Participant's holding
company could have achieved but for such adoption, change or compliance (taking
into consideration Bank's or such Participant's policies and the policies of
Bank's or such Participant's holding company with respect to capital adequacy)
by an amount deemed by Bank or any Participant to be material, then from time to
time Borrower shall pay to Bank on demand such additional amount or amounts as
will compensate Bank or any Participant or Bank's or such Participant's holding
company for any such reduction suffered.
-70-
<PAGE>
Any such request shall be accompanied by a description and calculation of the
amount requested and shall, absent manifest error, be conclusive.
SECTION 12.14. Agent's Fee. In the event Bank grants a participation in
any of the Loans or the Letters of Credit to any Participant, Borrower shall,
concurrently therewith and on each June 1 thereafter, pay to Bank a fee in the
amount of $25,000, which fee shall be in addition to and not in substitution of
all or any part of the Commitment Fee and shall compensate Bank for the
additional costs to be incurred by it in monitoring and servicing the
participating interest.
SECTION 12.15. Governing Law. This Agreement and the Notes shall be
governed in all respects by the law of the Commonwealth of Pennsylvania and for
all purposes shall be construed in accordance with such law.
SECTION 12.16. Headings. Article and Section headings used in this
Agreement are for convenience only and shall not affect the construction of this
Agreement.
BORROWER ACKNOWLEDGES THAT THIS AGREEMENT CONTAINS AN AUTHORIZATION TO
CONFESS JUDGMENT, THAT IT HAS CONSULTED LEGAL COUNSEL WITH RESPECT THERETO, AND
THAT IT UNDERSTANDS THAT THE EXERCISE BY BANK OF THE CONFESSION WILL RESULT IN
THE ENTRY OF JUDGMENT AGAINST BORROWER AND THE SALE OR ATTACHMENT OF, OR
EXECUTION UPON, BORROWER'S PROPERTY (INCLUDING WITHOUT LIMITATION REAL PROPERTY,
PERSONAL PROPERTY AND BANK ACCOUNTS) WITHOUT PRIOR NOTICE OR THE OPPORTUNITY FOR
A HEARING.
-71-
<PAGE>
IN WITNESS HEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
HOLT CARGO SYSTEMS, INC.
HOLT HAULING AND WAREHOUSING SYSTEM, INC.
(Signatures continued on next page)
-72-
<PAGE>
(Signatures continued from previous page)
BROADWAY EQUIPMENT LEASING CORP.
REFRIGERATED DISTRIBUTION CENTER, INC.
TRIPLE SEVEN ICE, INC.
HOLT CARGO SYSTEMS OF CALIFORNIA, INC.
THE RIVERFRONT DEVELOPMENT CORPORATION
777 PATTISON AVE, INC.
HOLT WAREHOUSING COMPANY
MARINE INFORMATION TECHNOLOGY, INC.
B.H. SOBELMAN & CO., INC.
T. AND L. LEASING CORP.
CRT, INC.
REFRIGERATED ENTERPRISES, INC.
OREGON AVENUE ENTERPRISES, INCORPORATED
PATTISON AVENUE WAREHOUSING CORP.
MURPHY MARINE SERVICES, INC.
DOCKSIDE INTERNATIONAL FISH CO., INC.
WILMINGTON STEVEDORES, INC.
By, as to all: /s/ Bernard Gelman
--------------------------
Vice President
701 North Broadway
Gloucester City, NJ 08030
Attn: Bernard Gelman
By /s/ Phyllis [illegible]
-------------------------------------
Vice President
One Liberty Place
1650 Market Street
Suite 3600
Philadelphia, PA 19103
Attn: Secured Lending
-73-
<PAGE>
CONSENT AND JOINDER
In order to induce Bank to enter into the foregoing Loan Agreement
("Agreement") and to make the Commitment available and issue the Letters of
Credit, each of the undersigned (to the extent applicable to it) agrees,
represents and warrants, with the intent to be legally bound, as follows:
1. All of the representations and warranties in the Agreement applicable
to it are true and correct as if made by the undersigned.
2. The undersigned shall comply fully with all covenants contained in the
Agreement applicable to it as if the undersigned were a party to the Agreement.
IN WITNESS WHEREOF, the undersigned have executed this Consent and
Joinder this 30th day of July, 1995.
Witness:
/s/ John Evans /s/ Thomas J. Holt
- ------------------------------ -------------------------------------
Thomas J. Holt
-74-
<PAGE>
STATE OF NEW JERSEY :
:
COUNTY OF CAMDEN :
On this 20th day of July, 1995, before me, a notary public, personally
appear Thomas J. Holt who acknowledged himself to be the person who executed the
foregoing Consent and Joinder dated July 20, 1995 for the purposes therein
contained.
IN WITNESS WHEREOF, I have hereunto set my hand and official seal.
/s/ Stephen A. Genovese
-----------------------------------
Notary Public
STEPHEN A. GENOVESE
NOTARY PUBLIC - STATE OF NEW JERSEY
My Commission Expires May 30, 2000
-75-
[LOGO]
CONTAINER LEASE PURCHASE AGREEMENT
BETWEEN
NPR, INC. dba NAVIERAS ("LESSEE")
AND
INTERPOOL LIMITED ("LESSOR")
This Agreement, dated June 5, 1996 between NPR, Inc. dba Navieras (Lessee),
whose principal place of business is located at 212 Fernwood Avenue, Edison, NJ
08837, and Interpool Limited, (Lessor), a corporation duly organized and
incorporated under the laws of Barbados, with an office located at 211 College
Road East, Princeton, NJ 08540, shall be an addendum to the Interpool Membership
and Equipment Leasing Agreement between Lessor and Lessee dated April 1, 1996
("MELA"), the terms and conditions of which are incorporated by reference herein
and made a part hereof (said Membership Agreement, together with this Agreement,
hereinafter are referred to as the "Lease").
In the event of a conflict between the terms and conditions of this Agreement,
and those of the MELA, the terms and conditions of this Agreement shall prevail.
a/c 1160
1. QUANTITY AND TYPE:
Six hundred (600) new 45' steel hi cube dry van
containers, built in accordance with Lessee's
specifications. The equipment will be manufactured in
Lessee's colors, and will bear Lessee's prefixes and
numbers: NPRU 655000 - NPRU 655599. Lessee's logos may
be dispatched to the factory by Lessee, and, at Lessee's
costs, they will be affixed by the factory free of
charge. Domestication of the containers is included in
the rates quoted in Section 3 hereof.
2. TERM AND DURATION OF LEASE:
Each container leased hereunder shall remain on hire for
a minimum period of seven (7) years, which shall commence
on the date of delivery of the container to Lessee.
<PAGE>
3. PER DIEM: $3.00 per container per day.
4. DELIVERY:
Production will commence approximately six weeks from the
date of signature of this agreement: 300 units in June
1996, and 300 units in July 1996. Delivery will be made
"free on truck" to Lessee's designated terminal in Hong
Kong.
5. PURCHASE OPTON:
Provided that Lessee is not in default hereunder, at the
conclusion of the seven (7) year minimum lease period,
Lessee shall have the option to purchase the containers
at a purchase price of $1.00 per container.
6. TRANSFER OF TITLE:
In the event that such option is exercised, it is
understood that
a) the Lessor shall pass a good and marketable title to
the Lessee for the containers so purchased, including
title to any containers that have suffered a loss or a
total constructive loss;
b) the Lessor warrants and represents that it has and
shall have the authority to transfer such title to the
Lessee free and clear of liens and encumbrances
arising through the Lessor;
c) all costs associated with the transfer of titles
(including U.C.C. releases) shall be for the account
of the Lessor.
7. PAYMENT:
During the build up period, payment will be due 30 days
from the date of Lessor's invoice. Following the
completion of the quantity per Section 1, Lessee shall
pay all rental charges monthly in advance against
Lessor's invoice.
In the event of late payment, an interest charge of 1.5%
per month will be applied to the amount of such late
payment, until such payment is made. In addition, a late
payment charge equal to 5% of the amount of such late
payment, or the legal maximum amount, whichever is less,
will be due.
<PAGE>
8. TOTAL LOSS:
In the event that any container is damaged beyond repair, destroyed, or
lost, during the term of this Agreement, and notwithstanding any terms to
the contrary in the MELA, the Lessee shall have the option of either:
a} Continuing to pay rental charges on the container for the remaining
term of the lease, or
b) Payment at the time of the loss, the present value of the remaining
lease payments, plus the $1.00 purchase option price, discounted on an
annual basis, using an interest factor of ten percent.
In recognition of any losses covered by Section 8 (b), the minimum quantity
of containers that the Lessee is required to maintain on hire as per Section
1 shall be reduced accordingly.
9. FORCE MAJEURE:
Lessor shall not be liable to Lessee or any other person for any failure or
delay in the performance of any obligation due to events beyond its
reasonable control, including, but not limited to, fire, storm, flood,
earthquake, explosion, accidents, acts of the public enemy, sabotage, riots,
civil disorder, strikes, lockouts, labor disputes, labor shortage, work
stoppages, transportation embargoes or delays, failure or shortage of
materials, supplies, or shipment, failure of suppliers to deliver as
requested, failure of repair facilities to finish repairs, Acts of God, and
acts of regulations or priorities of any government or its branches or
agencies.
10. SECURITY INTEREST:
It is further acknowledged and agreed that this Container Lease Purchase
Agreement is a true lease, and that the relationship of the parties
hereunder is that of Lessor and Lessee. Accordingly, the Lessor shall at all
times remain the sole owner of the containers, and Lessee shall have no
ownership interest therein.
Notwithstanding the foregoing, Lessee hereby grants
Lessor, and Lessor hereby reserves to itself a security
interest in and to the containers leased hereunder (the
"Collateral") as security for the full and complete
performance of all of Lessee's obligations hereunder.
Lessor is hereby authorized to file a "precautionary"
UCC financing statement in New Jersey, and in such other
<PAGE>
jurisdictions as it may deem advisable.
11. WARRANTY:
During the period of this Lease, so long as Lessee is not in default of its
obligations hereunder, Lessor hereby authorizes Lessee to exercise and
enforce all manufacturer and dealer warranties, whether express or implied,
on the Units for the Lessor's account. All claims or actions on any such
warranty shall be made or prosecuted by Lessee, at its sole expense, and
Lessor shall have no obligation whatsoever to make any claims or actions on
any such warranty. Provided that no event of default shall then exist
hereunder, any recovery under any such warranty shall be paid to Lessee to
the extent of the cost of any repairs effected and if such proceeds are not
applied to repairs by Lessee, then to Lessor less Lessee's expenses incurred
in obtaining such recovery.
The Units shall be covered by the following manufacturer and dealer
warranties:
a) The Units will be sound, free from defects in design, material and
workmanship and will be as described in and comply with all applicable
specifications. The manufacturer and/or dealer will replace or repair
any part or any workmanship of any Unit which shall be found to not be
in compliance with the above representation and warranty stated herein
during a one (1) year period after the date of acceptance of Lessee
under this Lease.
b) The paint or other coating materials and finish on the Units and on the
components thereof will be free from coating failures or other defects
which result in corrosion and paint failure or other coating materials
to the surface of the Units in accordance with all applicable
specifications (collectively called "Coating Failure"). The
manufacturer and/or dealer will replace or repair any Coating Failure
of any Unit during the five (5) year period after the date of
acceptance of Lessee under this Lease.
12. DOCUMENTATION:
This lease agreement may be executed in two counterparts, each of which so
executed shall be deemed to be an original, and such counterparts together
shall constitute but one and the same instrument. Notwithstanding the
<PAGE>
foregoing, only the counterpart copy retained by the Lessor shall be deemed
to be "chattel paper" within the meaning of the Uniform Commercial Code.
The parties hereto agree that to the extent this agreement constitutes
"chattel paper" under the laws of the State of New York, then only that
counterpart of the agreement designated as "First Original" or that is
otherwise in the possession of the Lessor can transfer the Lessor's rights
in the agreement. All other counterparts of this agreement shall be
designated as "Second Original."
NPR, INC.
dba NAVIERAS INTERPOOL LIMITED
SIGNED /s/ E. G. Cawthon SIGNED /s/ Frank Sellier
--------------------------- ---------------------------
NAME E. G. Cawthon NAME Frank Sellier
--------------------------- ---------------------------
TITLE Exec. VP Operations TITLE Managing Director
--------------------------- ---------------------------
DATE June 14, 1996 DATE June 25, 1996
--------------------------- ---------------------------
<PAGE>
[LOGO]
MEMBERSHIP
AND
EQUIPMENT
LEASING AGREEMENT
INTERPOOL
633 Third Avenue, 17th Floor
New York, NY 10017
MELA
R-3/94 Phone (212) 986-3386 Fax (212) 986-3384
<PAGE>
MEMBERSHIP AND EQUIPMENT
LEASE AGREEMENT
This lease agreement entered into April 1, 1996, between INTERPOOL
LIMITED ("Lessor"), a Barbados corporation whose principal place of business is
at 633 Third Avenue, New York, New York, 10017 U.S.A., and NPR, Inc.
(hereinafter referred to as "Lessee"), a corporation organized under the laws of
Delaware whose principal place of business is at 212 Fernwood Avenue, Edison, NJ
08837
WHEREAS, Lessor has established an international pool of containers,
chassis and other equipment for the carriage of cargo; and
WHEREAS, Lessee desires to lease equipment in said pool, and also
desires equipment to be available for such use:
W I T N E S S E T H
NOW, THEREFORE, in consideration of the mutual covenants and promises
hereinafter set forth, Lessor and Lessee agree as follows:
ARTICLE 1
Leasing
Subject to the terms and conditions hereinafter set forth, Lessor agrees
to lease to Lessee, and Lessee agrees to lease from Lessor such containers,
chassis or other equipment as may be listed or described in one or more addenda
hereto executed from time to time by Lessor or any division of Lessor and Lessee
(the "Units"). Such addenda may set forth any additional terms to which the
parties may agree including, without limitation, lease terms, rental rates,
pick-up and drop-off points and special conditions. This lease, together with
all such addenda and all extensions, renewals, amendments and modifications
hereinafter entered into between Lessor and Lessee are referred to collectively
hereinafter as the "Lease". All containers, chassis or other equipment of Lessor
that is picked up by or coming under the control of Lessee including all such
equipment listed in all communications of Lessor to Lessee or its agents shall
be subject to the terms and conditions of the Lease.
ARTICLE 2
Term, Rental
The term of lease for each Unit leased hereunder shall commence upon
date of delivery of such Unit to Lessee or its representative and shall continue
until the date set out in the applicable addendum. If the term is extended or
renewed, all provisions of this Lease shall apply during any extension or
renewal period.
Lessee shall pay all rental charges due under the Lease monthly in
advance unless otherwise agreed in writing and all other charges as same shall
become due hereunder. All payments hereunder shall be in currency of the United
States. The obligation to make rental or any other payments to Lessor shall not
be deemed waived, delayed, abated or eliminated for any reason, except for any
failure of Lessor to perform any obligation of Lessor to Lessee under this
Lease. No payment to be made by Lessee hereunder shall be subject to reduction,
limitation, impairment, set-off or counterclaim whether arising out of an
alleged breach by Lessor or any third party or otherwise, provided, however,
that this paragraph shall not be deemed a bar to Lessee's right to assert any
claims to which it may be entitled against Lessor, in a separate proceeding.
The rental period for each Unit shall commence on the date of delivery
of such Unit to Lessee or its representative, and shall end, at the expiration
of the day that the Unit is taken off hire pursuant to Article 9 hereof. If
redelivery of any Unit is impossible because of total loss or constructive total
loss, then the rental period for such Unit shall end Lessee tenders the
replacement cost of such Unit to Interpool pursuant to Lessee's obligation under
Article 9 hereof. Unless otherwise agreed, the minimum rental period for each
Unit shall be thirty (30) days.
Lessee shall pay interest for late payment of any sum due Lessor under
this Lease at the lesser of the highest legal rate or one-and-one-half percent
(1 1/2%) per month commencing on the tenth (10th) day after the day on which
Lessee receives Lessor's invoice for such sum.
-1-
<PAGE>
ARTICLE 3
Disclaimer of Warranties
Each Unit subject to this Lease is leased AS IS, and Lessor warrants
only that Lessee so long as it is not in default hereunder shall have quiet
possession against any person claiming through Lessor. LESSOR EXPRESSLY
DISCLAIMS ANY WARRANTIES, EXPRESS OR IMPLIED, OF QUALITY, MERCHANTABILITY,
FITNESS FOR A PARTICULAR PURPOSE OR OTHERWISE WITH RESPECT TO ANY UNIT AND HAS
NOT MADE, AND SHALL NOT BE BOUND BY, ANY STATEMENT, AGREEMENT OR REPRESENTATION
NOT SPECIFICALLY SET OUT IN WRITING AND SIGNED BY LESSOR. LESSOR SHALL NOT BE
LIABLE FOR LOSS OF USE OF THE EQUIPMENT, LOSS OF TIME, INCONVENIENCE OR ANY
OTHER CONSEQUENTIAL DAMAGES.
ARTICLE 4
Ownership; Subleasing; Substitution; Encumbrances
This Lease shall not be deemed a sale or anything other than a true
lease for any purpose. Each Unit shall at all times remain the property of
Lessor, and Lessee shall acquire no ownership rights of any nature by virtue of
this Lease. Some of the Units leased to Lessee may be owned by a third party and
leased by it to Lessor. This Lease shall be subject and subordinate to any such
leases. In the event that such third party becomes entitled to possession of any
Unit, Lessee agrees, if requested by Lessor, to attorn to or enter into a new
lease with such third party, the terms and conditions of which will be
consistent with this agreement. The Units may be owned by a third party and
managed by Lessor under a management agreement that limits the term for which
the Units can be leased. In the event such third party becomes entitled to
possession of such Units, Lessee will return them to such third party upon
written request by Lessor and Lessor, at Lessee's request, will replace at
Lessor's expense, the Units returned with comparable Units. Lessor can
substitute other Units for some or all of the Units leased at any time providing
the substitute Units are of a similar type and in as good condition as the Units
leased. All costs connected with such substitution shall be borne by Lessor.
Lessee shall not sublet any Unit or assign this Lease or any rights
hereunder without the prior written consent of Lessor except as required through
the normal course of business. Lessee agrees to execute such documents as Lessor
shall deem necessary in order to perfect its security interest in such
assignment. Lessee shall not pledge, hypothecate, mortgage, create any security
interest in or otherwise encumber or permit the encumbrance of any Unit other
than any encumbrances that result from acts of lessor and any persons claiming
against or through Lessor. Lessee shall promptly at its own expense take all
actions necessary to discharge any lien, charge or other encumbrance asserted by
any party against any Unit arising after delivery of such Unit to Lessee.
Notwithstanding the foregoing, Lessee shall have the right to contest in good
faith by appropriate proceedings diligently pursued and available to Lessee, any
lien, charge or other encumbrances asserted by any party against any Unit. Each
Unit shall have Lessor's serial numbers and other identifying marks affixed
thereto, which shall not be obliterated, altered, concealed or otherwise changed
or hidden from view by Lessee so as to prevent or block access to such number or
marks.
ARTICLE 5
Delivery of Equipment and Interchange of Units
Lessor will use its best efforts to make the Units available for
delivery to Lessee on the dates specified in the Lease at the locations agreed
upon by Lessor and Lessee, but Lessor shall not be liable for any delays in
delivery beyond its reasonable control. The signature of Lessee or its
representative on an equipment interchange receipt shall constitute conclusive
evidence that the Unit to which same relates has been delivered to Lessee and
that Lessee has examined the Unit and found it to be free of all damage (except
as described otherwise in said receipt) and in good operating condition.
Notwithstanding any entry in such receipt, nothing shall affect Lessee's
obligation to pay the full rental charge or any other obligations under this
Lease.
If the manufacturer fails to make any Unit available for Lessee's
inspection in accordance with the terms and conditions of this Lease and any
addenda hereto, then Lessee may at its option reject such Unit, in which event
(a) the number of Units required to be leased shall be reduced by the number of
Units so rejected by Lessee, and the rent due shall be reduced accordingly, and
(b) Lessor shall refund to Lessee the Lease rental payments made hereunder with
respect to all such rejected Units, if any.
Subject to any provision in the Lease requiring Lessee to maintain
certain minimum numbers of Units or specific Units on lease for designated
periods of time, Lessee may interchange Units leased with no fixed term to
another ocean carrier provided that such interchange and carrier are approved in
advance by Lessor and Lessee obtains an interchange receipt signed by the new
carrier or its authorized agent acknowledging receipt of the Unit, noting any
damages to the Unit and acknowledging its responsibility for damages upon
redelivery to Lessor. An interchanged Unit shall not be deemed off-hired by
lessor unless such receipt is received by Interpool or its agent.
-2-
<PAGE>
ARTICLE 6
Operation, Maintenance and Repairs
Lessee shall at all times maintain the Units, at its own cost and expense
in good and safe repair and operating condition in accordance with
manufacturer's specifications and the International Convention for Safe
Containers ("CSC"), International Institute of Container Lessors {"IICL")
guidelines and U.S. FHWA inspection standards, as applicable. Lessee shall be
responsible for all damages and changes in the condition of the Units, subject
to the provisions of Article 9 hereof relating to such normal wear and tear on
all Units and damage prior to delivery to Lessee noted on the on-hire equipment
interchange receipt. Lessee's maintenance and repair obligations shall include,
without limitation, washing and cleaning each Unit regularly inside and outside
to prevent corrosion and spot painting and replacement of parts as may be
necessary. Lessee shall comply with all loading limitations, handling procedures
and operating instructions to prevent excessive impact or unbalanced loading.
Lessee shall not use any Unit for storage or transportation of unsuitable
contents which may damage the Unit, including, without limitation, unprotected
corrosive substances, poorly secured materials or bulk commodities which may
corrode, oxidize, severely dent, puncture, contaminate, stain or damage the
Unit.
Lessee shall make no modifications, improvements, repairs or replacements,
nor attach accessories or additions to any Unit, without the prior written
consent of Lessor, (which shall not be reasonably refused) except as may be
necessary to comply with the provisions of this Lease. All improvements,
repairs, accessories and replacements made or attached to any Unit by Lessee
shall become part of the Unit and the Property of Lessor without Lessor
incurring any liability therefor, or at Lessor's option shall be removed and the
Unit shall be restored to its original condition at Lessee's expense. Lessee
shall not change or supplement any identification marks on any Unit except as
agreed upon in writing between Lessor and Lessee.
Lessee shall at all times comply with all conventions, laws, regulations or
orders of federal, state, foreign and local governments and agencies which in
any way affect any Unit or its use, operation or storage or which in any way
affect this Lease and shall be liable for all fines, penalties, fees and
interest thereon for failure to comply. Lessee shall comply in all respects with
the CSC and shall have and exercise such responsibility as would otherwise be
Lessor's as owner for maintenance, examination and repair. Lessee shall also
comply in all respects with all applicable customs conventions that provide
requirements relating to temporary admission, transport of goods under customs
seal, maintenance of records or otherwise. Lessee shall at its own expense
comply with all rules and practices of ports, depots, storage areas and
transportation companies consistent with the other requirements herein.
ARTICLE 7
Taxes and Other Expenses
Lessee shall be responsible for all applicable sales, use, excise,
property, stamp or other taxes, levies, import duties, charges or withholdings
of any nature (together with penalties, fines or interest thereon) imposed
against Lessor, Lessee or any Unit by any governmental or taxing authority if
such taxes or charges are based upon the possession or use of the units by
Lessee upon or with respect to any Unit, or upon the leasing, delivery,
possession, use, operation, redelivery or other disposition thereof, or upon the
rentals, receipts or earnings arising therefrom, excluding, however, (i) all
such taxes, levies, import duties, charges and withholdings that are imposed and
accrued with respect to a Unit prior to its delivery to Lessee and (ii) any
taxes levied on Lessor's revenue, income, capital or business franchise. Lessee
shall pay all other expenses relating to Units arising during the rental period
including but not limited to expenses incurred in ports, depots or storage
areas.
The above is subject to: (a) Lessor giving prompt notice to Lessee; and (b)
Lessee having the right to contest in good faith by Appropriate proceedings
diligently pursued and available to Lessee, any such tax or charge.
ARTICLE 8
Risk of Loss
Subject to the provisions of Section 9 of the Lease, Lessee shall be liable
for all loss and damage to each Unit subsequent to delivery to Lessee and prior
to return to Lessor, regardless of when such damage may be discovered. In the
event any Unit is damaged beyond repair, requisitioned by any governmental
entity, lost or destroyed (a "Casualty Occurrence"), the Lessee shall pay to the
Lessor the Depreciated Value for such Unit. The Depreciated Value shall be
calculated based on an attached schedule when equipment is leased out.
Depreciated Value shall be defined as the greater of the original cost of the
unit to the Lessor or the current cost of a new unit of equipment. Lessee shall
notify Lessor in writing immediately upon discovery of a Casualty Occurrence.
Lessee shall pay rental charges pursuant hereto until the date that full
settlement is made therefor. In the event that full settlement is not made
within 30 days after the return date specified in the Lease, Lessee shall be
liable for Lessor's standard daily rental charge for such Unit at the rate
prevailing on each day after expiration of the aforesaid 30 days. Full
settlement shall consist of proof of such loss satisfactory to Lessor and full
payment of the depreciated value of the Unit. In the event of a Casualty
Occurrence, Lessor may elect, but shall not be obligated to deliver another Unit
of like kind and condition as the Unit suffering the Casualty Occurrence to
Lessee in substitution therefor which shall become in all respects subject to
the terms hereof.
-3-
<PAGE>
After compliance with the foregoing to Lessor's satisfaction, and
provided Lessee is not in default under this Lease, Lessee shall be subrogated
to Lessor's rights with respect to any insurance policies or claims for
reimbursement by others with respect to such loss, damage, theft or destruction.
ARTICLE 9
Redelivery of Units
Lessee shall redeliver each Unit, at Lessee's sole expense, to
redelivery locations specified in the applicable addendum, or in the absence
thereof to Interpool's authorized depot at any pool point listed in Lessor's
most recent "Bulletin" or at any other location agreed to in advance in writing
by Lessor. All redelivery points and dates specified in an addendum are subject
to drop-off charges set forth therein, or in the absence thereof, as listed in
the "Bulletin" in effect at the time of redelivery, or in the case of
redeliveries to other locations, as specified by Lessor.
Upon return of a Unit, the Lessor and Lessee may execute a joint
condition inspection report identifying and acknowledging any changes in the
condition of the Unit subsequent to delivery. Lessee at its expense will have
completed a cleanliness certificate issued by a recognized classification
society, if requested by Lessor. Lessee shall return all Units to Lessor free of
damage and in a condition evidencing the standard of maintenance, required in
paragraph 6 hereof, including, without limitation, compliance with all
applicable laws and regulations applicable to the use and operation of the Unit.
Notwithstanding the foregoing, Lessee shall not be responsible for (i) such
normal wear and tear defined below as may reasonably be expected between
delivery of the Unit and the date of its return or for (ii) such damage to the
Unit that occurred prior to delivery to or on behalf of Lessee provided that in
the event of a dispute, Lessee provides Lessor with a copy of the interchange
receipt executed at the time of delivery to Lessee evidencing such damage.
Normal wear and tear shall be determined in accordance with the current
guidelines published by the International Institute of Container Lessors,
International Convention for Safe Containers and U.S. FHWA (incorporated by
reference herein) and may include light oxidation or light rust, random small
dents and scratches on any side of a Unit caused by normal handling, ground
storage, ship storage and securing, transport and loading and discharge
consistent with good practice and in accordance with any specifications,
handling procedures and operating instructions as may have been given by Lessor
to Lessee. Notwithstanding the two preceding sentences, changes which could have
been prevented by routine washing, routine lubrication, spot painting, or other
normal repair or maintenance changes affecting security, water tightness,
weather proof qualities, mechanical and/or electrical function of integral
components, the integrity of design or structure, or by adherence to applicable
regulatory or classification society requirements, or changes affecting the
inside or outside dimensions or cubic content of a Unit, whether or not such
changes add thereto or subtract therefrom, or changes which may threaten the
safety of person or property, shall in no event constitute normal wear and tear,
and Lessee shall be liable therefor. Lessor shall have the right to inspect all
Units leased under this Lease at any reasonable time and at Lessor's sole cost,
and upon Lessor's request, Lessee shall furnish Lessor with a list of all
locations of Units, as of the most recent date possible and take all reasonable
steps to make the Units available for inspection. With regard to chassis and
trailer equipment, Lessee shall return such Units with a complete set of tires
with a minimum tread of 4/32", with air to 85 p.s.i. for 24 hours. There will be
no cuts to tire cord or flat spots with 4/32" from the surface. Minor oxidation
only shall be acceptable, notwithstanding the provisions of this Lease otherwise
exempting Lessee from liability for "normal wear and tear."
Units will be inspected at the expense of Lessee upon their return to
the agreed-upon depot. If a Unit is in the required condition, the Unit shall be
taken off-hire and the rental charge shall cease. If a Unit is returned to a
depot location authorized by Lessor in damaged condition, Lessor or such depot
will so advise Lessee upon discovery thereof. Lessor shall, in its sole
discretion, have the right to require Lessee to repair the Unit, to authorize
the repair of the Unit at Lessee's expense or to refrain from repairing the Unit
and invoice Lessee for the amount of damages for which it is liable hereunder.
In the event Lessor elects to authorize repairs, Lessee hereby authorizes
Lessor to proceed with the repairs for which Lessee is liable hereunder at
Lessee's expense at any repair facility of Lessor's choice. Lessee will execute
any further documents required to authorize the repair facility to proceed and
Lessee shall have the right to inspect any repairs so made. The Unit shall
remain on-hire and Lessee shall continue to pay the rental charge until the date
upon which Lessor and Lessee shall agree in writing upon the amount of the cost
of the repairs for which Lessee is liable, and, in the event Lessor in its
discretion elects to have such repairs performed, thereafter until the date (not
greater than 10 business days thereafter) specified in such writing for
completion of such repairs; provided, however, that in the event Lessee fails to
authorize repairs for which Lessor claims it is responsible within 10 days of
return of any Unit, Lessor, at its option, may either (i) promptly authorize
repairs to the Unit whereupon the Unit shall be off-hired and rental charges
shall cease upon approval of repair (not greater than 10 business days
thereafter) or (ii) continue to make the Unit available for joint inspection
with Lessee and to attempt to resolve damage disputes for a reasonable period of
time at the expiration of which the Unit shall be off-hired and rental charges
shall terminate. All handling expenses for the inspection and reinspection of
Units and storage charges from the date of redelivery to the date of off-hire
pursuant to the terms hereof shall be for the account of Lessee.
Lessee shall be liable to Lessor for the cost of repairing all damages
for which Lessee is liable under this Lease whether or not Lessor elects to have
such repairs made but in no event shall Lessee's liability for such damages
exceed the depreciated value for a new Unit.
-4-
<PAGE>
In the event that without obtaining the prior written consent of
Lessor, Lessee shall fail to return any Unit for more than 120 days after the
return date specified in the Lease, Lessor, without prejudice to any other
rights hereunder may, in its sole discretion, elect to treat such Unit as lost,
and Lessee shall pay to Lessor the depreciated value of such Unit in accordance
with the provisions of the Lease. Lessee shall pay Lessor's standard rental
charge for such Unit at the rate prevailing on each day after expiration of the
aforesaid 120 days, until the date that payment of such depreciated value is
made. In the event that after payment of such depreciated value, Lessor shall
elect and obtain repossession, Lessor shall, after deducting Lessor's expenses,
return to Lessee such portion of such depreciated value as Lessor, in its sole
discretion, shall deem to be the depreciated value that remains of such Unit on
the date of repossession.
Should any Unit be redelivered to Lessor, or should Lessor repossess
any Unit, and there shall at the time of such redelivery or repossession be in,
upon or attached to such Unit any other things of value belonging to Lessee or
in the custody or control of Lessee, Lessor is hereby authorized to take
possession of such things of value and hold the same for Lessee either in
Lessor's possession, or, in the exercise of Lessor's sole discretion, in public
storage for the account of, and at the expense of, Lessee.
ARTICLE 10
Indemnity
Lessee shall defend, indemnify and hold Lessor, its agents and
employees harmless from all claims, causes of action, liability, damage or loss
(including, without limitation, expenses in connection with any claim or suit,
such as reasonable attorney's fees, court cost and other expenses) arising
directly or indirectly in any manner out of (a) any failure by Lessee to comply
with its obligations under this Lease or any attempt by any third party, whether
private or governmental, to impose upon Lessor liability for Lessee's acts or
omissions, (b) any claim, whether private or governmental, for personal injury
or death or for loss or damage to person, property, cargo or vessels or
otherwise arising out of or incident to the selection, possession, leasing,
operation, control, use, storage, loading, unloading, moving, maintenance,
delivery, or return of any Unit except if caused by the gross negligence or
willful misconduct of Lessor, and (c) any forfeiture, seizure or impounding of,
or charge or lien imposed or asserted against any Unit.
ARTICLE 11
Insurance
Lessee shall secure and maintain, at its own expense and with insurance
companies acceptable to Lessor, amounts of insurance and types of coverage as
shall be reasonably required from time to time by Lessor. Simultaneously with
the execution of this Lease, Lessee shall furnish Lessor with certificates of
insurance evidencing (a) all risk, loss and damage insurance (including
mysterious disappearance/unexplained loss and war risks and strikes, riots and
civil commotions risks) while on land, afloat or airborne, in transit or at rest
anywhere in the world, in an amount equal to the depreciated value of all Units
on lease to the Lessee, (b) comprehensive general liability insurance including
contractual liability and broad form property damage for limits of not less than
one million dollars ($1,000,000), combined single limit, and (c) automobile
liability and property damage for limits of not less than one million dollars
($1,000,000) combined single limit. All insurance coverages shall (a) name
Lessor as a joint assured, as its interest may appear, (b) include a loss
payable clause in favor of Lessor providing that upon Lessor's giving notice to
the insurer that Lessee is in default under the Lease, all claims are to be paid
to Lessor, and (c) include an undertaking from the insurer that, notwithstanding
the expiry or cancellation of such insurance, it shall, insofar as the interest
of Lessor is concerned, remain in full force and effect until after the expiry
of 30 days written notice of such expiry or cancellation from the insurer to
Lessor. If the Lessee shall default in the payment of any premium in respect of
any such insurance policies, the Lessor may, but shall not be obliged to, pay
such premium, and in such event, Lessee shall repay the amount thereof to the
Lessor on demand.
ARTICLE 12
Default
If any of the following events shall occur:
(a) Lessee shall fail to pay any sum to be paid hereunder within
fifteen days after the same shall become due; (b) Lessee shall fail to observe
or perform any other term or condition of this Lease or in any other lease or
other agreement between Lessor (or any division or subsidiary thereof) and
Lessee in the manner and at the time or times required herein and therein, and
any such failure remains unremedied for thirty days after written notice thereof
to Lessee by Lessor; (c) Lessee shall become unable to pay its debts generally
as they become due, or shall make a general assignment for the benefit of
creditors; or any proceedings shall be instituted by or against Lessee seeking
to adjudicate it a bankrupt or insolvent, or seeking reorganization or relief to
debtors, or seeking appointment of a receiver, trustee or equivalent official
for it or for any substantial part of its property or any involuntary
proceedings that remain undismissed after 90 days, or Lessee shall take any
corporate action authorizing any of the actions set forth above; (d) any
distress, execution or other legal process shall be levied upon any of the
Units; (e) following a material adverse
-5-
<PAGE>
change in Lessee's financial condition subsequent to the date hereof, either an
obligation of the Lessee in excess of $1,000,000 for the payment of borrowed
money, for the deferred purchase price of property or for the payment of rent
shall not be paid when due, the effect of which is to cause such obligation to
become due prior to its stated maturity or Lessee shall permit any judgment
against it in excess of $1,000,000 to remain unsatisfied for more than thirty
days, unless covered by insurance; (f) the seizure or nationalization of Lessee
or a material part of Lessee's assets by a government instrumentality; or (g) a
default by a guarantor shall occur under the terms of any guarantee agreement
between Lessor and any third party guaranteeing the obligations of Lessee
hereunder.
Then, in any such case, Lessor, at its option may:
(a) proceed by appropriate court action or actions either at law,
admiralty or in equity to enforce performance by Lessee of the terms of this
Lease and/or to recover from Lessee any and all damages or expenses, including
reasonable attorney's fees, and all costs which Lessor shall have sustained by
reason of Lessee's default or on account of Lessor's enforcement of its remedies
hereunder and/or
(b) by notice in writing to Lessee terminate Lessee's right to
possession of some or all of the Units under this Lease (the "date of
termination"), whereupon all rights of Lessee to or in the use of such Units
shall absolutely cease, but Lessee shall remain liable as herein provided.
Thereupon, Lessee shall notify Lessor immediately of the locations of all Units
and Lessor by itself or by its agents without further notice, may, but shall be
under no obligation to, retake the Units wherever found and irrespective of
whether Lessee, any sublessee or any other entity may be in possession of the
Units, all without prior demand and without legal process. For that purpose
Lessor or its agents may enter upon any premises where the Units may be and may
take possession thereof, without Lessor or its agents incurring any liability by
reason of such retaking absent Lessor's gross negligence or willful misconduct,
whether for the restoration of damage to property caused by such retaking or
otherwise and thenceforth hold, possess and enjoy the Units free from any right
of Lessee, or its successors or assigns, to hold, use or sell such Units for any
purpose whatsoever, as hereinafter provided. This paragraph shall serve as the
express authorization and instruction by Lessee to any depot or other custodian
of any Unit hereunder to release the Unit or Units to Lessor or any authorized
representative of Lessor, without further inquiry or liability to Lessee for
such release, upon delivery to such depot or custodian of a copy of this Lease
and a certification by Lessor (which may be made by telex) that Lessee is in
default under this Lease and that Lessor is entitled to possession of the
Unit(s). The rental charges specified in the Lease shall continue for a period
of ten days following notice of termination. Thereafter for each Unit that has
not been returned, the Lessee shall be liable for Lessor's then standard per
diem rental until the date each Unit is returned to Lessor in accordance with
the terms of this Lease. In addition to such rentals, Lessee shall also pay to
Lessor,
(1) any other actual damages which Lessor shall have sustained by
reason of the breach of any terms of this Lease, plus
(2) as damages for loss of a bargain and not as a penalty, an aggregate
sum, which on the date of termination represents either (i) the excess of (x)
the balance of total rental for such Unit for the entirety of the lease term, if
any, specified with respect thereto (discounted at a per annum discount rate of
8%) from the dates the rentals would have otherwise been paid to the date of
termination over (y) the present worth (discounted at 8%) on the date of
termination of the fair rental value of such Unit to Lessor for the same period,
or (ii) the amount of retroactive rental rate adjustment provided for in the
Lease, if any, with respect to an early termination, plus
(3) interest on the above sums at a rate equal to the maximum rate
enforceable in accordance with applicable law from the date of termination until
paid, plus
(4) reasonable provision for expenses (including reasonable attorney's
fees and costs) incurred by Lessor in taking possession of, relocating,
overhauling or repairing the Units after repossession thereof as determined by
Lessor to be required to place such Units in the location and in a condition
required under this Lease.
In addition to the above sums, Lessee shall also remain liable for the
depreciated value of each Unit not returned to Lessor within ten days from the
notice of termination. Lessee shall in turn be credited with the lesser of the
fair market value or the depreciated value of any Unit thereafter recovered,
less expenses, as determined by Lessor.
Lessor shall have the option, whether or not it shall then have
possession of a Unit, to conclusively establish the present worth of its fair
rental value for all purposes by (a) an appraisal by Lessor based upon then
current market conditions, costs of repair and relocation, (b) a bona fide lease
of the Units which may be made by Lessor free from any and all claims of Lessee,
or of any other party claiming by, through or under Lessee at law or in equity
or in admiralty, or (c) a written appraisal by an independent appraiser selected
by Lessor. Such appraisal shall also take into account current market conditions
and costs of repair and relocation.
Lessor or its agents may sell all or some of the Units at public or
private sale, with or without notice to Lessee, advertisement or publication, as
Lessor may determine, or otherwise may dispose of, hold, use, operate or lease
to others, all on such terms and conditions and at such place or places as
Lessor may determine and all free and clear of any rights of Lessee and of any
claim of Lessee in admiralty, in equity, at law or by statute, whether for loss
or damage or otherwise.
No right or remedy conferred upon or reserved to Lessor by this Lease
shall be exclusive of any other right or remedy available to Lessor. Lessee
hereby waives any mandatory requirement of law now or hereafter in effect, which
might limit or modify any of the remedies herein provided, to the extent that
such waiver is permitted by law. Lessor may, at its election, waive any default
and its consequences and rescind and annul any such notice of termination by
notice to
-6-
<PAGE>
Lessee in writing to that effect. Notwithstanding the provisions of this
Section, it is expressly understood and agreed by Lessee that time is of the
essence in this Lease and that no waiver, rescission or annulment shall extend
to or affect any other or subsequent default or impair any right or remedies of
Lessor consequent thereto.
In the event of the occurrence of a Lessee default hereunder, if Lessor
shall so elect by notice in writing to Lessee, Lessor may utilize such legal
and/or equitable remedies as may be available to it, including, without
limitation, replevin, injunction or any other provisional remedy designed to
obtain possession of or protect the Units or any items thereof. Lessee hereby
specifically waives, to the extent permitted by law, any hearing with respect to
any such provisional remedy.
ARTICLE 13
Jurisdiction
Institution of litigation by any party pursuant to any separate
arbitration agreement that may be entered into by the parties, shall not
prejudice or waive Lessor's right to any of Lessor's remedies otherwise
available, including, without limitation, termination, provisional remedies and
repossession without judicial process. This Lease shall be deemed to have been
made in New York regardless of the order in which the signature of the parties
be affixed hereto. Lessee hereby irrevocably submits itself to the personal
jurisdiction of the Supreme Court of the State of New York, New York County, of
the United States of America, and to the personal jurisdiction of the United
States District Courts for the Eastern and Southern Districts of New York (and
to the personal jurisdiction of the appropriate appeals courts therefrom), for
the purposes of any suit, action or other proceeding arising out of, or relating
to this Lease and agrees that all claims in respect of such action or proceeding
may be heard and determined in any such court. Process against Lessee may be
served upon it by mailing a copy to Lessee (by registered or certified mail, if
practicable) postage prepaid, or by telex to Lessee at its principal place of
business indicated above or such other address as the Lessor shall have been
notified in writing by Lessee. Lessee also designates Corporation Service
Company, 375 Hudson Street, New York, New York 10014-2660, agent for the purpose
of accepting service of any process within the State of New York, USA with
respect to any claim or controversy arising out of relating to, directly or
indirectly, this Lease. After such agent has accepted such service or process
such agent shall send Lessee written notice of such service and a copy of such
process by certified or registered mail, return receipt requested. Service may
be effected at Lessor's option either by the mailing referred to above or by
service upon Corporation Service Company, as agent.
Lessee agrees that its submission to jurisdiction set forth above is
made for the express benefit of Lessor. Lessee further agrees that final
judgment against Lessee in any such action or proceeding shall be conclusive,
and may be enforced in other jurisdictions by suit on the judgment or in any
other manner provided by law, a certified or true copy of which judgment shall
be conclusive evidence of fact and the amount of any indebtedness or liability
of Lessee therein described; provided that nothing herein shall affect the right
of Lessee to serve legal process in any other manner permitted by law or affect
the right of the Lessor to bring any action or proceeding against Lessee or its
property in the courts of any other jurisdiction. Lessee shall pay all costs,
including reasonable attorney's fees, incurred by Lessor in enforcing this
Lease. No right or remedy herein granted shall be deemed in lieu of any legal or
equitable remedy otherwise available.
ARTICLE 14
Immunity from Jurisdiction
To the extent Lessee has or hereafter may acquire any immunity from
jurisdiction of any court or from any legal process, Lessee hereby waives such
immunity and agrees not to assert, by way of motion, as a defense, or otherwise,
in any suit, action or proceeding, any claim that it is not personally subject
to the jurisdiction of the above-named courts, that it is immune from any legal
process (whether through service or notice, attachment or arrest prior to
judgment, attachment in aid of execution, execution or otherwise) with respect
to itself or its property, that the suit, action or proceeding is brought in an
inconvenient forum, that the venue of the suit, action or proceeding is
improper, or that this Lease may not be enforced in or by such courts.
ARTICLE 15
Lessor's Liability
Lessor shall not be liable to Lessee or any other person for any
failure or delay in the performance of any obligation due to events beyond its
reasonable control, including, but not limited to, fire, storm, flood,
earthquake, explosion, accidents, acts of the public enemy, sabotage, riots,
civil disorder, strikes, lockouts, labor disputes, labor shortage, work
stoppages, transportation embargoes or delays, failure or shortage of materials,
supplies or equipment, failure of suppliers to deliver as requested, failure of
repair facilities to finish repairs, acts of God, and acts or regulations or
priorities of any government or its branches or agencies. Under no circumstances
shall Lessor be liable and Lessee hereby waives any claim against Lessor for any
lost profits or for special, consequential or exemplary damages, including,
without limitation, damages to cargo, even if Lessor has been advised of the
possibility of such damage.
-7-
<PAGE>
ARTICLE 16
Financial Statements
Within sixty (60) days after the close of each of the first three
quarters of Lessee's fiscal year, Lessee shall deliver to Lessor a copy of
Lessee's and any guarantor's balance sheet, statement of profit and loss and
statement of changes in financial position for such quarter. Within 90 days
after the close of Lessee's fiscal year, Lessee shall deliver to Lessor an
audited balance sheet, statement of income and retained earnings, and statement
of changes in financial position of Lessee and any guarantor as of the close of
such fiscal year.
ARTICLE 17
General
This Lease is binding upon the parties and their respective successors
and assigns. All matters relating to the construction, validity or
enforceability of this Lease shall in all respects be governed by and construed
in accordance with laws of the State of New York. This Lease contains the entire
agreement between the parties with respect to the subject matter hereof and may
not, subject to the provisions of Article 1 of this Lease, be amended, altered,
modified or added to except by a writing signed by the party to be bound
thereby. Lessor may assign all or any part of its obligations, rights, title or
interest in this Lease, including all rental charges due or to become due,
provided, however, such assignment shall not affect Lessor's obligation to
provide Lessee quiet possession and enjoyment of the units as provided in
Article 3 hereof. Lessee hereby expressly consents to the application by Lessor
of any payment credit to which it may be entitled hereunder (and any other funds
belonging to or payable to Lessee in the custody of Lessor) toward payment
obligations of Lessee hereunder or under any other agreement between Lessor and
Lessee. The paragraph headings in these conditions are for convenience only and
shall not be deemed to alter or affect any provision hereof.
Any notice required to be given under this Lease shall be effective upon
dispatch to the party to whom such notice is directed at the address first above
written, or at such other address as may have been communicated in writing
unless otherwise specified herein to the other party or parties to this Lease in
accordance with the provisions of this paragraph. All notices required to be
given in writing shall be given either by hand delivery, by mail or by telex.
Such mail shall in all cases be registered or certified mail. In the event that
any of the terms and conditions of this Lease are not completed by insertion of
the necessary words and/or figures, the parties agree to adopt Lessor's standard
terms and conditions for comparable equipment, prevailing on the date on which
Lessee executed the Lease, including, without limitation, rental charges,
penalties for improper return and replacement values. Where there are two or
more parties to the Lease as Lessee their liabilities under this Lease shall be
joint and several. The provisions of this Lease are separable and any provisions
found upon judicial interpretation or construction to be prohibited by law shall
be ineffective to the extent of such prohibition without invalidating the
remaining provisions hereof. No waiver of any remedy or other right under this
Lease shall operate as a waiver of any other remedy or right, nor shall any
single or partial exercise of any remedy or right preclude any other or further
exercise thereof or of any other remedy or right.
LESSEE: NPR, Inc. dba NAVIERAS LESSOR: INTERPOOL LTD.
(Type full name of Lessee)
BY: /s/ E. G. Cawthon BY: /s/ Frank Sellier
----------------------------- -----------------------------
E. G. Cawthon Frank Sellier
Exec. VP Operations Managing Director
----------------------------- -----------------------------
(Type name and title of (Type name and title of
signing officer) signing officer)
-8-
BUSINESS LOAN AGREEMENT
Borrower: Holt Hauling and Warehousing System, Inc.
300 North Ellis Street
Gloucester City, NJ 08030
Lender: WILMINGTON SAVINGS FUND SOCIETY, FSB
838 Market Street
Wilmington, DE 08030
THIS BUSINESS LOAN AGREEMENT between Holt Hauling and Warehousing System, Inc.
("Borrower") and WILMINGTON SAVINGS FUND SOCIETY, FSB ("Lender") is made and
executed on the following terms and conditions. Borrower has received prior
commercial loans from Lender or has applied to Lender for a commercial loan or
loans and other financial accommodations, including those which may be described
on any exhibit or schedule attached to this Agreement. All such loans and
financial accommodations, together with all future loans and financial
accommodations from Lender to Borrower, are referred to in this Agreement
individually as the "Loan" and collectively as the "Loans." Borrower understands
and agrees that: (a) in granting, renewing, or extending any Loan, Lender is
relying upon Borrower's representations, warranties, and agreements, as set
forth in this Agreement; (b) the granting, renewing, or extending of any Loan by
Lender at all times shall be subject to Lender's sole judgment and discretion;
and (c) all such Loans shall be and shall remain subject to the following terms
and conditions of this Agreement.
TERM. This Agreement shall be effective as of March 13, 1997, and shall continue
thereafter until all Indebtedness of Borrower to Lender has been performed in
full and the parties terminate this Agreement in writing.
DEFINITIONS. The following words shall have the following meanings when used in
this Agreement. Terms not otherwise defined in this Agreement shall have the
meanings attributed to such terms in the Uniform Commercial Code. All references
to dollar amounts shall mean amounts in lawful money of the United States of
America.
Agreement. The word "Agreement" means this Business Loan Agreement, as this
Business Loan Agreement may be amended or modified from time to time,
together with all exhibits and schedules attached to this Business Loan
Agreement from time to time.
Borrower. The word "Borrower" means Holt Hauling and Warehousing System,
Inc. The word "Borrower" also includes, as applicable, all subsidiaries and
affiliates of Borrower as provided below in the paragraph titled
"Subsidiaries and Affiliates."
CERCLA. The word "CERCLA" means the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended.
Collateral. The word "Collateral" means and includes without limitation all
property and assets granted as collateral security for a Loan, whether real
or personal property, whether granted directly or indirectly, whether
granted now or in the future, and whether granted in the form of a security
interest, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien, charge, lien or title retention contract, lease or
consignment intended as a security device, or any other security or lien
interest whatsoever, whether created by law, contract, or otherwise.
ERISA. The word "ERISA" means the Employee Retirement Income Security Act
of 1974, as amended.
Event of Default. The words "Event of Default" mean and include without
limitation any of the Events of Default set forth below in the section
titled "EVENTS OF DEFAULT."
Grantor. The word "Grantor" means and includes without limitation each and
all of the persons or entities granting a Security Interest in any
Collateral for the Indebtedness, including without limitation all Borrowers
granting such a Security interest.
Guarantor. The word "Guarantor" means and includes without limitation each
and all of the guarantors, sureties, and accommodation parties in
connection with any Indebtedness.
Indebtedness. The word "Indebtedness" means and includes without limitation
all Loans, together with all other obligations, debts and liabilities of
Borrower to Lender, or any one or more of them, as well as all claims by
Lender against Borrower, or any one or more of them; whether now or
hereafter existing, voluntary or involuntary, due or not due, absolute or
contingent, liquidated or unliquidated; whether Borrower may be liable
individually or jointly with others; whether Borrower may be obligated as a
guarantor, surety, or otherwise; whether recovery upon such Indebtedness
may be or hereafter may become barred by any statute of limitations; and
whether such Indebtedness may be or hereafter may become otherwise
unenforceable.
Lender. The word "Lender" means WILMINGTON SAVINGS FUND SOCIETY, FSB, its
successors and assigns.
Loan. The word "Loan" or "Loans" means and includes without limitation any
and all commercial loans and financial accommodations from Lender to
Borrower, whether now or hereafter existing, and however evidenced,
including without limitation those loans and financial accommodations
described herein or described on any exhibit or schedule attached to this
Agreement from time to time.
Note. The word "Note" means and includes without limitation Borrower's
promissory note or notes, if any, evidencing Borrower's Loan obligations in
favor of Lender, as well as any substitute, replacement or refinancing note
or notes therefor.
Related Documents. The words "Related Documents" mean and include without
limitation all promissory notes, credit agreements, loan agreements,
environmental agreements, guaranties, security agreements, mortgages, deeds
of trust, and all other instruments, agreements and documents, whether now
or hereafter existing, executed in connection with the Indebtedness.
Security Agreement. The words "Security Agreement" mean and include without
limitation any agreements, promises, covenants, arrangements,
understandings or other agreements, whether created by law, contract, or
otherwise, evidencing, governing, representing, or creating a Security
Interest.
Security Interest. The words "Security Interest" mean and include without
limitation any type of collateral security, whether in the form of a lien,
charge, mortgage, deed of trust, assignment, pledge, chattel mortgage,
chattel trust, factor's lien, equipment trust, conditional sale, trust
receipt, lien or title retention contract, lease or consignment intended as
a security device, or any other security or lien interest whatsoever,
whether created by law, contract, or otherwise.
SARA. The word "SARA" means the Superfund Amendments and Reauthorization
Act of 1986 as now or hereafter amended.
<PAGE>
BUSINESS LOAN AGREEMENT
Page 2
Loan No 17069519001 (Continued)
CONDITIONS PRECEDENT TO EACH ADVANCE. Lender's obligation to make the initial
Loan Advance and each subsequent Loan Advance under this Agreement shall be
subject to the fulfillment to Lender's satisfaction of all of the conditions set
forth in this Agreement and in the Related Documents.
Loan Documents. Borrower shall provide to Lender in form satisfactory to
Lender the following documents for the Loan: (a) the Note, (b) Security
Agreements granting to Lender security interests in the Collateral, (c)
Financing Statements perfecting Lender's Security Interests: (d) evidence
of insurance as required below; and (e) any other documents required under
this Agreement or by Lender or its counsel.
Borrower's Authorization. Borrower shall have provided in form and
substance satisfactory to Lender properly certified resolutions, duly
authorizing the execution and delivery of this Agreement, the Note and the
Related Documents, and such other authorizations and other documents and
instruments as Lender or its counsel, in their sole discretion, may
require.
Payment of Fees and Expenses. Borrower shall have paid to Lender all fees,
charges, and other expenses which are then due and payable as specified in
this Agreement or any Related Document.
Representations and Warranties. The representations and warranties set
forth in this Agreement, in the Related Documents, and in any document or
certificate delivered to Lender under this Agreement are true and correct.
No Event of Default. There shall not exist at the time of any advance a
condition which would constitute an Event of Default under this Agreement.
REPRESENTATIONS AND WARRANTIES. Borrower represents and warrants to Lender, as
of the date of this Agreement, as of the date of each disbursement of Loan
proceeds, as of the date of any renewal, extension or modification of any Loan,
and at all times any indebtedness exists:
Organization. Borrower is a corporation which is duly organized, validly
existing, and in good standing under the laws of the Commonwealth of
Pennsylvania and is validly existing and in good standing in all states in
which Borrower is doing business. Borrower has the full power and authority
to own its properties and to transact the businesses in which it is
presently engaged or presently proposes to engage. Borrower also is duly
qualified as a foreign corporation and is in good standing in all states in
which the failure to so qualify would have a material adverse effect on its
businesses or financial condition.
Authorization. The execution, delivery, and performance of this Agreement
and all Related Documents by Borrower, to the extent to be executed,
delivered or performed by Borrower, have been duly authorized by all
necessary action by Borrower; do not require the consent or approval of any
other person, regulatory authority or governmental body; and do not
conflict with, result in a violation of, or constitute a default under (a)
any provision of its articles of incorporation or organization, or bylaws,
or any agreement or other instrument binding upon Borrower or (b) any law,
governmental regulation, court decree, or order applicable to Borrower.
Financial Information. Each financial statement of Borrower supplied to
Lender truly and completely disclosed Borrower's financial condition as of
the date of the statement, and there has been no material adverse change in
Borrower's financial condition subsequent to the date of the most recent
financial statement supplied to Lender. Borrower has no material contingent
obligations except as disclosed in such financial statements.
Legal Effect. This Agreement constitutes, and any instrument or agreement
required hereunder to be given by Borrower when delivered constitute,
legal, valid and binding obligations of Borrower enforceable against
Borrower in accordance with their respective terms.
Properties. Except as contemplated by this Agreement or as previously
disclosed in Borrower's financial statements or in writing to Lender and as
accepted by Lender, and except for property tax liens for taxes not
presently due and payable, Borrower owns and has good title to all of
Borrower's properties free and clear of all Security Interests, and has not
executed any security documents or financing statements relating to such
properties. All of Borrower's properties are titled in Borrower's legal
name, and Borrower has not used, or filed a financing statement under, any
other name for at least the last five (5) years.
Hazardous Substances. The terms "hazardous waste," "hazardous substance,"
"disposal," "release," and "threatened release," as used in this Agreement,
shall have the same meanings as set forth in the "CERCLA," "SARA," the
Hazardous Materials Transportation Act, 49 U.S.C. Section 1801, et seq.,
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901, et
seq., the New Jersey Industrial Site Recovery Act, NJSA Section 13:1K-6
("ISRA"), the New Jersey Spill Compensation and Control Act, NJSA
58:10-23.11, et seq., or other applicable state or Federal laws, rules, or
regulations adopted pursuant to any of the foregoing. Except as disclosed
to and acknowledged by Lender in writing, Borrower represents and warrants
that: (a) During the period of Borrower's ownership of the properties,
there has been no use, generation, manufacture, storage, treatment,
disposal, release or threatened release of any hazardous waste or substance
by any person on, under, about or from any of the properties. (b) Borrower
has no knowledge of, or reason to believe that there has been (i) any use,
generation, manufacture, storage, treatment, disposal, release, or
threatened release of any hazardous waste or substance on, under, about or
from the properties by any prior owners or occupants of any of the
properties, or (ii) any actual or threatened litigation or claims of any
kind by any person relating to such matters. (c) Neither Borrower nor any
tenant, contractor, agent or other authorized user of any of the properties
shall use, generate, manufacture, store, treat, dispose of, or release any
hazardous waste or substance on, under, about or from any of the
properties; and any such activity shall be conducted in compliance with all
applicable federal, state, and local laws, regulations, and ordinances,
including without limitation those laws, regulations and ordinances
described above. Borrower authorizes Lender and its agents to enter upon
the properties to make such inspections and tests as Lender may deem
appropriate to determine compliance of the properties with this section of
the Agreement. Any inspections or tests made by Lender shall be at
Borrower's expense and for Lender's purposes only and shall not be
construed to create any responsibility or liability on the part of Lender
to Borrower or to any other person. The representations and warranties
contained herein are based on Borrower's due diligence in investigating the
properties for hazardous waste and hazardous substances. Borrower hereby
(a) releases and waives any future claims against Lender for indemnity or
contribution in the event Borrower becomes liable for cleanup or other
costs under any such laws, and (b) agrees to indemnify and hold harmless
Lender against any and all claims, losses, liabilities, damages, penalties,
and expenses which Lender may directly or indirectly sustain or suffer
resulting from a breach of this section of the Agreement or as a
consequence of any use, generation, manufacture, storage, disposal, release
or threatened release occurring prior to Borrower's ownership or interest
in the properties, whether or not the same was or should have been known to
Borrower. The provisions of this section of the Agreement, including the
obligation to indemnify, shall survive the payment of the Indebtedness and
the termination or expiration of this Agreement and shall not be affected
by Lender's acquisition of any interest in any of the properties, whether
by foreclosure or otherwise.
Litigation and Claims. No litigation, claim, investigation, administrative
proceeding or similar action (including those for unpaid taxes) against
Borrower is pending or threatened, and no other event has occurred which
may materially adversely affect Borrower's financial condition or
properties, other than litigation, claims, or other events, if any, that
have been disclosed to and acknowledged by Lender in writing.
Taxes. To the best of Borrower's knowledge, all tax returns and reports of
Borrower that are or were required to be filed, have been filed and all
taxes, assessments and other governmental charges have been paid in full,
except those presently being or to be contested by Borrower in good faith
in the ordinary course of business and for which adequate reserves have
been provided.
Lien Priority. Unless otherwise previously disclosed to Lender in writing,
Borrower has not entered into or granted any Security Agreements, or
permitted the filing or attachment of any Security Interests on or
affecting any of the Collateral directly or indirectly securing repayment
of Borrower's Loan and Note, that would be prior or that may in any way be
superior to Lender's Security Interest and
<PAGE>
BUSINESS LOAN AGREEMENT Page 3
Loan No 17069519001 (Continued)
Collateral.
Binding Effect. This Agreement, the Note, all Security Agreements directly
or indirectly securing repayment of Borrower's Loan and Note and all of the
Related Documents are binding upon Borrower as well as upon Borrower's
successors, representatives and assigns, and are legally enforceable in
accordance with their respective terms.
Commercial Purposes. Borrower intends to use the Loan proceeds solely for
business or commercial related purposes.
Employee Benefit Plans. Each employee benefit plan as to which Borrower may
have any liability complies in all material respects with all applicable
requirements of law and regulations, and (i) no Reportable Event nor
Prohibited Transaction (as defined in ERISA) has occurred with respect to
any such plan, (ii) Borrower has not withdrawn from any such plan or
initiated steps to do so, (iii) no steps have been taken to terminate any
such plan, and (iv) there are no unfunded liabilities other than those
previously disclosed to Lender in writing.
Location of Borrower's Offices and Records. Borrower's place of business,
or Borrower's Chief executive office, if Borrower has more than one place
of business, is located at 300 North Ellis Street, Gloucester City, NJ
08030. Unless Borrower has designated otherwise in writing this location is
also the office or offices where Borrower keeps its records concerning the
Collateral.
Information. All information heretofore or contemporaneously herewith
furnished by Borrower to Lender for the purposes of or in connection with
this Agreement or any transaction contemplated hereby is, and all
information hereafter furnished by or on behalf of Borrower to Lender will
be, true and accurate in every material respect on the date as of which
such information is dated or certified; and none of such information is or
will be incomplete by omitting to state any material fact necessary to make
such information not misleading.
Survival of Representations and Warranties. Borrower understands and agrees
that Lender, without independent investigation, is relying upon the above
representations and warranties in making the above referenced Loan to
Borrower. Borrower further agrees that the foregoing representations and
warranties shall be continuing in nature and shall remain in full force and
effect until such time as Borrower's Indebtedness shall be paid in full, or
until this Agreement shall be terminated in the manner provided above,
whichever is the last to occur.
AFFIRMATIVE COVENANTS. Borrower covenants and agrees with Lender that, while
this Agreement is in effect, Borrower will:
Litigation. Promptly inform Lender in writing of (a) all material adverse
changes in Borrower's financial condition, and (b) all existing and all
threatened litigation, claims, investigations, administrative proceedings
or similar actions affecting Borrower or any Guarantor which could
materially affect the financial condition of Borrower or the financial
condition of any Guarantor.
Financial Records. Maintain its books and records in accordance with
generally accepted accounting principles, applied on a consistent basis.
Financial Statements. Furnish Lender with, as soon as available, but in no
event later than one hundred twenty (120) days after the end of each fiscal
year, Borrower's balance sheet and income statement for the year ended,
compiled by a certified public accountant satisfactory to Lender. All
financial reports required to be provided under this Agreement shall be
prepared in accordance with generally accepted accounting principles,
applied on a consistent basis, and certified by Borrower as being true and
correct.
Insurance. Maintain fire and other risk insurance, public liability
insurance, and such other insurance as Lender may require with respect to
Borrower's properties and operations, in form, amounts, coverages and with
insurance companies reasonably acceptable to Lender. Borrower, upon request
of Lender, will deliver to Lender from time to time the policies or
certificates of insurance in form satisfactory to Lender, including
stipulations that coverages will not be cancelled or diminished without at
least ten (10) days' prior written notice to Lender. Each insurance policy
also shall include an endorsement providing that coverage in favor of
Lender will not be impaired in any way by any act, omission or default of
Borrower or any other person. In connection with all policies covering
assets in which Lender holds or is offered a security interest for the
Loans, Borrower will provide Lender with such loss payable or other
endorsements as Lender may require.
Insurance Reports. Furnish to Lender, upon request of Lender, reports on
each existing insurance policy showing such information as Lender may
reasonably request, including without limitation the following: (a) the
name of the insurer; (b) the risks insured; (c) the amount of the policy;
(d) the properties insured; (e) the then current property values on the
basis of which insurance has been obtained, and the manner of determining
those values; and (f) the expiration date of the policy.
Other Agreements. Comply with all terms and conditions of all other
agreements, whether now or hereafter existing, between Borrower and any
other party and notify Lender immediately in writing of any default in
connection with any other such agreements.
Loan Proceeds. Use all Loan proceeds solely for Borrower's business
operations, unless specifically consented to the contrary by Lender in
writing.
Taxes, Charges and Liens. Pay and discharge when due all of its
indebtedness and obligations, including without limitation all assessments,
taxes, governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to the
date on which penalties would attach, and all lawful claims that, if
unpaid, might become a lien or charge upon any of Borrower's properties,
income, or profits. Provided however, Borrower will not be required to pay
and discharge any such assessment, tax, charge, levy, lien or claim so long
as (a) the legality of the same shall be contested in good faith by
appropriate proceedings, and (b) Borrower shall have established on its
books adequate reserves with respect to such contested assessment, tax,
charge, levy, lien, or claim in accordance with generally accepted
accounting practices. Borrower, upon demand of Lender, will furnish to
Lender evidence of payment of the assessments, taxes, charges, levies,
liens and claims and will authorize the appropriate governmental official
to deliver to Lender at any time a written statement of any assessments,
taxes, charges, levies, liens and claims against Borrower's properties,
income, or profits.
Performance. Perform and comply with all terms, conditions, and provisions
set forth in this Agreement and in the Related Documents in a timely
manner, and promptly notify Lender if Borrower learns of the occurrence of
any event which constitutes an Event of Default under this Agreement or
under any of the Related Documents.
Operations. Maintain executive and management personnel with substantially
the same qualifications and experience as the present executive and
management personnel; provide written notice to Lender of any change in
executive and management personnel; conduct its business affairs in a
reasonable and prudent manner and in compliance with all applicable
federal, state and municipal laws, ordinances, rules and regulations
respecting its properties, charters, businesses and operations, including
without limitation, compliance with the Americans With Disabilities Act and
with all minimum funding standards and other requirements of ERISA and
other laws applicable to Borrower's employee benefit plans.
Inspection. Permit employees or agents of Lender at any reasonable time to
inspect any and all Collateral for the Loan or Loans or Loans and
Borrower's other properties.
<PAGE>
BUSINESS LOAN AGREEMENT Page 4
Loan No 17069519001 (Continued)
Compliance Certificate. Unless waived in writing by Lender, provide Lender
at least annually and at the time of each disbursement of Loan proceeds
with a certificate executed by Borrower's chief financial officer, or other
officer or person acceptable to Lender, certifying that the representations
and warranties set forth in this Agreement are true and correct as of the
date of the certificate and further certifying that, as of the date of the
certificate, no Event of Default exists under this Agreement.
Environmental Compliance and Reports. Borrower shall comply in all respects
with all environmental protection federal, state and local laws, statutes,
regulations and ordinances; not cause or permit to exist, as a result of an
intentional or unintentional action or omission on its part or on the part
of any third party, on property owned and/or occupied by Borrower, any
environmental activity where damage may result to the environment, unless
such environmental activity is pursuant to and in compliance with the
conditions of a permit issued by the appropriate federal, state or local
governmental authorities; shall furnish to Lender promptly and in any event
within thirty (30) days after receipt thereof a copy of any notice,
summons, lien, citation, directive, letter or other communication from any
governmental agency or instrumentality concerning any intentional or
unintentional action or omission on Borrower's part in connection with any
environmental activity whether or not there is damage to the environment
and/or other natural resources.
Additional Assurances. Make, execute and deliver to Lender such promissory
notes, mortgages, deeds of trust, security agreements, financing
statements, instruments, documents and other agreements as Lender or its
attorneys may reasonably request to evidence and secure the Loans and to
perfect all Security Interests.
NEGATIVE COVENANTS. Borrower covenants and agrees with Lender that while this
Agreement is in effect, Borrower shall not, without the prior written consent of
Lender:
Continuity of Operations. (a) Engage in any business activities
substantially different than those in which Borrower is presently engaged,
(b) cease operations, liquidate, merge, transfer, acquire or consolidate
with any other entity, change ownership, change its name, dissolve or
transfer or sell Collateral out of the ordinary course of business, (c) pay
any dividends on Borrower's stock (other than dividends payable in its
stock), provided, however that notwithstanding the foregoing, but only so
long as no Event of Default has occurred and is continuing or would result
from the payment of dividends, if Borrower is a "Subchapter S Corporation"
(as defined in the Internal Revenue Code of 1986, as amended), Borrower may
pay cash dividends on its stock to its shareholders from time to time in
amounts necessary to enable the shareholders to pay income taxes and make
estimated income tax payments to satisfy their liabilities under federal
and state law which arise solely from their status as Shareholders of a
Subchapter S Corporation because of their ownership of shares of stock of
Borrower, or (d) purchase or retire any of Borrower's outstanding shares or
alter or amend Borrower's capital structure.
CESSATION OF ADVANCES. If Lender has made any commitment to make any Loan to
Borrower, whether under this Agreement or under any other agreement, Lender
shall have no obligation to make Loan Advances or to disburse Loan proceeds if:
(a) Borrower or any Guarantor is in default under the terms of this Agreement or
any of the Related Documents or any other agreement that Borrower or any
Guarantor has with Lender; (b) Borrower or any Guarantor becomes insolvent,
files a petition in bankruptcy or similar proceedings, or is adjudged a
bankrupt; (c) there occurs a material adverse change in Borrower's financial
condition, in the financial condition of any Guarantor, or in the value of any
Collateral securing any Loan; (d) any Guarantor seeks, claims or otherwise
attempts to limit, modify or revoke such Guarantor's guaranty of the Loan or any
other loan with Lender.
FAILURE TO MEET CERTAIN OBLIGATIONS. If Borrower fails (i) to provide Lender
with financial information or any other documentation to which Lender is
entitled; (ii) to execute any documentation which Borrower is obligated to
execute under the loan documents; or (iii) to timely pay to Lender any amounts
due Lender under the loan documents including, but not limited to, attorneys
fees, Lender may increase the interest rate to 2% above the interest rate in
effect at the time of such failure. Lender may increase the interest rate upon
expiration of the time period, if any, provided in the loan documents or in
Lender's request, without further notice to Borrower. This right is in addition
to any and all other rights Lender may have under the loan documents or by law
and whether or not Lender has declared a default. If Lender elects to increase
the rate but not declare a default, Lender has not waived its right to declare a
default at a later time or for another such failure.
RIGHT OF SETOFF. Borrower grants to Lender a contractual possessory security
interest in, and hereby assigns, conveys, delivers, pledges, and transfers to
Lender all Borrower's right, title and interest in and to, Borrower's accounts
with Lender (whether checking, savings, or some other account), including
without limitation all accounts held jointly with someone else and all accounts
Borrower may open in the future, excluding however all IRA and Keogh accounts,
and all trust accounts for which the grant of a security interest would be
prohibited by law. Borrower authorizes Lender, to the extent permitted by
applicable law, to charge or setoff all sums owing on the Indebtedness against
any and all such accounts.
EVENTS OF DEFAULT. Each of the following shall constitute an Event of Default
under this Agreement if not remedied within 10 days after receipt of written
notice:
Default on Indebtedness. Failure of Borrower to make any payment when due
on the Loans.
Other Defaults. Failure of Borrower or any Grantor to comply with or to
perform when due any other term, obligation, covenant or condition
contained in this Agreement or in any of the Related Documents, or failure
of Borrower to comply with or to perform any other term, obligation,
covenant or condition contained in any other agreement between Lender and
Borrower.
Default In Favor of Third Parties. Should Borrower or any Grantor default
under any loan, extension of credit, security agreement, purchase sales
agreement, or any other agreement, in favor of any other creditor or person
that may materially affect any of Borrower's property, Borrower's or any
Grantor's ability to repay the Loans or perform their respective
obligations under this Agreement or any of the Related Documents.
False Statements. Any warranty, representation or statement made or
furnished to Lender by or on behalf of Borrower or any Grantor under this
Agreement or the Related Documents is false or misleading in any material
respect at the time made or furnished, or becomes false or misleading at
any time thereafter.
Defective Collateralization. This Agreement or any of the Related Documents
ceases to be in full force and effect (including failure of any Security
Agreement to create a valid and perfected Security Interest) at any time
and for any reason.
<PAGE>
BUSINESS LOAN AGREEMENT Page 5
Loan No 17069519001 (Continued)
Insolvency. The dissolution or termination of Borrower's existence as a
going business, the insolvency of Borrower, the appointment of a receiver
for any part of Borrower's property, any assignment for the benefit of
creditors, any type of creditor workout, or the commencement of any
proceeding under any bankruptcy or insolvency laws by or against Borrower.
Creditor or Forfeiture Proceedings. Commencement of foreclosure or
forfeiture proceedings, whether by judicial proceeding, self-help,
repossession or any other method, by any creditor of Borrower, any creditor
of any Grantor against any collateral securing the Indebtedness, or by any
governmental agency. This includes a garnishment, attachment, or levy on or
of any of Borrower's deposit accounts with Lender.
Events Affecting Guarantor. Any of the preceding events occurs with respect
to any Guarantor of any of the Indebtness or revokes or disputes the
validity of, or liability under, any Guaranty of the Indebtedness.
Change in Ownership. Any change in ownership of twenty-five percent (25%)
or more of the common stock of Borrower.
Adverse Change. A material adverse change occurs in Borrower's financial
condition.
EFFECT OF AN EVENT OF DEFAULT. If any Event of Default shall occur, except where
otherwise provided in this Agreement or the Related Documents, all commitments
and obligations of Lender under this Agreement or the Related Documents or any
other agreement immediately will terminate and, at Lender's option, all
Indebtedness immediately will become due and payable, all without notice of any
kind to Borrower, except that in the case of an Event of Default of the type
described in the "Insolvency" subsection above, such acceleration shall be
automatic and not optional. In addition, Lender shall have all the rights and
remedies provided in the Related Documents or available at law, in equity, or
otherwise. Except as may be prohibited by applicable law, all of Lender's rights
and remedies shall be cumulative and may be exercised singularly or
concurrently. Election by Lender to pursue any remedy shall not exclude pursuit
of any other remedy, and an election to make expenditures or to take action to
perform an obligation of Borrower or of any Grantor shall not affect Lender's
right to declare a default and to exercise its rights and remedies.
MISCELLANEOUS PROVISIONS. The following miscellaneous provisions are a part of
this Agreement:
Amendments. This Agreement, together with any Related Documents,
constitutes the entire understanding and agreement of the parties as to the
matters set forth in this Agreement. No alteration of or amendment to this
Agreement shall be effective unless given in writing and signed by the
party or parties sought to be charged or bound by the alteration or
amendment.
Applicable Law. This Agreement has been delivered to Lender and accepted by
Lender in the State of Delaware. If there is a lawsuit, Borrower agrees
upon Lender's request to submit to the jurisdiction of the courts of New
Castle County, the State of Delaware. Lender and Borrower hereby waive the
right to any jury trial in any action, proceeding, or counterclaim brought
by either Lender or Borrower against the other. This Agreement shall be
governed by and construed in accordance with the laws of the State of
Delaware.
Caption Headings. Caption headings in this Agreement are for convenience
purposes only and are not to be used to interpret or define the provisions
of this Agreement.
Consent to Loan Participation. Borrower agrees and consents to Lender's
sale or transfer, whether now or later, of one or more participation
interests in the Loans to one or more purchasers, whether related or
unrelated to Lender. Lender may provide, without any limitation whatsoever,
to any one or more purchasers, or potential purchasers, any information or
knowledge Lender may have about Borrower or about any other matter relating
to the Loan, and Borrower hereby waives any rights to privacy it may have
with respect to such matters. Borrower additionally waives any and all
notices of sale of participation interests, as well as all notices of any
repurchase of such participation interests. Borrower also agrees that the
purchasers of any such participation interests will be considered as the
absolute owners of such interests in the Loans and will have all the rights
granted under the participation agreement or agreements governing the sale
of such participation interests. Borrower further waives all rights of
offset or counterclaim that it may have now or later against Lender or
against any purchaser of such a participation interest and unconditionally
agrees that either Lender or such purchaser may enforce Borrower's
obligation under the Loans irrespective of the failure or insolvency of any
holder of any interest in the Loans. Borrower further agrees that the
purchaser of any such participation interests may enforce its interests
irrespective of any personal claims or defenses that Borrower may have
against Lender.
Costs and Expenses. Borrower agrees to pay upon demand all of Lender's
expenses, including without limitation reasonable attorneys' fees, incurred
in connection with the preparation, execution, enforcement, modification
and collection of this Agreement or in connection with the Loans made
pursuant to this Agreement. Lender may pay someone else to help collect the
Loans and to enforce this Agreement, and Borrower will pay that amount.
This includes, subject to any limits under applicable law, Lender's
reasonable attorneys' fees and Lender's legal expenses, whether or not
there is a lawsuit, including reasonable attorneys' fees for bankruptcy
proceedings (including efforts to modify or vacate any automatic stay or
injunction), appeals, and any anticipated post-judgment collection
services. Borrower also will pay any court costs, in addition to all other
sums provided by law.
Notices. All notices required to be given under this Agreement shall be
given in writing, may be sent by telefacsimile, and shall be effective when
actually delivered or when deposited with a nationally recognized overnight
courier or deposited in the United States mail, first class, postage
prepaid, addressed to the party to whom the notice is to be given at the
address shown above. Any party may change its address for notices under
this Agreement by giving formal written notice to the other parties,
specifying that the purpose of the notice is to change the party's address.
To the extent permitted by applicable law, if there is more than one
Borrower, notice to any Borrower will constitute notice to all Borrowers.
For notice purposes, Borrower will keep Lender informed at all times of
Borrower's current address(es).
Severability. If a court of competent jurisdiction finds any provision of
this Agreement to be invalid or unenforceable as to any person or
circumstance, such finding shall not render that provision invalid or
unenforceable as to any other persons or circumstances. If feasible, any
such offending provision shall be deemed to be modified to be within the
limits of enforceability or validity; however, if the offending provision
cannot be so modified, it shall be stricken and all other provisions of
this Agreement in all other respects shall remain valid and enforceable.
Subsidiaries and Affiliates of Borrower. To the extent the context of any
provisions of this Agreement makes it appropriate, including without
limitation any representation, warranty or covenant, the word "Borrower" as
used herein shall include all subsidiaries and affiliates of Borrower.
Notwithstanding the foregoing however, under no circumstances shall this
Agreement be construed to require Lender to make any Loan or other
financial accommodation to any subsidiary or affiliate of Borrower.
Successors and Assigns. All covenants and agreements contained by or on
behalf of Borrower shall bind its successors and assigns and shall inure to
the benefit of Lender, its successors and assigns. Borrower shall not,
however, have the right to assign its rights under this Agreement or any
interest therein, without the prior written consent of Lender.
Survival. All warranties, representations, and covenants made by Borrower
in this Agreement or in any certificate or other instrument delivered by
Borrower to Lender under this Agreement shall be considered to have been
relied upon by Lender and will survive the making of the Loan and delivery
to Lender of the Related Documents, regardless of any investigation made by
Lender or on Lender's behalf.
Time is of the Essence. Time is of the essence in the performance of this
Agreement.
<PAGE>
BUSINESS LOAN AGREEMENT Page 6
Loan No 17069519001 (Continued)
Waiver. Lender shall not be deemed to have waived any rights under this
Agreement unless such waiver is given in writing and signed by Lender. No
delay or omission on the part of Lender in exercising any right shall
operate as a waiver of such right or any other right. A waiver by Lender
of a provision of this Agreement shall not prejudice or constitute a
waiver of Lender's right otherwise to demand strict compliance with that
provision or any other provision of this Agreement. No prior waiver by
Lender, nor any course of dealing between Lender and Borrower, or between
Lender and any Grantor, shall constitute a waiver of any of Lender's
rights or of any obligations of Borrower or of any Grantor as to any
future transactions. Whenever the consent of Lender is required under
this Agreement, the granting of such consent by Lender in any instance
shall not constitute continuing consent in subsequent instances where
such consent is required, and in all cases such consent may be granted or
withheld in the sole discretion of Lender.
BORROWER ACKNOWLEDGES HAVING READ ALL THE PROVISIONS OF THIS BUSINESS LOAN
AGREEMENT, AND BORROWER AGREES TO ITS TERMS. THIS AGREEMENT IS DATED AS OF MARCH
13, 1997.
BORROWER:
Holt Hauling and Warehousing System, Inc.
By: /s/ Bernard Gelman (SEAL)
______________________________
Bernard Gelman, Vice President
ATTEST:
/s/ John Evans
________________________________ (Corporate Seal)
Secretary or Assistant Secretary
LENDER:
WILMINGTON SAVINGS FUND SOCIETY, FSB
By: __________________________
Authorized Officer
===============================================================================
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY
AND
HOLT HAULING and WAREHOUSING SYSTEM, INC.
-----------------------
SERIES J LOAN AGREEMENT
-----------------------
Dated as of June 1, 1995
===============================================================================
The interest of the NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY (the
"Issuer") in this Loan Agreement has been assigned (except for certain rights
expressly reserved by the Issuer) pursuant to the Indenture of Trust dated as of
the date hereof from the Issuer to THE BANK OF NEW YORK (NJ), as trustee (the
"Trustee"), and is subject to the security interest of the Trustee thereunder.
<PAGE>
LOAN AGREEMENT
TABLE OF CONTENTS
(This Table of Contents is only for convenience of reference and is
not intended to define, limit or describe the scope or intent of any provisions
of this Loan Agreement.)
Page
----
PARTIES......................................................... 1
PREAMBLES....................................................... 1
ARTICLE I
DEFINITIONS
Section 1.1. Definitions.................................... I-1
Section 1.2. Interpretation and Construction................ I-11
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations and Covenants of the
Issuer........................................ II-1
Section 2.2. Representations and Warranties of the
Company....................................... II-1
Section 2.3. [Intentionally Omitted]........................ 11-6
Section 2.4. Covenants of the Company....................... 11-6
ARTICLE III
ISSUANCE OF THE SERIES J BONDS
Section 3.1. Agreement to Issue the Series J Bonds:
Application of Series J Bond Proceeds......... III-1
Section 3.2. Disbursements from the Project Fund............ III-1
Section 3.3. Furnishing Documents to the Trustee............ III-1
Section 3.4. Special Arbitrage Certifications............... III-1
ARTICLE IV
LOAN PROVISIONS
Section 4.1. Loan of Proceeds............................... IV-1
Section 4.2. Amounts Payable................................ IV-1
Section 4.3. Obligations of Company Unconditional........... IV-2
-i-
<PAGE>
ARTICLE V
THE PROJECT
Section 5.1. Disbursements from the Project Fund............ V-1
Section 5.2. Maintenance and Modification of the
Project Facility by the Company............... V-2
Section 5.3. Taxes, Other Governmental Charges and
Utility Charges............................... V-2
Section 5.4. Insurance Required............................. V-3
Section 5.5. Additional Provisions Concerning
Insurance..................................... V-4
Section 5.6. Worker's Compensation.......................... V-4
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 6.1. Damage, Destruction and Condemnation........... VI-1
Section 6.2. Application of Net Proceeds.................... VI-1
Section 6.3. Insufficiency of Net Proceeds.................. VI-2
ARTICLE VII
SPECIAL COVENANTS
Section 7.1. No Warranty of Condition or Suitability
by Issuer..................................... VII-1
Section 7.2. Access to the Project.......................... VII-1
Section 7.3. Further Assurances and Corrective
Instruments................................... VII-1
Section 7.4. Issuer and Company Representatives............. VII-1
Section 7.5. Financing Statements........................... VII-1
Section 7.6. Compliance with Code........................... VII-2
Section 7.7. Further Assurances ............................ VII-2
Section 7.8. [Intentionally Omitted]........................ VII-2
Section 7.9. Annual Certificate............................. VII-2
ARTICLE VIII
PROJECT USERS; MAINTAIN EXISTENCE; MERGE, SELL, TRANSFER;
INDEMNIFICATION; REDEMPTION
Section 8.1. Project Users; Maintain Existence;
Merge, Sell, Transfer........................ VIII-1
Section 8.2. Release and Indemnification Covenants......... VIII-2
Section 8.3. Redemption of Bonds........................... VIII-4
Section 8.4. Issuer to Grant Security Interest to
Trustee....................................... VIII-5
Section 8.5. Indemnification of Trustee..................... VIII-5
-ii-
<PAGE>
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Defaults Defined............................... IX-1
Section 9.2. Trustee's Remedies on Default.................. IX-3
Section 9.3. Issuer's Remedies on Default................... IX-4
Section 9.4. Specific Performance........................... IX-5
Section 9.5. No Remedy Exclusive............................ IX-5
Section 9.6. Agreement to Pay Attorneys' Fees and
Expenses...................................... IX-6
Section 9.7. No Additional Waiver Implied by One
Waiver........................................ IX-6
ARTICLE X
OPTIONS TO TERMINATE AGREEMENT.............................. X-1
ARTICLE XI
MISCELLANEOUS
Section 11.1. Term of Agreement.............................. XI-1
Section 11.2. Notices........................................ XI-1
Section 11.3. Binding Effect................................. XI-1
Section 11.4. Severability................................... XI-1
Section 11.5. Amounts Remaining in Funds..................... XI-1
Section 11.6. Amendments, Changes and Modification........... XI-3
Section 11.7. Execution in Counterparts...................... XI-3
Section 11.8. Applicable Law................................. XI-3
Section 11.9. Captions....................................... XI-3
EXHIBIT A - Project Facility
EXHIBIT B - Form of Requisition
EXHIBIT C - Permitted Encumbrances
EXHIBIT D - Form of Annual Certificate
-iii-
<PAGE>
THIS LOAN AGREEMENT is dated as of June 1, 1995, between the NEW JERSEY
ECONOMIC DEVELOPMENT AUTHORITY (the "Issuer"), a public body corporate and
politic constituting an instrumentality of the State of New Jersey and HOLT
HAULING AND WAREHOUSING SYSTEM, INC., a corporation duly organized and validly
existing under the laws of the Commonwealth of Pennsylvania (the "Company").
W I T N E S S E T H:
WHEREAS, the New Jersey Economic Development Authority Act, as amended and
supplemented, N.J.S.A. ss.34:1B-1, et seq. (the "Act"), declares that the
Legislature has determined that Department of Labor and Industry statistics of
recent years indicate a continuing decline in manufacturing employment within
the State which is a contributing factor to the drastic unemployment existing
within the State, which far exceeds the national average, thus adversely
affecting the economy of the State and the prosperity, safety, health and
general welfare of its inhabitants and their standard of living; and that the
availability of financial assistance and suitable facilities are important
inducements to new and varied employment promoting enterprises to locate in the
State, and to existing enterprises to remain and expand in the State; and
WHEREAS, the Issuer was created to aid in remedying the aforesaid
conditions and to implement the purposes of the Act, and the Legislature has
determined that the authority and powers conferred upon the Issuer under the Act
and the expenditure of moneys pursuant thereto constitute a serving of a valid
public purpose and that the enactment of the provisions set forth in the Act is
in the public interest and for the public benefit and good and has been so
declared to be as a matter of express legislative determination; and
WHEREAS, the Issuer, to accomplish the purposes of the Act, is empowered
(i) to extend credit or make loans to any person for the planning, designing,
acquiring, constructing, reconstructing, improving, equipping and furnishing of
a project, which credit or loans may be secured by loan and security agreements,
mortgages, leases, and any other instruments, upon such terms and conditions as
the Issuer shall deem reasonable; (ii) to require the inclusion in any mortgage,
lease, contract, loan and security agreement or other instruments, such
provisions for the construction, use, operation and maintenance and financing of
a project as the Issuer may deem necessary or desirable; and (iii) to enter into
contracts with respect to the planning, designing, financing, constructing,
reconstructing, improving, equipping, furnishing, operating and maintaining of a
project, for such consideration and upon such terms and conditions as the Issuer
may determine to be reasonable; and
<PAGE>
WHEREAS, as an inducement to the Company to undertake a certain project
consisting of the acquisition and filling of approximately 18.6 acres of
tidewater property (including the cost of off-site mitigation required by
environmental permits), the renovation of an existing building of approximately
36,500 square feet into a refrigerated warehouse and certain additional building
renovations, the performance of certain site improvements, including the
renovation of a collapsed pier, the construction of two marginal piers and
certain paying, grading and filling costs, and the purchase and installation of
machinery and equipment, including container cranes, bulldozers, forklift trucks
and other peripheral equipment for use in the loading and unloading of
oceangoing vessels, all part of a public port facility and property functionally
related and subordinate thereto (the "Project"), said Project to be located in
the City of Gloucester City, County of Camden, New Jersey, the Issuer, in
furtherance of the purposes of the Act, made certain findings and determinations
and preliminarily approved the application of the Company for the financing of
the Project by resolution duly adopted on May 24, 1983 and by further resolution
duly adopted on August 7, 1984 authorized the issuance of its Variable/Fixed
Rate Economic Development Bonds (Holt Hauling and Warehousing System, Inc.--1983
Project) in the principal amount of $13,500,000 (the "Series A Bonds") for the
purpose of providing funds for the making of a loan to the Company to finance a
portion of the Project and to enable the Company to refund certain outstanding
bonds; and
WHEREAS, in furtherance of the purposes of the Act, the Issuer heretofore
issued the Series A Bonds for the Company in the City of Gloucester City, Camden
County, New Jersey on August 24, 1984, and loaned the proceeds from the sale
thereof to the Company pursuant to a Loan Agreement dated as of August 1, 1984
between the Issuer and the Company; and
WHEREAS, as a further inducement to the Company to undertake certain
additional costs in connection with the Project and in furtherance of the
purposes of the Act, the Issuer by resolution duly adopted on September 4, 1985
authorized the issuance of its Variable/Fixed Rate Economic Development Bonds
(Holt Hauling and Warehousing System, Inc.--1983 Project) in the aggregate
principal amount of $17,500,000, consisting of its Series B Variable/Fixed Rate
Economic Development Bonds (Holt Hauling and Warehousing System, Inc.--1983
Project) in the principal amount of $7,500,000 (the "Series B Bonds") and its
Series C Variable/Fixed Rate Economic Development Bonds (Holt Hauling and
Warehousing System, Inc.--1983 Project) in the principal amount of $10,000,000
(the "Series C Bonds"), all for the purpose of providing funds for the making of
loans to the Company to finance a portion of the Project; and
WHEREAS, in furtherance of the purposes of the Act, the Issuer heretofore
issued the Series B Bonds for the Company in the City of
2
<PAGE>
Gloucester City, Camden County, New Jersey, on December 6, 1985, and loaned the
proceeds from the sale thereof to the Company pursuant to a loan agreement dated
as of November 1, 1985 between the Issuer and the Company; and
WHEREAS, in furtherance of the purposes of the Act, the Issuer heretofore
issued the Series C Bonds for the Company in the City of Gloucester City, Camden
County, New Jersey, on December 30, 1985, and loaned the proceeds from the sale
thereof to the Company pursuant to a loan agreement dated as of December 1, 1985
between the Issuer and the Company; and
WHEREAS, the Company requested an additional loan from the Issuer to refund
the Series C Bonds and, as an inducement to the Company to refund the Series C
Bonds, the Issuer duly adopted an amended final resolution on January 8, 1986
authorizing the issuance of its Economic Development Bonds (Holt Hauling and
Warehousing System, Inc.--1983 Project) 11.85% 1986 Series in the aggregate
principal amount of $10,000,000 (the "1986 Series Bonds") and providing for the
securing of the payment of said 1986 Series Bonds by a pledge of moneys to be
received by the Issuer and the assignment of certain rights of the Issuer with
respect to the Project, which pledge and assignment further secured the payment
of the principal of and interest on the 1986 Series Bonds; and
WHEREAS, the Issuer issued the 1986 Series Bonds on February 25, 1986 and
applied the proceeds of the 1986 Series Bonds to make a loan to the Company to
refund the Series C Bonds in accordance with a certain loan agreement between
the Issuer and the Company and a certain indenture of trust between the Issuer
and Bankers Trust Company, as trustee, both dated as of February 1, 1986,
providing, in part, for payments by the Company to the Issuer sufficient to meet
installments of interest and principal on the 1986 Series Bonds; and
WHEREAS, the Company requested an additional loan from the Issuer to refund
the Series A Bonds and the Series B Bonds, and, as an inducement to the Company
to refund the Series A Bonds and the Series B Bonds, the Issuer duly adopted an
amended final resolution on July 1, 1986 authorizing the issuance of its Series
D Senior Mortgage Economic Development Bonds (Holt Hauling and Warehousing
System, Inc.--1983 Project) in an aggregate principal amount of $18,750,000
(the "Series D Bonds") and providing for the securing of the payment of said
Series D Bonds by a pledge of moneys to be received by the Issuer and the
assignment of certain rights of the Issuer with respect to the Project, which
pledge and assignment further secured the payment of the principal of and
interest on the Series D Bonds; and
WHEREAS, the Issuer issued the Series D Bonds on September 18, 1986 and
applied the proceeds of the Series D Bonds to make a loan to the Company to
refund the Series A Bonds and the Series B Bonds
3
<PAGE>
in accordance with a certain loan agreement between the Issuer and the Company
and a certain indenture of trust between the Issuer and Bankers Trust Company,
as trustee, both dated as of August 1, 1986, providing, in part, for payments by
the Company to the Issuer sufficient to meet installments of interest and
principal on the Series D Bonds; and
WHEREAS, the Company requested an additional loan from the Issuer to
finance certain additional costs in connection with the Project and as a further
inducement to the Company to undertake such costs and in furtherance of the
purposes of the Act, the Issuer duly adopted an amended final resolution on
December 2, 1986 authorizing the issuance of its Series E Senior Mortgage
Economic Development Bonds (Holt Hauling and Warehousing System, Inc.--1983
Project) in an aggregate amount not to exceed $8,500,000 (the "Series E Bonds")
and secured the payment of said Series E Bonds by a pledge of moneys to be
received by the Issuer and the assignment of certain rights of the Issuer with
respect to the Project, which pledge and assignment further secured the payment
of the principal of and interest on the Series E Bonds; and
WHEREAS, the Issuer issued the Series E Bonds on December 30, 1986 and
applied the proceeds of the Series E Bonds to make a loan to the Company for the
financing of a portion of the costs of the Project, all in accordance with a
certain loan agreement between the Issuer and the Company and a certain
indenture of trust between the Issuer and Bankers Trust Company, as trustee,
both dated as of December 1, 1986, providing, in part, for payments by the
Company to the Issuer sufficient to meet installments of interest and principal
on the Series E Bonds; and
WHEREAS, the Company thereafter amended the Application, revising certain
aspects thereof to reflect cost overruns incurred with respect to the Project
and requested that the Issuer reconfirm its approval of the project described in
the Application; and
WHEREAS, the Company requested a further loan from the Issuer to finance
certain additional costs in connection with the Project and as a further
inducement to the Company to undertake such additional costs and in furtherance
of the purposes of the Act, the Issuer duly adopted an amended final resolution
on August 4, 1987 (the "August Resolution") authorizing the issuance of its
Series F Economic Development Bonds (Holt Hauling and Warehousing System,
Inc.--1983 Project) in an aggregate principal amount not to exceed $9,000,000
(the "Series F Bonds") and providing for the securing of the payment of said
Series F Bonds by a pledge of moneys to be received by the Issuer and the
assignment of certain rights of the Issuer with respect to the Project, which
pledge and assignment further secured the payment of the principal of and
interest on the Series F Bonds; and
4
<PAGE>
WHEREAS, the Issuer was thereafter requested and agreed to amend the form
of bonds approved in the August Resolution and to substitute Fidelity Bank,
National Association as trustee in the place of Bankers Trust Company, New York,
New York, and duly adopted an amended final resolution on December 1, 1987
authorizing the amended form of Series F Bonds and the substitution of trustee,
and otherwise ratifying and confirming the August Resolution; and
WHEREAS, the Issuer issued its Variable/Fixed Rate Economic Development
Bonds (Holt Hauling and Warehousing System, Inc.--1983 Project), Series F, in
the aggregate principal amount of $9,000,000 on December 24, 1987 and applied
the proceeds of the Series F Bonds to make a loan to the Company for the
financing of a portion of the costs of the Project, all in accordance with a
certain loan agreement between the Issuer and the Company and a certain
indenture of trust between the Issuer and Fidelity Bank, National Association,
as trustee, both dated as of December 1, 1987, providing, in part, for payments
by the Company to the Issuer sufficient to meet installments of interest and
principal on the Series F Bonds; and
WHEREAS, the Company requested an additional loan from the Issuer to refund
the 1986 Series Bonds and the Series F Bonds and, as an inducement to the
Company to refund such Bonds, the Issuer duly adopted an amended final
resolution on January 7, 1992 authorizing the issuance of its Economic
Development Bonds (Holt Hauling and Warehousing System, Inc.--1983 Project),
Series G in the aggregate principal amount of $10,000,000 (the "Series G
Bonds"), and its Economic Development Bonds (Holt Hauling and Warehousing
System, Inc.--1983 Project), Series H in the aggregate principal amount of
$9,000,000 (the "Series H Bonds"), and provided for the securing of the payment
of said Series G Bonds and the Series H Bonds by a pledge of moneys to be
received by the Issuer and the assignment of certain rights of the Issuer with
respect to the Project, which pledge and assignment are hereby declared to
further secure the payment of the principal of and interest on the Series G
Bonds and the Series H Bonds; and
WHEREAS, the Issuer issued the Series G Bonds on January 28, 1992 and
applied the proceeds of the Series G Bonds to make a loan to the Company to
refund the 1986 Series Bonds in accordance with a certain loan agreement between
the Issuer and the Company, and a certain indenture of trust between the Issuer
and Mellon Bank, N.A., as trustee, both dated as of January 2, 1992 providing,
in part, for payments by the Company to the Issuer sufficient to meet
installments of interest and principal on the Series G Bonds; and
WHEREAS, the Issuer issued the Series H Bonds on January 28, 1992 and
applied the proceeds of the Series H Bonds to make a loan to the Company to
refund the Series F Bonds in accordance with a certain loan agreement between
the Issuer and the Company, and a certain indenture of trust between the Issuer
and Mellon Bank,
5
<PAGE>
N.A., as trustee, both dated as of January 2, 1992, providing, in part, for
payments by the Company to the Issuer sufficient to meet installments of
interest and principal on the Series H Bonds; and
WHEREAS, the Company requested an additional loan from the Issuer to
undertake certain additional costs in connection with the Project and, as an
inducement to the Company to undertake such costs and in furtherance of the
purposes of the Act, the Issuer duly adopted a final resolution on September 7,
1993 authorizing the issuance of its Economic Development Bonds (Holt Hauling
and Warehousing System, Inc.--1983 Project), 1993 Series I in the aggregate
principal amount of $5,000,000 (the "Series I Bonds"), and secured the Series I
Bonds by a pledge of moneys to be received by the Issuer and the assignment of
certain rights of the Issuer with respect to the Project, which pledge and
assignment are hereby declared to further secure the payment of the principal of
and interest on the Series I Bonds; and
WHEREAS, the Issuer issued the Series I Bonds on November 10, 1993 and
applied the proceeds of the Series I Bonds to make a loan to the Company for the
financing of a portion of the additional costs in connection with the Project,
all in accordance with a certain loan agreement between the Issuer and the
Company, and a certain indenture of trust between the Issuer and The Bank of New
York (NJ), as trustee, both dated as of November 1, 1993 providing, in part,
for payments by the Company to the Issuer sufficient to meet installments of
interest and principal on the Series I Bonds; and
WHEREAS, the Company has requested an additional loan from the Issuer to
refund the Series I Bonds; and
WHEREAS, the Issuer proposes to issue its Economic Development Revenue
Refunding Bonds (Holt Hauling and Warehousing System, Inc.--1983 Project) 1995
Series J in the aggregate principal amount of $5,000,000 (the "Bonds"), and to
secure the Bonds by a pledge of moneys to be received by the Issuer and the
assignment of certain rights of the Issuer with respect to the Project, which
pledge and assignment are hereby declared to further secure the payment of the
principal of and interest on the Bonds; and
WHEREAS, the Issuer proposes to apply the proceeds of the Bonds to make a
loan to the Company to refund the Series I Bonds, all in accordance with a
certain loan agreement (the "Loan Agreement") between the Issuer and the
Company, and a certain indenture of trust (the "Indenture") between the Issuer
and The Bank of New York (NJ) (the "Trustee"), providing, in part, for payments
by the Company to the Issuer sufficient to meet installments of interest and
principal on the Bonds; and
WHEREAS, the Company and the Issuer each have full right and lawful
authority to enter into this Loan Agreement (hereinafter
6
<PAGE>
referred to as the "Agreement"), and to perform and observe the provisions
hereof on their respective parts to be performed and observed.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
hereinafter contained, the parties hereto covenant, agree and bind themselves as
follows; provided, that any obligation of the Issuer created by or arising out
of this Loan Agreement shall never constitute a debt or a pledge of the faith
and credit or the taxing power of the State or any political subdivision or
taxing district of the State (other than the Issuer, to the limited extent
provided in the Indenture) but shall be payable solely out of the Trust Estate
(as hereinafter defined), anything herein contained to the contrary by
implication or otherwise notwithstanding:
7
<PAGE>
ARTICLE I
DEFINITIONS
Section 1.1. Definitions. All capitalized, undefined terms used herein
shall have the same meanings as used in Article I of the hereinafter defined
Indenture. In addition, the following words and phrases shall have the following
meanings:
"Act" means the New Jersey Economic Development Authority Act, as amended,
N.J.S.A. ss.34:1B-1, et seq. or any successor legislation, and any regulations
and administrative pronouncements promulgated thereunder, as amended and
supplemented.
"Affiliate" means any Person under the control of or in common control or
ownership (direct or indirect) of or with the Company or any Subsidiary or
Affiliate of the Company. For the purposes of this definition and the definition
of Related Party below, "control" shall mean ownership or control (direct or
indirect) of five percent or more of the voting stock of the Person for which
such determination is to be made or the exercise of management control over the
business and affairs of such Person. The term "Affiliate" shall not be deemed
to include any Person any portion of which is owned or held by the Company
solely for investment purposes provided that (i) the Company does not own or
hold more than 49% of such Person and (ii) such Person is not included in the
Company's consolidated financial statements.
"Agreement" or "Loan Agreement" means this Series J Loan Agreement as the
same may be amended, modified or supplemented from time to time in accordance
with its terms.
"Application" means the application for financial assistance of the Company
dated April 28, 1983, submitted to the Issuer, including any amendments thereto
as are on file at the Issuer's offices.
"Assignment" means the Series J Assignment dated the Closing Date by and
between the Issuer, as assignor, and the Trustee, as assignee, assigning,
subject to such reservations as are contained therein, all of the Issuer's
right, title and interest in and to this Agreement and the other Loan Documents,
as the same may be amended, modified or supplemented from time to time.
"Bond" or "Bonds" or "Series J Bond" or "Series J Bonds" means one or more
of the Economic Development Revenue Refunding Bonds (Holt Hauling and
Warehousing System, Inc.--1983 Project) 1995 Series J of the Issuer in the
aggregate principal amount of $5,000,000 authorized to be issued pursuant to
the Bond Resolution,
I-1
<PAGE>
delivered under and pursuant to the Bond Resolution and Indenture and any bonds
issued in lieu of or in substitution therefor.
"Bond Counsel" with respect to the issuance and delivery of the Bonds means
Wolff & Samson, A Professional Corporation, having its office at 5 Becker Farm
Road, Roseland, New Jersey 07068, and subsequent thereto, such firm or any other
nationally recognized bond counsel reasonably satisfactory to the Issuer and the
Trustee.
"Bond Fund" means the fund so designated which is established and created
pursuant to Section 5.01 of the Indenture.
"Bond Placement Agreement" means the bond placement agreement dated as of
June 1, 1995 by and among the Issuer, the Company and the Placement Agent,
relating to the placement of the Bonds, as the same may be amended, modified or
supplemented from time to time.
"Bond Resolution" means the resolution of the Issuer adopted on May 9, 1995
and entitled "Amended Final Resolution (Holt Hauling and Warehousing System,
Inc.--1983 Project)" authorizing the issuance and sale of the Bonds and the
execution and delivery of this Agreement, the Indenture, the Bond Placement
Agreement, the Assignment and the other Loan Documents and determining other
matters in connection with the Project.
"Bond Year" shall have the meaning ascribed to such term in the Tax
Certificate.
"Business Day" means a day on which the Trustee and banks located in West
Paterson, New Jersey or New York City, New York are open for the purpose of
conducting a commercial banking business.
"Cancellation Date" means the effective date of the Issuer's notice of
cancellation of the Bonds given pursuant to Section 9.3 hereof.
"Cash Flow" of a Person shall mean Net Income of such Person plus
depreciation and other non-cash charges to income plus (or minus) any increase
(or decrease) in deferred taxes.
"Chief Financial Officer" shall mean Bernard Gelman, the Vice President and
Treasurer of the Company, or such other individual functioning in a
substantially similar capacity on behalf of the Company as the Company shall
designate in a notice to the Trustee from time to time.
"Closing Date" means June 7, 1995 or such other date which shall be the
date of the execution and delivery of this Loan Agreement and the making of the
Loan.
I-2
<PAGE>
"Code" means the Internal Revenue Code of 1986, as amended, or any
successor legislation, and the regulations promulgated thereunder, and
including, to the extent not inconsistent with the Code, Treasury Regulations
promulgated under the 1954 Code.
"Collateral" means all of the rights and assets of the Company or any other
Person in which the Issuer or the Trustee is now or hereafter granted a lien or
security interest in order to secure the performance of the Company's
obligations under this Loan Agreement, or any of the Loan Documents, the
obligations of the Issuer hereunder or under the Bonds or the obligations of any
Guarantor under the Guaranty.
"Combined Cash Flow", "Combined Interest Charges", "Combined Net Income"
and "Combined Net Income Before Interest and Taxes" for any period shall mean,
respectively, the Cash Flow, Interest Charges, Net Income and Net Income Before
Interest and Taxes of the Company, its Subsidiaries and Affiliates for such
period, combined in accordance with generally accepted accounting principles
consistently applied.
"Combined Indebtedness" means (i) the Combined Total Assets less (ii) the
total combined stockholders' equity of the Company and its Subsidiaries and
Affiliates plus deferred taxes, each determined in accordance with generally
accepted accounting principles consistently applied, as such combination is
effected in accordance with generally accepted accounting principles
consistently applied as at any date on which the amount thereof shall be
determined.
"Combined Tangible Net Worth" means (i) total combined shareholders' equity
in the Company, its Subsidiaries and Affiliates, determined in accordance with
generally accepted accounting principles consistently applied, as such
combination is effected in accordance with generally accepted accounting
principles consistently applied, less (ii) the aggregate net amount of the
following items to the extent, if any, that they were included in consolidated
assets or deducted from consolidated liabilities in computing shareholders,
equity:
(a) All licenses, patents, copyrights, tradenames, trademarks, franchises,
good will, experimental or organizational expense, unamortized debt discount and
expense, treasury stock and all other assets which under generally accepted
accounting principles are deemed intangible; and
(b) Any write-up of assets (other than current assets written up in
accordance with generally accepted accounting principles consistently applied)
made after January 1, 1984.
I-3
<PAGE>
"Combined Total Assets" means the assets of the Company, its Subsidiaries
and Affiliates, combined in accordance with generally accepted accounting
principles consistently applied.
"Company Representative" means the person or persons at the time designated
to act on behalf of the Company by written certificate furnished to the Issuer
and the Trustee containing the signature of such person or persons and signed on
behalf of the Company by its President or any Vice President. Such certificate
may designate an alternate or alternates.
"Cost" with respect to the Project shall be deemed to include all items
permitted to be financed under the provisions of the Act, including, but not
limited to:
(i) all costs which the Issuer or the Company shall be required to
pay under the terms of any contract or contracts for the acquisition,
construction, improving, or equipping of the Project;
(ii) obligations of the Company incurred for labor and materials
(including obligations payable to the Company) in connection with the
acquisition, construction, improving or equipping of the Project,
including reimbursement to the Company for all advances and payments made
in connection with the Project prior to or after delivery of the Bonds;
(iii) the cost of performance or other bonds and any and all types of
insurance that may be necessary or appropriate to have in effect during the
course of construction of the Project;
(iv) the cost of refunding the Series I Bonds;
(v) all costs of engineering and architectural services, including
the costs of the Company for test borings, surveys, estimates, plans and
specifications and preliminary investigations therefor, and for supervising
construction, as well as for the performance of all other duties required
by for consequent to the proper construction of the Project;
(vi) all expenses incurred in connection with the issuance of the
Bonds, including but not limited to, compensation, fees and expenses of the
Issuer and the Trustee including reasonable counsel fees, compensation to
any financial consultant, underwriters or placement agents, legal fees and
expenses, costs of printing and engraving, and recording and filing fees
and costs of title insurance, if any; and
(vii) any sums required to reimburse the Company for advances made by
the Company for any of the above items or for
I-4
<PAGE>
any other costs incurred which are properly chargeable to the Project.
"Cumulative Combined Net Income" for any specified period means the sum of
Combined Net Income for each of such periods (subtracting Combined Net Income
for any period in which it is negative, as appropriate).
"Date of Issue" or "Issue Date" shall have the meaning set forth in the Tax
Certificate.
"Debt Service" means, for any Bond Year, the scheduled amount of interest
and amortization of principal payable for that Bond Year with respect to the
Bonds; provided, however, that in determining Debt Service for any Bond Year,
there shall not be taken into account amounts scheduled with respect to any
Bonds (or portion thereof) that have been retired before the beginning of the
Bond Year. The determination of Debt Service on the Bonds shall be made on the
first day of each Bond Year in the manner provided in Section 148(d) of the Code
and the regulations promulgated thereunder.
"Default" means any Default under this Agreement as specified in and
defined by Section 9.1 hereof.
"Distribution Fund" shall have the meaning set forth in Section 2.4(f)
hereof.
"ERISA" means the federal Employee Retirement Income Security Act of 1974,
as amended, and the rules and regulations thereunder.
"Event of Cancellation" means any Event of Cancellation as defined in
Section 9.3(A) hereof.
"Excess Amount" means, as of any payment date, the amount in the Bond Fund
on such date in excess of the amount required for the payment of principal,
accrued interest and premium, if any, on the Bonds due on such date.
"Fiscal Year" means January 1 through December 31.
"Gross Proceeds" shall have the meaning set forth in the Tax Certificate.
"Guarantor" means any of B.H. Sobelman & Co., Inc., Refrigerated
Distribution Center, Inc., Oregon Avenue Enterprises, Incorporated, Holt Cargo
Systems, Inc., The Riverfront Development Corp., CRT, Inc., Triple Seven Ice,
Inc., Pattison Avenue Warehousing Corp., Refrigerated Enterprises, Inc., 777
Pattison Ave., Inc., Dockside International Fish Co., Inc. and Murphy Marine
I-5
<PAGE>
Services, Inc. and any other Person required to be a guarantor under the
Guaranty.
"Guaranty" means the Series J Guaranty Agreement dated as of June 1, 1995
among the Guarantors and the Trustee, and any amendments or supplements thereto.
"Indebtedness" means, for any Person, (i) all indebtedness of such Person
for borrowed money or for the deferred purchase price of property, (ii) all
direct or indirect guaranties of such Person in respect of and all obligations
or undertakings (contingent or otherwise) of such Person to purchase or
otherwise acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness of any other Person for borrowed money or for the deferred purchase
price of property and (iii) all other obligations, contingent or otherwise,
which in accordance with generally accepted accounting principles consistently
applied shall be classified upon the obligor's balance sheet as liabilities,
including liabilities secured by any lien on any property owned or acquired by
the obligor or a Subsidiary thereof, whether or not the liabilities secured
thereby shall have been assumed, capitalized leases and all guaranties,
endorsements and other contingent obligations. For purposes of determining the
amount of Indebtedness of a Person, the total amount of Indebtedness of another
Person as to which such Person is obligated described in clause (ii) or (iii)
above, or the total possible payments which such Person may become obligated to
make in respect of a contingent liability, shall be considered Indebtedness of
such Person.
"Indemnified Party" shall have the meaning set forth in Section 8.2(b).
"Indenture" means the Series J Indenture of Trust dated as of June 1, 1995
between the Issuer and the Trustee, pursuant to which the Bonds are authorized
to be issued, and any amendments and supplements thereto.
"Initial Temporary Period" shall have the meaning set forth in the Tax
Certificate.
"Issuer" means the New Jersey Economic Development Authority, a public body
corporate and politic constituting an instrumentality of the State, exercising
governmental functions and any body, board, authority, agency or political
subdivision or other instrumentality of the State which shall hereafter succeed
to the powers, duties and functions thereof.
"Issuer Representative" means such person or persons at the time designated
by the Issuer to act on its behalf.
"Liens" means any mortgages, pledges, liens or other charges or
encumbrances of any kind (including the charge upon
I-6
<PAGE>
property purchased under conditional sale or other title retention agreements)
upon, or any security interest in, any property, real or personal, tangible or
intangible.
"Loan" means the Series J loan in the aggregate principal amount of
$5,000,000 made by the Issuer, as lender, from the proceeds of the sale of the
Series J Bonds, to the Company, as borrower, to provide funds for the refunding
of the Series I Bonds, all in accordance with the terms of this Agreement.
"Loan Documents" means any or all of this Agreement, the Indenture, the
Bond Placement Agreement, the Mortgage, the Guaranty, the Assignment and all
documents, certificates and instruments executed in connection therewith.
"Moody's" means Moody's Investors Service, Inc.
"Mortgage" means the Series J Mortgage and Security Agreement dated as of
June 1, 1995 from the Company to the Trustee under which the Company grants to
the Trustee a mortgage lien on and a security interest in the Project Facility
to secure payment of the Company's obligations contained in Section 4.2(a)
hereof, and any amendments and supplements thereto.
"Net Proceeds," when used with respect to any insurance proceeds or any
condemnation award, means the amount remaining after deducting all expenses
(including attorneys' fees and disbursements) incurred in the collection of such
proceeds or award from the gross proceeds thereof.
"1954 Code" means the Internal Revenue Code of 1954, as in effect on the
day prior to the effective date of the Code.
"Nonpurpose Obligation" shall have the meaning set forth in the Tax
Certificate.
"Owner" means the person or persons in whose name or names a Bond shall be
registered on the books of the Issuer kept for that purpose in accordance with
the provisions of the Indenture.
"Permitted Encumbrances" means, as of any particular time, (i) those items
shown in Exhibit C hereto, and (ii) any Indebtedness secured by a Lien on the
Project Facility hereafter incurred by the Company or any of its Subsidiaries
and Affiliates in accordance with the provisions of this Agreement.
"Person" or "Persons" means any one or more individuals, corporations,
partnerships, joint ventures, trusts, unincorporated organizations, limited
liability companies, governmental agencies or political subdivisions.
I-7
<PAGE>
"Plans" shall have the meaning set forth in Section 2.2(h) hereof.
"Placement Agent" means PaineWebber Incorporated and its successors and
assigns.
"Placement Memorandum" means the placement memorandum distributed in
connection with the placement of the Bonds.
"Prime Rate" means a fluctuating interest rate per annum equal to the rate
published in The Wall Street Journal from time to time as the prime lending
rate; any change in the Prime Rate shall be effective on the date such change is
published in The Wall Street Journal.
"Private Activity Bond" means a private activity bond as defined in Section
141 of the Code.
"Project" means the acquisition and filling of approximately 18.6 acres of
tidewater property (including the cost of off-site mitigation required by
environmental permits), the renovation of an existing building of approximately
36,500 square feet into a refrigerated warehouse and certain additional building
renovations, the performance of certain site improvements, including the
renovation of a collapsed pier, the construction of two marginal piers and
certain paving, grading and filling costs, and the purchase and installation of
machinery and equipment, including container cranes, bulldozers, forklift trucks
and other peripheral equipment for use in the loading and unloading of
ocean-going vessels, all part of a public port facility and property
functionally related and subordinate thereto, all to be located in the Project
Municipality.
"Project Facility" means the marine terminal complex, consisting of land
and improvements existing or to be constructed thereon, and all fixtures and
other personalty affixed thereto, which is or will be owned by the Company and
located in the Project Municipality, the location of which is more fully
described in Exhibit A annexed hereto, including any additions, substitutions
and replacements which have been or will be acquired and constructed thereon.
"Project Fund" means the fund so designated which is established and
created pursuant to Section 5.05 of the Indenture.
"Project Municipality" means the City of Gloucester City, County of Camden,
New Jersey.
"Purchaser" means the purchaser or purchasers of the Series J Bonds, and
their successors and assigns.
I-8
<PAGE>
"Rebate Fund" means the fund so designated which is established pursuant to
Section 5.12 of the Indenture.
"Rebate Requirement" shall have the meaning set forth in the Tax
Certificate.
"Related Party" means the Company, any Subsidiary or Affiliate, any Person
controlling the Company or Affiliate and any director or employee of the
Company, any Subsidiary, or any Affiliate.
"Related Person" means a related person within the meaning of Section
103(b)(6)(C) of the 1954 Code.
"Requisition" means a written request for a disbursement from the Project
Fund or the separate trust fund described in Section 6.2 hereof, as the case may
be, signed by a Company Representative, substantially in the form attached
hereto as Exhibit B and satisfactorily completed as contemplated by said form.
"Restricted Payment" means:
(i) The declaration of any dividend on, or the incurrence of any
liability to make any other payment or distribution in respect of, any
shares of the Company, its Subsidiaries or Affiliates (other than one
payable solely in its common shares);
(ii) Any payment or distribution on an account of the purchase,
redemption or other retirement of any shares of the Company, its
Subsidiaries or Affiliates or of any warrant, option or other right to
acquire such shares, or any other payment or distribution made in respect
thereof, either directly or indirectly, except any payment or distribution
on account of (A) the principal of and prepayment charge, if any, on
convertible debt, or (B) the purchase, redemption or other retirement of
shares of the Company, its Subsidiaries or Affiliates in exchange for, or
out of the net cash proceeds received by the Company, its Subsidiaries or
Affiliates from a substantially concurrent sale of, other shares of the
Company, its Subsidiaries or Affiliates; and
(iii) Any payment or distribution on account of the principal and
prepayment charge, if any, with respect to subordinated debt of the
Company, its Subsidiaries or Affiliates other than mandatory sinking fund
or other retirement payments required by the terms thereof, and other than
any working capital line of credit secured by a mortgage.
I-9
<PAGE>
The amount of a Restricted Payment in property shall be deemed to be the
greater of its fair market value (as determined by an independent recognized
appraiser) or its net book value.
"Security Ratio" means at any time the value of the property subject to the
lien of the Mortgage, as such value is determined by an appraisal required by
Section 2.4(k) hereof, divided by the sum of (i) the amount (including interest
which has accrued and is being deferred) of Senior Indebtedness, plus (ii) the
amount of the Bonds outstanding, plus (iii) the amount (including interest which
has accrued and is being deferred) of the Indebtedness outstanding to the City
of Gloucester City secured by the mortgages described in Exhibit C hereto.
"Senior Indebtedness" shall have the meaning set forth in Section 2.4(k)
hereof.
"Series I Bonds" means one or more of the Variable/Fixed Rate Economic
Development Bonds (Holt Hauling and Warehousing System, Inc.--1983 Project)
1993 Series I of the Issuer in the aggregate principal amount of $5,000,000
which were issued on November 10, 1993, and are being refunded with the
proceeds of the Series J Bonds.
"S & P" means Standard & Poor's Ratings Group.
"State" means the State of New Jersey.
"Subsidiary" means any entity of which at least a majority of the
outstanding stock having by the terms thereof ordinary voting power to elect a
majority of the board of directors of such corporation (irrespective of whether
or not at the time stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any contingencies)
is at the time directly or indirectly owned or controlled by the Company or one
or more of its subsidiaries.
"Substantial User" means a substantial user within the meaning of Section
103(b)(13) of the 1954 Code or Section 147(a) of the Code.
"Tax Certificate" means the Certificate as to Arbitrage and Compliance with
the Internal Revenue Code of 1986 executed and delivered by the Company and the
Issuer on the Date of Issue.
"Taxes" shall have the meaning set forth in Section 5.3 hereof.
"Term of Agreement" means the term of this Agreement as specified in
Section 11.1 hereof.
I-10
<PAGE>
"Trustee" means The Bank of New York (NJ), a national banking association,
and its successors and any corporation resulting from or surviving any
consolidation or merger to which it or its successors may be a party and any
successor trustee at the time serving as successor trustee under the Indenture.
"Principal Office" of the Trustee means the address specified in Section 12.04
of the Indenture or such other address as may be designated in writing to the
Issuer and the Company.
"Uniform Commercial Code" means the Uniform Commercial Code, Title 12A of
the New Jersey Statutes, as enacted and in force and effect in the State.
"Yield" shall have the meaning set forth in the Tax Certificate.
Section 1.2. Interpretation and Construction. In this Loan Agreement,
unless the context otherwise requires:
(1) Articles and Sections mentioned by number only are the respective
Articles and Sections of this Loan Agreement so numbered as originally executed;
(2) Words importing a particular gender mean and include every other
gender, words importing the singular number mean and include the plural
number and vice versa;
(3) Words importing persons mean and include firms, associations,
partnerships (including limited partnerships), societies, trusts, public or
private corporations or other legal entities, including public or governmental
bodies, as well as natural persons;
(4) Any headings preceding the texts of the several Articles and Sections
of this Loan Agreement, and any table of contents or marginal notes appended to
copies hereof, shall be solely for convenience of reference and shall not
constitute a part of this Loan Agreement, nor shall they affect its meaning,
construction or effect;
(5) If any clause, provision or section of this Loan Agreement or the
application thereof to any circumstance shall be ruled invalid or unenforceable
by any court of competent jurisdiction, such holding shall not invalidate or
render unenforceable any of the remaining provisions hereof or the application
of such clause, provision or section to circumstances other than those as to
which it is held invalid or unenforceable.
I-11
<PAGE>
(6) References herein to the Issuer, the Trustee, the Company and the
Purchaser shall include their respective successors and assigns.
[END OF ARTICLE I]
I-12
<PAGE>
ARTICLE II
REPRESENTATIONS, COVENANTS AND WARRANTIES
Section 2.1. Representations and Covenants of the Issuer. (a) The
Issuer represents and covenants that:
(1) The Issuer is a public body corporate and politic constituting an
instrumentality of the State duly organized and existing under the laws of the
State. Under the provisions of the Act, the Issuer is authorized to enter into
the transactions contemplated by this Loan Agreement and the Indenture and to
carry out its obligations hereunder and thereunder. The Issuer has been duly
authorized to execute and deliver this Agreement and the Indenture.
(2) The Issuer covenants that it will not pledge the amounts derived
from this Loan Agreement other than as contemplated by the Indenture.
(b) All covenants, stipulations, promises, agreements and obligations
of the Issuer set forth herein shall be deemed to be the covenants,
stipulations, promises, agreements and obligations of the Issuer and not of any
member, officer or employee of the Issuer in his or her individual capacity,
and no recourse shall be had for the payment of the principal or redemption
price of or interest on the Bonds or for any claim based thereon or hereunder
against any member, officer or employee of the Issuer or any person executing
the Bonds.
Section 2. 2. Representations and Warranties of the Company. The
Company represents and warrants that:
(a) Corporate Status. The Company and each of its Subsidiaries and
Affiliates is a duly organized and validly existing corporation in good standing
under the laws of the state of its incorporation. The Company and each of its
Subsidiaries and Affiliates are duly qualified or licensed as foreign
corporations in good standing in every jurisdiction in which the nature of the
respective businesses conducted makes such qualification or licensing necessary.
The Company has no Subsidiary or Affiliate other than as listed in the
definition of the term "Affiliate" set forth in Article I hereof.
(b) Corporate Power and Authority. The Company has the corporate power
and authority to own its property and assets and to transact the business in
which it is engaged or presently proposes to engage. The Company is not in
violation of any provision of its Certificate of Incorporation, as amended. The
Company and each of its Subsidiaries and Affiliates has the corporate power and
authority to execute, deliver, perform its obligations under, and
II-1
<PAGE>
consummate the transactions contemplated by this Agreement and the other Loan
Documents to which each is a party; and has taken all necessary corporate action
(including, without limitation, any consent of stockholders required by law or
by its charter or by-laws) to authorize the execution and delivery of this
Agreement and each of the other Loan Documents to which each is a party. This
Agreement and the Loan Documents to which the Company and its Subsidiaries and
Affiliates are parties each constitutes the legal, valid, and binding
obligations of the Company and its Subsidiaries and Affiliates, as applicable,
enforceable in accordance with their terms subject to applicable bankruptcy,
insolvency, or other similar laws relating to creditors' rights generally.
(c) No Litigation. There is no action, suit, proceeding, inquiry, or
investigation pending or, to the knowledge of the Company, threatened against or
affecting the Company, its officers, or any Subsidiary or Affiliate, or any of
their respective properties, by or before any court, arbitrator or governmental,
administrative, or public body or agency, nor to the best knowledge of the
Company is there any basis therefor, which might result in any material adverse
change in the operations, business, property, or assets or in the condition
(financial or otherwise) of the Company and its Subsidiaries and Affiliates or
which involves the possibility of materially adversely affecting the ability of
the Company or any of its Subsidiaries or Affiliates to comply with this
Agreement or any of the other Loan Documents to which the Company or any of its
Subsidiaries or Affiliates is a party, or which would adversely affect, in any
way, the validity or enforceability of the Bonds, this Agreement, any of the
Loan Documents to which the Company or any of its Subsidiaries or Affiliates is
a party, or any agreement or instrument to which the Company is a party, used or
contemplated for use in the consummation of the transactions contemplated
hereby. The Company is not, nor to the knowledge of the Company are any of its
Subsidiaries or Affiliates, in default in any material respect with respect to
any judgment, order, writ, injunction, decree, rule or regulation of any
governmental instrumentality or agency.
(d) No Violation. (i) Neither the execution and delivery of this
Agreement or the Loan Documents, nor the consummation of any of the
transactions herein or therein contemplated, nor the fulfillment of or
compliance with the terms and provisions hereof or thereof, will contravene any
provision of any law, statute, rule or regulation to which the Company or any of
its Subsidiaries or Affiliates is subject or any judgment, decree, license,
order, or permit applicable to the Company or any of its Subsidiaries or
Affiliates, or will conflict or be inconsistent with, or will result in any
breach of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of any Lien,
security interest, charge or encumbrance whatsoever upon any of the property or
assets of the Company or its Subsidiaries or Affiliates pursuant to
II-2
<PAGE>
the terms of any indenture, mortgage, deed of trust, agreement, or other
instrument to which the Company or any of its Subsidiaries or Affiliates is a
party or by which any of them may be bound, or to which any of them may be
subject, or violate any provision of the charter or by-laws of the Company or
any of its Subsidiaries or Affiliates.
(ii) Neither the Company nor any of its Affiliates or Subsidiaries
is a party to any contract or agreement or subject to any charter or other
corporate restriction which materially and adversely affects its business,
property, assets or financial condition. Neither the Company nor any Subsidiary
or Affiliate is a party to, or otherwise subject to any provision contained in,
any instrument evidencing Indebtedness of the Company or such Subsidiary or
Affiliate, any agreement relating thereto, or any other contract or agreement
(including its charter) which restricts or otherwise limits the incurring of the
Indebtedness to be represented by this Agreement and the other Loan Documents.
(e) Governmental Approval. No consent or approval of, or filing with,
or exemption by, any governmental or public body or authority is required to
authorize, or is required in connection with the execution, delivery, and
performance of, this Agreement, any of the other Loan Documents, or of any of
the instruments or agreements herein or therein referred to, or the taking of
any action hereby or thereby contemplated. The Company and its Subsidiaries and
Affiliates and the Project Facility are in compliance in all material respects
with all applicable requirements of all federal, state, regional and local laws
and with rules and regulations of federal, state, regional and local
governmental and regulatory bodies. Without limiting the foregoing, the Company
and its Subsidiaries and Affiliates and the Project and Project Facility are in
compliance with all applicable environmental laws, including without limitation
the permits, licenses and approvals issued by the U.S. Army Corps of Engineers
pursuant to the Federal Clean Water Act and the Federal River and Harbors Act
and by the New Jersey Department of Environmental Affairs for waterfront
development, stream encroachment and the grant of riparian rights.
(f) Margin Regulations. Neither the Company nor any of its Subsidiaries
or affiliates is engaged principally in, or as one of its important activities
is involved in, the business of extending credit for the purpose of purchasing
or carrying any Margin Stock (as defined in 12 C.F.R. 221.3(v) or in any
successor provision thereto). The proceeds of the loans made pursuant to the
Loan Agreement will not be used in violation of Regulation U of the Board of
Governors of the Federal Reserve System as from time to time in effect or any
successor thereto.
(g) Financial Condition. The combined comparative balance sheet of the
Company, its Subsidiaries, and its combined
II-3
<PAGE>
Affiliates as at December 31, 1994, and the combined comparative statements of
income, changes in financial position and retained earnings of the Company, its
Subsidiaries, and its Affiliates for the fiscal year ending on said date, all
certified by BDO Seidman, all of which have heretofore been furnished to the
Purchaser, fairly reflect the combined comparative financial condition of the
Company, its Subsidiaries and its Affiliates at the respective dates thereof,
and the results of the operations of the Company, its Subsidiaries, and its
Affiliates for the periods covered thereby. The financial statements included in
the Placement Memorandum (including any related schedules or notes) are true and
correct in all material respects (subject, as to interim statements, to changes
resulting from audits and year-end adjustments) and have been prepared in
conformity with generally accepted accounting principles applied on a consistent
basis throughout the periods involved and show all liabilities, direct and
contingent, of the Company and its consolidated Subsidiaries and Affiliates
required to be shown in accordance with such principles. Since December 31, 1994
there has been no material adverse change in the combined financial condition of
the Company, its Subsidiaries, and its Affiliates from that shown by the balance
sheet as at that date.
(h) Compliance with ERISA. The pension or other employee benefit plans
which are established or maintained by the Company and each of its Subsidiaries
and Affiliates (the "Plans") are in substantial compliance with ERISA; no Plan
is insolvent or in reorganization; no plan has an accumulated or waived funding
deficiency within the meaning of Section 412 of the Code; neither the Company
nor any of its Subsidiaries or Affiliates, nor any ERISA Affiliate, has incurred
any material liability (including any material contingent liability) to or on
account of a Plan pursuant to Section 4062, 4063, 4064, 4201, or 4204 of ERISA
or expects to incur any liability under any of the foregoing Sections on account
of the termination of participation in or contributions to any such Plan; no
proceedings have been instituted to terminate any Plan; no condition exists
which presents a material risk to the Company, any Subsidiary, or any Affiliate,
respectively, of incurring a liability to or on account of a Plan pursuant to
any of the foregoing Sections of ERISA; and no lien imposed under the Code or
ERISA on the assets of the Company or any Affiliate or Subsidiary exists or is
likely to arise on account of any Plan.
(i) Title to Property. To the best of the Company's knowledge, the
Company and its Subsidiaries and Affiliates have good and marketable title to
all their respective properties and assets (i) reflected on the latest combined
balance sheet referred to in Section 2.2(g) and (ii) comprising the Project
Facility (as defined in the Indenture) and the property subject to the Mortgage,
and all such properties and assets are free and clear of Liens, except (A) Liens
disclosed on such balance sheet, (B) materialmen's and mechanic's Liens which do
not materially detract from the value
II-4
<PAGE>
or interfere with the present or anticipated business use of the properties
subject thereto, and (C) those Permitted Encumbrances described on Exhibit C
annexed hereto. To the best of the Company's knowledge, upon execution and
delivery of this Agreement and the documents contemplated hereby and upon any
filings or recordings made in connection therewith, the Mortgage will be a valid
lien on the Project Facility subject and subordinate only to Permitted
Encumbrances.
(j) Tax Returns. All tax returns and tax reports of the Company and
each of its former and present Subsidiaries and Affiliates required by law to be
filed have been duly filed, and all taxes, assessments, and other governmental
charges or levies (other than those presently payable without penalty and those
currently being contested in good faith for which adequate reserves have been
established) upon the Company or any of its former or present Subsidiaries and
Affiliates (or any of their properties) which are due and payable have been paid
in full. The charges, accruals and reserves on the books of the Company and its
affiliates in respect of federal income tax for all periods are adequate in the
opinion of the Company.
(k) Disclosure. There is no fact known to the Company which materially
adversely affects or in the future may (so far as the Company can now foresee)
materially adversely affect the business, property, assets, or financial
condition of the Company or any of its Subsidiaries or Affiliates which has not
been set forth in the Loan Documents.
(1) The Project. The Project is included within the definition of a
"project" in the Act and the Company will operate or cause the Project to be
operated as a "project" under the Act.
(m) [Intentionally omitted]
(n) Compliance with Laws. The Company will cause the Project and the
Project Facility to be operated in accordance with the laws, rulings,
regulations, and ordinances of federal and state governmental bodies and the
departments, agencies and political subdivisions thereof. The Company has
obtained or caused to be obtained all requisite approvals or permits or licenses
of the State and of other federal, state, regional and local governmental bodies
for the acquisition, construction, improving, and equipping of the Project and
the operation of the Project Facility, and will obtain or cause to be obtained
any such approvals, permits or licenses as may be required in the future from
time to time.
(o) Information in Application Accurate. All information and data
contained in the Application relating to the Company were true, correct, and
complete in all material respects as of the date thereof. Aside from financial
information relating to the Company, which information has not been updated
since the date of
II-5
<PAGE>
submission of the Application, no information has been omitted therefrom which
would make the Application misleading in any material respect, and the
Application does not contain any untrue statement of a material fact and does
not omit to state a material fact necessary in order to make the statements
contained therein not misleading or incomplete.
(p) Inducement. The availability of financial assistance from the
Issuer as provided for herein was an important inducement to the Company to
undertake the Project and to locate the Project in the State.
(q) No Untrue Statements. The representations, statements, and
warranties of the Company set forth in the Application, this Agreement, or any
other Loan Document (1) are true, correct, and complete in all material
respects, (2) do not contain any untrue statement of a material fact, and (3) do
not omit to state a material fact necessary in order to make the statements
contained herein or therein not misleading or incomplete. The Company
understands that all such statements, representations, and warranties have been
relied upon as an inducement by the Issuer to make the Loan and the Purchaser to
purchase the Bonds.
(r) Brokerage Commissions. Except for a placement fee payable to the
Placement Agent, no Person is entitled to receive from the Company or any other
Person any brokerage commission, finder's fee, or similar fee or payment in
connection with the consummation of the transactions contemplated by this
Agreement.
(s) Commencement of Project. Except as otherwise disclosed in the
Application, the Project commenced subsequent to May 24, 1983, the date upon
which the Issuer adopted a resolution preliminarily approving the Project, and
prior to such date neither the Company nor any Related Person commenced or
caused to be commenced any off-site production or entered into an agreement
binding the Company or any Related Person to proceed with the Project.
(t) Prevailing Wages and Affirmative Action. The Company is fully
familiar with the Issuer's Prevailing Wage Regulations and Affirmative Action
Program and has submitted to the Issuer all reports and certificates required to
date pursuant to the Prevailing Wage Regulations and Affirmative Action Program.
Section 2.3. [Intentionally Omitted]
Section 2.4. Covenants of the Company. The Company agrees that, so long
as any of the Bonds are outstanding or any amounts are due under this Agreement
or under any of the Loan Documents, it shall comply and shall cause each of its
Subsidiaries and Affiliates to comply with the following provisions:
II-6
<PAGE>
(a) Compliance with Agreement. The Company shall observe and perform
all of its obligations under this Agreement and the Loan Documents to which it
is a party. The Company shall fully and faithfully perform all the duties and
obligations which the Issuer has covenanted and agreed in the Indenture to cause
the Company to perform and any duties and obligations which the Company is
required in the Indenture to perform.
(b) Notice of Default, Litigation, Etc. (i) The Company shall furnish
to the Trustee as soon as possible and in any event within five (5) Business
Days after the discovery by any executive officer of the Company of any Default,
a certificate setting forth the details of such Default, and the action which
the Company proposes to take with respect thereto.
(ii) The Company shall give prompt notice to the Trustee of any
litigation or governmental proceeding pending, involving or, to its knowledge,
threatened against the Company, any Subsidiary or any Affiliate which (A)
involves an uninsured claim or the uninsured portion or deductible of an insured
claim which is over $500,000 or (B) if adversely determined, would have a
material adverse effect on the business or financial condition of the Company,
any Subsidiary, or any Affiliate.
(c) Corporate Existence. The Company covenants that it shall maintain
its corporate existence in good standing under the laws of the Commonwealth of
Pennsylvania, shall cause each of its Subsidiaries and Affiliates to maintain
its corporate existence in good standing under the laws of its respective
jurisdiction of incorporation, and shall maintain, in each jurisdiction where
material to the business of the Company or any of its Subsidiaries and
Affiliates or the maintenance of the Collateral, its and each of their right to
transact business in each jurisdiction in which the nature of its or their
business or the character of the properties which it or they own or lease
requires qualification as a foreign corporation and where failure to so qualify
would permanently preclude the Company or any of its Subsidiaries or Affiliates,
as the case may be, from enforcing its rights with respect to its assets. No
Subsidiary or Affiliate shall be incorporated in any jurisdiction if in the
opinion of the Trustee the laws of such jurisdiction would restrict or otherwise
adversely affect the ability of such Subsidiary or Affiliate to perform its
obligations under the Guaranty. The Company and each Subsidiary and Affiliate
will comply in all material respects with all applicable laws, ordinances,
rules, regulations, and requirements of governmental authorities, except where
the necessity of compliance therewith is contested in good faith by appropriate
proceedings and the effect of non compliance during such contest will not have a
material adverse effect upon the business, properties, or condition, financial
or otherwise, of the Company or any Subsidiary or Affiliate or result in the
imposition of any Lien on the properties of any of them (unless the enforcement
of any
II-7
<PAGE>
such Lien has been and continues to be effectively stayed). The Company will and
will cause its Subsidiaries and Affiliates to preserve and keep in full force
and effect all rights, licenses, registrations, and franchises necessary (i) to
the proper conduct of their business or affairs and (ii) to continue to operate
their business as presently operated.
(d) Acquisition, Merger or Consolidation; Sale of Substantially All
Assets. Neither the Company nor any Subsidiary or Affiliate shall sell, lease,
assign, transfer, or otherwise dispose of any assets from and after the date
hereof (i) for less than fair market value or (ii) if the total of the net book
value of all assets sold, leased, or otherwise assigned or disposed of from and
after the date hereof exceeds 25% of total combined assets of the Company and
all of its Subsidiaries and Affiliates, as the case may be. The Company shall
not permit in any event any such event to occur unless the Company has complied
with the provisions of Section 8.1. In addition, in the event of any sale of any
property subject to the lien of the Mortgage or any part thereof, the Company
shall make or set aside in trust for prepayments or payments of Senior
Indebtedness, or if no such Indebtedness is outstanding, the Bonds and any
Indebtedness on a parity with the Bonds incurred in compliance with Section
2.4(h) of this Agreement, in an amount equal to the greater of (x) the
sales price of such property sold or (y) 60% of the appraised fair market value
thereof. Notwithstanding the foregoing, neither the Company nor any Subsidiary
or Affiliate shall sell, lease, or otherwise transfer or dispose of any asset
if, after giving effect to such sale, lease, or other transfer or disposition,
there shall exist any Default.
Neither the Company nor any Subsidiary or Affiliate shall merge or
consolidate with or into or acquire all or substantially all of the assets of
any other Person, provided that the Company or any Subsidiary or Affiliate may
merge or consolidate with or into or acquire all or substantially all of such
assets of another corporation (i) if the acquiring corporation is the Company or
a corporation duly organized in good standing under the laws of a State of the
United States, (ii) if each of the representations and warranties set forth in
paragraphs (a) through (f), inclusive, (h), (i), (j), and (n) of Section 2.2
of this Agreement remains true and correct immediately after giving effect to
such merger, consolidation or asset acquisition, (iii) if the surviving
corporation is not the Company, the surviving corporation expressly assumes all
of the covenants and obligations of its predecessor under this Agreement and
each of the Loan Documents and otherwise in respect of the Bonds, (iv) the
Company or the surviving corporation could immediately after giving effect to
the transaction, incur at least $1.00 of Indebtedness pursuant to Section 2.4(h)
hereof, (v) if the surviving corporation has rated debt securities, such debt
securities are rated by a nationally recognized credit rating agency and such
rating is investment grade
II-8
<PAGE>
or better (e.g., if by S & P, "BBB" or better and if by Moody's, "Baa" or
better), and (vi) the Trustee shall have received an opinion of Bond Counsel to
the effect that such merger, consolidation or acquisition of assets will not
adversely affect the exemption of interest on the Series J Bonds from federal
income taxation, a certificate of the Chief Financial Officer stating that none
of the covenants contained in this Agreement will be violated as a result of
such merger, consolidation or acquisition of assets, and such other agreements,
certificates, opinions, and documents as the Trustee shall have reasonably
requested. Notwithstanding the foregoing, any such transaction must comply in
all respects with the conditions of Section 8.1.
The Company agrees to notify the Purchaser of its intent to merge,
consolidate or acquire assets pursuant to this paragraph at least 10 days prior
to entering into any binding agreements with respect to such acquisition.
Notwithstanding the foregoing, the Company shall have the right at any
time and from time to time to (i) merge or consolidate any Subsidiary or
Affiliate with or into it (provided the Company is the surviving corporation) or
with or into any other Subsidiary or Affiliate, or (ii) acquire substantially
all of the assets, or cause any other Subsidiary or Affiliate to acquire
substantially all of the assets, of any Subsidiary or Affiliate (other than the
Company), without regard to the provisions of the immediately preceding
paragraph of this Section 2.4(d), but subject to the provisions of Section 8.1.
(e) Financial Statements; Inspections. (i) The Company shall deliver to
the Trustee and the Purchaser (A) as soon as available but in any event within
120 days after the end of each Fiscal Year a combined and combining comparative
statement of income, reconciliation of capital accounts and related balance
sheets for the Company, its Subsidiaries and its Affiliates for such year
prepared in conformity with generally accepted accounting principles
consistently applied and in reasonable detail (such combined statements to be
audited and certified by an accounting firm with an unqualified opinion and such
combining statements to be unaudited and certified by the Chief Financial
Officer, (B) as soon as available but in any event within 60 days after the end
of each of the first three fiscal quarters of each Fiscal Year, a combined
comparative statement of income, reconciliation of capital accounts, and related
balance sheet for such quarter and for the period from the beginning of the then
fiscal year to the end of such quarter, prepared in accordance with generally
accepted accounting principles consistently applied (subject to year-end
adjustments) and in reasonable detail (all of which shall be unaudited and
certified by the Chief Financial Officer, whose certificate shall be
satisfactory to the Trustee) for the Company, its Subsidiaries, and its
Affiliates, (C) upon request, copies of all such regular or periodic reports,
which are available for
II-9
<PAGE>
public inspection, which the Company may be required to file with any federal or
state department, bureau, commission, or agency, (D) such other financial data
as the Trustee may reasonably request and which is reasonably available to the
Company, and (E) copies of any statements, notices, certificates, and other
information required to be furnished to the Issuer under this Agreement,
including without limitation Section 7.9 hereof, on the date such information is
required to be so furnished. In addition, the Company shall deliver within 90
days after the end of each of the first three fiscal quarters of each Fiscal
Year combining statements for any such reporting period during which the
Company's investment in any Subsidiary or Affiliate shall account for 15% or
more of Combined Tangible Net Worth or 15% or more of combined sales and
revenues, such combining statements to be unaudited and certified by the Chief
Financial Officer. All financial statements specified in clauses (A) and (B)
above shall be furnished in combined comparative form for the Company, its
Subsidiaries, and its Affiliates with comparative figures for the corresponding
period in the preceding year, and shall be accompanied by a certificate signed
by the Chief Financial Officer, with appropriate documentation substantiating
all financial calculations, stating that there exists no Default or, if any such
Default exists, stating the nature thereof and what action the Company proposes
to take with respect thereto.
(ii) The Company shall permit, and shall cause each of its
Subsidiaries and Affiliates to permit, any Person designated by the Issuer, the
Trustee or the Purchaser, at their own expense, to visit and inspect the
properties of the Company and each of its Subsidiaries and Affiliates and to
examine the books and records, including financial records of the Company, its
Subsidiaries and Affiliates, and make copies or extracts thereof, and to discuss
the affairs, finances, and accounts of the Company, its Subsidiaries and
Affiliates, with its and their officers, at such reasonable times as the Issuer
or the Trustee may reasonably request.
(f) Restricted Payments. Neither the Company nor any of its
Subsidiaries or Affiliates shall make any Restricted Payment or set aside any
funds therefor unless, after giving effect thereto, the aggregate of such
Restricted Payments for all such purposes subsequent to the Closing Date would
not exceed the sum (as in effect from time to time, hereinafter referred to as
the "Distribution Fund") of (i) 50% of the Company's Cumulative Combined Net
Income subsequent to December 31, 1991 so long as the Company's Combined
Tangible Net Worth is greater than $31,051,000, (ii) the aggregate of the net
cash proceeds received by the Company from any issuance or sale of capital
shares of the Company subsequent to the Closing Date, and (iii) the aggregate of
the net cash proceeds received by the Company from any issuance of any
Indebtedness of the Company which has been converted into capital shares of the
Company subsequent to the Closing Date, which amount shall be added to the
Distribution Fund only after such conversion.
II-10
<PAGE>
Notwithstanding the foregoing, the Company may acquire its own capital shares
for an aggregate amount from and after the Closing date equal to the greater of
(x) the sum of (i) 25% of the Cumulative Combined Net Income of the Company
subsequent to December 31, 1991, plus (ii) $500,000, or (y) the amount then
available under the Distribution Fund, which amount shall be charged to the
Distribution Fund. No Restricted Payment may be made in other than cash or
securities which are actively traded on a nationally recognized public market
and have a readily ascertainable market value (which value shall be the amount
of such Restricted Payment), unless the Company shall have received a report
from an independent recognized appraiser as to the fair value of the property to
be distributed or transferred, in which case the amount of such Restricted
Payment shall be deemed to be the greater of its fair value (as determined by
such appraiser) or its net book value on the books of the Company.
Notwithstanding any of the foregoing provisions of this paragraph, neither the
Company nor any Subsidiary or Affiliate shall make any Restricted Payment if at
the time or after giving effect thereto, there shall exist any Default.
(g) Maintenance of Combined Tangible Net Worth. The Company shall at
all times maintain a Combined Tangible Net Worth of (i) not less than
$31,051,000, plus 50% of the Company's Aggregate Combined Net Income at the end
of each fiscal year subsequent to the fiscal year ending December 31, 1991 and
(ii) not less than 25% of Combined Long Term Indebtedness but in no event less
than $31,051,000.
(h) Limitation of Total Indebtedness. Neither the Company nor any of
its Subsidiaries or Affiliates shall incur additional Indebtedness if, at the
time such Indebtedness is incurred and after giving effect thereto and to any
concurrent reduction of Indebtedness, Combined Indebtedness would exceed 400% of
Combined Tangible Net Worth.
(i) Times Interest Earned. The ratio of (i) the Company's Combined Net
Income Before Interest and Taxes to (ii) the Company's Combined Interest Charges
calculated as of the end of each fiscal quarter beginning December 31, 1991 for
the period including such quarter and the immediately prior three fiscal
quarters, combined, will be at least 1.35 for each of said periods.
(j) Cash Flow. The Combined Cash Flow of the Company shall not be less
than $7,000,000 at the end of any Fiscal Year commencing January 1, 1991.
(k) Limitation on Primary Debt. After the date hereof, neither the
Company nor any Subsidiary or Affiliate shall incur additional Indebtedness
having a Lien on the Project Facility or any part thereof senior to any lien
securing the Series J Bonds or the obligations of the Company or any Subsidiary
or Affiliate under
II-11
<PAGE>
this Agreement or any of the Loan Documents. After the date hereof, neither the
Company nor any Subsidiary or Affiliate shall incur additional Indebtedness
having a Lien on the Project Facility or any part thereof of equal priority with
any lien securing the Series J Bonds or the obligations of the Company or any
Subsidiary or Affiliate under this Agreement or any of the Loan Documents (all
of such Indebtedness, together with any indebtedness incurred pursuant to the
preceding sentence whether now outstanding or hereafter incurred being referred
to as "Senior Indebtedness") if, at the time it is incurred and after giving
effect thereto, (i) the Security Ratio would be less than 2.2 to 1; provided
that no additional Senior Indebtedness (including interest which has accrued
and is being deferred) shall be incurred without providing to the Trustee an
appraisal performed not more than two years prior to such incurrence by an
independent appraiser of recognized standing of the value of the property
subject to the lien of the Mortgage; or (ii) if, at the time of or after giving
effect to the incurrence of such Indebtedness, there shall exist any Default.
Prior to the incurrence of any Senior Indebtedness by the Company or any
Subsidiary or Affiliate, the Company shall furnish to the Trustee a certificate
of the Chief Financial Officer demonstrating in reasonable detail compliance by
the Company and such Subsidiary or Affiliate with the provisions of this Section
2.4(k). In connection with the incurrence of Senior Indebtedness meeting the
requirements of this Section 2.4(k), the Trustee, at the written direction of
the Company, shall execute and deliver a subordination of the Mortgage or a
parity agreement with respect to the Mortgage, provided that no such agreement
shall amend or modify any provisions of the Mortgage, but only the priority
thereof.
(l) Investments in Subsidiaries and Affiliates, Etc. Neither the
Company nor any Subsidiary or Affiliate shall purchase any capital stock or
other security issued by, make any loan, advance, or extension of credit to,
purchase any of the business or integral part of the business of, or otherwise
make any investment in, any Subsidiary, Affiliate, or any other Person if,
immediately before or after giving effect thereto, there shall exist any
Default.
(m) Compliance with ERISA. The Company and each of its Subsidiaries and
Affiliates shall meet all minimum funding requirements applicable to any Plans
which are subject to ERISA or to Section 412 of the Code and will at all times
comply in all material respects with the provisions of ERISA and Section 412 of
the Code which are applicable to the Plans. Neither the Company nor any
Subsidiary or Affiliate will permit any event or condition to exist which would
permit any of the Plans which is not a multi-employer plan to be terminated
under circumstances which would cause the lien provided for in Section 4068 of
ERISA to attach to the assets of the Company or any Subsidiary or Affiliate.
Promptly after the occurrence of a "reportable event", as defined in Section
4043 of ERISA, or after the Company or a Subsidiary or Affiliate
II-12
<PAGE>
receives notice that the Pension Benefit Guarantee Corporation has instituted or
intends to institute termination proceedings with respect to any Plan, and prior
to the termination of any Plan by the administrator thereof, the Company shall
notify the Trustee and provide such documentation, data and other information
with respect thereto as the Trustee may reasonably request.
(n) Transactions with Related Parties. Neither the Company nor any
Subsidiary or Affiliate shall engage in or effect any transactions with any
Related Party (other than the Company) on a basis less favorable to the Company
or such Subsidiary or Affiliate, as the case may be, than would be the case if
such transaction had been effected with a Person which was not a Related Party.
[END OF ARTICLE II]
II-13
<PAGE>
ARTICLE III
ISSUANCE OF THE SERIES J BONDS
Section 3.1. Agreement to Issue the Series J Bonds: Application of
Series J Bond Proceeds. In order to provide funds to finance a portion of the
Cost of the Project, the Issuer, concurrently with the execution of this
Agreement, will issue, sell, and deliver the Series J Bonds. The Issuer will
deposit the net proceeds of the Series J Bonds with the Trustee to be applied to
refund the Series I Bonds.
Section 3.2. Disbursements from the Project Fund. The Issuer has, in
the Indenture, authorized and directed the Trustee to disburse the Series J Bond
proceeds on the Closing Date from the Series J Account within the Project Fund
to refund the Series I Bonds. The Trustee shall not make any disbursement from
the Project Fund until the Company shall have provided the Trustee with a
Requisition and the other documents required by Section 5.1 of this Agreement.
Section 3.3. Furnishing Documents to the Trustee. The Company agrees to
cause such Requisitions to be directed to the Trustee as may be necessary to
effect payments out of the Project Fund in accordance with Section 3.2 hereof.
Section 3.4. Special Arbitrage Certifications. The Issuer covenants not
to cause or direct any moneys on deposit in any fund or account to be used in a
manner which would cause the Bonds to be classified as "arbitrage bonds" within
the meaning of Section 148 of the Code, and the Company certifies and covenants
to and for the benefit of the Issuer and the Owners of the Bonds that so long as
there are any Bonds Outstanding, moneys on deposit in any fund or account in
connection with the transactions contemplated herein, whether such moneys were
derived from the proceeds of the sale of the Bonds or from any other sources,
will not be used in a manner which will cause the Bonds to be classified as
"arbitrage bonds" within the meaning of Section 148 of the Code.
[END OF ARTICLE III]
III-1
<PAGE>
ARTICLE IV
LOAN PROVISIONS
Section 4.1. Loan of Proceeds. The Issuer agrees, upon the terms and
conditions contained in this Agreement and the Indenture, to make a loan to the
Company in the principal amount of FIVE MILLION DOLLARS ($5,000,000), equal to
the proceeds received by the Issuer from the sale of the Series J Bonds. Such
proceeds shall be disbursed to or on behalf of the Company as provided in
Section 3.3 hereof.
Section 4.2. Amounts Payable.
(a) The Company hereby covenants and agrees to repay the Loan, as
follows: on or before the Business Day preceding any interest payment date for
the Series J Bonds or any other date that any payment of interest, premium, if
any, or principal is required to be made in respect of the Series J Bonds
pursuant to the Indenture, until the principal of, premium, if any, and interest
on the Series J Bonds shall have been fully paid or provision for the payment
thereof shall have been made in accordance with the Indenture, in immediately
available funds, a sum which, together with any moneys available for such
payment in the Bond Fund, will enable the Trustee to pay the amount payable on
such date as principal of (whether at maturity or upon redemption or
acceleration or otherwise), premium, if any, and interest on the Series J Bonds
as provided in the Indenture.
It is understood and agreed that all payments payable by the Company
under subsection (a) of this Section 4.2 are assigned by the Issuer to the
Trustee for the benefit of the Owners of the Bonds. The Company assents to such
assignment. The Issuer hereby directs the Company and the Company hereby agrees
to pay to the Trustee at the Principal Office of the Trustee all payments
payable by the Company pursuant to this subsection. Payments by the Company to
the Trustee as aforesaid or as otherwise required pursuant to this Agreement or
the other Loan Documents shall be sufficient to discharge the obligation of the
Company with respect to the amounts so paid, and the Company shall not be liable
to the Issuer, the Owners or to any other party by reason of the failure of the
Trustee to remit such amounts to the Owners, or otherwise to apply such amounts,
as provided in the Indenture.
(b) The Company will also pay the reasonable expenses of the Issuer
related to the issuance of the Series J Bonds, including the payment on the
Closing Date of a fee equal to $12,500. The Company shall also pay on the
Closing Date the fees and expenses of Bond Counsel, of counsel to the Purchaser
and of counsel to the Trustee.
IV-1
<PAGE>
(c) The Company will also pay the reasonable fees and expenses of the
Trustee under the Indenture and all other amounts which may be payable to the
Trustee under Section 9.02 of the Indenture, such amounts to be paid directly to
the Trustee for the Trustee's own account as and when such amounts become due
and payable.
(d) In the event the Company should fail to make any of the payments
required in this Section 4.2, the item or installment so in default shall
continue as an obligation of the Company until the amount in default shall have
been fully paid, and the Company agrees to pay the same with interest thereon,
to the extent permitted by law, from the date when such payment was due, at the
rate set forth in the Series J Bonds.
Section 4.3. Obligations of Company Unconditional. The obligations of
the Company to make the payments required in Section 4.2 hereof and, to perform
and observe the other agreements contained herein shall be absolute and
unconditional and shall not be subject to any defense or any right of setoff,
counterclaim or recoupment arising out of any breach by the Issuer or the
Trustee of any obligation to the Company, whether hereunder or otherwise, or out
of any indebtedness or liability at any time owing to the Company by the Issuer
or the Trustee, and, until such time as the principal of, premium, if any, and
interest on the Series J Bonds shall have been fully paid or provision for the
payment thereof shall have been made in accordance with the Indenture, the
Company (i) will not suspend or discontinue any payments provided for in Section
4.2 hereof, (ii) will perform and observe all other agreements contained in this
Agreement and (iii) except as provided in Article X hereof, will not terminate
the Term of Agreement for any cause, including, without limiting the generality
of the foregoing, the occurrence of any acts or circumstances that may
constitute failure of consideration, eviction or constructive eviction,
destruction of or damage to the Project Facility, the taking by eminent domain
of title to or temporary use of any or all of the Project Facility, commercial
frustration of purpose, any change in the tax or other laws of the United States
of America or of the State or any political subdivision of either thereof or any
failure of the Issuer or the Trustee to perform and observe any agreement,
whether express or implied, or any duty, liability or obligation arising out of
or connected with this Agreement. Nothing contained in this Section shall be
construed to release the Issuer from the performance of any of the agreements on
its part herein contained, and in the event the Issuer or the Trustee should
fail to perform any such agreement on its part, the Company may institute such
action against the Issuer or the Trustee as the Company may deem necessary to
compel performance so long as such action does not abrogate the obligations of
the Company contained in the first sentence of this Section.
[END OF ARTICLE IV]
IV-2
<PAGE>
ARTICLE V
THE PROJECT
Section 5.1. Disbursements from the Project Fund. (a) In the Indenture,
the Issuer has authorized and directed the Trustee to make disbursements from
the Project Fund as required by this Agreement. Disbursement of the entire
$5,000,000 of proceeds from the sale of the Series J Bonds shall be made from
the Series J Account to refund the Series I Bonds, upon receipt by the Trustee
of a requisition signed by a Company Representative stating with respect to such
disbursement to be made: (1) that it is requisition no. 1; (2) that payment is
to be made to the Trustee of the Series I Bonds; (3) that the amount to be paid
is $5,000,000; and (4) that on the date thereof there has not occurred any act
which, with the giving of notice or passage of time, or both, would constitute a
Default.
(b) The Company further agrees that as a condition precedent to the
disbursement from the Project Fund on the Closing Date of the entire proceeds of
the Series J Bonds to be used to refund the Series I Bonds, there shall be
furnished to the Trustee, in writing, unless waived by the Purchaser, the
following:
(1) evidence of fee and mortgage title insurance, in form and substance
satisfactory to the Issuer;
(2) proof that the insurance required to be maintained pursuant to
Section 5.4 is in full force and effect and that all premiums have been paid;
(3) proof of flood insurance as required in Section 5.4(c);
(4) verification evidencing that all permits, consents, approvals and
agreements required by all governmental boards and bureaus have been secured and
remain in full force and effect;
(5) such evidence as the Issuer or the Trustee may require to
demonstrate exemption from or compliance with all applicable building, zoning,
health and safety laws, ordinances and regulations; and
(6) such other additional documents, financing statements, affidavits
or certificates of the Company or any other person or entity as the Issuer or
the Trustee may reasonably request.
(c) The Company hereby agrees that it shall pay all costs incurred by
the Company or the Trustee in making such disbursement from the Project Fund. In
making any such disbursements
V-1
<PAGE>
from the Project Fund, the Trustee may conclusively rely on such requisitions
and other documents delivered to it and the Trustee shall be relieved of all
liability with respect to the making of such disbursements if made in accordance
with the foregoing.
Section 5.2. Maintenance and Modification of the Project Facility by
the Company. (a) The Company shall operate and maintain the Project Facility in
accordance with all applicable governmental laws, ordinances, approvals, rules
and regulations and requirements, including, but not limited to, zoning,
sanitary, pollution, environmental and safety ordinances, laws and rules and
regulations promulgated thereunder and in accordance with the terms of the
riparian grant from the State of New Jersey to the Company dated December 22,
1983 as recorded January 23, 1984, in Deed Book 3947, Page 279 in the Office of
the Camden County Register of Deeds.
(b) The Company shall (1) maintain, preserve and keep the Project
Facility or cause the Project Facility to be maintained, preserved and kept in
good repair, working order and condition, (2) from time to time, make or cause
to be made all necessary and proper repairs, replacements and renewals thereto
and (3) from time to time, make such substitutions, additions, modifications and
improvements as may be necessary and as shall not impair the structural
integrity, operating efficiency and economic value of the Project Facility. Any
alterations, replacements, renewals or additions made pursuant to this Section
shall become and constitute a part of the Project Facility and shall be
performed in accordance with Section 5.2(a).
(c) The Company shall operate or cause the Project to be operated as an
authorized project for a purpose and use as provided for under the Act until the
expiration or earlier termination of this Agreement.
(d) [Intentionally Omitted]
(e) The Company shall not remove, relocate, discontinue the use of or
sell, fail to restore, or otherwise dispose of any part of the Project except as
may be permitted pursuant to Section 8.1 hereof.
(f) The Company shall not relocate the Project or any part thereof
outside the State.
Section 5.3. Taxes, Other Governmental Charges and Utility Charges.
(a) The Company covenants that it and each of its Subsidiaries and Affiliates
shall duly and punctually pay all taxes, assessments (including deficiency
assessments), and governmental charges or levies of any kind whatsoever
("Taxes") imposed on it or on its respective income or profits or on any of its
respective properties or assets, including, without limiting
V-2
<PAGE>
the generality of the foregoing, any taxes levied upon the Project Facility
which, if not paid, will become a Lien or charge upon the Project Facility or
upon any payment pursuant to this Agreement, prior to the date on which
penalties attach thereto. The Company shall also pay all utility, water and
sewer rents, and other charges incurred in connection with the Project Facility
and all assessments and charges lawfully made by any governmental body for
public improvements that may be secured by a Lien on the Project Facility.
(b) The Company may, at its own expense and in its own name and in good
faith, contest any such taxes, assessments, and other charges, provided that
such contest shall not result in a lien being placed on the Project Facility or
any part thereof or result in the Project Facility being subject to loss or
forfeiture, and further provided that the Company gives notice in writing of
such contest to the Issuer and the Trustee. Nothing herein shall preclude the
Company, at its own expense and in its own name and behalf, from applying for
any tax exemption allowed by the federal government, the State, or any political
subdivision which grants or may grant such tax exemption.
Section 5.4. Insurance Required. The Company shall obtain and maintain
insurance on the Project Facility and all parts thereof and operations conducted
therein and thereon in such manner and against such loss, damage and liability,
including liability to third parties, as is customary with property owners in
the same or similar business in the State. Without limiting the generality of
the foregoing sentence, such insurance shall include, without limitation:
(a) Public liability insurance insuring against any and all liability
or claims of liability arising out of, occasioned by, or resulting from any
accident or otherwise resulting in or about the Project Facility, in a minimum
amount of $5,000,000 for the death of or bodily injury to one person, $5,000,000
for the death of or bodily injury in any one accident or occurrence and
$5,000,000 for loss or damage to the property of any Person or Persons,
provided, however, that in the event the Company is unable at any time to obtain
such insurance in such amounts, the failure of the Company to obtain such
insurance shall not constitute a Default hereunder so long as its obtains such
insurance in such lesser amounts as is available;
(b) Property damage and broad form fire and extended coverage insurance
with respect to the Project Facility and insurance insuring against such other
hazards, casualties and contingencies as the Issuer may require, which insurance
shall provide coverage at replacement cost and with no provisions for
coinsurance penalties and shall be in an amount equal to the lesser of (i)
$40,000,000, or (ii) the aggregate outstanding principal balance of the Loan and
all Senior Indebtedness; and
V-3
<PAGE>
(c) If the Project Facility is required to be insured pursuant to the
Flood Disaster Protection Act of 1973 or the National Flood Insurance Act of
1968, and the regulations promulgated thereunder, flood insurance with respect
to the Project Facility in an amount not less than $5,000,000 or the maximum
limit of coverage available, whichever amount is less.
Section 5.5. Additional Provisions Concerning Insurance. (a) Any
insurance required hereunder shall be written by insurance companies authorized
or licensed to do business in the State and shall be on such forms and written
by such companies as shall be approved by the Issuer. Such insurance coverage
may be effected under overall blanket or excess coverage policies of the Company
provided that the Company shall not be deemed to be a co-insurer thereunder.
Each insurance policy maintained pursuant to this Agreement shall contain a
provision to the effect that such policy shall not be canceled or altered unless
the Trustee is notified at least fifteen (15) days prior to such cancellation or
alteration. At least thirty (30) days prior to the expiration of any such
policy, the Company shall furnish evidence satisfactory to the Trustee that such
policy has been renewed or replaced or is no longer required by this Agreement.
(b) Each insurance policy maintained pursuant to this Agreement and
providing insurance against loss of or damage to property shall be written or
endorsed so as to name the Trustee as an additional insured as its interests may
appear and to have the proceeds thereof payable directly to the Trustee as loss
payee. Each policy providing public liability coverage shall be written or
endorsed so as to name the Trustee as an additional insured.
(c) Duplicate copies of any insurance policies and evidence of renewal
or replacement thereof shall promptly be furnished to the Trustee for its
records. Evidence of the payment of the first year's premiums on such policies
shall be delivered to the Trustee on the Closing Date. Thereafter, the Company
shall deliver to the Trustee evidence of the payment of all additional premiums
prior to the expiration or renewal dates of all such policies.
(d) In the event of loss or damage to the Project Facility, the Net
Proceeds of any insurance provided hereunder shall be deposited with the Trustee
and applied as set forth in Article VI hereof, and in the event of a public
liability occurrence, the Net Proceeds of any insurance provided hereunder shall
be applied towards satisfaction of such liability.
Section 5.6. Worker's Compensation. The Company shall comply with the
laws of the State relating to Worker's Compensation and similar worker's
protection laws.
[END OF ARTICLE V]
V-4
<PAGE>
ARTICLE VI
DAMAGE, DESTRUCTION AND CONDEMNATION
Section 6.1. Damage, Destruction and Condemnation. Unless the Company
shall have exercised its option to terminate this Agreement pursuant to the
provisions of paragraphs (A) or (B) of Article X hereof, if prior to full
payment of the Series J Bonds (or prior to provision for payment thereof having
been made in accordance with the provisions of the Indenture) (i) the Project or
any portion thereof is destroyed (in whole or in part) or is damaged by fire or
other casualty or (ii) title to or any interest in, or the temporary use of, the
Project or any part thereof shall be taken under the exercise of the power of
eminent domain by any governmental body or by any person, firm or corporation
acting under governmental authority, the Company shall be obligated to continue
to pay the amounts specified in Section 4.2 hereof.
Section 6.2. Application of Net Proceeds. The Net Proceeds of any
insurance proceeds or condemnation award resulting from any event described in
Section 6.1 hereof shall be immediately deposited in a separate trust fund to be
held by the Trustee. All Net Proceeds so deposited shall be applied in one or
more of the following ways as shall be elected by the Company in a written
notice to the Trustee, which notice shall be received by the Trustee within 60
days after the receipt by the Company or the Trustee, as the case may be, of the
Net Proceeds:
(a) To the prompt repair, restoration, modification or improvement of
the Project Facility, and the Issuer has, in the Indenture, authorized and
directed the Trustee to make disbursements from such separate trust fund for
such purposes. Such disbursements shall be made by the Trustee only upon receipt
of Requisitions therefor. Any balance of the Net Proceeds remaining after such
work has been completed shall be transferred into the Bond Fund to be applied in
accordance with subsection (b) of this Section, or if the Bonds have been fully
paid (or provision for payment thereof has been made in accordance with the
provisions of the Indenture), any balance remaining in such separate trust fund
shall be paid in accordance with Section 6.11 of the Indenture.
(b) To the redemption at par of the Bonds, pro rata in proportion to
their respective then outstanding principal balances, on the earliest
practicable redemption date as specified in a written notice by the Company to
the Trustee, provided that no part of such Net Proceeds may be applied for such
redemption unless (1) all of the Bonds are to be redeemed in accordance with the
Indenture upon termination of this Agreement pursuant to clauses (A) or (B) of
Article X hereof or (2) in the event that less than all of the Bonds are to be
redeemed, the Company shall furnish to the Trustee a certificate of a Company
Representative stating that
VI-I
<PAGE>
(i) the property forming the part of the Project Facility that was damaged or
destroyed by such casualty or was taken by such condemnation proceedings is not
essential to the use, operation or possession of the Project by the Company or
(ii) the Project Facility has been repaired, restored, modified or improved to
operate as designed.
(c) If the Company elects to repair, restore, modify or improve the
Project Facility or pay the cost thereof and fails to do so diligently, the
Issuer or the Trustee may (but shall be under no obligation to) do so on behalf
of the Company and recover the reasonable costs thereof from the Company, less
the amount, if any, collected from Net Proceeds on account of such costs. No
such payment by the Trustee or the Issuer shall affect or impair any rights of
the Issuer hereunder or of the Trustee or the Owners under the Indenture arising
as a result of such failure by the Company.
(d) If the Company fails to give the notice required under subsection
(a) of this Section within the specified time period, the Issuer or the Trustee,
upon notice to the other and to the Company, may direct the Company to take
either of the actions therein described and the Company shall be obligated to
take such action.
Section 6.3. Insufficiency of Net Proceeds. If the Net Proceeds are
insufficient to pay in full the cost of any repair, restoration, modification or
improvement referred to in Section 6.2(a) hereof, the Company will nonetheless
complete the work and will pay any cost in excess of the amount of the Net
Proceeds held by the Trustee. The Company agrees that if by reason of any such
insufficiency of the Net Proceeds, the Company shall make any payments pursuant
to the provisions of this Section 6.3, the Company shall not be entitled to any
reimbursement therefor from the Issuer, the Trustee or the Owners, nor shall the
Company be entitled to any diminution of the amounts payable under Section 4.2
hereof.
[END OF ARTICLE VI]
VI-2
<PAGE>
ARTICLE VII
SPECIAL COVENANTS
Section 7.1. No Warranty of Condition or Suitability by Issuer. THE
ISSUER MAKES NO WARRANTY, EITHER EXPRESS OR IMPLIED, AS TO THE PROJECT OR THE
CONDITION THEREOF, OR THAT THE PROJECT WILL BE SUITABLE FOR THE PURPOSES OR
NEEDS OF THE COMPANY. THE ISSUER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR
IMPLIED, THAT THE COMPANY WILL HAVE QUIET AND PEACEFUL POSSESSION OF THE
PROJECT. THE ISSUER MAKES NO REPRESENTATION OR WARRANTY, EXPRESS OR IMPLIED,
WITH RESPECT TO THE MERCHANTABILITY, CONDITION OR WORKMANSHIP OF ANY PART OF THE
PROJECT OR ITS SUITABILITY FOR THE COMPANY'S PURPOSES.
Section 7.2. Access to the Project. The Company agrees that the Issuer,
the Trustee, the Purchaser and their duly authorized agents, attorneys, experts,
engineers, accountants and representatives shall have the right to inspect the
Project at all reasonable times and on reasonable notice. The Issuer, the
Trustee and their duly authorized agents shall also be permitted, at all
reasonable times, to examine the books and records of the Company with respect
to the Project.
Section 7.3. Further Assurances and Corrective Instruments. The Issuer
and the Company agree that they will, from time to time, execute, acknowledge
and deliver, or cause to be executed, acknowledged and delivered, such
supplements hereto and such further instruments as may reasonably be required
for carrying out the expressed intention of this Agreement and the other Loan
Document.
Section 7.4. Issuer and Company Representatives. Whenever under the
provisions of this Agreement the approval of the Issuer or the Company is
required or the Issuer or the Company is required to take some action at the
request of the other, such approval or such request shall be given for the
Issuer by an Issuer Representative and for the Company by a Company
Representative. The Trustee shall be authorized to act on any such approval or
request.
Section 7.5. Financing Statements. The Company agrees to execute and
file or cause to be executed and filed any and all financing statements or
amendments thereof or continuation statements necessary to perfect and continue
the perfection of the security interests granted in the Mortgage and the
Indenture. Within three months of the expiration date of any financing
statements or continuation statements, the Company shall furnish to the Trustee
evidence satisfactory to the Trustee that such filing has taken place. The
Company shall pay all reasonable costs of the preparation and filing of such
instruments.
VII-1
<PAGE>
Section 7.6. Compliance with Code. The Company shall at all times do
and perform all acts and things permitted by law and necessary or desirable in
order to assure that interest paid on the Bonds shall for the purposes of
federal income taxation be excludable from the gross income of the holders of
the Bonds, except in the event that any such holder is a Substantial User or
Related Person thereto. For purposes of this Section 7.6, any and all actions of
any Related Person shall be deemed to be actions of the Company. In addition,
any and all actions to be undertaken by the Company or by any other person as to
which the Issuer or the Trustee must, pursuant to the terms hereof, consent or
approve in advance, shall be deemed to be the actions of the Company or such
other person (and not the actions of the Issuer or the Trustee). The Company
shall cause any Related Person to comply with all of the provisions of this
Section as to its own operations. A breach of this Section 7.6 shall not
constitute a Default but shall be governed by the provisions of Section 3.01 of
the Indenture.
Section 7.7. Further Assurances. The Issuer and the Company shall, from
time to time, execute, acknowledge and deliver, or cause to be executed,
acknowledged and delivered, such supplements hereto and such further instruments
as may reasonably be required for carrying out the intention of or facilitating
the performance of this Loan Agreement and the other Loan Documents.
Section 7.8. [Intentionally Omitted]
Section 7.9. Annual Certificate. On each anniversary hereof, the
Company shall furnish to the Issuer, with a copy to the Trustee, the following:
(a) a certificate indicating whether or not the Company is aware of any
condition, event or act which constitutes a Default, or which would constitute a
Default with the giving of notice or passage of time, under any of the Loan
Documents;
(b) a written description of the present use of the Project and a
description of any anticipated material change in the use of the Project or in
the number of employees employed at the Project, and
(c) a report from every entity that leases or occupies space at the
Project indicating the number of persons the entity employs at the Project in
the form annexed hereto as Exhibit D.
[END OF ARTICLE VII]
VII-2
<PAGE>
ARTICLE VIII
PROJECT USERS; MAINTAIN EXISTENCE; MERGE, SELL, TRANSFER;
INDEMNIFICATION; REDEMPTION
Section 8.1. Project Users; Maintain Existence; Merge, Sell, Transfer.
(a) Upon the request of the Issuer from time to time, the Company shall
cause a Project Occupant Information Form to be submitted to the Issuer by every
prospective lessee, sublessee or lease assignee of all or any part of the
Project. The Company shall not permit any such leasing, subleasing or assigning
of leases of all or any part of the Project that would impair the excludability
of interest paid on the Series J Bonds from the gross income of the Owners
thereof for purposes of federal income taxation, or that would impair the
ability of the Company to assure the continued operation of the Project, or
would cause the Project not to be operated, as an authorized project under the
Act.
(b) The Company shall maintain its existence as a legal entity and
shall not sell, assign, transfer or otherwise dispose of the Project or
substantially all of its assets. The Company may merge with or into or
consolidate with another entity, and the Project or this Agreement may be
transferred without violating this Section 8.1(b) provided (i) the Company
causes the proposed surviving, resulting or transferee company to furnish the
Issuer with a Change of Ownership Information Form; (ii) the net worth of the
surviving, resulting or transferee company following the merger, consolidation
or transfer is equal to or greater than the net worth of the Company immediately
preceding the merger, consolidation or transfer; (iii) any litigation or
investigations in which the surviving, resulting or transferee company or its
officers and directors are involved, and any court, administrative or other
orders to which the surviving, resulting or transferee company or its officers
and directors are subject, relate to matters arising in the ordinary course of
business; (iv) the merger, consolidation or transfer shall not impair the
excludability of interest paid on the Series J Bonds from the gross income of
the Owners thereof for purposes of federal income taxation pursuant to an
opinion of Bond Counsel; (v) the surviving, resulting or transferee company
assumes in writing the obligations of the Company under this Agreement and the
Loan Documents, and (vi) after the merger, consolidation or transfer the Project
shall be operated as an authorized project under the Act.
(c) The obligations of the Company under this Section 8.1 shall be in
addition to its obligations under Section 2.4(d).
VIII-1
<PAGE>
Section 8.2. Release and Indemnification Covenants.
(a) The Issuer, the members, agents, servants, officers or employees
thereof, the Trustee and the Purchaser shall not be liable for (1) any loss,
damage or injury to, or death of, any person occurring at or about or resulting
from any defect in the Project Facility, (2) any damage or injury to the persons
or property of the Company or any user of the Project Facility, or their
officers, agents, servants or employees, or any other person who may be about
the Project Facility, caused by an act of negligence of any person (other than
the Issuer or its members, officers, agents, servants and employees, the Trustee
and the Purchaser, as the case may be), or (3) any costs, expenses or damages
incurred as a result of any lawsuit commenced because of action taken in good
faith by the Issuer in connection with the Project and the Project Facility, and
the Company shall and does hereby indemnify, protect, defend and hold harmless
the Issuer, the members, agents, servants, officers or employees thereof, the
Trustee and the Purchaser from and against any and all losses, damages,
injuries, costs or expenses (including reasonable attorneys fees) and from and
against any and all claims, demands, suits, actions or other proceedings
whatsoever, brought by any person or entity whatsoever and arising or
purportedly arising from any of the foregoing.
(b) The Company shall and does hereby indemnify, protect, defend and
hold harmless the Issuer, the State and every agency of the State, the Trustee,
any Person who controls the Issuer, the State or any agency of the State or the
Trustee (within the meaning of Section 15 of the Securities Act of 1933, as
amended) and any member, officer, director, official, employee and attorney of
the Issuer, the State and every agency of the State and the Trustee (each an
"Indemnified Party"), from and against any and all losses, damages, injuries,
costs or expenses (including reasonable attorneys fees) and from and against any
and all claims, demands, suits, actions or other proceedings whatsoever, brought
by any person or entity whatsoever (except the Company) and arising or
purportedly arising from this Agreement, the Indenture or the Bonds or from the
performance of the Indenture.
(c) The Company agrees to and hereby does indemnify and hold harmless
the Indemnified Parties and the Purchaser from and against any and all losses,
claims, damages, liabilities, costs or expenses, including reasonable attorneys'
fees suffered or incurred by any of the Indemnified Parties or the Purchaser and
caused by, relating to, arising out of, resulting from or in any way connected
with (i) the condition, use, possession, conduct, management, planning, design,
acquisition, construction, installation, financing (in the case of financing, as
to the Indemnified Parties only) or sale of the Project or any part thereof
including without limitation the Indemnified Matters referenced in the next
paragraph; (ii) any untrue statement or alleged untrue statement of
VIII-2
<PAGE>
a material fact contained in the Application or any other information submitted
or to be submitted by or on behalf of the Company to the Indemnified Parties or
the Trustee in connection with the transactions contemplated hereby or the
issuance and purchase of the Bonds; or (iii) any omission or alleged omission of
a material fact necessary to be stated thereon in order to make such statements
to the Indemnified Party not misleading or incomplete.
(d) The Company covenants and agrees, at its sole cost and expense, to
indemnify, protect and save the Indemnified Parties and the Purchaser (the
"Indemnitees") harmless against and from any and all damages, losses,
liabilities, obligations, penalties, claims, litigation, demands, defenses,
judgments, suits, proceedings, costs, disbursements or expenses (including,
without limitation, attorneys' and experts' reasonable fees and disbursements)
of any kind or of any nature whatsoever (collectively, the "Indemnified
Matters") which may at any time be imposed upon, incurred by or asserted or
awarded against Indemnitees and arising from or out of:
(1) any hazardous materials, as defined under any Laws as defined
below, on, in, under or affecting all or any portion of the property subject to
the Mortgage or any surrounding areas (but in the case of hazardous materials
in surrounding areas, only if the source of such materials is or is alleged to
be the Company or the property subject to the Mortgage), or
(2) the enforcement of this paragraph or the assertion by the Company
of any defense to its obligations hereunder (except the successful defense of
actual performance not subject to further appeal), whether any of such matters
arise before or after the Closing Date or before or after foreclosure of the
Mortgage or other taking of title to the Company's interest in all or any
portion of the mortgaged property by Indemnitees or any affiliate of
Indemnitees. Indemnified Matter shall include, without limitation, all of the
following: (i) the costs of removal of any and all hazardous materials from all
or any portion of the property or any surrounding areas (except that the
indemnity provided for under this paragraph shall not cover the costs of such
removal unless either (a) such removal is required by any federal or state law,
regulation or regulatory agency ("Laws") or (b) any present or future use,
operation, development, construction, alteration or reconstruction of all or any
portion of the mortgaged property is or would be conditioned in any way upon, or
is or would be limited in any way until the completion of, such removal in
accordance with any Laws), (ii) additional costs required to take necessary
precautions as required by law to protect against the release of hazardous
materials on, in, under or affecting the mortgaged property into the air, any
body of water, any other public domain
VIII-3
<PAGE>
or any surrounding areas and (iii) costs incurred to comply, in connection with
all or any portion of the mortgaged property or any surrounding areas, with all
applicable Laws with respect to hazardous materials. If any Indemnitee or any
affiliate of an Indemnitee takes title to the Company's interest in the
mortgaged property at a foreclosure sale, at a sale pursuant to a power of sale
under the Mortgage or by deed in lieu of foreclosure or otherwise, then the
indemnity provided for under this paragraph shall not apply to hazardous
materials which are initially placed on, in or under all or any portion of the
mortgaged property after the date Indemnitee or such affiliate so takes title to
such interest in the Property. At any time during the six months prior to any
such foreclosure sale, sale pursuant to a power of sale under the Mortgage or by
deed in lieu of foreclosure or otherwise by which any Indemnitee or affiliate
takes title to such interest in the mortgage property, such Indemnitee or
affiliate shall have the right, at its sole discretion and at the Company's sole
cost and expense, to have performed an environmental site assessment of the
mortgaged property to determine whether any hazardous materials are present.
(e) In case any action shall be brought against one or more of the
Indemnified Parties or the Purchaser based upon any of the above and in respect
of which indemnity may be sought against the Company, such Indemnified Parties
or the Purchaser shall promptly notify the Company in writing, and the Company
shall assume the defense thereof, including the employment of counsel
satisfactory to the Indemnified Parties, the payment of all expenses and the
right to negotiate and consent to settlement. Any one or more of the Indemnified
Parties or the Purchaser shall have the right to employ separate counsel at the
Company's expense in any such action and to participate in the defense thereof.
The Company shall not be liable for any settlement of any such action effected
without its consent, but if settled with the consent of the Company or if there
be a final judgment for the claimant in any such action, the Company shall
discharge the liability and indemnify and hold harmless the Indemnified Parties
and the Purchaser from and against any loss or liability by reason of such
settlement or judgment. The provisions of this Section 8.2 shall survive the
repayment of the Bonds.
Section 8.3. Redemption of Bonds. The Company shall have and is hereby
granted the option to cause all or a portion of the Bonds to be redeemed at the
times, at the prices and in the manner permitted by the Indenture. The Issuer,
at the request of the Company, shall forthwith take all steps (other than the
payment of the money required for such redemption) necessary under the
applicable redemption provisions of the Indenture to effect redemption of all or
part of the Outstanding Bonds, as may be specified by the Company, on the date
established for such redemption.
VIII-4
<PAGE>
Section 8.4. Issuer to Grant Security Interest to Trustee. The parties
hereto agree that pursuant to the Indenture, the Issuer shall assign to the
Trustee, in order to secure payment of the Bonds, all of the Issuer's right,
title, and interest in and to this Agreement, except for certain of the Issuer's
rights as are expressly reserved pursuant to the granting clauses of the
Indenture.
Section 8.5. Indemnification of Trustee. The Company shall and hereby
agrees to indemnify the Trustee for, and hold the Trustee harmless against, any
loss, liability or expense (including the costs and expenses of defending
against any claim of liability) incurred without gross negligence or willful
misconduct by the Trustee and arising out of or in connection with its acting as
Trustee under the Indenture, the Mortgage or any other Loan Document.
[END OF ARTICLE VIII]
VIII-5
<PAGE>
ARTICLE IX
DEFAULTS AND REMEDIES
Section 9.1. Defaults Defined. The following shall be "Defaults" under
this Agreement and the term "Default" shall mean, whenever it is used in this
Agreement, any one or more of the following events:
(a) Failure by the Company to pay any amount required to be paid under
subsection (a) of Section 4.2 hereof when due.
(b) Failure by the Company or any of its Subsidiaries or Affiliates to
observe and perform any covenant, condition or agreement on its part to be
observed or performed under this Agreement or the other Loan Documents, other
than as referred to in Section 9.1(a) or 9.1(1), for a period of ninety (90)
days after it first becomes known to any officer of the Company.
(c) The occurrence of a Default under the Indenture or any other Loan
Document.
(d) [Intentionally omitted]
(e) If any warranty or representation by or on behalf of the Company
contained in this Agreement, the Indenture, the Bond Placement Agreement, the
Loan Documents, the Guaranty or in any instrument or certificate furnished in
compliance with same proves false or misleading in any material respect as of
the time it was made.
(f) Failure by the Company or any of its Subsidiaries or Affiliates to
make one or more payments due with respect to aggregate Indebtedness exceeding
$500,000 within any applicable periods for cure; or if any event shall occur
or any condition shall exist, the effect of which event or condition is to cause
more than $500,000 of aggregate Indebtedness or other securities of the Company
or any Subsidiary or Affiliate to become due or subject to mandatory redemption
or repurchase before its (or their) stated maturity or before its (or their)
regularly scheduled dates of payment, redemption or purchase.
(g) If a custodian, receiver or liquidator is appointed for the Company
or any Subsidiary or Affiliate or the Company or any Subsidiary or Affiliate is
adjudicated bankrupt or insolvent; or an order of relief is entered under the
Federal Bankruptcy Code against the Company or any Subsidiary or Affiliate or
any of its property is sequestered by court order and the order remains in
effect for more than 60 days; or a petition is filed is against the Company or
Subsidiary or Affiliate under any bankruptcy, reorganization, arrangement,
insolvency, readjustment of debt,
IX-1
<PAGE>
dissolution or liquidation law of any Jurisdiction, whether now or subsequently
in effect, and is not dismissed within 60 days after filing.
(h) If the Company or any Subsidiary or Affiliate commences a voluntary
case or files a petition in voluntary bankruptcy or seeking relief under any
provision of the Federal Bankruptcy Code or any other bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law of any jurisdiction, whether now or subsequently in effect; or
consents to the filing of any petition against it under any such law; or applies
for or consents to the appointment of or taking possession by a custodian,
receiver, trustee or liquidator of the Company or any Subsidiary or Affiliate or
of all or any part of its property; or makes an assignment for the benefit of
its creditors; or admits in writing its inability to pay its debt generally as
they become due.
(i) Any of the Loan Documents shall not be, or shall cease to be, the
legal, valid, binding and enforceable obligations of each of the parties thereto
in accordance with its terms, or any of the Loan Documents shall not be or shall
cease to be in full force and effect.
(j) There shall exist any Subsidiary or Affiliate which has not, within
90 days after becoming a Subsidiary or Affiliate, duly authorized, executed and
delivered to the Trustee, a counterpart of the Guaranty or a document evidencing
its agreement to be bound by the Guaranty which is the legal, valid, binding and
enforceable obligation of such Subsidiary or Affiliate in accordance with its
terms.
(k) There shall occur a foreclosure with respect to any of the
following mortgages, as amended and supplemented:
(i) Mortgage dated March 15, 1984 between the Company and the City
of Gloucester City,
(ii) Mortgage dated April 18, 1984 between the Company and the City
of Gloucester City,
(iii) Mortgage dated August 22, 1984 between the Company and the
City of Gloucester City,
(iv) Mortgage and Security Agreement dated as of August 1, 1986
between the Company and Bankers Trust Company, as trustee,
(v) Mortgage and Security Agreement dated as of December 1, 1986
between the Company and Bankers Trust Company, as trustee,
IX-2
<PAGE>
(vi) Mortgage and Security Agreement dated as of January 2, 1992
between the Company and Mellon Bank, N.A., as trustee (Series G),
(vii) Mortgage and Security Agreement dated as of January 2, 1992
between the Company and Mellon Bank, N.A., as trustee (Series H), or
(viii) Mortgage and Security Agreement dated as of March 15, 1994
between the Company and 777 Pattison Ave., Inc., jointly and severally,
and The Bank of New York (NJ).
(1) Failure by the Company or any of its Subsidiaries or Affiliates to
observe and perform the covenant set forth in Section 2.4(d).
Section 9.2. Trustee's Remedies on Default. Whenever any Default
referred to in Section 9.1 hereof shall have happened and be continuing, the
Trustee may (subject in the case of the Trustee to its mandatory obligations
upon the occurrence of certain Defaults) take one or any combination of the
following remedial steps:
(a) If the Trustee has declared the Bonds immediately due and payable
pursuant to Section 8.02 of the Indenture, by written notice to the Company,
declare an amount equal to all amounts then due and payable on the Bonds,
whether by acceleration of maturity (as provided in the Indenture) or otherwise,
to be immediately due and payable as liquidated damages under this Agreement and
not as a penalty, whereupon the same shall become immediately due and payable;
(b) Have reasonable access to and inspect, examine and make copies of
the books and records and any and all accounts, data and income tax and other
tax returns of the Company during regular business hours of the Company if
reasonably necessary in the opinion of the Trustee; or
(c) Take whatever action at law or in equity may appear necessary or
desirable to collect the amounts then due and thereafter to become due, or to
enforce performance and observance of any obligation, agreement or covenant of
the Company under this Agreement, the Indenture and the Loan Documents.
(d) Exercise any and all rights and remedies of a creditor or secured
party under the Uniform Commercial Code or other applicable law.
Any amounts collected pursuant to action taken under this Section shall
be paid into the Bond Fund and applied in accordance with the provisions of the
Indenture. The rights specified in this Section 9.2 are in addition to, and not
in limitation of, any other
IX-3
<PAGE>
obligations of the Company which may arise upon a default or acceleration in
respect of the Bonds, including without limitation, under Section 4.2 hereof.
Section 9.3. Issuer's Remedies on Default.
(A) The occurrence of a Default referred to in Section 9.1(b) or 9.1(e)
hereof (other than a default resulting from a breach of the covenant contained
in Section 2.4(e) hereof) shall constitute an Event of Cancellation hereunder,
and at any time thereafter during the continuance of such Event of Cancellation,
the Issuer may, by written notice in accordance with the provisions of Section
11.2 hereof to the Trustee, call and cancel the Series J Bonds. The Trustee and
any assigns and the Company hereby expressly agree that the Series J Bonds may
be called and canceled by the Issuer in the manner provided above, and upon the
Cancellation Date specified in the notice from the Issuer, which shall be at
least 30 and no more than 60 days after the giving of such notice, the Series J
Bonds will be called and canceled, and the Trustee may, at its option, declare
the obligations evidenced by this Agreement immediately due and payable. The
Trustee will deliver the Series J Bonds to the Issuer for cancellation upon the
Cancellation Date, but even if such delivery does not occur, the Series J Bonds
will be considered canceled and of no further force or effect on the
Cancellation Date.
Subject to the provisions of Section 9.4 hereof, the remedies set
forth in this Section 9.3 are the sole and exclusive remedies of the Issuer in
the event of an occurrence of an Event of Cancellation as set forth herein.
(B) Upon the Cancellation Date, this Agreement will evidence the
indebtedness from the Company to the Trustee and the Bondholders and, in the
event the payment obligations hereunder are not accelerated by the Trustee as
hereinabove provided, all of the terms of this Agreement, including the interest
rate and payment terms herein specified, will control the obligations of the
Company to the Trustee and the Bondholders except that from the Cancellation
Date, the per annum interest rate will remain __% for a period of six (6)
months, after which the interest rate will change to the greater of (i) two
percent (2%) in excess of the Prime Rate, or (ii) the quotient obtained by
dividing ________% by the difference between one (1) and the highest marginal
federal income tax rate at the time in effect. The Issuer will no longer be a
party to the transaction and shall have no further rights with respect thereto
and shall be released of any and all debts, liabilities and obligations to any
other party under this Agreement, the Series J Bonds or any other Loan Document.
The Issuer and the Trustee will execute and deliver to each other such other
documents and agreements as the other may reasonably request in order to
evidence the cancellation of the Series J Bonds and the withdrawal of the Issuer
from the transaction.
IX-4
<PAGE>
(C) Upon cancellation of the Series J Bonds pursuant to the provisions
hereof, the Issuer hereby agrees that the Trustee shall automatically be vested
with all of the Issuer's right, title and interest in and to the Loan Documents.
Any amounts remaining in the Bond Fund on the Cancellation Date after the
deduction therefrom of amounts which may be due the Issuer pursuant to the terms
of this Agreement are hereby assigned to the Trustee to be disbursed in
accordance with the Indenture.
(D) In the event that there is a dispute among any of the parties
concerning the right of the Issuer to cancel the Series J Bonds pursuant to the
provisions of this Section 9.3, the Company will nevertheless comply with all of
the terms of this Agreement as hereinabove amended and make all payments
required hereunder from and after the Cancellation Date directly to the Trustee
at the new interest rate. If a court of competent jurisdiction determines
finally that the Issuer's attempted cancellation of the Series J Bonds violated
the terms of this Agreement, the Series J Bonds will be reinstated in accordance
with the final order of the court, but until such final order is made, the
Company will continue to comply with the terms of this Agreement as hereinabove
amended. Any overpayment by the Company will be returned to it by the Trustee
upon reinstatement of the Series J Bonds.
Section 9.4. Specific Performance. In addition to the rights and
remedies provided for in Section 9.2 hereof, if the Company commits a breach or
threatens to commit a breach of any of the provisions of this Agreement, the
Indenture or the Loan Documents, the Issuer and the Trustee shall each have the
right, without posting bond or other security, to seek injunctive relief or
specific performance, it being acknowledged and agreed that any such breach or
threatened breach will cause irreparable injury to the Issuer and the Trustee
and that money damages will not provide an adequate remedy.
Any amounts collected pursuant to action taken under this Section shall
be paid into the Bond Fund and applied in accordance with the provisions of the
Indenture.
Section 9.5. No Remedy Exclusive. Subject to Section 9.02 of the
Indenture, no remedy herein conferred upon or reserved to the Issuer or the
Trustee is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Agreement or now or hereafter existing at
law or in equity. No delay or omission to exercise any right or power accruing
upon any Default shall impair any such right or power or shall be construed to
be a waiver thereof, but any such right or power may be exercised from time to
time and as often as may be deemed expedient. In order to entitle the Issuer or
the Trustee to exercise any remedy reserved to it in this Article, it shall not
be necessary to give any notice, other than such notice as may be
IX-5
<PAGE>
required in this Article. Such rights and remedies as are given the Issuer
hereunder shall also extend to the Trustee, and the Trustee and the Owners of
the Bonds, subject to the provisions of the Indenture, shall be entitled to the
benefit of all covenants and agreements herein contained.
Section 9.6. Agreement to Pay Attorneys' Fees and Expenses. In the
event the Company should default under any of the provisions of this Agreement
and the Issuer should employ attorneys or incur other expenses for the
collection of payments required hereunder or the enforcement of performance or
observance of any obligation or agreement on the part of the Company herein
contained, the Company agrees that it will on demand therefor pay to the Issuer
the reasonable fee of such attorneys and such other expenses so incurred by the
Issuer.
Section 9.7. No Additional Waiver Implied by One Waiver. In the event
any agreement contained in this Agreement should be breached by either party and
thereafter waived by the other party, such waiver shall be limited to the
particular breach so waived and shall not be deemed to waive any other breach
hereunder.
[END OF ARTICLE IX]
IX-6
<PAGE>
ARTICLE X
OPTIONS TO TERMINATE AGREEMENT
The Company shall have, and is hereby granted, the option to terminate
its obligations under this Agreement at any time if any of the events set forth
below shall occur:
(A) The Project shall have been damaged or destroyed (1) to such extent
that it cannot, in the Company's reasonable judgment, be reasonably restored
within a period of six (6) months to the condition thereof immediately preceding
such damage or destruction, and (2) to such extent that the Company is thereby
prevented, in the Company's reasonable judgment, from carrying on its normal
operations at the Project for a period of six (6) months or more.
(B) Title to, or the temporary use for a period of six (6) months or
more of, all or substantially all the Project, or such part thereof as shall
materially interfere, in the Company's reasonable judgment, with the operation
of the Project for the purpose for which the Project is designed, shall have
been taken under the exercise of the power of eminent domain by any governmental
body or by any person, firm or corporation acting under governmental authority
(including such a taking or takings as results in the Company being thereby
prevented from carrying on its normal operations at the Project for a period of
six (6) months or more).
(C) Changes which the Company cannot reasonably control or overcome in
the economic availability of materials, supplies, labor, equipment and other
properties and things necessary for the efficient operation of the Project for
the purposes contemplated by this Agreement shall have occurred, or
technological or other changes shall have occurred which in the reasonable
judgment of the Company render the continued operation of the Project uneconomic
for such purposes.
(D) As a result of any changes in the Constitution of the State or the
Constitution of the United States of America or of legislative or administrative
action (whether state or federal) or by final decree, judgment or order of any
court or administrative body (whether state or federal) entered after the
contest thereof by the Company in good faith, this Agreement shall have become
void or unenforceable or impossible of performance in accordance with the intent
and purposes of the parties as expressed in this Agreement, or unreasonable
burdens or excessive liabilities shall have been imposed on the Company in
respect to the Project, including, without limitation, federal, state or other
ad valorem, property, income or other taxes not being imposed on the date of
this Agreement. To exercise such option, the Company shall within
X-1
<PAGE>
ninety (90) days following the event authorizing such termination, give written
notice to the Issuer and the Trustee and shall specify therein the date of
redemption of Bonds pursuant to Section 3.01 of the Indenture, which date shall
be the next interest payment date in respect of the Bonds for which the required
notice of redemption can practicably be given. In accordance with the terms of
the Indenture, the Company shall make arrangements for the Trustee to give the
required notice of redemption. In order to exercise such option, the Company
shall pay, or cause to be paid, on or prior to the applicable redemption date,
to the Trustee, an amount equal to the sum of the following:
(1) An amount of money which, when added to the amount then on deposit
and available in the Bond Fund, will be sufficient to retire and redeem all the
Outstanding Bonds on the earliest possible redemption date after notice as
provided in the Indenture, including, without limitation, the principal amount
thereof, all interest to accrue to said redemption date, and the applicable
redemption premium, if any, plus
(2) An amount of money equal to the Trustee's fees and expenses under
the Indenture accrued and to accrue until such final payment and redemption of
the Bonds, plus
(3) An amount of money equal to the Issuer's fees and expenses under
this Agreement accrued and to accrue until such final payment and redemption
of the Bonds.
[END OF ARTICLE X]
X-2
<PAGE>
ARTICLE XI
MISCELLANEOUS
Section 11.1. Term of Agreement. This Agreement shall remain in full
force and effect from the date hereof to and including such time as all of the
Series J Bonds and the fees and expenses of the Issuer and the Trustee and all
amounts payable hereunder shall have been fully paid or provision made for such
payment.
Section 11.2. Notices. All notices, certificates or other
communications hereunder shall be sufficiently given and shall be deemed given
when delivered or mailed by first class mail or by registered or certified mail,
postage prepaid, addressed as follows: if to the Issuer, to 200 South Warren
Street, Capital Place One -- CN 990, Trenton, New Jersey 08625, Attention:
Executive Director; if to the Trustee, to The Bank of New York (NJ), 385 Rifle
Camp Road, West Paterson, New Jersey 07424, Attention: Corporate Trust
Department; to the Company, to Holt Hauling and Warehousing System, Inc., P.O.
Box 8698, Philadelphia, Pennsylvania 19101, Attention: Mr. Bernard Gelman, Vice
President; and if to the Purchaser, to John Hancock Advisors, 101 Hungtington
Avenue, 7th Floor, Boston, Massachusetts 02199. A duplicate copy of each notice,
certificate or other communication given hereunder by the Issuer or the Company
shall also be given to the Trustee. The Issuer, the Company, the Trustee and the
Purchaser may, by written notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates or other
communications shali be sent.
Section 11.3. Binding Effect. This Agreement shall inure to the benefit
of and shall be binding upon the Issuer, the Company, the Trustee, the Owners of
the Bonds and their respective successors and assigns, subject, however, to the
limitations contained in Section 2.1(b) hereof.
Section 11.4. Severability. In the event any provision of this
Agreement shall be held invalid or unenforceable by any court of competent
jurisdiction, such holding shall not invalidate or render unenforceable any
other provision hereof.
Section 11.5. Amounts Remaining in Funds. Subject to the provisions of
Section 5.12 of the Indenture, it is agreed by the parties hereto that any
amounts remaining in the Bond Fund, the Project Fund, or any other fund created
under the Indenture upon expiration or earlier termination of this Agreement, as
provided in this Agreement, after payment in full of the Bonds (or provision for
payment thereof having been made in accordance with the provisions of the
Indenture), the fees and expenses of the Trustee in accordance with the
Indenture and all amounts which may be due under the Bond Placement Agreement,
the Mortgage, any Loan Document
[CONTINUED ON PAGE XI-2]
XI-1
<PAGE>
or the Guaranty, shall belong to and be paid to the Company by the Trustee.
Section 11. 6. Amendments, Changes and Modification. Subsequent to the
issuance of Bonds and prior to their payment in full (or provision for the
payment thereof having been made in accordance with the provisions of the
Indenture), and except as otherwise herein expressly provided this Agreement may
not be effectively amended, changed, modified, altered or terminated without the
written consent of the Trustee in accordance with the provisions of the
Indenture.
Section 11.7. Execution in Counterparts. This Agreement may be
simultaneously executed in several counterparts, each of which shall be an
original and all of which shall constitute but one and the same instrument.
Section 11.8. Applicable Law. This Agreement shall be governed by and
construed in accordance with the laws of the State.
Section 11.9. Captions. The captions and headings in this Agreement are
for convenience only and in no way define, limit or describe the scope or intent
of any provisions or Sections of this Agreement.
IN WITNESS WHEREOF, the Issuer has caused this Agreement to be executed
in its name and the Company has caused this Agreement to be executed in its name
all as of the date first above written.
ATTEST: NEW JERSEY ECONOMIC DEVELOPMENT
AUTHORITY
/s/ Frank T. Mancini, Jr By: /s/ Caren S. Franini
- ------------------------ ---------------------
Frank T. Mancini, Jr. Caren S. Franini
Assistant Secretary Executive DiVector
[SEAL)
ATTEST: HOLT HAULING AND WAREHOUSING
SYSTEM, INC.
/s/ John Evans By: /s/ Bernard Gelman
- ----------------------- ---------------------------
John Evans, Secretary Bernard Gelman,
Vice President
XI-2
HOLT HAULING AND WAREHOUSING SYSTEM, INC.,
as Mortgagor
AND
THE BANK OF NEW YORK (NJ),
as Trustee
SERIES J MORTGAGE AND SECURITY AGREEMENT
Dated as of June 1, 1995
This Mortgage and Security Agreement secures an obligation incurred for the
construction of improvements on land and contains after-acquired property
provisions.
This Mortgage and Security Agreement also constitutes a fixture filing under
Article 9 of the Uniform Commercial Code-Secured Transactions, N.J.S.A.
12A:9-402(3) and (6).
Return and Record To:
M. Jeremy Ostow, Esq.
Wolff & Samson
A Professional Corporation
5 Becker Farm Road
Roseland, New Jersey 07068
<PAGE>
THIS SERIES J MORTGAGE AND SECURITY AGREEMENT is dated as of June 1,
1995 (the "Mortgage") and is made by HOLT HAULING AND WAREHOUSING SYSTEM, INC.,
a Pennsylvania corporation, having an address at 701 N. Broadway, Gloucester
City, New Jersey 08030, as mortgagor (the "Mortgagor") in favor of THE BANK OF
NEW YORK (NJ), a banking corporation organized and existing under the laws of
the United States of America, having an address at 385 Rifle Camp Road, West
Paterson, New Jersey 07424, as Trustee under the Indenture referred to below
(the "Trustee"). All capitalized terms used herein and not otherwise defined
shall have the meanings set forth in the Agreement (as hereinafter defined) and
the Indenture (as hereinafter defined).
W I T N E S S E T H :
WHEREAS, the New Jersey Economic Development Authority (the "Issuer")
intends to issue its Economic Development Revenue Refunding Bonds (Holt Hauling
and Warehousing System, Inc. - 1983 Project) 1995 Series J (the "Bonds") in the
aggregate principal amount of Five Million Dollars ($5,000,000), maturing
November 1, 2023, pursuant to an Indenture of Trust dated as of June 1, 1995 (as
amended and supplemented from time to time, the "Indenture") between the Issuer
and the Trustee and in accordance with the provisions of the New Jersey Economic
Development Authority Act, as amended, N.J.S.A. ss.34:1B-1, et seq. (the "Act"),
the proceeds from the sale of which are to be loaned to the Mortgagor in order
to permit the Mortgagor to refund a certain issue of Series I Bonds, all with
respect to a project located in the City of Gloucester City, Camden County, New
Jersey, all pursuant to a Series J Loan Agreement dated as of June 1, 1995 (as
amended from time to time, the "Agreement") between the Issuer and the
Mortgagor; and
WHEREAS, all of the Issuer's rights under the Agreement (except for
such rights as are specifically reserved) are to be assigned to the Trustee
pursuant to the Indenture, and this Mortgage is being granted directly to the
Trustee as a result of such assignment; and
WHEREAS, in connection with the issuance of the Bonds, certain
subsidiaries and affiliates of the Mortgagor (the "Guarantors") have entered
into a Series J Guaranty Agreement dated as of June 1, 1995 (as amended from
time to time, the "Guaranty");
NOW, THEREFORE, to equally and ratably secure (without preference or
priority) payment of the principal of, premium (if any) and interest on the
Bonds, the Mortgagor's payment obligations pursuant to paragraphs (a) and (d) of
Section 4.2 of the Agreement (herein called the "Loan Obligations"), and the
payment of any and all other amounts required to be paid pursuant to, and the
performance of all covenants, agreements and obligations required to be
performed by the Mortgagor or the Guarantors under, this
<PAGE>
Mortgage the Guaranty, the Agreement or the other Loan Documents (Collectively,
the "Secured Agreements"), whether direct or indirect, absolute or contingent,
due or to become due, now existing or hereafter arising and howsoever evidenced,
plus all expenses of enforcing this Mortgage, the Mortgagor, for and in
consideration of Ten Dollars and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, does by these presents
GRANT, BARGAIN, SELL, CONVEY AND MORTGAGE unto the Trustee (for the ratable
benefit of the owners of the Bonds) and its respective successors and assigns,
all of its right, title and interest in and to the following property, interests
and rights (collectively, the "Mortgaged Property"):
THAT certain parcel of real estate described in Exhibit A hereto (the
"Site");
TOGETHER with all and singular the ways, easements, rights,
privileges and appurtenances belonging or in any wise appertaining to the Site;
TOGETHER with the buildings and improvements now erected and hereafter
to be erected upon the Site, including any repairs, restorations or replacements
thereof or any changes, alterations or additions thereto (collectively, the
"Improvements");
TOGETHER with all right, title and interest, if any, of the Mortgagor
in and to any land lying in the bed of any street, avenue or alley adjoining the
Site to the center line thereof;
TOGETHER with the fixtures, building equipment and other personal
property owned by the Mortgagor and located on and used in connection with the
maintenance of the Improvements, including, without limitation, the equipment as
described in Exhibit B hereto but excluding any personal property or equipment
which is not a fixture but is used in connection with the business conducted on
the Mortgaged Property and excluding specifically container cranes, forklifts,
trucks and other vehicles (subject to such exclusions, collectively, the
"Equipment"); and
TOGETHER with all the rents, issues and profits of the Mortgaged
Property, and all the estate, right, title, interest and all claim and demand
whatsoever, at law or in equity, of the Mortgagor in and to the same, including
but not limited to:
(a) All rents, issues, profits, revenues, royalties, rights and
benefits derived from the Mortgaged Property from time to time accruing, whether
under leases or tenancies or contracts of sale now existing or hereafter
created, reserving to the Mortgagor, however, so long as there is no "Default"
under the Indenture, the right to receive and retain all such rents, issues and
profits.
-2-
<PAGE>
(b) All judgments, awards of damages, insurance proceeds and
settlements hereafter made resulting from condemnation proceedings or the taking
of the Mortgaged Property or any part thereof under the power of eminent domain,
or for any damage (whether caused by such taking or otherwise) to the Mortgaged
Property or any part thereof, or to any rights appurtenant thereto, including
any award for change of grade of streets.
TO HAVE AND TO HOLD the above granted and described property equally
and ratably unto the Trustee and its respective successors and assigns,
forever. The Mortgagor does hereby fully warrant good and marketable fee simple
title to the Site and the Improvements and good and marketable title to the
Equipment and will defend the same against the lawful claims of all persons
whomsoever, subject only to the exceptions set forth in Exhibit C hereto and
made a part hereof (the "Permitted Encumbrances") and that it has good and
lawful authority to sell, convey, mortgage and grant a security interest in the
Mortgaged Property.
PROVIDED, ALWAYS that if the Mortgagor or its successors or assigns
shall pay to the Trustee or its respective successors or assigns all amounts
secured hereby, including without limitation the Loan Obligations, all amounts
due under the Secured Agreements, and all other amounts due hereunder, and shall
perform, observe and comply with all of the terms, conditions, covenants and
agreements contained herein and in the Secured Agreements, and if no Bonds
remain Outstanding, then this Mortgage shall be absolutely void; otherwise the
same shall remain in full force and effect.
This Mortgage is subject and subordinate to (i) a certain Mortgage
dated March 15, 1984 between the Mortgagor and the City of Gloucester City and
recorded in the Camden County Register's Office in Book 2785, Page 543, (ii) a
certain Mortgage dated April 18, 1984 between the Mortgagor and the City of
Gloucester City and recorded in the Camden County Register's Office in Book
2793, Page 937 and (iii) a certain Mortgage dated August 22, 1984 between the
Mortgagor and the City of Gloucester City recorded in the Camden County
Register's Office in Book 2823, Page 135; provided, however, that this Mortgage
shall enjoy the benefits, pari passu with the mortgages described in the next
paragraph, of that certain Subordination Agreement dated as of August 1, 1986
among the Mortgagor, the City of Gloucester and Bankers Trust Company and
recorded September 25, 1986 in Mortgage Book 3050, Page 0644.
This Mortgage and the lien created hereby is pari passu and equal in
all respects to the lien created by certain other mortgages, all as more fully
described in that certain Amendment to Senior Indebtedness Coordinate Lien
Agreement dated as of June 1, 1995 by and among the Mortgagor, Dockside
Refrigerated Warehouses, Inc., Bankers Trust Company, as Series D Trustee, The
Bank of New
-3-
<PAGE>
York NA, as Series E Trustee, The Bank of New York NA, as CCIA Series Trustee
and the Trustee.
The Mortgagor further covenants and agrees as follows:
1. Payment. The Mortgagor shall pay all sums, including interest,
secured hereby when due, as provided for in the Secured Agreements and in this
Mortgage, and any renewal, extension or modification of any thereof.
2. Compliance with Laws. The Mortgagor shall comply with all present
and future laws, ordinances, rules, regulations, covenants, conditions and
restrictions affecting the Mortgagor, the Mortgaged Property or the use and
occupancy thereof, and not suffer or permit any violation thereof.
3. Maintenance and Modification of Mortgaged Property by the Mortgagor.
The Mortgagor agrees that at all times, the Mortgagor will maintain, preserve
and keep the Mortgaged Property or cause the Mortgaged Property to be
maintained, preserved and kept, with the appurtenances and every part and parcel
thereof in good repair, working order, and condition as more particularly
described in Section 5.2 of the Agreement, and that the Mortgagor will from time
to time make or cause to be made all repairs, replacements and renewals deemed
proper and necessary by it.
In addition, the Mortgagor shall have the privilege of remodeling the
Mortgaged Property or, subject to the limitations imposed by Section 5.2 of the
Agreement, making substitutions, modifications and improvements to the Mortgaged
Property from time to time as the Mortgagor, in its discretion, may deem to be
desirable for the Mortgagor's use for such purposes as shall be permitted by the
Act, the costs of which remodeling, substitutions, modifications and
improvements shall be paid by the Mortgagor, and the same shall be the property
of the Mortgagor and be included under the terms of this Mortgage as part of the
Mortgaged Property; provided, however, that such remodeling, substitutions,
modifications and improvements shall not interfere with the operation of the
Mortgaged Property in the manner contemplated in the Application and in the
Agreement or in any way damage the Mortgaged Property, and provided that the
Mortgaged Property, as remodeled, improved or altered, upon completion of such
remodeling, substitutions, modifications and improvements made pursuant to this
Section, shall be of a value not less than the value of the Mortgaged Property
immediately prior to the remodeling or the making of substitutions,
modifications and improvements. Any property for which a substitution or
replacement is made pursuant to this Section may be disposed of by the Mortgagor
in any manner and in the sole discretion of the Mortgagor.
-4-
<PAGE>
4. Liens. The Mortgagor will not permit any mechanic's or other lien
other than Permitted Encumbrances to be established or remain against the
Mortgaged Property, provided that if the Mortgagor shall first notify the
Trustee of its intention to do so, the Mortgagor may in good faith contest at
the Mortgagor's expense any mechanic's or other lien filed or established
against the Mortgaged Property, and in such event may permit the item so
contested to remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom unless by nonpayment of any such item the
security afforded by this Mortgage will be materially endangered or the
Mortgaged Property or any part thereof will be subject to loss or forfeiture, in
which event the Mortgagor shall promptly pay and cause to be satisfied and
discharged such unpaid item.
5. Taxes and Governmental and Utility Charges. The Mortgagor will pay
or cause to be paid, as the same respectively become due, all taxes and
governmental charges of any kind whatsoever that may at any time be lawfully
assessed or levied against or with respect to the Mortgaged Property or any part
thereof, including without limiting the generality of the foregoing, all ad
valorem taxes levied against the Mortgaged Property and any other taxes levied
upon the Mortgaged Property which, if not paid, will become a charge on the
receipts from the Mortgaged Property or a lien against the Mortgaged Property or
any interest therein or the revenues derived therefrom; all utility and other
charges incurred in the operation, maintenance, use, occupancy and upkeep of the
Mortgaged Property; and all assessments and charges lawfully made by any
governmental body for public improvements that may be secured by a lien on the
Mortgaged Property, provided that with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of
years, the Mortgagor shall be obligated to pay only such installments when and
as they are required to be paid.
The Mortgagor may, at the Mortgagor's expense, in good faith contest
any such taxes, assessments and other charges, all in the manner and subject to
the conditions set forth in Section 5.3(b) of the Agreement.
6. Casualty and Other Insurance. The Mortgagor agrees to insure or
cause to be insured the Mortgaged Property against loss or damage by fire and
other hazards as more particularly described in Sections 5.4 and 5.5 of the
Agreement. The Mortgagor will not do or suffer to be done anything which will
increase the risk of fire or other hazard to the Mortgaged Property or any part
thereof without first causing such increased risk to be fully and adequately
covered by insurance.
-5-
<PAGE>
7. Worker's Compensation Coverage. The Mortgagor shall maintain
worker's compensation coverage or cause the same to be maintained to the extent
required by applicable law.
8. Self-Insurance. Notwithstanding the provisions of Sections 6 and 7,
but subject to the requirements of Article V of the Agreement, if the Mortgagor
shall insure similar properties by self-insurance, the Mortgagor, at the
Mortgagor's election, may insure the Mortgaged Property, partially or wholly by
means of an adequate self-insurance fund set aside and maintained out of its
earnings, or in conjunction with other companies through an insurance trust or
other arrangement.
9. Condemnation. The net proceeds of any taking by the power of eminent
domain of all or a portion of the Mortgaged Property shall be applied as
provided in Section 6.2 of the Agreement.
10. Advances. If the Mortgagor fails to pay, subject to any right
hereunder to contest, any claim, lien, or encumbrance (other than Permitted
Encumbrances), or, prior to delinquency, any tax or assessment, or, when due,
any insurance premium, or to keep the Mortgaged Property in repair, or shall
commit or permit waste, or if there shall be commenced any action or proceeding
affecting the Mortgaged Property or the title thereto, or the interest of the
Trustee therein, including, but not limited to, eminent domain and bankruptcy or
reorganization proceedings, then the Trustee, at its option, may pay said claim,
lien, encumbrance, tax assessment or premium, with right of subrogation
thereunder, may make such repairs and take such steps as it deems advisable to
prevent or cure such waste, and may appear in any such action or proceeding and
retain counsel therein, and take such action therein as the Trustee deems
advisable, and for any of said purposes the Trustee may advance such sums of
money, including all costs, reasonable attorneys' fees and other items of
expense as it deems necessary. The Mortgagor shall pay to the Trustee all sums
of money so advanced by the Trustee together with interest on each such advance
at two percent (2%) in excess of the Prime Rate, and the repayment of such
advances shall be secured hereby. In making any payment or securing any
performance relating to any obligation of the Mortgagor under the Mortgage, the
Trustee, so long as it acts in good faith, shall be the sole judge of the
legality, validity and amount of any lien or encumbrance and of all other
matters necessary to be determined in satisfaction thereof. No such action of
the Trustee shall ever be considered as a waiver of any right accruing to it
hereunder. The Trustee shall not ever be held accountable for any delay in
making any such payment, which delay may result in any additional interest,
costs, charges or expenses.
11. Attorneys' Fees. In case of any action or any proceedings in any
court to collect any sums payable or secured by this
-6-
<PAGE>
Mortgage or to protect the lien of the Trustee or in any other case permitted by
law in which attorneys' fees may be collected from the Mortgagor or charged upon
the Mortgaged Property, the Mortgagor agrees to pay reasonable attorneys fees.
12. Remedies. Subject always to the provisions of Section 13 hereof,
upon the occurrence of a "Default" as defined and specified in the Indenture and
the declaration of an acceleration of the Bonds pursuant to the Indenture, the
Trustee may exercise one or more of the following remedies (no remedy hereunder
intended to be exclusive of any other remedy hereunder, under any of the Secured
Agreements or under the Indenture):
(a) The Trustee may require the Mortgagor, upon demand of the Trustee,
to forthwith surrender, and the Trustee may, to the extent permitted by
applicable law, by such officer, agent or receiver as it may appoint, all
without regard to the value of the security hereof, take possession of, all or
any part of the Mortgaged Property together with the books, papers and accounts
of the Mortgagor pertaining thereto, and make all needful repairs and
improvements as the Trustee shall deem necessary or appropriate, and lease or
sell the Mortgaged Property or any part thereof in the name and for the account
of the Mortgagor and collect, receive and sequester the rental therefrom, and
out of the same and any moneys received from any receiver pay, or set up proper
reserves for the payment of, all paper costs and expenses of so taking, holding,
payment of, leasing, selling and managing the same, including reasonable
compensation to the Trustee, its agents and counsel, and any charges of the
Trustee hereunder, and any taxes and assessments and other charges due and
payable which the Trustee may deem it wise to pay, and all expenses of such
repairs and improvements, and apply the remainder of the moneys so received to
the payment of the indebtedness secured hereby. Whenever all that is due upon
the indebtedness secured hereby shall have been paid and all defaults made good,
the Trustee shall surrender whatever possession the Trustee shall retain to the
Mortgagor; the same right of entry, however, shall exist upon any subsequent
default.
(b) The Trustee may enter and take possession of the Mortgaged
Property, and lease the Mortgaged Property for the account of the Mortgagor,
holding the Mortgagor liable for all payments due to the effective date of such
leasing and for the difference in the rent and other amounts paid by the lessee
pursuant to such lease and the amounts payable by the Mortgagor on account of
the indebtedness secured hereby.
(c) Subject to any mandatory requirements of applicable law, the
Trustee may sell the Mortgaged Property as an entirety or from time to time in
part to the highest bidder at public auction at such place and at such time
(which sale may be adjourned from time to time in the discretion of the Trustee
by announcement at
-7-
<PAGE>
the time and place fixed for such sale, without further notice) and upon such
terms as the Trustee may fix and briefly specify in a notice of sale to be
published once each week for four (4) successive weeks prior to such sale in a
newspaper of general circulation in the county in which the Mortgaged Property
is located and in such event the Trustee may bid for or become the purchaser of
the Mortgaged Property at the public auction and be entitled to have the
purchase price payable at the public auction payable by credit for the balance
due and payable hereunder in respect of the indebtedness secured hereby.
(d) The Trustee may foreclose this Mortgage by judicial proceedings in
the manner provided by the laws of the State of New Jersey for the foreclosure
of mortgages, and in such event the Trustee may bid for or become the purchaser
of the Mortgaged Property at the foreclosure sale and be entitled to have the
purchase price payable at foreclosure sale payable by credit to the judgment for
the balance, if any, due and payable hereunder in respect of the indebtedness
secured hereby.
(e) The Trustee may exercise all rights and remedies available to
secured creditors under the Uniform Commercial Code as in effect in the State of
New Jersey.
13. Option To Release Certain Real Estate. Notwithstanding any other
provisions of this Mortgage, the Trustee hereby agrees, subject to the
provisions of the Agreement, at any time and from time to time, to release from
this Mortgage (i) any unimproved part of the Site, provided such release shall
not adversely affect the value of the Mortgaged Property, or (ii) any part of
the Site with respect to which fee title is to be conveyed to a railroad, public
utility or public body in order that railroad service, utility services or roads
may be provided for the Mortgaged Property, upon receipt of:
(a) Copies of the instrument of release, in recordable form.
(b) A certificate of the Mortgagor (i) stating that no "Default" or any
condition or event which, with the giving of notice or the passage of time or
both would constitute a "Default" has occurred under the Secured Agreements or
the Indenture, (ii) giving an adequate legal description of that portion of the
Site to be released, (iii) stating the purpose for which the release is desired,
(iv) requesting such release, and (v) approving such release.
(c) If applicable, a copy of the instrument conveying the portion of
the Site to be released.
-8-
<PAGE>
(d) Any instrument or instruments required by the terms of such
release.
(e) A certificate of an independent engineer acceptable to the Trustee
dated not more than sixty (60) days prior to the date of the release and stating
that, in the opinion of such engineer (i) the portion of the Site so proposed to
be released is necessary or desirable in order to obtain railroad service,
utility services or roads to benefit the Mortgaged Property, or is not otherwise
needed for the efficient operation of the Mortgaged Property for the purpose
stated in the Agreement and (ii) the release so proposed to be made will not
impair the usefulness of the Mortgaged Property as a facility for the purposes
for which it was designed and for such purposes as shall be permitted by the Act
and will not destroy the means of ingress thereinto and egress therefrom.
Provided, however, that if the portion of the, Site to be released has
transportation or utility facilities located upon it, the Mortgagor shall retain
an easement to use such facilities to the extent necessary for the efficient
operation of the Mortgaged Property.
The Trustee agrees that upon receipt of the items required in this
Section to be furnished by the Mortgagor, it will promptly execute and deliver
the proposed release covering the portion of the Site to be released. In the
event of any such release, the Mortgagor shall not be entitled to any
postponement, abatement or diminution of amounts payable on account of the
indebtedness secured hereby.
14. Release of Items of Equipment. In any instance where the Mortgagor
in its sole discretion determines that any items of the Equipment have become
obsolete, worn out, unsuitable, inappropriate or unnecessary for its purposes,
and so long as no "Default" or any condition or event which, with the giving of
notice or the passage of time or both would constitute a "Default" has occurred
under the Secured Agreements or the Indenture, the Mortgagor may remove such
Equipment from the Mortgaged Property and sell, trade-in, exchange or otherwise
dispose of such Equipment (as a whole or in part) without any responsibility or
accountability to the Trustee therefor, provided that the Mortgagor shall
substitute and install anywhere in the Mortgaged Property other machinery or
equipment having equal or greater utility or value (but not necessarily having
the same function) in the operation of the Mortgaged Property as a modern
facility, all of which substituted machinery or equipment shall be free of all
liens and encumbrances (other than Permitted Encumbrances) and shall become a
part of the property secured hereunder.
-9-
<PAGE>
The removal from the Mortgaged Property of any portion of the Equipment
pursuant to the provisions of this Section shall not entitle the Mortgagor to
any postponement, abatement or diminution in amounts payable on account of the
indebtedness secured hereby.
Upon the request of the Mortgagor, the Trustee shall deliver or cause
to be delivered to the Mortgagor, such instruments as are reasonably necessary
to confirm the release of removed items of the Equipment from the lien of this
Mortgage and cancel any security interest with respect thereto, provided that
such request is accompanied by a certificate of an officer of the Mortgagor to
the effect that such release complies in all respects with this Section.
15. Granting of Easements. If no "Default" or any condition or event
which, with the giving of notice or the passage of time or both would constitute
a "Default" has occurred under the Secured Agreements or the Indenture, the
Mortgagor may at any time or times, grant easements, licenses, rights-of-way
(including the dedication of public highways) and other rights or privileges in
the nature of easements with respect to any property or rights included in the
Mortgaged Property, free from the lien and security interest afforded by or
under this Mortgage or the Mortgagor may reconvey existing easements, licenses,
rights-of-way and other rights and privileges with or without consideration, and
the Trustee agrees to execute and deliver or cause to be executed and delivered
any instruments necessary or appropriate to confirm and grant or convey any such
easement, license, right-of-way or other grant or privilege upon receipt of: (1)
a copy of the instrument of grant or reconveyance; (2) a written statement
signed by an officer of the Mortgagor stating (i) that such grant or
reconveyance will not impair the effective use or interfere with the operation
of the Mortgaged Property and (ii) that such grant or reconveyance is not
detrimental to the proper conduct of the business of Mortgagor; and (3) an
opinion of independent counsel that such grant or reconveyance will not
materially weaken, diminish or impair the security afforded pursuant to the
terms of this Mortgage, and will not violate the terms, covenants or conditions
of any agreement or grant which the Mortgagor or the Issuer may have with the
United States, the State of New Jersey or any agency, department or political
subdivision thereof with respect to the Mortgaged Property or the Indenture.
16. No Waiver. No failure, forbearance or delay by the trustee in
exercising any right or remedy hereunder, under any Secured Agreement, or under
the Indenture, or otherwise afforded by law, shall operate as a waiver thereof
or preclude the exercise thereof in accordance herewith or therewith. No waiver
by the Trustee of any default shall constitute a waiver of or consent to
subsequent defaults. No withdrawal or abandonment of foreclosure proceedings by
the Trustee shall be taken or construed as a waiver
-10-
<PAGE>
of its right to exercise any right or remedy hereunder by reason of any past,
present or future default; and, in like manner, the procurement of insurance or
the payment of taxes or other liens or charges by the Trustee shall not be taken
or construed as a waiver of its rights or remedies hereunder.
17. Waiver of Mortgagor. The Mortgagor, on behalf of itself and all
persons now or hereafter interested in the Mortgaged Property, to the fullest
extent permitted by applicable law, hereby waives all rights under all
appraisement, homestead, moratorium, valuation, exemption, stay, extension,
redemption and marshalling statutes, laws or equities now or hereafter existing,
and the Mortgagor agrees that no defense, claim or right based on any thereof
will be asserted, or may be enforced, in any action enforcing or relating to
this Mortgage or any of the Mortgaged Property. Without limiting the generality
of the preceding sentence, the Mortgagor, on its own behalf and on behalf of
each and every person acquiring any interest in or title to the Mortgaged
Property subsequent to the date of this Mortgage, hereby irrevocably waives any
and all rights of redemption from sale under any power contained herein or under
any sale pursuant to any statute, order, decree or judgment of any court.
18. Definitions. In this Mortgage, all words and terms defined in the
Agreement and the Indenture shall have the respective meanings and be construed
as provided therein unless a different meaning clearly appears from the context.
Reference herein to, or citation herein of, any provisions of the Agreement, or
the Indenture shall be deemed to incorporate such provisions as a part hereof in
the same manner and with the same effect as if the same were fully set forth
herein.
19. Severability. In the event that any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Mortgage, but this Mortgage shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein or therein.
20. Successors and Assigns. Unless otherwise expressly stated, the
terms "Issuer", "Mortgagor" and "Trustee', as used herein include each of their
respective successors in interest and assigns.
21. Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
or mailed by certified or registered mail, postage prepaid, addressed as
follows: if to the Mortgagor, to Holt Hauling and Warehousing System, Inc.,
P.O. Box 8698, Philadelphia, Pennsylvania 19101, Attention: Mr. Bernard Gelman,
-11-
<PAGE>
Vice President; and if to the Trustee, The Bank of New York (NJ), 385 Rifle Camp
Road, West Paterson, New Jersey 07424. Any party hereto may by written notice
given hereunder, designate any further or different addresses to which
subsequent notices, certificates or other communications shall be sent.
22. New Jersey Uniform Commercial Code Security Interest and Financing
Statement. This instrument is intended to be a security agreement pursuant to
the New Jersey Uniform Commercial Code covering any of the items or types of
property included as part of the Mortgaged Property that may be subject to a
security interest pursuant to the New Jersey Uniform Commercial Code, and the
Mortgagor hereby grants to the Trustee, its successors and assigns a security
interest in such items or types of property. This Mortgage or a reproduction
hereof is deemed to constitute a fixture filing to be filed of record in the
real estate records maintained by the Clerk of Camden County, pursuant to
N.J.S.A. 12A:9-402(3) and (6). In addition, the Mortgagor will execute, deliver
and file any financing statements or amendments thereof or continuation
statements thereto that may be required to perfect or to continue the perfection
of a security interest in said items or types of property. The Mortgagor shall
pay all reasonable costs of the preparation and filing of such instruments.
23. Amendments. Except as may otherwise be specifically provided
herein, no charge, amendment, modification, cancellation or discharge hereof, or
any part hereof, shall be valid unless in writing and signed by the parties
hereto.
24. Relation Back. The parties to this Mortgage may mutually agree to
change the interest rate, due date or other term or terms of this Mortgage or of
the obligations secured by this Mortgage. If the parties mutually agree to a
change, which change is a"modification" as defined in New Jersey P.L. 1985,
c.353, this Mortgage shall be subject to the priority provisions of that law.
-12-
<PAGE>
25. Captions. The captions herein are inserted only for convenience of
reference and in no way define, limit or describe the scope or intent of this
Mortgage or any particular paragraph or section hereof, nor the proper
construction hereof.
26. Governing Law. This Mortgage is to be governed and construed
according to the laws of the State of New Jersey.
27. RECEIPT. THE MORTGAGOR HEREBY ACKNOWLEDGES RECEIPT OF A TRUE COPY
OF THIS MORTGAGE, WITHOUT CHARGE.
IN WITNESS WHEREOF, the Mortgagor has caused this instrument to be
executed in its name by one of its duly authorized officers; and the Trustee has
evidenced its acceptance of this instrument by having caused this instrument to
be executed in its corporate name by one of its duly authorized officers, as of
the date first above written.
[SEAL] HOLT HAULING AND WAREHOUSING
SYSTEM, INC., a Pennsylvania
corporation
Attest:
/s/ John Evans /s/ Bernard Gelman
- --------------------- --------------------------
John Evans, Secretary Bernard Gelman, Vice
President
[SEAL] THE BANK OF NEW YORK (NJ), as
Trustee
Attest:
- --------------------- By:-----------------------
================================================================================
HOLT HAULING AMD WAREHOUSING SYSTEM, INC.
AND 777 PATTISON AVE., INC., jointly and severally as Mortgagor
AND
THE BANK OF NEW YORK (NJ)
as Trustee
-------------------------------
MORTGAGE AND SECURITY AGREEMENT
-------------------------------
Dated as of January 15, 1996
================================================================================
This Mortgage and Security Agreement also constitutes a fixture filing
under Article 9 of the Commercial Code - Secured Transactions, N.J.S.A.
12A:9-402(3) and (6).
Prepared by and Return and Record To:
/s/ M. Jeremy Ostow
- ----------------------------
M. Jeremy Ostow, Esq.
Wolff & Samson
A Professional Corporation
5 Becker Farm Road
Roseland, New Jersey 07068
<PAGE>
THIS MORTGAGE AND SECURITY AGREEMENT is dated as of ____________, 1996
(the "Mortgage") and is made by HOLT HAULING AND WAREHOUSING SYSTEM, INC., a
Pennsylvania corporation ("Holt" or the "Company"), and 777 Pattison Ave., Inc.,
("Pattison") a Pennsylvania corporation, each having an address at 701 N.
Broadway, Gloucester City, New Jersey 08030, jointly and severally
(collectively, the "Mortgagor") , in favor of THE BANK OF NEW YORK (NJ), a
banking corporation organized and existing under the laws of the State of New
Jersey, having an address at 385 Rifle Camp Road, West Paterson, New Jersey
07424, as Trustee (the "Trustee") under the Indenture of Trust entered with the
Camden County Improvement Authority (the "Issuer") and dated as of January 15,
1996 (the "Indenture"). All capitalized terms used but not otherwise defined
herein shall have the meanings set forth in the Indenture or in the Lease
Agreement as defined in the Indenture.
W I T N E S S E T H
WHEREAS, the Issuer was created pursuant to the Act for the purposes,
among other things, of providing within the County structures, franchises,
equipment and facilities for operation of public transportation or for terminal
purposes, including development and improvement of port terminal structures,
facilities and equipment, for public use in counties, in, along or through which
a navigable river flows; and
WHEREAS, the Issuer is authorized, pursuant to the Act, to issue its
bonds for the purpose of financing the cost of any public facility or
facilities; and
WHEREAS, Pattison, has a leasehold interest in a portion of the Land
(as hereinafter defined) and a fee interest in certain improvements located on
the Land, and Holt is the owner of the fee estate in the Land and in certain
improvements located on the Land and has a leasehold interest in certain
improvements located on the Land; and
WHEREAS, the Issuer proposes to provide financial assistance in
connection with a certain project ("Project") consisting of (i) the construction
by the Company of approximately 155,000 square feet of refrigerated warehouse
space, (ii) the construction by the Company of approximately 31, 000 square feet
of dry warehouse space, and (iii) the construction by the Company of
approximately 20,000 square feet of office space, all to be located on a portion
of the Terminal in the City of Gloucester City, Camden County, New Jersey; and
WHEREAS, the Issuer proposes to issue its Lease Revenue Bonds (Holt
Hauling and Warehousing System, Inc. Project) 1996 Series A in the aggregate
principal amount of $24,500,000 (the "Bonds") pursuant to the Indenture and
proposes to apply the proceeds of the sale of the Bonds to finance the
construction of the Project; and
<PAGE>
WHEREAS, the Issuer proposes to lease the Project to Holt pursuant to
the Lease Agreement, pursuant to which the Company shall covenant to make lease
payments to the Issuer sufficient to pay all principal, interest and premium, if
any, when due on the Bonds and other amounts payable in connection with the
Bonds; and
WHEREAS, (i) the Bonds shall be secured by the pledge of payments to be
made by Holt under the Lease Agreement and by this mortgage, delivered from the
Mortgagor to the Trustee on the Project, the Land and the Terminal and conveying
a security interest in certain machinery and equipment of the Mortgagor, subject
and subordinate to the Senior Mortgage Debt, and (ii) the obligations of the
Company under the Lease Agreement and the payment of the Bonds shall be
guaranteed by the Company, B.H. Sobelman & Co., Inc., Refrigerated Distribution
Center, Inc., Oregon Avenue Enterprises, Incorporated, Holt Cargo Systems, Inc.,
The Riverfront Development Corp., CRT, Inc., Triple Seven Ice, Inc., Pattison
Avenue Warehousing Corp., Refrigerated Enterprise, Inc., 777 Pattison Ave,,
Inc., Dockside International Fish Co., Inc., Murphy Marine Services, Inc.,
Wilmington Stevedores., Inc. and any other person required to be a Guarantor
(collectively, the "Guarantor") pursuant to the Guaranty; and
WHEREAS, the Bonds shall be further secured by a leasehold mortgage on
the Project Site (as defined in the Ground Lease) and a fee mortgage on the
Project from the Issuer to the Trustee subject and subordinate to the Senior
Mortgage Debt; and
WHEREAS, the Mortgagor and the Trustee each have full right and lawful
authority to enter into this Mortgage, and to perform and observe the provisions
hereof on their respective parts to be performed and observed.
NOW, THEREFORE, to equally and ratably secure (without preference or
priority) payment of the principal of, premium (if any) and interest on the
Bonds, the Company's and the Guarantors' respective obligations under the Lease
Agreement and the Guaranty, and the payment of any and all other amounts
required to be paid pursuant to, and the performance of all covenants,
agreements and obligations required to be performed by the Mortgagor or the
Guarantors under this Mortgage, the Lease Agreement and the Guaranty
(collectively, the "Secured Agreements"), whether direct or indirect, absolute
or contingent, due or to become due, now existing or hereafter arising and
howsoever evidenced, plus all expenses of enforcing this Mortgage, each
Mortgagor, for and in consideration of Ten Dollars and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
does by these presents GRANT, BARGAIN, SELL, CONVEY AND MORTGAGE and grant a
security interest unto the Trustee (for the ratable benefit it of the owners of
the Bonds) and its respective successors and assigns, all of its respective
right, title and fee
-2-
<PAGE>
and leasehold interest in and to the following property, interests and
rights (collectively, the "Mortgaged Property"):
THAT certain parcel of real estate described in Exhibit A hereto (the
"Land);
TOGETHER with all and singular the ways, easements, rights, privileges
and appurtenances belonging or in any wise appertaining to the Land;
TOGETHER with the buildings and improvements now erected and hereafter
to be erected upon the Land, including any repairs, restorations or replacements
thereof or any changes, alterations or additions thereto (collectively, the
"Improvements");
TOGETHER with all of the Company's leasehold interest in the Project
and the Project Site pursuant to the Lease Agreement;
TOGETHER with all right, title and interest, if any, of the Mortgagor
in and to any land lying in the bed of any street, avenue or alley adjoining the
Land to the center line thereof;
TOGETHER with the fixtures, building equipment and other personal
property owned by the Mortgagor and located on and used in connection with the
maintenance of the Improvements, but excluding any personal property or
equipment which is not a fixture but is used in connection with the business
conducted on the Mortgaged Property (subject to such exclusions, collectively,
the "Equipment"); and
TOGETHER with all the rents, issues and profits of the Mortgaged
Property, and all the estate, right, title, interest and all claim and demand
whatsoever, at law or in equity, of the Mortgagor in and to the same, including
but not limited to:
(a) All rents, issues, profits, revenues, royalties, rights and
benefits derived from the Mortgaged Property from time to time accruing, whether
under leases or tenancies or contracts of sale now existing or hereafter
created, reserving to the Mortgagor, however, so long as there is no "Default"
under the Indenture, the right to receive and retain all such rents, issues and
profits.
(b) All judgments, awards of damages, insurance proceeds and
settlements hereafter made resulting from condemnation proceedings or the taking
of the Mortgaged Property or any part thereof under the power of eminent domain,
or for any damage (whether caused by such taking or otherwise) to the Mortgaged
Property or any part thereof, or to any rights appurtenant thereto, including
any award for change of grade of streets.
-3-
<PAGE>
TO HAVE AND TO HOLD the above granted and described property equally
and ratably unto the Trustee and its respective successors and assigns, forever.
The Mortgagor does hereby fully warrant good and marketable fee simple title to
the Land and the Improvements and good and marketable title to the Equipment and
will defend the same against the lawful claims of all persons whomsoever, all
subject only to Permitted Encumbrances and that it has good and lawful authority
to sell, convey, mortgage and grant a security interest in the Mortgaged
Property.
PROVIDED, ALWAYS that if the Mortgagor or its successors or assigns
shall pay to the Trustee or its respective successors or assigns all amounts
secured hereby, including without limitation, all amounts due under the Secured
Agreements, and all other amounts due hereunder, and shall perform, observe and
comply with all of the terms, conditions, covenants and agreements contained
herein and in the Secured Agreements, and if no Bonds remain Outstanding, then
this Mortgage shall be absolutely void; otherwise the same shall remain in full
force and effect.
This Mortgage is in all respects subject and subordinate to all
mortgages securing the Senior Mortgage Debt.
The Mortgagor further covenants and agrees as follows:
1. Payment. The Mortgagor shall pay all sums, including interest,
secured hereby when due, as provided for in the Lease Agreement, the Guaranty
and in this Mortgage, and any renewal, extension or modification of any thereof.
2. Compliance with Laws. The Mortgagor shall comply with all present
and future laws, ordinances, rules, regulations, covenants, conditions and
restrictions affecting the Mortgagor, the Mortgaged Property or the use and
occupancy thereof, and not suffer or permit any violation thereof.
3. Maintenance and Modification of Mortgaged Property by the Mortgagor.
The Mortgagor agrees that at all times, the Mortgagor will maintain, preserve
and keep the Mortgaged Property or cause the Mortgaged Property to be
maintained, preserved and kept, with the appurtenances and every part and parcel
thereof in good repair, working order, and condition, and that the Mortgagor
will from time to time make or cause to be made all repairs, replacements and
renewals deemed proper and necessary by it.
In addition, the Mortgagor shall have the privilege of remodeling the
Mortgaged Property or making substitutions, modifications and improvements to
the Mortgaged Property from time to time as the Mortgagor, in its discretion,
may deem to be desirable for the Mortgagor's use for such purposes as shall be
permitted by the Act, the costs of which remodeling, substitutions,
-4-
<PAGE>
modifications and improvements shall be paid by the Mortgagor, and the same
shall be the property of the Mortgagor and be included under the terms of this
Mortgage as part of the Mortgaged Property; provided, however, that such
remodeling, substitutions, modifications and improvements shall not interfere
with the operation of the Mortgaged Property or in any way damage the Mortgaged
Property, and provided that the Mortgaged Property, as remodeled, improved or
altered, upon completion of such remodeling, substitutions, modifications and
improvements made pursuant to this Section shall be of a value not less than the
value of the Mortgaged Property immediately prior to the remodeling or the
making of substitutions, modifications and improvements. Any property for which
a substitution or replacement is made pursuant to this Section may be disposed
of by the Mortgagor in any manner and in the sole discretion of the Mortgagor.
4. Liens. The Mortgagor will not permit any mechanic's or other lien
other than Permitted Encumbrances to be established or remain against the
Mortgaged Property, provided that if the Mortgagor shall first notify the
Trustee of its intention to do so, the Mortgagor may in good faith contest at
the Mortgagor's expense any mechanic's or other lien filed or established
against the Mortgaged Property, and in such event may permit the item so
contested to remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom unless by nonpayment of any such item the
security afforded by this Mortgage will be materially endangered or the
Mortgaged Property or any part thereof will be subject to loss or forfeiture, in
which event the Mortgagor shall promptly pay and cause to be satisfied and
discharged such unpaid item.
5. Taxes and Governmental and Utility Charges. The Mortgagor will pay
or cause to be paid, as the same respectively become due, all taxes and
governmental charges of any kind whatsoever that may at any time be lawfully
assessed or levied against or with respect to the Mortgaged Property or any part
thereof, including, without limiting the generality of the foregoing, all ad
valorem taxes levied against the Mortgaged Property and any other taxes levied
upon the Mortgaged Property which, if not paid, will become a charge on the
receipts from the Mortgaged Property or a lien against the Mortgaged Property or
any interest therein or the revenues derived therefrom; all utility and other
charges incurred in the operation, maintenance, use, occupancy and upkeep of the
Mortgaged Property; and all assessments and charges lawfully made by any
governmental body for public improvements that may be secured by a lien on the
Mortgaged Property, provided that with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of
years, the Mortgagor shall be obligated to pay only such installments when and
as they are required to be paid.
-5-
<PAGE>
The Mortgagor may, at the Mortgagor's expense, in good faith contest
any such taxes, assessments and other charges, all in the manner and subject to
the conditions set forth in Section 7.3 of the Lease Agreement.
6. Casualty and Other Insurance. The Mortgagor agrees to insure or
cause to be insured the Mortgaged Property against loss or damage by fire and
other hazards of the nature in accordance with the requirements of Section 7.4
of the Lease Agreement. The Mortgagor will not do or suffer to be done anything
which will increase the risk of fire or other hazard to the Mortgaged Property
or any part thereof without first causing such increased risk to be fully and
adequately covered by insurance.
7. Worker's Compensation Coverage. The Mortgagor shall maintain
worker's compensation coverage or cause the same to be maintained to the extent
required by applicable law.
8. [INTENTIONALLY OMITTED]
9. Casualty or Condemnation. Subject to the provisions of any Senior
Indebtedness secured by a Lien on the Mortgaged Property senior to the Lien of
this Mortgage and any Coordinate Lien Agreement to which the Trustee may become
a party, the net proceeds of any casualty affecting or any taking by the power
of eminent domain of all or a portion of the Mortgaged Property shall be applied
as provided in Section 8.2 of the Lease Agreement.
10. Advances. If the Mortgagor fails to pay, subject to any right
hereunder to contest, any claim, lien, or encumbrance (other than Permitted
Encumbrances), or, prior to delinquency, any tax or assessment, or, when due,
any insurance premium, or to keep the Mortgaged Property in repair, or shall
commit or permit waste, or if there shall be commenced any action or proceeding
affecting the Mortgaged Property or the title thereto, or the interest of the
Trustee therein, including, but not limited to, eminent domain and bankruptcy or
reorganization proceedings, then the Trustee, at its option, may pay said claim,
lien, encumbrance, tax, assessment or premium, with right of subrogation
thereunder, may make such repairs and take such steps as it deems advisable to
prevent or cure such waste, and may appear in any such action or proceeding and
retain counsel therein, and take such action therein as the Trustee deems
advisable, and for any of said purposes the Trustee may advance such sums of
money, including all costs, reasonable attorneys' fees and other items of
expense as it deems necessary. The Mortgagor shall pay to the Trustee all sums
of money so advanced by the Trustee together with interest on each such advance
at two percent (2%) in excess of (a) the Prime Rate, or (b) the highest rate
then in effect on the Bonds, and the repayment of such advances shall be secured
hereby. In making any payment or securing any performance relating to any
obligation of the
-6-
<PAGE>
Mortgagor under this Mortgage, the Trustee, so long as it acts in good
faith, shall be the sole judge of the legality, validity and amount of any
lien or encumbrance and of all other matters necessary to be determined in
satisfaction thereof. No such action of the Trustee shall ever be
considered as a waiver of any right accruing to it hereunder. The Trustee
shall not ever be held accountable for any delay in making any such
payment, which delay may result in any additional interest, costs, charges
or expenses.
11. Attorneys' Fees. In case of any action or any proceedings in any
court to collect any sums payable or secured by this Mortgage or to protect the
lien of the Trustee or in any other case permitted by law in which attorneys'
fees may be collected from the Mortgagor or charged upon the Mortgaged Property,
the Mortgagor agrees to pay reasonable attorneys' fees.
12. Remedies. Subject always to the provisions of Section 13 hereof,
upon the occurrence of a "Default" as defined and specified in the Indenture and
the declaration of an acceleration of the Bonds pursuant to the Indenture, or of
the Mortgagor's payment obligations under the Lease Agreement the Trustee may
exercise one or more of the following remedies (no remedy hereunder intended to
be exclusive of any other remedy hereunder, under any of the Secured Agreements
or under the Indenture):
(a) The Trustee may require the Mortgagor, upon demand of the Trustee,
to forthwith surrender, and the Trustee may, to the extent permitted by
applicable law, by such officer, agent or receiver as it may appoint, all
without regard to the value of the security hereof, take possession of, all or
any part of the Mortgaged Property together with the books, papers and accounts
of the Mortgagor pertaining thereto, and make all needful repairs and
improvements as the Trustee shall deem necessary or appropriate, and lease or
sell the Mortgaged Property or any part thereof in the name and for the account
of the Mortgagor and collect, receive and sequester the rental therefrom, and
out of the same and any moneys received from any receiver pay, or set up proper
reserves for the payment of, all proper costs and expenses of so taking,
holding, leasing, selling and managing the same, including reasonable
compensation to the Trustee, its agents and counsel, and any charges of the
Trustee hereunder, and any taxes and assessments and other charges due and
payable which the Trustee may deem it wise to pay, and all expenses of such
repairs and improvements, and apply the remainder of the moneys so received to
the payment of the indebtedness secured hereby. Whenever all that is due upon
the indebtedness secured hereby shall have been paid and all defaults made good,
the Trustee shall surrender whatever possession the Trustee shall retain to the
Mortgagor; the same right of entry, however, shall exist upon any subsequent
default.
-7-
<PAGE>
(b) The Trustee may enter and take possession of the Mortgaged Property
or any part thereof, and lease the Mortgaged Property or any part thereof for
the account of the Mortgagor, holding the Mortgagor liable for all payments due
to the effective date of such leasing and for the difference in the rent and
other amounts paid by the lessee pursuant to such lease and the amounts payable
by the Mortgagor on account of the indebtedness secured hereby.
(c) Subject to any mandatory requirements of applicable law, the
Trustee may sell the Mortgaged Property as an entirety or from time to time in
part to the highest bidder at public auction at such place and at such time
(which sale may be adjourned from time to time in the discretion of the Trustee
by announcement at the time and place fixed for such sale, without further
notice) and upon such terms as the Trustee may fix and briefly specify in a
notice of sale to be published once each week for four (4) successive weeks
prior to such sale in a newspaper of general circulation in the county in which
the Mortgaged Property is located and in such event the Trustee may bid for or
become the purchaser of the Mortgaged Property at the public auction and be
entitled to have the purchase price payable at the public auction payable by
credit for the balance due and payable hereunder in respect of the indebtedness
secured hereby.
(d) The Trustee may foreclose this Mortgage by judicial proceedings in
the manner provided by the laws of the State of New Jersey for the foreclosure
of mortgages, and in such event the Trustee may bid for or become the purchaser
of the Mortgaged Property or any part thereof at the foreclosure sale and be
entitled to have the purchase price payable at foreclosure sale payable by
credit to the judgment for the balance, if any, due and payable hereunder in
respect of the indebtedness secured hereby.
(e) The Trustee may exercise all rights and remedies available to
secured creditors under the Uniform Commercial Code as in effect in the State of
New Jersey.
13. Option To Release Certain Real Estate. Notwithstanding any other
provisions of this Mortgage, the Trustee hereby agrees, at any time and from
time to time, to release from this Mortgage at the request of the Company, (i)
any unimproved part of the Land, provided such release shall not adversely
affect the value of the Mortgaged Property (the Trustee may conclusively rely on
the below mentioned documents for any such determination), or (ii) any part of
the Land with respect to which fee title is to be conveyed to a railroad, public
utility or public body in order that railroad service, utility services or roads
may be provided for the Mortgaged Property, upon receipt of:
-8-
<PAGE>
(a) Copies of the instrument of release, in recordable form.
(b) A certificate of the Mortgagor (i) stating that no "Default" or
"Event of Default" or any condition or event which, with the giving of notice or
the passage of time or both would constitute a "Default" or "Event of Default"
has occurred under the Secured Agreements or the Indenture, (ii) giving an
adequate legal description of that portion of the Land to be released, (iii)
stating the purpose for which the release is desired, (iv) requesting such
release, and (v) approving such release.
(c) If applicable, a copy of the instrument conveying the portion of
the Land to be released.
(d) Any instrument or instruments required by the terms of such
release.
(e) A certificate of an independent engineer not unacceptable to the
Trustee in its reasonable discretion dated not more than sixty (60) days prior
to the date of the release and stating that, in the opinion of such engineer (i)
the portion of the Land so proposed to be released is necessary or desirable in
order to obtain railroad service, utility services or roads to benefit the
Mortgaged Property, or is not otherwise needed for the efficient operation of
the Mortgaged Property for the purpose stated in the Agreement and (ii) the
release so proposed to be made will not impair the usefulness of the Mortgaged
Property as a facility for the purposes for which it was designed and for such
purposes as shall be permitted by the Act and will not destroy the means of
ingress thereinto and egress therefrom or the value of the Mortgaged Property.
Provided, however, that if the portion of the Land to be released has
transportation or utility facilities located upon it, the Mortgagor shall retain
an easement to use such facilities to the extent necessary for the efficient
operation of the Mortgaged Property.
The Trustee agrees that upon receipt of the items required in this
Section to be furnished by the Mortgagor, it will promptly execute and deliver
the proposed release covering the portion of the Land to be released. In the
event of any such release, the Mortgagor shall not be entitled to any
postponement, abatement or diminution of amounts payable on account of the
indebtedness secured hereby.
14. Release of Items of Equipment. In any instance where the Company in
its sole discretion determines that any items of the Equipment have become
obsolete, worn out, unsuitable, inappropriate or unnecessary for its purposes,
and so long as no "Default" or
-9-
<PAGE>
"Event of Default" or any condition or event which, with the giving of
notice or the passage of time or both would constitute a "Default" or
"Event of Default" has occurred under the Lease Agreement, the Guaranty or
this Mortgage the Mortgagor may remove such Equipment from the Mortgaged
Property and sell, trade-in, exchange or otherwise dispose of such
Equipment (as a whole or in part) without any responsibility or
accountability to the Trustee therefor, provided that the Mortgagor shall
substitute and install anywhere in the Mortgaged Property other machinery
or equipment having equal or greater utility or value (but not necessarily
having the same function) in the operation of the Mortgaged Property as a
modern facility, all of which substituted machinery or equipment shall be
free of all liens and encumbrances (other than Permitted Encumbrances) and
shall become a part of the property secured hereunder.
The removal from the Mortgaged Property of any portion of the Equipment
pursuant to the provisions of this Section shall not entitle the Mortgagor to
any postponement, abatement or diminution in amounts payable on account of the
indebtedness secured hereby.
Upon the request of the Mortgagor, the Trustee shall deliver and cause
to be delivered to the Mortgagor, such instruments as are reasonably necessary
to confirm the release of removed items of the Equipment from the lien of this
Mortgage and cancel any security interest with respect thereto, provided that
such request is accompanied by a certificate of an officer of the Mortgagor to
the effect that such release complies in all respects with this Section.
15. Granting of Easements. If no "Default" or "Event of Default" or any
condition or event which, with the giving of notice or the passage of time or
both would constitute a "Default" or "Event of Default" has occurred under the
Lease Agreement, the Guaranty or this Mortgage, the Mortgagor may at any time or
times and at the request of the Company, grant easements, licenses,
rights-of-way (including the dedication of public highways) and other rights or
privileges in the nature of easements with respect to any property or rights
included in the Mortgaged Property, free from the lien and security interest
afforded by or under this Mortgage or the Mortgagor may reconvey existing
easements, licenses, rights-of-way and other rights and privileges without
consideration, and the Trustee agrees to execute and deliver or cause to be
executed and delivered any instrument necessary or appropriate to confirm and
grant or convey any such easement, license, right-of-way or other grant or
privilege upon receipt of: (1) a copy of the instrument of grant or
reconveyance; (2) a written statement signed by an officer of the Mortgagor
stating (i) that such grant or reconveyance will not impair the effective use or
value or interfere with the operation of the Mortgaged Property and (ii) that
such grant or reconveyance is not detrimental to the
-10-
<PAGE>
proper conduct of the business of the Mortgagor; and (3) an opinion of
Independent Counsel (as defined in the Indenture) that such grant or
reconveyance will not materially weaken, diminish or impair the security
afforded pursuant to the terms of this Mortgage, and will not violate the
terms, covenants or conditions of any agreement or grant which the Mortgagor
or the Issuer may have with the United States, the State of New Jersey or any
agency, department or political subdivision thereof with respect to the
Mortgaged Property or the Indenture.
16. No Waiver. No failure, forbearance or delay by the Trustee in
exercising any right or remedy hereunder, under any Secured Agreement, or under
the Indenture, or otherwise afforded by law, shall operate as a waiver thereof
or preclude the exercise thereof in accordance herewith or therewith. No waiver
by the Trustee of any default shall constitute a waiver of or consent to
subsequent defaults. No withdrawal or abandonment of foreclosure proceedings by
the Trustee shall be taken or construed as a waiver of its right to exercise any
right or remedy hereunder by reason of any past, present or future default; and,
in like manner, the procurement of insurance or the payment of taxes or other
liens or charges by the Trustee shall not be taken or construed as a waiver of
its rights or remedies hereunder.
17. Waiver of Mortgagor. Each Mortgagor, on behalf of itself and all
persons now or hereafter interested in the Mortgaged Property, to the fullest
extent permitted by applicable law, hereby waives all rights under all
appraisement, homestead, moratorium, valuation, exemption, stay, extension,
redemption and marshalling statutes, laws or equities now or hereafter existing,
and the Mortgagor agrees that no defense, claim or right based on any thereof
will be asserted, or may be enforced, in any action enforcing or relating to
this Mortgage or any of the Mortgaged Property. Without limiting the generality
of the preceding sentence, the Mortgagor, on its own behalf and on behalf of
each and every person acquiring any interest in or title to the Mortgaged
Property subsequent to the date of this Mortgage, hereby irrevocably waives any
and all rights of redemption from sale under any power contained herein or under
any sale pursuant to any statute, order, decree or judgment of any court.
18. Merger. So long as any amount remains due and owing under the
Secured Agreements, unless the Mortgagee shall otherwise consent in writing,
neither the fee title to nor any other estate, title or interest in, the
Mortgaged Property shall merge with the Company's leasehold interest in the
Project Site and the Project under the Lease Agreement, but shall always be kept
separate and distinct therefrom, notwithstanding the union of such estate in the
Company or in a third party under the Lease Agreement, by purchase or otherwise.
-11-
<PAGE>
19. Definitions. In this Mortgage, all words and terms defined in the
Lease Agreement, the Guaranty and the Indenture shall have the respective
meanings and be construed as provided therein unless a different meaning clearly
appears from the context. Reference herein to, or citation herein of, any
provisions of the Lease Agreement, the Guaranty or the Indenture shall be deemed
to incorporate such provisions as a part hereof in the same manner and with the
same effect as if the same were fully set forth herein.
20. Severability. In the event that any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Mortgage, but this Mortgage shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein or therein.
21. Successors and Assigns. Unless otherwise expressly stated, the
terms "Issuer", "Mortgagor" and "Trustee", as used herein include each of their
respective successors in interest and assigns.
22. Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
or mailed by certified or registered mail, postage prepaid, addressed as
follows: if to the Mortgagor, to Holt Hauling and Warehousing System, Inc., P.O.
Box 8698, Philadelphia, Pennsylvania 19101, Attention: Mr. Bernard Gelman, Vice
President; and if to the Trustee, The Bank of New York (NJ), 385 Rifle Camp
Road, West Paterson, New Jersey 07424, Attention: Corporate Trust Department.
Any party hereto may, by written notice given hereunder, designate any further
or different addresses to which subsequent notices, certificates or other
communications shall be sent.
23. New Jersey Uniform Commercial Code Security Interest and Financing
Statement. This instrument is intended to be a security agreement pursuant to
the New Jersey Uniform Commercial Code covering any of the items or types of
property included as part of the Mortgaged Property that may be subject to a
security interest pursuant to the New Jersey Uniform Commercial Code, and the
Mortgagor hereby grants to the Trustee, its successors and assigns a security
interest in such items or types of property. This Mortgage or a reproduction
hereof is deemed to constitute a fixture filing to be filed of record in the
real estate records maintained by the Clerk of Camden County, pursuant to
N.J.S.A. 12A:9-402(3) and (6). In addition, the Mortgagor will execute, deliver
and file any financing statements or amendments thereof or continuation
statements thereto that may be required to perfect or to continue the perfection
of a security interest in said items or types of
-12-
<PAGE>
property. The Mortgagor shall pay all reasonable costs of the preparation and
filing of such instruments.
24. Amendments. Except as may otherwise be specifically provided
herein, no charge, amendment, modification, cancellation or discharge hereof, or
any part hereof, shall be valid unless in writing and signed by the parties
hereto.
25. Modifications. The parties to this Mortgage may mutually agree to
change the interest rate, due date or other term or terms of this Mortgage or of
the obligations secured by this Mortgage. If the parties mutually agree to a
change, which change is a "modification" as defined in New Jersey P.L. 1985, c.
353, this Mortgage shall be subject to the priority provisions of that law.
26. Captions. The captions herein are inserted only for convenience of
reference and in no way define, limit or describe the scope or intent of this
Mortgage or any particular paragraph or section hereof, nor the proper
construction hereof.
27. Governing Law. This Mortgage is to be governed and construed
according to the laws of the State of New Jersey.
28. RECEIPT. EACH MORTGAGOR HEREBY ACKNOWLEDGES RECEIPT OF A TRUE COPY
OF THIS MORTGAGE, WITHOUT CHARGE.
-13-
<PAGE>
IN WITNESS WHEREOF, each Mortgagor has caused this instrument to be
executed in its name by one of its duly authorized officers; and the Trustee has
evidenced its acceptance of this instrument by having caused this instrument to
be executed in its corporate name by one of its duly authorized officers, as of
the date first above written.
[SEAL] HOLT HAULING AND WAREHOUSING
SYSTEM, INC., Mortgagor
Attest:
/s/ John Evans /s/ Bernard Gelman
- ------------------------- BY:_________________________
John Evans, Secretary Bernard Gelman, Vice
President
(SEAL] 777 PATTISON AVE., INC.,
Mortgagor
Attest:
/s/ John Evans /s/ Bernard Gelman
- ------------------------- BY:_________________________
John Evans, Secretary Bernard Gelman, Vice
President
(SEAL] THE BANK OF NEW YORK (NJ)
as Trustee, Mortgagee
Attest:
/s/ ALISON M. MIGLIACCIO /s/ PAUL F. ANATRELLA
_____________________ ______________________________
Alison M. Migliaccio PAUL F. ANATRELLA
ASSISTANT VICE PRESIDENT ASSISTANT VICE PRESIDENT
Signature page to Company Mortgage
HOLT HAULING AND WAREHOUSING SYSTEM, INC.
AND
777 PATTISON AVE., INC.
as Mortgagors
AND
FIDELITY BANK, NATIONAL ASSOCIATION
as Trustee
MORTGAGE AND SECURITY AGREEMENT
Dated as of May 15, 1992
This Mortgage and Security Agreement secures an obligation incurred for the
construction of improvements on land and contains after-acquired property
provisions.
This Mortgage and Security Agreement also constitutes a fixture filing under
Article 9 of the Uniform Commercial Code-Secured Transactions, N.J.S.A.
12A:9-402(3) and (6).
<PAGE>
THIS MORTGAGE AND SECURITY AGREEMENT dated as of May 15, 1992 (the
"Mortgage") made by HOLT HAULING AND WAREHOUSING SYSTEM, INC. ("Holt") and 777
PATTISON AVE., INC. (the "Company"), Pennsylvania corporations having an address
at 701 N. Broadway, Gloucester City, New Jersey 08030, as mortgagors (each a
"Mortgagor" and collectively, the "Mortgagors") in favor of FIDELITY BANK,
NATIONAL ASSOCIATION, a banking corporation organized and existing under the
laws of the United States of America, having an address at 123 South Broad
Street, Philadelphia, Pennsylvania 19109, Attention: Corporate Trust
Administration, 18 MBO, as Trustee under the Indenture referred to below (the
"Trustee").
W I T N E S S E T H:
WHEREAS, the Philadelphia Authority for Industrial Development (the
"Issuer") intends to issue its Revenue Bonds (Refrigerated Enterprises, Inc.
Project) Series of 1992 (the "Bonds") in the aggregate principal amount of Seven
Million Dollars ($7,000,000), maturing December 1, 2019, pursuant to a Trust
Indenture dated as of May 15, 1992 (as amended and supplemented from time to
time, the "Indenture") between the Issuer and the Trustee and in accordance with
the provisions of the Pennsylvania Industrial and Commercial Development
Authority Law, being the Act of August 23, 1967, P.L. 251, as amended (the
"Act"), the proceeds from the sale of which are to be loaned to Refrigerated
Enterprises, Inc., a Pennsylvania corporation ("REI") in order to permit REI
to refund the 1989 Bonds (as defined in the Agreement), all with respect to a
project located in the City of Philadelphia, Philadelphia County, Pennsylvania,
all pursuant to an Installment Sale Agreement dated as of May 15, 1992 (as
amended from time to time, the "Agreement") between the Issuer and REI; and
WHEREAS, all of the Issuer's rights under the Agreement (except for
such rights as are specifically reserved) are to be assigned to the Trustee
pursuant to the Indenture; and
WHEREAS, in connection with the issuance of the Bonds, Holt and certain
subsidiaries and affiliates of Holt (the "Guarantors") have entered into a
Guaranty Agreement dated as of May 15, 1992 (as amended from time to time, the
"Guaranty");
NOW, THEREFORE, to equally and ratably secure (without preference or
priority) payment of the principal of, premium (if any) and interest on the
Bonds, each Mortgagor's payment obligations pursuant to Section 4.3 of the
Agreement and pursuant to the Guaranty (herein called the "Loan Obligations"),
and the payment of any and all other amounts required to be paid pursuant to,
and the performance of all covenants, agreements and obligations required to be
performed by the Mortgagors or the other Guarantors under this Mortgage, the
Guaranty, the Agreement or the other Loan Documents (collectively, the "Secured
Agreements"), whether direct or indirect, absolute or contingent,
1
<PAGE>
due or to become due, now existing or hereafter arising and howsoever evidenced,
plus all expenses of enforcing this Mortgage, each Mortgagor, for and in
consideration of Ten Dollars and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, does by these presents
GRANT, BARGAIN, SELL, CONVEY AND MORTGAGE unto the Trustee (for the ratable
benefit of the owners of the Bonds) and its respective successors and assigns,
all of its right, title and fee and leasehold interest in and to the following
property, interests and rights (collectively, the "Mortgaged Property"):
THAT certain parcel of real estate described in Exhibit A hereto (the
"Site");
TOGETHER with all and singular the ways, easements, rights, privileges
and appurtenances belonging or in any wise appertaining to the Site;
TOGETHER with the buildings and improvements now erected and hereafter
to be erected upon the Site, including any repairs, restorations or replacements
thereof or any changes, alterations or additions thereto (collectively, the
"Improvements");
TOGETHER with all right, title and interest, if any, of each Mortgagor
in and to any land lying in the bed of any street, avenue or alley adjoining the
Site to the center line thereof;
TOGETHER with the fixtures, building equipment and other personal
property owned by each Mortgagor and located on and used in connection with the
maintenance of the Improvements, including, without limitation, the equipment as
described in Exhibit B hereto but excluding any personal property or equipment
which is not a fixture but is used in connection with the businesses conducted
on the Mortgaged Property and excluding specifically container cranes,
forklifts, trucks and other vehicles (subject to such exclusions, collectively,
the "Equipment"); and
TOGETHER with all the rents, issues and profits of the Mortgaged
Property, and all the estate, right, title, fee and leasehold interest and all
claim and demand whatsoever, at law or in equity, of each Mortgagor in and to
the same, including but not limited to:
(a) All rents, issues, profits, revenues, royalties, rights and
benefits derived from the Mortgaged Property from time to time accruing, whether
under leases or tenancies or contracts of sale now existing or hereafter
created, reserving to the Mortgagors, however, so long as there is no "Event of
Default" under the Indenture, the right to receive and retain all such rents,
issues and profits.
2
<PAGE>
(b) All judgments, awards of damages, insurance proceeds and
settlements hereafter made resulting from condemnation proceedings or the taking
of the Mortgaged Property or any part thereof under the power of eminent domain,
or for any damage (whether caused by such taking or otherwise) to the Mortgaged
Property or any part thereof, or to any rights appurtenant thereto, including
any award for change of grade of streets.
TO HAVE AND TO HOLD the above granted and described property equally
and ratably unto the Trustee and its respective successors and assigns, forever.
The Mortgagors do hereby fully warrant good and marketable fee simple and
leasehold title to the Site and the Improvements and good and marketable title
to the Equipment and will defend the same against the lawful claims of all
persons whomsoever, subject only to the exceptions set forth in Exhibit C hereto
and made a part hereof (the "Permitted Encumbrances") and the Mortgagors have
good and lawful authority to sell, convey, mortgage and grant a security
interest in the Mortgaged Property.
PROVIDED, ALWAYS that if the Mortgagors or their successors or assigns
shall pay to the Trustee or its respective successors or assigns all amounts
secured hereby, including without limitation the Loan Obligations, all amounts
due under the Secured Agreements, and all other amounts due hereunder, and shall
perform, observe and comply with all of the terms, conditions, covenants and
agreements contained herein and in the Secured Agreements, and if no Bonds
remain Outstanding (as defined in the Indenture), then this Mortgage shall be
absolutely void; otherwise the same shall remain in full force and effect.
This Mortgage is subject and subordinate to (i) a certain Mortgage
dated March 15, 1984 between Holt and the City of Gloucester City and recorded
in the Camden County Register's Office in Book 2785, Page 543, (ii) a certain
Mortgage dated April 18, 1984 between Holt and the City of Gloucester City and
recorded in the Camden County Register's Office in Book 2793, Page 937, (iii) a
certain Mortgage dated August 22, 1984 between Holt and the City of Gloucester
City recorded in the Camden County Register's Office in Book 2823, Page 135,
(iv) a certain Mortgage and Security Agreement dated as of August 1, 1986
between Holt and Bankers Trust Company, as trustee and recorded in the Camden
County Register's Office in Book 3050, Page 0689, and (v) a certain Mortgage and
Security Agreement dated as of December 1, 1986 between Holt and Bankers Trust
Company, as trustee and recorded in the Camden County Register's Office in Book
3092, Page 059. This Mortgage is pari passu and on a parity with a certain
Series G Mortgage and Security Agreement and a certain Series H Mortgage and
Security Agreement, both dated as of January 2, 1992, between Holt and Mellon
Bank, N.A., as trustee and a Mortgage and Security Agreement dated as of
3
<PAGE>
March 2, 1992 among Holt, the Company and Fidelity Bank, National
Association, as trustee and recorded in the Camden County Register's
Office in Mortgage Book 3768, Page 0867.
The Mortgagors further covenant and agree as follows:
1. Payment. Each Mortgagor shall pay all sums required to be paid by
it, including interest, secured hereby when due, as provided for in the Secured
Agreements and in this Mortgage, and any renewal, extension or modification of
any thereof.
2. Compliance with Laws. Each Mortgagor shall comply with all present
and future laws, ordinances, rules, regulations, covenants, conditions and
restrictions affecting such Mortgagor, the Mortgaged Property or the use and
occupancy thereof, and not suffer or permit any violation thereof.
3. Maintenance and Modification of Mortgaged Property by the Mortgagor.
The Mortgagors agree that at all times, the Mortgagors will maintain, preserve
and keep the Mortgaged Property or cause the Mortgaged Property to be
maintained, preserved and kept, with the appurtenances and every part and parcel
thereof in good repair, working order, and condition, and that the Mortgagors
will from time to time make or cause to be made all repairs, replacements and
renewals deemed proper and necessary by it.
In addition, the Mortgagors shall have the privilege of remodeling the
Mortgaged Property or making substitutions, modifications and improvements to
the Mortgaged Property from time to time as the Mortgagors, in their discretion,
may deem to be desirable for each Mortgagor's use for such purposes as shall be
permitted by the Act, the costs of which remodeling, substitutions,
modifications and improvements shall be paid by the Mortgagors, and the same
shall be the property of the Mortgagors and be included under the terms of this
Mortgage as part of the Mortgaged Property; provided, however, that such
remodeling, substitutions, modifications and improvements shall not interfere
with the operation of the Mortgaged Property in the manner contemplated in the
Applications and in the Agreement or in any way damage the Mortgaged Property,
and, provided further that the Mortgaged Property, as remodeled, improved or
altered, upon completion of such remodeling, substitutions, modifications and
improvements made pursuant to this Section 3 shall be of a value not less than
the value of the Mortgaged Property immediately prior to the remodeling or the
making of substitutions, modifications and improvements. Any property for which
a substitution or replacement is made pursuant to this Section 3 may be disposed
of by the Mortgagors in any manner and in the sole discretion of the Mortgagors.
4
<PAGE>
4. Liens. The Mortgagors will not permit any mechanic's or other lien
other than Permitted Encumbrances to be established or remain against the
Mortgaged Property, provided that if either Mortgagor shall first notify the
Trustee of its intention to do so, such Mortgagor may in good faith contest at
such Mortgagor's expense any mechanic's or other lien filed or established
against the Mortgaged Property, and in such event may permit the item so
contested to remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom unless by nonpayment of any such item the
security afforded by this Mortgage will be materially endangered or the
Mortgaged Property or any part thereof will be subject to loss or forfeiture, in
which event the Mortgagors shall promptly pay and cause to be satisfied and
discharged such unpaid item.
5. Taxes and Governmental and Utility Charges. The Mortgagors will pay
or cause to be paid, as the same respectively become due, all taxes and
governmental charges of any kind whatsoever that may at any time be lawfully
assessed or levied against or with respect to the Mortgaged Property or any part
thereof, including, without limiting the generality of the foregoing, all ad
valorem taxes levied against the Mortgaged Property and any other taxes levied
upon the Mortgaged Property which, if not paid, will become a charge on the
receipts from the Mortgaged Property or a lien against the Mortgaged Property or
any interest therein or the revenues derived therefrom; all utility and other
charges incurred in the operation, maintenance, use, occupancy and upkeep of the
Mortgaged Property; and all assessments and charges lawfully made by any
governmental body for public improvements that may be secured by a lien on the
Mortgaged Property, provided that with respect to special assessments or other
governmental charges that may lawfully be paid in installments over a period of
years, the Mortgagors shall be obligated to pay only such installments when and
as they are required to be paid.
Each Mortgagor may, at such Mortgagor's expense, in good faith contest
any such taxes, assessments and other charges, all in the manner and subject to
the conditions set forth in Section 5.18(a)(ii) of the Installment Sale
Agreement.
6. Casualty and Other Insurance. The Mortgagors agree to insure or
cause to be insured the Mortgaged Property against loss or damage by fire and
other hazards as more particularly described in Section 5.18(b) of the
Installment Sale Agreement. The Mortgagors will not do or suffer to be done
anything which will increase the risk of fire or other hazard to the Mortgaged
Property or any part thereof without first causing such increased risk to be
fully and adequately covered by insurance.
7. Worker's Compensation Coverage. The Mortgagors shall maintain
worker's compensation coverage or cause the same to be maintained to the extent
required by applicable law.
5
<PAGE>
8. [Intentionally omitted]
9. Condemnation. The net proceeds of any taking by the power of eminent
domain of all or a portion of the Mortgaged Property shall be applied as
provided in Section 5.18(c) of the Installment Sale Agreement.
10. Advances. If the Mortgagors fail to pay, subject to any right
hereunder to contest, any claim, lien, or encumbrance (other than Permitted
Encumbrances), or, prior to delinquency, any tax or assessment, or, when due,
any insurance premium, or to keep the Mortgaged Property in repair, or shall
commit or permit waste, or if there shall be commenced any action or proceeding
affecting the Mortgaged Property or the title thereto, or the interest of the
Trustee therein, including, but not limited to, eminent domain and bankruptcy or
reorganization proceedings, then the Trustee, at its option, may but shall not
be required to pay said claim, lien, encumbrance, tax, assessment or premium,
with right of subrogation thereunder, may but shall not be required to make such
repairs and take such steps as it deems advisable to prevent or cure such waste,
and may but shall not be required to appear in any such action or proceeding and
retain counsel therein, and take such action therein as the Trustee deems
advisable, and for any of said purposes the Trustee may but shall not be
required to advance such sums of money, including all costs, reasonable
attorneys' fees and sums of money, including all costs, reasonable attorneys'
fees and other items of expense as it deems necessary. The Mortgagors shall pay
to the Trustee all sums of money so advanced by the Trustee together with
interest on each such advance at two percent (2%) in excess of the Prime Rate,
and the repayment of such advances shall be secured hereby. In making any
payment or securing any performance relating to any obligation of the Mortgagors
under this Mortgage, the Trustee, so long as it acts in good faith, shall be the
sole judge of the legality, validity and amount of any lien or encumbrance and
of all other matters necessary to be determined in satisfaction thereof. No such
action of the Trustee shall ever be considered as a waiver of any right accruing
to it hereunder. The Trustee shall not ever be held accountable for any delay in
making any such payment, which delay may result in any additional interest,
costs, charges or expenses.
11. Attorneys' Fees. In case of any action or any proceedings in any
court to collect any sums payable or secured by this Mortgage or to protect the
lien of the Trustee or in any other case permitted by law in which attorneys'
fees may be collected from the Mortgagors or charged upon the Mortgaged
Property, the Mortgagors agree to pay reasonable attorneys' fees.
12. Remedies. Subject always to the provisions of Section 13 hereof,
upon the occurrence of an "Event of Default" as defined and specified in the
Indenture and the declaration of an acceleration of the Bonds pursuant to the
Indenture, the
6
<PAGE>
Trustee may exercise one or more of the following remedies (no remedy
hereunder is intended to be exclusive of any other remedy hereunder,
under any of the Secured Agreements or under the Indenture):
(a) The Trustee may require the Mortgagors, upon demand of the Trustee,
to forthwith surrender, and the Trustee may, to the extent permitted by
applicable law, by such officer, agent or receiver as it may appoint, all
without regard to the value of the security hereof, take possession of all or
any part of the Mortgaged Property together with the books, papers and accounts
of the Mortgagors pertaining thereto, and make all needful repairs and
improvements as the Trustee shall deem necessary or appropriate, and lease or
sell the Mortgaged Property or any part thereof in the name and for the account
of the Mortgagors and collect, receive and sequester the rental therefrom, and
out of the same and any moneys received from any receiver pay, or set up proper
reserves for the payment of, all proper costs and expenses of so taking,
holding, leasing, selling and managing the same, including reasonable
compensation to the Trustee, its agents and counsel, and any charges of the
Trustee hereunder, and any taxes and assessments and other charges due and
payable which the Trustee may deem it wise to pay, and all expenses of such
repairs and improvements, and apply the remainder of the moneys so received to
the payment of the indebtedness secured hereby. Whenever all that is due upon
the indebtedness secured hereby shall have been paid and all defaults made good,
the Trustee shall surrender whatever possession the Trustee shall retain to the
Mortgagors; the same right of entry, however, shall exist upon any subsequent
default.
(b) The Trustee may enter and take possession of the Mortgaged
Property, and lease the Mortgaged Property for the account of the Mortgagors,
holding the Mortgagors liable for all payments due to the effective date of such
leasing and for the difference in the rent and other amounts paid by the lessee
pursuant to such lease and the amounts payable by the Mortgagors on account of
the indebtedness secured hereby.
(c) Subject to any mandatory requirements of applicable law, the
Trustee may sell the Mortgaged Property as an entirety or from time to time in
part to the highest bidder at public auction at such place and at such time
(which sale may be adjourned from time to time in the discretion of the Trustee
by announcement at the time and place fixed for such sale, without further
notice) and upon such terms as the Trustee may fix and briefly specify in a
notice of sale to be published once each week for four (4) successive weeks
prior to such sale in a newspaper of general circulation in the county in which
the Mortgaged Property is located and in such event the Trustee may bid for or
become the purchaser of the Mortgaged Property at the public auction and be
entitled to have the purchase price payable at the public auction payable by
credit for the balance due and payable hereunder in respect of the indebtedness
secured hereby.
7
<PAGE>
(d) The Trustee may foreclose this Mortgage by judicial proceedings in
the manner provided by the laws of the State of New Jersey for the foreclosure
of mortgages, and in such event the Trustee may bid for or become the purchaser
of the Mortgaged Property at the foreclosure sale and be entitled to have the
purchase price payable at foreclosure sale payable by credit to the judgment for
the balance, if any, due and payable hereunder in respect of the indebtedness
secured hereby.
(e) The Trustee may exercise all rights and remedies available to
secured creditors under the Uniform Commercial Code as in effect in the State of
New Jersey.
13. Option To Release Certain Real Estate. Notwithstanding any other
provisions of this Mortgage, the Trustee hereby agrees, subject to the
provisions of the Agreement, at any time and from time to time, to release from
this Mortgage (i) any unimproved part of the Site, provided such release shall
not adversely affect the value of the Mortgaged Property as evidenced by an MAI
appraisal on which the Trustee may conclusively rely, or (ii) any part of the
Site with respect to which fee title is to be conveyed to a railroad, public
utility or public body in order that railroad service, utility services or roads
may be provided for the Mortgaged Property, upon receipt of:
(a) Copies of the instrument of release, in recordable form.
(b) A certificate of the Mortgagors (i) stating that no "Event of
Default" or any condition or event which, with the giving of notice or the
passage of time or both would constitute an "Event of Default" has occurred
under the Secured Agreements or the Indenture, (ii) giving an adequate legal
description of that portion of the Site to be released, (iii) stating the
purpose for which the release is desired, (iv) requesting such release, and (v)
approving such release.
(c) If applicable, a copy of the instrument conveying the portion of
the Site to be released.
(d) Any instrument or instruments required by the terms of such
release.
(e) A certificate of an independent engineer dated more than sixty (60)
days prior to the date of the release and stating that, in the opinion of such
engineer (i) the portion of the Site so proposed to be released is necessary or
desirable in order to obtain railroad service, utility services or roads to
benefit the Mortgaged Property, or is not otherwise needed for the efficient
operation of the Mortgaged Property for the purpose stated in the Agreement and
(ii) the release so proposed to be made will not impair the usefulness of the
Mortgaged Property as
8
<PAGE>
a facility for the purposes for which it was designed and for such purposes as
shall be permitted by the Act and will not destroy the means of ingress
thereinto and egress therefrom.
Provided, however, that if the portion of the Site to be released has
transportation or utility facilities located upon it, the Mortgagors shall
retain an easement to use such facilities to the extent necessary for the
efficient operation of the Mortgaged Property.
The Trustee agrees that upon receipt of the items required in this
Section 13 to be furnished by the Mortgagors, it will promptly execute and
deliver the proposed release covering the portion of the Site to be released. In
the event of any such release, the Mortgagors shall not be entitled to any
postponement, abatement or diminution of amounts payable on account of the
indebtedness secured hereby.
14. Release of Items of Equipment. In any instance where either
Mortgagor in its sole discretion determines that any items of the Equipment
owned by it have become obsolete, worn out, unsuitable, inappropriate or
unnecessary for its purposes, and so long as no "Event of Default" or any
condition or event which, with the giving of notice or the passage of time or
both would constitute an "Event of Default" has occurred under the Secured
Agreements or the Indenture, such Mortgagor may remove such Equipment from the
Mortgaged Property and sell, trade-in, exchange or otherwise dispose of such
Equipment (as a whole or in part) without any responsibility or accountability
to the Trustee therefor, provided that such Mortgagor shall substitute and
install anywhere in the Mortgaged Property other machinery or equipment having
equal or greater utility or value (but not necessarily having the same function)
in the operation of the Mortgaged Property as a modern facility, all of which
substituted machinery or equipment shall be free of all liens and encumbrances
(other than Permitted Encumbrances) and shall become a part of the property
secured hereunder.
The removal from the Mortgaged Property of any portion of the Equipment
pursuant to the provisions of this Section 14 shall not entitle the Mortgagors
to any postponement, abatement or diminution in amounts payable on account of
the indebtedness secured hereby.
Upon the request of either Mortgagor, the Trustee shall deliver and
cause to be delivered to such Mortgagor, such instruments as are reasonably
necessary to confirm the release of removed items of the Equipment from the lien
of this Mortgage and cancel any security interest with respect thereto, provided
that such request is accompanied by a certificate of an officer of such
Mortgagor to the effect that such release complies in all respects with this
Section 14.
9
<PAGE>
15. Granting of Easements. If no "Event of Default" or any condition or
event which, with the giving of notice or the passage of time or both would
constitute an "Event of Default" has occurred under the Secured Agreements or
the Indenture, the Mortgagors may at any time or times, grant easements,
licenses, rights-of-way (including the dedication of public highways) and other
rights or privileges in the nature of easements with respect to any property or
rights included in the Mortgaged Property, free from the lien and security
interest afforded by or under this Mortgage or the Mortgagors may reconvey
existing easements, licenses, rights-of-way and other rights and privileges with
or without consideration, and the Trustee agrees to execute and deliver or cause
to be executed and delivered any instrument necessary or appropriate to confirm
and grant or convey any such easement, license, right-of-way or other grant or
privilege upon receipt of: (1) a copy of the instrument of grant or
reconveyance; (2) a written statement signed by an officer of the Mortgagors
stating (i) that such grant or reconveyance will not impair the effective use or
value of, or interfere with the operation of the Mortgaged Property and (ii)
that such grant or reconveyance is not detrimental to the proper conduct of the
business of the Mortgagors; and (3) an opinion of independent counsel that such
grant or reconveyance will not materially weaken, diminish or impair the
security afforded pursuant to the terms of this Mortgage, and will not violate
the terms, covenants or conditions of any agreement or grant which the
Mortgagors or the Issuer may have with the United States, the State of New
Jersey or any agency, department or political subdivision thereof with respect
to the Mortgaged Property or the Indenture.
16. No Waiver. No failure, forbearance or delay by the Trustee in
exercising any right or remedy hereunder, under any Secured Agreement, or under
the Indenture, or otherwise afforded by law, shall operate as a waiver thereof
or preclude the exercise thereof in accordance herewith or therewith. No waiver
by the Trustee of any default shall constitute a waiver of or consent to
subsequent defaults. No withdrawal or abandonment of foreclosure proceedings by
the Trustee shall be taken or construed as a waiver of its right to exercise any
right or remedy hereunder by reason of any past, present or future default;
and, in like manner, the procurement of insurance or the payment of taxes or
other liens or charges by the Trustee shall not be taken or construed as a
waiver of its rights or remedies hereunder.
17. Waiver of Mortgagor. Each Mortgagor, on behalf of itself and all
persons now or hereafter interested in the Mortgaged Property, to the fullest
extent permitted by applicable law, hereby waives all rights under all
appraisement, homestead, moratorium, valuation, exemption, stay, extension,
redemption and marshalling statutes, laws or equities now or hereafter existing,
and each Mortgagor agrees that no defense, claim or right based on any thereof
will be asserted, or may be enforced, in any action enforcing or relating to
this Mortgage or any of the
10
<PAGE>
Mortgaged Property. Without limiting the generality of the preceding sentence,
each Mortgagor, on its own behalf and on behalf of each and every person
acquiring any interest in or title to the Mortgaged Property subsequent to the
date of this Mortgage, hereby irrevocably waives any and all rights of
redemption from sale under any power contained herein or under any sale pursuant
to any statute, order, decree or judgment of any court.
18. Definitions. In this Mortgage, all words and terms defined in the
Agreement and the Indenture shall have the respective meanings and be construed
as provided therein unless a different meaning clearly appears from the context.
Reference herein to, or citation herein of, any provisions of the Agreement or
the Indenture shall be deemed to incorporate such provisions as a part hereof in
the same manner and with the same effect as if the same were fully set forth
herein.
19. Severability. In the event that any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid, illegal
or unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Mortgage, but this Mortgage shall
be construed as if such invalid, illegal or unenforceable provision had never
been contained herein or therein.
20. Successors and Assigns. Unless otherwise expressly stated, the
terms "Issuer", "Mortgagor" and "Trustee", as used herein include each of their
respective successors in interest and assigns.
21. Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
or mailed by certified or registered mail, postage prepaid, addressed as
follows: if to the Mortgagors, to 777 Pattison Ave., Inc. and Holt Hauling and
Warehousing System, Inc., P.O. Box 8698, Philadelphia, Pennsylvania 19101,
Attention: Mr. Bernard Gelman, Vice President; and if to the Trustee, to
Fidelity Bank, National Association, 123 South Broad Street, Philadelphia,
Pennsylvania 19101, Attention: Corporate Trust Administration, 18 MBO. Any party
hereto may, by written notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates or other
communications shall be sent.
22. New Jersey Uniform Commercial Code Security Interest and Financing
Statement. This instrument is intended to be a security agreement pursuant to
the New Jersey Uniform Commercial Code covering any of the items or types of
property included as part of the Mortgaged Property that may be subject to a
security interest pursuant to the New Jersey Uniform Commercial Code, and each
Mortgagor hereby grants to the Trustee, its successors and assigns a security
interest in such items or types of property. This Mortgage or a reproduction
hereof is deemed to
11
<PAGE>
constitute a fixture filing to be filed of record in the real estate records
maintained by the Clerk of Camden County, pursuant to N.J.S.A. 12A:9-402(3)
and (6). In addition, each Mortgagor will execute, deliver and file any
financing statements or amendments thereof or continuation statements thereto
that may be required to perfect or to continue the perfection of a security
interest in said items or types of property. The Mortgagors shall pay all
reasonable costs of the preparation and filing of such instruments.
23. Amendments.
(a) Except as may otherwise be specifically provided herein, no charge,
amendment, modification, cancellation or discharge hereof, or any part hereof,
shall be valid unless in writing and signed by the parties hereto.
(b) The parties to this Mortgage may mutually agree to change the
interest rate, due date or other term or terms of this Mortgage or of the
obligations secured by this Mortgage. If the parties mutually agree to a change,
which change is a "modification" as defined in New Jersey P.L. 1985, c. 353,
this Mortgage shall be subject to the priority provisions of that law.
24. Captions. The captions herein are inserted only for convenience of
reference and in no way define, limit or describe the scope or intent of this
Mortgage or any particular paragraph or section hereof, nor the proper
construction hereof.
25. Governing Law. This Mortgage is to be governed and construed
according to the laws of the State of New Jersey.
26. RECEIPT. THE MORTGAGORS HEREBY ACKNOWLEDGE RECEIPT OF A TRUE COPY
OF THIS MORTGAGE, WITHOUT CHARGE.
IN WITNESS WHEREOF, each Mortgagor has caused this instrument to be
executed in its name by one of its duly authorized officers; and the Trustee has
evidenced its acceptance
12
<PAGE>
of this instrument by having caused this instrument to be executed in
its corporate name by one of its duly authorized officers, as of the
date first above written.
(SEAL) HOLT HAULING AND WAREHOUSING
SYSTEM, INC., a Pennsylvania
corporation
Attest:
/s/ John Evans /s/ Bernard Gelman
_______________________________ By_______________________________
John Evans, Secretary Bernard Gelman, Vice President
[SEAL] 777 PATTISON AVE., INC., a
Pennsylvania corporation
Attest:
/s/John Evans /s/ Bernard Gelman
________________________________ By_________________________________
John Evans, Secretary Bernard Gelman, Vice President
FIDELITY BANK, NATIONAL
ASSOCIATION, as Trustee
[SEAL]
Attest:
/s/ [ILLEGIBLE] /s/ John H. Clapham
________________________________ By_________________________________
John H. Clapham
Assistant Vice President
Assistant Secretary
13
<PAGE>
EXHIBIT A
DESCRIPTION
TRACT 1:
LAND and premises situate in the City of Gloucester City, County of
Camden and State of New Jersey, being more particularly described according to a
survey made by John G. Reutter Associates, Inc., dated January 3, 1985 bounded
and described as follows:
Parcel A:
BEGINNING at a point in the Northwesterly line of Broadway, said point
being at the point of intersection of the said line of Broadway with the
Northwesterly line of Old Kings Road and from said point runs thence
l. North 01 degrees 22 minutes 19 seconds East, along the said line of
Broadway, 1146.07 feet to a point; thence
2. North 88 degrees 37 minutes 41 seconds West, 48.28 feet to a point;
thence
3. South 43 degrees 31 minutes 19 seconds West, 562.13 feet to a point;
thence
4. South 58 degrees 46 minutes 35 seconds West, 135.34 feet to a
point; thence
5. North 88 degrees 39 minutes 06 seconds West, 945.07 feet to a point;
thence
6. North 88 degrees 41 minutes 10 seconds West, 136.38 feet to a point;
thence
7. South 16 degrees 16 minutes 10 seconds West, 761.24 feet to a point;
thence
8. South 77 degrees 09 minutes 47 seconds East, 341.24 feet to a point;
thence
9. South 12 degrees 50 minutes 13 seconds West, 37.00 feet to a point;
thence
10. South 77 degrees 09 minutes 47 seconds East, 545.69 feet to a
point; thence
11. North 57 degrees 10 minutes 09 seconds West, 232.64 feet to a
point; thence
12. South 77 degrees 08 minutes 47 seconds East, 687.92 feet to a
point; thence
continued
Page 1 of 5
<PAGE>
DESCRIPTION-CONTINUED
13. South 88 degrees 41 minutes 16 seconds East, 317.39 feet to a point
in the Northwesterly line of Old Kings Road; thence
14. North 29 degrees 06 minutes 33 seconds East, along same, 347.46
feet to the place of beginning.
Parcel B:
BEGINNING at a point in the Northwesterly line of Ellis Street, said
point being at the point of intersection of the said line of Ellis Street with
the Northeasterly line of Monmouth Street and from said point runs thence
1. North 32 degrees 49 minutes 50 seconds East, along the said line of
Ellis Street, 1826.43 feet to a point; thence
2. North 57 degrees 10 minutes 10 seconds West, 310.40 feet to a point;
thence
3. North 77 degrees 09 minutes 47 seconds West, 87.04 feet to a point;
thence
4. North 62 degrees 38 minutes 34 seconds West, 89.75 feet to a point;
thence
5. North 43 degrees 24 minutes 58 seconds West, 36.00 feet to a point;
thence
6. North 77 degrees 09 minutes 47 seconds West, 531.95 feet to a
point; thence
7. South 12 degrees 51 minutes 03 seconds West, 37.00 feet to a point;
thence
8. North 77 degrees 09 minutes 47 seconds West, 353.40 feet to a point;
thence
9. South 16 degrees 16 minutes 10 seconds West, 1756.67 feet to a
point; thence
10. South 57 degrees 10 minutes 10 seconds East, 675.48 feet to a
point; thence
11. North 32 degrees 49 minutes 50 seconds East, 165.00 feet to a
point in the Southwesterly line of Monmouth Street; thence
12. North 57 degrees 10 minutes 10 seconds West, along same, 127.47
feet to a point in the apparent high water line of the Delaware River as located
August 22, 1983; thence
continued
Page 2 of 5
<PAGE>
DESCRIPTION-CONTINUED
13. Northeastwardly, along said high water line, 61.00 feet more or
less to a point; thence
14. South 57 degrees 10 minutes 10 seconds East, along the
Northeasterly line of Monmouth Street, 296.86 feet to the place of beginning.
EXCEPTING THEREOUT AND THEREFROM THE FOLLOWING DESCRIBED LAND DEEDED TO
BROADWAY EQUIPMENT LEASING BY DEED FROM KATHERINE RAGAN IN DEED BOOK 3932 PAGE
79:
Beginning at a point in the Southwesterly line of Monmouth Street,
distant 339.53 feet Northwestwardly from the extended Northwesterly line of King
Street and from said point runs thence
1. North 57 degrees 10 minutes 10 seconds West, 127.47 feet to the high
water line of the Delaware River as located August 22, 1983; thence
2. In a general Southwesterly direction along the high water line of
the Delaware River, 170.00 feet more or less to a point in the line of land now
or formerly of the United States Coast Guard; thence
3. South 57 degrees 10 minutes 10 seconds East, 114.00 more or less to
a point in the line of lands now or formerly of Frank J. Costa Real Estate;
thence
4. North 32 degrees 49 minutes 50 seconds East, 165.00 feet to the
place of beginning.
Parcel C:
BEGINNING at a corner formed by the intersection of the Southeasterly
line of Ellis Street (52 feet wide) with the Northeasterly line of Essex Street
(60 feet wide) and from said point runs thence
1. North 32 degrees 49 minutes 50 seconds East, along the Southeasterly
line of Ellis Street, 100.00 feet to a point corner lands now or late of Thomas
P. and Margaret Lynch; thence
2. South 57 degrees 11 minutes 20 seconds East, along same, 128.50 feet
to a point in the Northwesterly line of King Street; thence
3. South 32 degrees 49 minutes 50 seconds West, along same, 100.00 feet
to the corner formed by the intersection of same with the aforementioned
Northeasterly line of Essex Street; thence
4. North 57 degrees 11 minutes 20 seconds West, along the Northeasterly
line of Essex Street, 128.50 feet to the place of beginning.
continued
Page 3 of 5
<PAGE>
DESCRIPTION-CONTINUED
Parcel D:
BEGINNING at a point in the Southeasterly line of Ellis Street (52 feet
wide); distant 120.00 feet if measured North 32 degrees 49 minutes 50 seconds
East, along the Southeasterly line of Ellis Street from a corner formed by the
intersection of the Southeasterly line of Ellis Street with the Northeasterly
line of Essex Street (60 feet wide); said beginning point being corner to lands
now or, late of Thomas P. and Margaret Lynch; thence
1. North 32 degrees 49 minutes 50 seconds East, along the Southeasterly
line of Ellis Street, 20.00 feet to a point corner to lands now or late Edward
H. and Angeline M. Love; thence
2. South 57 degrees 11 minutes 20 seconds East, along same, 128.50 feet
to a point in the Northwesterly line of King Street; thence
3. South 32 degrees 49 minutes 50 seconds West, along same, 20.00 feet
to a point corner to lands now or late of Thomas P. and Margaret Lynch; thence
4. North 57 degrees 11 minutes 20 seconds West, along lands now or
formerly of Lynch, 128.50 feet to the place of beginning.
Parcel E:
BEGINNING at a corner formed by the intersection of the Southeasterly
line of King Street (60 feet wide) with the Southwesterly line of Salem Street
(40 feet wide); and from said point runs thence
South 57 degrees 11 minutes 20 seconds East, along the Southwesterly
line of Salem Street, 120.00 feet to the corner formed by the intersection of
same with the Northwesterly line of Willow Street (20 feet wide); thence
2. South 32 degrees 49 minutes 50 seconds West, along the Northwesterly
line of Willow Street, 80.00 feet to a point corner to lands now or late of
James and Anna Conroy; thence
3. North 57 degrees 11 minutes 20 seconds West, along same, and along
lands now or late of Nerbert Jr. and Ruth Green, Wm. W. and Marian E. Willetts
and Stella Zemaitatis, 120.00 feet to a point in the aforementioned
Southeasterly line of King Street; thence
4. North 32 degrees 49 minutes 50 seconds East, along same, 80.00 feet
to the place of beginning.
Parcel F:
BEGINNING at a corner formed by the intersection of the Southeasterly
line of King Street (60 feet wide) with the Northeasterly lien of Warren Street
(60 feet wide); and from said point runs thence
1. North 32 degrees 49 minutes 50 seconds East, along the Southeasterly
line of King Street, 80.00 feet to a point corner to lands now or late of John
McDade; thence
continued
Page 4 of 5
<PAGE>
DESCRIPTION-CONTINUED
2. South 57 degrees 10 minutes 10 seconds East, along same, 20.00 feet
to a point; thence
3. South 32 degrees 49 minutes 50 seconds West, still along lands now
or late of John McDade, 80.00 feet to a point in the aforementioned
Northeasterly line of Warren Street; thence
4. North 57 degrees 10 minutes 10 seconds West, along same, 20.00 feet
to the place of beginning.
FURTHER EXCEPTING THEREOUT AND THEREFROM THE LANDS TAKEN BY THE STATE
OF NEW JERSEY, BY THE COMMISSIONER OF TRANSPORTATION BY A DECLARATION OF TAKING
RECORDED IN DEED BOOK 4466, PAGE 0473 ON OCTOBER 9, 1990.
TRACT 2:
LAND and premises situate in the City of Gloucester City, County of
Camden and State of New Jersey, being more particularly described as follows:
That being commonly known as Building #14 in an industrial complex
owned by Holt Hauling and Warehousing System, Inc.; The easterly wall of the
building being conveyed hereby being approximately 449 feet from the
intersection of the Easterly side of Ellis Street with the Southerly side of
Essex Street.
Page 5 of 5
<PAGE>
COMMONWEALTH OF PENNSYLVANIA :
: ss.
COUNTY OF PHILADELPHIA :
I, James P. Cardamone, do hereby certify that Bernard Gelman and John
Evans, the Vice President and Secretary of HOLT HAULING AND WAREHOUSING SYSTEM,
INC., a Pennsylvania corporation, personally known to me to be the same persons
whose names are subscribed to the foregoing instrument, appeared before me this
day in person and acknowledged that they signed and delivered such instrument
with full authority as such Vice President and Secretary on behalf of Holt
Hauling and Warehousing System, Inc., as their free and voluntary act for the
uses and purposes therein set forth.
Given under my hand and official seal, this 27th day of May, 1992.
/s/ James P. Cardamone
_______________________________________
Notary Public
My Commission Expires:
NOTARIAL SEAL
JAMES P. CARDAMONE, Notary Public
Norristown, Montgomery Co. Pa.
My Commission Expires August 2, 1995
14
MEMORANDUM OF INSTALLMENT SALE AGREEMENT
THIS INSTRUMENT is a memorandum of the Installment Sale Agreement dated
as of May 15, 1992 by and among PHILADELPHIA AUTHORITY FOR INDUSTRIAL
DEVELOPMENT, a public instrumentality of the Commonwealth of Pennsylvania and a
body corporate and politic organized and existing under the provisions of the
Pennsylvania Industrial and Commercial Development Authority Law, Act of August
23, 1967, P.L. 201, as amended, whose address is 123 South Broad Street, 22nd
Floor, Philadelphia, Pennsylvania 19109, as SELLER, REFRIGERATED ENTERPRISES,
INC., a Pennsylvania corporation, whose address is 777 Pattison Avenue,
Philadelphia, Pennsylvania, as BUYER, and HOLT HAULING AND WAREHOUSING SYSTEM,
INC., a Pennsylvania corporation, B.H. SOBELMAN & CO., INC., a Pennsylvania
corporation, REFRIGERATED DISTRIBUTION CENTER, INC., a Pennsylvania corporation,
OREGON AVENUE ENTERPRISES, INCORPORATED, a Pennsylvania corporation, HOLT CARGO
SYSTEMS, INC., a Delaware corporation, THE RIVERFRONT DEVELOPMENT CORP., a New
Jersey corporation, CRT, INC., a New Jersey corporation, TRIPLE SEVEN ICE,
INC., a Pennsylvania corporation, and 777 PATTISON AVE., INC., a Pennsylvania
corporation, jointly and severally (each a "Guarantor" and collectively the
"Guarantors").
1. The name and address of the Seller set forth in said Installment Sale
Agreement, the name and address of the Buyer set forth therein and the date
thereof are all as set forth above. To assist in the financing of the Project
Facilities (as such term is defined in the Installment Sale Agreement), Seller
has entered into a Trust Indenture dated as of May 15, 1992 (the "Indenture")
with Fidelity Bank, National Association, as trustee (the "Trustee"), pursuant
to which the Seller is issuing its Revenue Bonds (Refrigerated Enterprises, Inc.
Project), Series of 1992 (the "Bonds"). Pursuant to the Installment Sale
Agreement, the Seller is selling the Project Facilities to the Buyer and the
Buyer is purchasing such Project Facilities from Seller.
2. The description of the Project Facilities set forth in said
Installment Sale Agreement is summarized as follows:
(a) that certain parcel of real property located at 777 Pattison
Avenue, Philadelphia, Philadelphia County, Pennsylvania, as more fully
described in Exhibit "A" attached hereto (and attached as Exhibit "A" to
said Installment Sale Agreement); and
(b) an approximately 132,500 square foot manufacturing facility
located on said tract of land and any additional facilities which may be
constructed or installed thereon during the term of said Installment
Sale Agreement.
3. The Bonds presently outstanding have a final maturity of December 1,
2019.
1
<PAGE>
4. The Installment Sale Agreement shall be terminated when, and
settlement for the Project Facilities shall take place within thirty (30) days
after, all Bonds of the Seller issued and for which the purchase payments due
under the Installment Sale Agreement shall be pledged as security, and all
remaining obligations to Seller and to the Trustee shall have been paid or
provisions for such payment shall have been duly made.
IN WITNESS WHEREOF, the Seller and the Buyer have caused this Memorandum
of Installment Sale Agreement to be duly executed under seal as of the 15th day
of May, 1992.
[SEAL] PHILADELPHIA AUTHORITY FOR
INDUSTRIAL DEVELOPMENT
By /s/ [ unreadable copy ]
----------------------------------
Chair
Attest: /s/ [ unreadable copy ]
------------------------------
Secretary
(SEAL] REFRIGERATED ENTERPRISES, INC.
By /s/ [ unreadable copy ]
----------------------------------
(Vice) President
Attest: /s/ [ unreadable copy ]
------------------------------
(Assistant) Secretary
ATTEST: HOLT HAULING AND WAREHOUSING
SYSTEM, INC.
/s/ John Evans By /s/ Bernard Gelman
- ----------------------------------- ----------------------------------
John Evans, Secretary Bernard Gelman,
Vice President
ATTEST: B.H. SOBELMAN & CO., INC.
/s/ John Evans By /s/ Bernard Gelman
- ----------------------------------- ----------------------------------
ATTEST: REFRIGERATED DISTRIBUTION
CENTER, INC.
/s/ John Evans By /s/ Bernard Gelman
- ----------------------------------- ----------------------------------
John Evans, Secretary Bernard Gelman,
Vice President
2
<PAGE>
ATTEST: OREGON AVENUE ENTERPRISES,
INCORPORATED
/s/ John Evans By /s/ Bernard Gelman
- ----------------------------------- ----------------------------------
John Evans, Secretary Bernard Gelman,
Vice President
ATTEST: HOLT CARGO SYSTEMS, INC.
/s/ John Evans By /s/ Bernard Gelman
- ----------------------------------- ----------------------------------
John Evans, Secretary Bernard Gelman,
Vice President
ATTEST: CRT, INC.
/s/ John Evans By /s/ Bernard Gelman
- ----------------------------------- ----------------------------------
John Evans, Secretary Bernard Gelman,
Vice President
ATTEST: THE RIVERFRONT DEVELOPMENT CORP.
/s/ John Evans By /s/ Bernard Gelman
- ----------------------------------- ----------------------------------
ATTEST: TRIPLE SEVEN ICE, INC.
/s/ John Evans By /s/ Bernard Gelman
- ----------------------------------- ----------------------------------
ATTEST: PATTISON AVENUE WAREHOUSING CORP.
/s/ John Evans By /s/ Bernard Gelman
- ----------------------------------- ----------------------------------
ATTEST: 777 PATTISON AVE., INC.
/s/ John Evans By /s/ Bernard Gelman
- ----------------------------------- ----------------------------------
Exhibit "A" - Real Estate Description
3
<PAGE>
Exhibit "A"
ALL THAT CERTAIN lot or piece of ground with the buildings and improvements
thereon erected.
SITUATE in the 39th Ward of the City of Philadelphia, described according to a
Survey and Plan of Property made for U.S. Cold Storage of Philadelphia by Lewis
C. Jones, Surveyor and Regulator of the 2nd District dated August 12, 1965
to wit:
BEGINING at a point of intersection formed by the Northerly side of
Pattison Avenue (120 feet wide) and the Westerly side of 7th Street (108 feet
wide); thence extending Westwardly along the said Northerly side of Pattison
Avenue crossing railroad track and crossing a 17 feet wide railroad right of way
and crossing a 15 feet wide easement for electric, gas and telephone purposes
the distance of 562.600 feet to a point on the Easterly side of Darien Street
(84 feet wide) (also being the Westerly side of aforesaid 15 feet wide
easement); thence Northwardly along the said Easterly side of Darien Street and
along the Westerly side of said 15 feet wide easement 793.888 feet to a point;
thence Eastwardly on a line parallel with said Pattison Avenue recrossing said
15 feet wide easement, and said 17 feet wide railroad right of way 562.600 feet
to a point on the said Westerly side of 7th Street; thence Southwardly along the
said Westerly side of 7th Street 793.888 feet to a point on the said
Northerly side of Pattison Avenue, being the first mentioned point and place of
beginning.
BEING the same premises which Pennsylvania Warehousing and Safe Deposit
Company, A Pennsylvania Corporation by Deed dated 2/12/1988 and recorded
3/1/1988 in the County of Philadelphia in Deed Book FHS 1008 page 162, conveyed
unto 777 Pattison Avenue Inc., A Pa. Corporation, in fee.
UNDER AND SUBJECT to certain Restrictions, Reservations and Covenants as
of record.
INSTALLMENT SALE AGREEMENT
THIS INSTALLMENT SALE AGREEMENT dated as of May 15, 1992 (the
"Agreement," which term, unless the context clearly requires otherwise, as of
any particular time, shall include this document and all amendments and/or
supplements hereto made and at such time constituting a part hereof, and which
term sometimes is referred to in this document by use of such words as "hereto,"
"hereby," "herein," "hereof" and "hereunder"), by and among
PHILADELPHIA AUTHORITY FOR INDUSTRIAL DEVELOPMENT
(the "Authority"), a body politic and corporate organized and existing
under the laws of the Commonwealth of Pennsylvania and a public instrumentality
of such Commonwealth, having its principal office at 123 South Broad Street,
22nd Floor, Philadelphia, Pennsylvania 19109 as Seller, and
REFRIGERATED ENTERPRISES, INC.
(the "Company"), a Pennsylvania corporation, having its principal place
of business at 777 Pattison Avenue, Philadelphia, Pennsylvania, as Buyer, and
Holt Hauling and Warehousing System, Inc. ("Holt"), a Pennsylvania
corporation, B.H. Sobelman & Co., Inc., a Pennsylvania corporation, Refrigerated
Distribution Center, Inc., a Pennsylvania corporation, Oregon Avenue
Enterprises, Incorporated, a Pennsylvania corporation, Holt Cargo Systems, Inc.,
a Delaware corporation, The Riverfront Development Corp., a New Jersey
corporation, CRT, Inc., a New Jersey corporation, Triple Seven Ice, Inc., a
Pennsylvania corporation, Pattison Avenue Warehousing Corp., a Pennsylvania
corporation, and 777 Pattison Ave., Inc., a Pennsylvania corporation, jointly
and severally (each a "Guarantor" and collectively the "Guarantors").
WHEREAS, the Authority is organized and existing under the Industrial
and Commercial Development Authority Law, as amended (the "Act"), of the
Commonwealth of Pennsylvania (the "Commonwealth") and is empowered by the Act,
among other things, to acquire, hold, construct, improve, maintain, own,
finance, lease, as lessor or lessee, and/or sell industrial, commercial and
specialized development projects to further the public purposes of the Act; and
WHEREAS, the Company has requested the Authority to undertake a project
(the "Project"), that consists of, among other things: (i) the current refunding
of the Authority's 1989 Bonds; and (ii) the sale of the Project Facilities to
the Company; and
WHEREAS, in order to provide funds for and toward the payment of a
portion of the costs of the Project, the Authority has authorized the issuance
and sale of 1992 Bonds; and
1
<PAGE>
WHEREAS, the 1992 Bonds are to be issued under and secured by the
Indenture; and
WHEREAS, to further secure the 1992 Bonds, the Company will cause to be
delivered to the Trustee, at the time of delivery of the 1992 Bonds, the
Guaranty.
NOW, THEREFORE, THIS INSTALLMENT SALE AGREEMENT WITNESSETH THAT each of
the parties hereto, intending to be bound legally hereby, for and in
consideration of payments herein stipulated to be made by the Company and of
covenants and agreements set forth herein, do hereby covenant and agree that the
terms and conditions upon which the Project Facilities (hereinafter defined) and
all additions, improvements, betterments, substitutions, replacements,
alterations and renovations thereto and thereof, all as more specifically set
forth herein, shall be sold by the Authority to the Company are as follows:
ARTICLE I
DEFINITIONS; INTERPRETATION; COVENANTS
SECTION 1.1 Definitions. Unless the context clearly requires otherwise,
capitalized terms and phrases used herein shall have the meanings set forth in
this Section 1.1 or elsewhere within this document, except that capitalized
terms and phrases not otherwise defined herein shall have the meanings given
thereto in the Indenture.
"Act" shall mean the Industrial and Commercial Development Authority Law
of the Commonwealth, the Act of August 23, 1967, Act No. 102, P.L. 251, 73 P.S.
ss.371 et seq., as amended and supplemented from time to time.
"Act of Bankruptcy" shall mean any of the following events:
(a) The Company or the Authority (or any other person or entity
obligated, as guarantor or otherwise, to make payments under the Agreement)
shall (i) apply for or consent to the appointment of, or the taking of
possession by, a receiver, custodian, trustee, liquidator or the like of
the Company or the Authority or such other person or entity, or of all or
any substantial part of the property of the Company or the Authority or
such other person or entity, (ii) admit in writing its inability to pay its
debts generally as they become due or (iii) make a general assignment for
the benefit of creditors or (iv) commence a voluntary case under the United
States Bankruptcy Code (as now or hereafter in effect) or (v) file a
petition or answer seeking to take advantage of any other law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts; or
2
<PAGE>
(b) A proceeding or case shall be commenced, without the application,
approval or consent of the Company or the Authority (or any other person or
entity obligated, as guarantor or otherwise, to make payments under the
Agreement) in any court of competent jurisdiction, and shall not have been
withdrawn or dismissed seeking (i) the bankruptcy, liquidation,
reorganization, dissolution, winding-up, or composition or adjustment of
debts of the Company or the Authority or such other person or entity, (ii)
the appointment of a trustee, receiver, custodian, liquidator or the like
of the Company or the Authority or such other person or entity, or of all
or any substantial part of the property of the Company or the Authority or
such other person or entity or (iii) similar relief in respect of the
Company or such other person or entity under any law relating to
bankruptcy, insolvency, reorganization, winding-up or composition or
adjustment of debts.
"Additional Facilities" shall mean any improvements, replacements,
alterations, relocations, additions, enlargements, or expansions of or to any
part of the Project Facilities and any and all machinery, apparatus, equipment,
furnishings and fixtures therefor.
"Affiliate" means, with respect to any Person, any other Person under
the control of or in common control or ownership (direct or indirect) of or with
such Person and, with respect to Holt, any Person included in its combined
annual financial statements including, without limitation, the Company. For the
purposes of this definition and the definition of Related Party below,
"control" shall mean ownership or control (direct or indirect) of five percent
or more of the voting stock of the Person for which such determination is to be
made or the exercise of management control over the business and affairs of such
Person.
"Agreement" shall mean this Installment Sale Agreement.
"Authority" shall mean the Philadelphia Authority for Industrial
Development, a body politic and corporate organized and existing as set forth in
the preamble hereto and a party hereto.
"Bond" or "Bonds" shall mean the 1992 Bonds.
"Bond Documents" shall mean, as applicable, the Indenture, this
Agreement, the Guaranty, the Mortgage, the Guarantor Mortgage, the Bond Purchase
Agreement and any and all other documents executed and delivered in connection
with the issuance of the Bonds.
3
<PAGE>
"Bond Purchase Agreement" shall mean the bond purchase agreement dated
as of May 28, 1992 by and among the Authority, the Company, the Guarantors and
the Purchaser, relating to the issuance and sale of the 1992 Bonds, as the same
may be amended, modified or supplemented from time to time.
"Cash Flow" of a Person shall mean Net Income of such Person plus
depreciation and other non-cash charges to income plus (or minus) any increase
(or decrease) in deferred taxes.
"Capital Expenditure" shall have the meaning set forth at Section
144(a)(4)(B) of the Code.
"Closing Date" shall mean the date the Bonds are issued within the
meaning of the Code.
"Code" shall mean the federal Internal Revenue Code of 1986, as amended
and supplemented from time to time, or any successor statute, and, as
appropriate, regulations, temporary regulations and proposed regulations
promulgated and applicable thereunder, including regulations under the Internal
Revenue Code of 1954, as amended.
"Collateral" means all of the rights and assets of the Company, Holt or
any other Person in which the Authority or the Trustee is now or hereafter
granted a lien or security interest in order to secure the performance of the
Company's obligations under this Agreement or any of the Bond Documents, the
obligations of the Authority hereunder or under the Bonds or the obligations of
any Guarantor under the Guaranty.
"Combined Cash Flow," "Combined Interest Charges," "Combined Net Income"
and "Combined Net Income Before Interest and Taxes" for any period shall mean,
respectively, the Cash Flow, Interest Charges, Net Income and Net Income Before
Interest and Taxes of Holt and its Affiliates for such period, combined in
accordance with generally accepted accounting principles consistently applied.
"Combined Indebtedness" means (i) the Combined Total Assets less (ii)
the total combined stockholders' equity of Holt and its Affiliates plus deferred
taxes, each determined in accordance with generally accepted accounting
principles consistently applied, as such combination is effected in accordance
with generally accepted accounting principles consistently applied as at any
date on which the amount thereof shall be determined.
"Combined Tangible Net Worth" means (i) total combined shareholders'
equity of Holt and its Affiliates, determined in accordance with generally
accepted accounting principles consistently applied, as such combination is
effected in accordance with generally accepted accounting principles
consistently applied, less (ii) the aggregate net amount of the
4
<PAGE>
following items to the extent, if any, that they were included in
consolidated assets or deducted from consolidated liabilities in computing
shareholders' equity:
(a) All licenses, patents, copyrights, tradenames, trademarks,
franchises, good will, experimental or organizational expense, unamortized
debt discount and expense, treasury stock and all other assets which under
generally accepted accounting principles are deemed intangible; and
(b) Any write-up of assets (other than current assets written up in
accordance with generally accepted accounting principles consistently
applied) made after January 1, 1984.
"Combined Total Assets" means the assets of Holt and its Affiliates,
combined in accordance with generally accepted accounting principles
consistently applied.
"Commonwealth" shall mean the Commonwealth of Pennsylvania.
"Company" shall mean Refrigerated Enterprises, Inc., created and
existing as set forth in the preamble hereto, a party hereto, together with its
successors and permitted assigns.
"Control Group" shall mean all corporations that constitute a
"controlled group of corporations" within the meaning of Section 1563 of the
Code.
"Costs" shall mean any cost in respect of the Project Facilities
permitted under the Act and the Code.
"County" shall mean the County of Philadelphia, Pennsylvania.
"Cumulative Combined Net Income" for any specified periods means the sum
of Combined Net Income for each of such periods (subtracting Combined Net Income
for any period in which it is negative, as appropriate).
"Determination of Taxability" shall have the meaning given to that term
in the Indenture.
"ERISA" shall mean the Federal Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations thereunder.
"Event of Default" or "Events of Default" shall have the meaning given
thereto in Article VI hereof.
"Exemption Event" shall have the meaning ascribed to such term in the
Indenture.
5
<PAGE>
"Guarantor" means any or all of Holt Hauling and Warehousing System,
Inc., B.H. Sobelman & Co., Inc., Refrigerated Distribution Center, Inc., Oregon
Avenue Enterprises, Incorporated, Holt Cargo System, Inc., The Riverfront
Development Corp., CRT, Inc., Triple Seven Ice, Inc., Pattison Avenue
Warehousing Corp., 777 Pattison Ave., Inc., and any other Person required to be
a guarantor under the Guaranty.
"Guarantor Mortgage" means the Mortgage and Security Agreement dated as
of May 15, 1992 from Holt and 777 Pattison Ave., Inc. to the Trustee under which
Holt and 777 Pattison Ave., Inc. grant to the Trustee a mortgage lien on and a
security, interest in their respective interests in the Guarantor Project
Facilities to secure payment of the Company's obligations contained in Section
4.3 hereof and of the Guarantors' obligations contained in the Guaranty, and any
amendments and supplements thereto.
"Guarantor Project Facilities" means the Marine Terminal Complex,
consisting of land and improvements existing or to be constructed thereon, and
all fixtures and other personalty affixed thereto, which is or will be owned by
Holt or 777 Pattison Ave., Inc. and located in the City of Gloucester, Camden
County, New Jersey, including the New Jersey Facility, the location of which is
more fully described in Exhibit A attached to the Guarantor Mortgage, including
any additions, substitutions and replacements which have been or will be
acquired and constructed thereon.
"Guaranty" shall mean the Guaranty Agreement dated as of May 15, 1992 by
the Guarantors of the Company's obligations under the Agreement and the other
Bond Documents, and any amendments or supplements thereto.
"Holt" means Holt Hauling and Warehousing System, Inc., a Pennsylvania
corporation.
"Indebtedness" means, for any Person, (i) all indebtedness of such
Person for borrowed money or for the deferred purchase price of property
pursuant to an installment sale agreement or otherwise, (ii) all direct or
indirect guaranties of such Person in respect of and all obligations or
undertakings (contingent or otherwise) of such Person to purchase or otherwise
acquire, or otherwise to assure a creditor against loss in respect of,
indebtedness of any other Person for borrowed money or for the deferred purchase
price of property and (iii) all other obligations, contingent or otherwise,
which in accordance with generally accepted accounting principles consistently
applied shall be classified upon the obligor's balance sheet as liabilities,
including liabilities secured by any lien on any property owned or acquired by
the obligor or a subsidiary thereof, whether or not the liabilities secured
thereby shall have been assumed, capitalized leases and all guaranties,
endorsements and other contingent obligations. For
6
<PAGE>
purposes of determining the amount of Indebtedness of a Person, the
total amount of Indebtedness of another Person as to which such Person is
obligated described in clause (ii) or (iii) above, or the total possible
payments which such Person may become obligated to make in respect of a
contingent liability, shall be considered Indebtedness of such Person.
"Indenture" shall mean the Trust Indenture dated as of May 15, 1992,
between the Authority and the Trustee, as trustee, together with all amendments
and/or supplements thereto executed and delivered from time to time, securing
Bonds, including the 1992 Bonds.
"Integrated Facilities" shall mean Facilities contiguous or integrated
with any Facilities in the Borough within the meaning of Section
1.103-10(b)(ii)(e) and 1.103-10(d)(2) of the regulations under Section 103 of
the Code.
"Interest Payment Date" shall mean, with respect to Outstanding 1992
Bonds, December 1, 1992, and each June 1 and December 1 thereafter so long as
such Bonds are Outstanding.
"Issuance Costs" shall mean all costs and expenses of issuance of the
Bonds, including, but not limited to:
(i) counsel fees and expenses (including bond counsel, Authority
solicitor, Company counsel and special tax counsel fees, as well as any
other specialized counsel fees and expenses);
(ii) Trustee fees and Trustee counsel fees;
(iii) paying agent and certifying and authenticating agent fees
related to issuance of the Bonds;
(iv) accountant fees;
(v) printing costs of the Bonds;
(vi) publication costs associated with the financing proceedings; and
(vii) costs of engineering and feasibility studies necessary to the
issuance of the Bonds.
"Liens" means any mortgages, pledges, liens or other charges or
encumbrances of any kind (including the charge upon property purchased under
conditional sale or other title retention agreements) upon, or any security
interest in, any property, real or personal, tangible or intangible.
7
<PAGE>
"Mortgage" shall mean the Mortgage, Security Agreement and Assignment
of Installment Sale Agreement dated as of June 1, 1992, from the Company and the
Authority, as mortgagors, to the Trustee, as mortgagee, pursuant to which the
Authority and the Company grant to the Trustee a mortgage lien on and security
interest in their respective interests in the Project Facilities.
"Net Proceeds", when used with respect to any insurance proceeds or any
condemnation award received by the Trustee as mortgagee under the Guarantor
Mortgage pursuant to and in accordance with the Coordinate Lien Agreement, dated
as of May 15, 1992, among Holt, 777 Pattison Ave., Inc., Mellon Bank, N.A. and
Fidelity Bank, National Association, means the amount remaining after deducting
all expenses (including attorneys' fees and disbursements) incurred in the
collection of such proceeds or award from the gross proceeds thereof.
"New Jersey Facilities" means the land and improvements thereon existing
or to be constructed thereon, and all fixtures and other personalty affixed
thereto, which is or will be the subject of a ground lease or owned by 777
Pattison Ave., Inc. and located in Gloucester City, Camden County, Pennsylvania,
including any additions, substitutions and replacements which have been or may
be acquired and constructed thereon.
"1989 Bonds" shall mean the Authority's Variable Rate Demand/Fixed Rate
Manufacturing Facilities Development Revenue Bonds (Refrigerated Enterprises,
Inc.) Series of 1989, in the original principal amount of $7,000,000.
"1992 Bonds" shall mean the Revenue Bonds, (Refrigerated Enterprises,
Inc. Project) Series of 1992, dated as of May 15, 1992, issued or to be issued
by the Authority in the aggregate principal amount of Seven Million Dollars
($7,000,000) under the Indenture, as the same shall be outstanding under the
Indenture from time to time.
"1992 Refunding Series Bonds" means one or more of the Economic
Development Bonds (777 Pattison Ave., Inc. - 1988 and 1989 Projects) 1992
Refunding Series of NJEDA in the aggregate principal amount of $6,140,000 which
were issued on March 2, 1992.
"1992 Refunding Series Mortgage" means the Mortgage and Security
Agreement, dated as of March 2, 1992, from Holt and 777 Pattison Ave., Inc. to
Fidelity Bank, National Association, as trustee for the 1992 Refunding Series
Bonds, under which Holt and 777 Pattison Ave., Inc. have granted to such trustee
a mortgage lien on and security interest in the Guarantor Project Facilities to
secure payment of 777 Pattison Ave., Inc.'s obligations in connection with the
1992 Refunding Series Bonds.
8
<PAGE>
"Person" shall mean an individual, a corporation, a partnership, a joint
venture, a trust or unincorporated organization, a joint stock company or other
similar organization, a government or any political subdivision thereof, or any
other legal entity.
"Plans" shall mean the pension or other employee benefit plans which are
established or maintained by the Company, the Guarantors and their Affiliates.
"Principal User" shall have the meaning set forth in Section 144(a) of
the Code.
"Project Facilities" shall mean the Property, together will all
buildings, improvements, and appurtenant facilities located on the Property.
"Property" shall mean that certain parcel of real property located at
777 Pattison Avenue, Philadelphia, Philadelphia County, Pennsylvania, as more
fully described in Exhibit "A" attached hereto and made a part hereof.
"Purchase Price" shall mean, with respect to the Project Facilities, the
amounts payable by the Company hereunder as described in Section 4.3 hereof.
"Purchaser" shall mean Fidelity Spartan Pennsylvania Municipal
Portfolio.
"Rebate Fund" shall mean the fund so designated that is established
pursuant to Section 4.04 of the Indenture.
"Related Party" means, with respect to any Person, any Affiliate of such
Person, any Person controlling such Person or Affiliate and any director or
employee of such Person or Affiliate.
"Related Person" means for purposes of Sections 144(a)(4) and 144(a)(10)
of the code, a related person within the meaning of Section 144(a)(3) of the
Code and, for purposes of Section 147(a) of the Code, a related person within
the meaning of Section 147(a)(2) of the Code.
"Restricted Payment" means:
(i) The declaration of any dividend on, or the incurrence of any
liability to make any other payment or distribution in respect of, any
shares of Holt or any Holt Affiliate (other than one payable solely in its
common shares);
(ii) Any payment or distribution on account of the purchase,
redemption or other retirement of any shares of Holt or any Holt Affiliates
or of any
9
<PAGE>
warrant, option or other right to acquire such shares, or any other payment
or distribution made in respect thereof, either directly or indirectly,
except any payment or distribution on account of (A) the principal of and
prepayment charge, if any, on convertible debt, or (B) the purchase,
redemption or other retirement of shares Holt or any Holt Affiliate in
exchange for, or out of the net cash proceeds received by Holt or any Holt
Affiliate from a substantially concurrent sale of, other shares of Holt or
any Holt Affiliate; and
(iii) Any payment or distribution on account of the principal and
prepayment charge, if any, with respect to subordinated debt of Holt or any
Holt Affiliate other than mandatory sinking fund or other retirement
payments required by the terms thereof, and other than any working capital
line of credit secured by a mortgage.
The amount of any Restricted Payment in property shall be deemed to be
the greater of its fair market value (as determined by an independent recognized
appraiser) or its net book value.
"Revenues" shall mean (i) all amounts payable by the Company under this
Agreement and assigned to the Trustee under the Indenture, (ii) any proceeds of
Bonds originally deposited with the Trustee for the payment of accrued or
capitalized interest on the Bonds, if any, (iii) any insurance proceeds or
condemnation awards in respect of the Project Facilities, (iv) investment income
in respect of any money held by the Trustee in any of the funds under the
Indenture (excluding investment income on any amounts held in the Rebate Fund)
and (v) any money paid to the Trustee under any other collateral security
instrument held by the Trustee.
"Security Ratio" means, (A) in the case of any Indebtedness secured by
all or any portion of the Project Facilities, at any time the value of the
property subject to the lien of the Mortgage, as such value is determined by an
appraisal required by Section 1.4(k) hereof, divided by the sum of (i) the
amount (including interest which has accrued and is being deferred) of Senior
Indebtedness, plus (ii) the amount of the Bonds outstanding and (B) in the case
of any Indebtedness secured by all or any portion of the Guarantor Project
Facilities, at any time the value of the property subject to the Lien of the
Guarantor Mortgage, as such value is determined by an appraisal required by
Section 1.4(k) hereof, divided by the sum of (i) the amount (including interest
which has accrued and is being deferred) of Senior Indebtedness, plus (ii) an
amount not in excess of $3,500,000 of the Bonds Outstanding.
10
<PAGE>
"Senior Indebtedness" shall mean (A) in the case of any Indebtedness
secured by all or any portion of the Project Facilities, any Indebtedness
secured by a Lien on all or any portion of the Project Facilities which is
senior to, or on a parity with, the Lien securing the Bonds, whether now
outstanding or hereafter incurred and (B) in the case of any Indebtedness
secured by all or any portion of the Guarantor Project Facilities, any
Indebtedness secured by a lien on all or any portion of the Guarantor Project
Facilities which is senior to, or on a parity with, the lien securing the Bonds,
whether now outstanding or hereafter incurred.
"Series G Bond" or "Series G Bonds" means one or more of the Economic
Development Bonds (Holt Hauling and Warehousing System, Inc. - 1983 Project),
Series G Refunding (Non-AMT) of NJEDA in the aggregate principal amount of
$10,000,000 which were issued on January 28, 1992.
"Series G Mortgage" means the Mortgage and Security Agreement, dated as
of January 2, 1992, from Holt to Mellon Bank, N.A., as trustee for the Series G
Bonds, under which Holt has granted to such trustee a mortgage lien on and a
security interest in the Guarantor Project Facilities to secure payment of
Holt's obligations in connection with the Series G Bonds.
"Series H Bond" or "Series H Bonds" means one or more of the Economic
Development Bonds (Holt Hauling and Warehousing System, Inc. - 1983 Project),
Series H Refunding (Non-AMT) of NJEDA in the aggregate principal amount of
$9,000,000 which were issued on January 28, 1992.
"Series H Mortgage" means the Mortgage and Security Agreement, dated as
of January 2, 1992, from Holt to Mellon Bank, N.A., as trustee for the Series H
Bonds, under which Holt has granted to such trustee a mortgage lien on and a
security interest in the Guarantor Project Facilities to secure payment of
Holt's obligations in connection with the Series H Bonds.
"Substantial User" shall have the meaning set forth in Treasury
Regulation Section 1.103-11.
"Tax Compliance Agreement" shall mean collectively the Proceeds
Certificate and Agreement and the Non-Arbitrage Certificate and Agreement dated
as of the date of the issuance of the Bonds.
"Trustee" shall mean Fidelity Bank, National Association, Philadelphia,
Pennsylvania, in its capacity as trustee under the Indenture, and its successors
and assigns, from time to time, in the trust under the Indenture.
11
<PAGE>
SECTION 1.2 Interpretation. Any reference herein to the Authority or to
any member, director or officer of the Authority, includes entities or officials
succeeding to their respective functions, duties or responsibilities pursuant to
or by operation of law or lawfully performing their functions.
Any reference to a section or provision of the Constitution of the
Commonwealth or the Act, or to a section, provision or chapter of any statute of
the Commonwealth of the United States of America, includes that section,
provision or chapter as amended, modified, revised, supplemented or superseded
from time to time; provided, that no amendment, modification, revision,
supplement or superseding section, provision or chapter shall be applicable
solely by reason of this provision, if it constitutes in any way an impairment
of the rights or obligations of the Authority, the holders of the Bonds, the
Trustee, or the Company under the Indenture, this Agreement, the Bonds or any
other instrument or document entered into in connection with any of the
foregoing, including without limitation any alteration of the obligation to pay
principal of or interest on the Bonds in the amount and manner, at the times and
from the sources provided in this Agreement, the Bonds and the Indenture, except
as permitted herein.
Unless the context indicates otherwise, (i) words importing the singular
number includes the plural number, and vice versa; (ii) the terms "hereof,"
"hereby," "herein," "hereto," "hereunder" and similar terms refer to this
Agreement; (iii) the term "hereafter" means after, and the term "heretofore"
means before, the date of this Agreement; (iv) all references to particular
Articles or Sections are references to the Articles or Sections of this
Agreement; (v) the words "including," "includes," and "include" shall be deemed
to be followed by the words "without limitation"; (vi) references to agreements
and other contractual instruments shall be deemed to include all subsequent
amendments and other modifications to such instruments, but only to the extent
such amendments and other modifications are not prohibited by the terms of this
Agreement; and (vii) references to Persons includes their respective permitted
successors and assigns. Words of any gender include the correlative words of the
other genders, unless the sense indicates otherwise.
SECTION 1.3 Covenants of the Company. The Company agrees that, so long
as any of the Bonds are outstanding or any amounts are due under this Agreement
or under any of the Bond Documents, it shall comply and shall cause each of its
Affiliates to comply with the following provisions:
(a) Compliance with Agreement. The Company shall observe and perform
all of its obligations under this Agreement and the Bond Documents to which it
is a party. The Company shall fully and faithfully perform all the duties and
obligations which
12
<PAGE>
the Authority has covenanted and agreed in the Indenture to cause the
Company to perform and any duties and obligations which the Company is required
in the Indenture to perform.
(b) Notice of Default, Litigation, Etc.
(i) The Company shall furnish to the Trustee as soon as possible
and in any event within five (5) Business Days after the discovery by
any executive officer of the Company of any Event of Default, a
certificate setting forth the details of such Event of Default, and
the action which the Company proposes to take with respect thereto.
(ii) The Company shall give prompt notice to the Trustee of any
litigation or governmental proceeding pending, involving or, to its
knowledge, threatened against the Company or any Affiliate which (A)
involves an uninsured claim or the uninsured portion or deductible of
an insured claim which is over $500,000 or (B) if adversely
determined, would have a material adverse effect on the business or
financial condition of the Company or any Affiliate.
(c) Corporate Existence. The Company covenants that it shall maintain
its corporate existence in good standing under the laws of the Commonwealth of
Pennsylvania, shall cause each of its Affiliates to maintain its corporate
existence in good standing under the laws of its respective jurisdiction of
incorporation, and shall maintain, in each jurisdiction where material to the
business of the Company or any of its Affiliates or the maintenance of the
Collateral, its and each of their right to transact business in each
jurisdiction in which the nature of its or their business or the character of
the properties which it or they own or lease requires qualification as a foreign
corporation and where failure to so qualify would permanently preclude the
Company or any of its Affiliates, as the case may be, from enforcing its rights
with respect to its assets. No Affiliate shall be incorporated in any
jurisdiction if the laws of such jurisdiction would restrict or otherwise
adversely affect the ability of such Affiliate to perform its obligations under
the Guaranty. The Company and each Affiliate will comply in all material
respects with all applicable laws, ordinances, rules, regulations, and
requirements of governmental authorities, except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings and
the effect of noncompliance during such contest will not have a material adverse
effect upon the business, properties, or condition, financial or otherwise, of
the Company or any Affiliate or result in the imposition of any Lien on the
properties of any of them (unless the enforcement of any such Lien has been and
continues to be effectively stayed). The Company will and will cause its
Affiliates to preserve and keep in full force and effect all rights, licenses,
13
<PAGE>
registrations, and franchises necessary (i) to the proper conduct of
their business or affairs and (ii) to continue to operate their business as
presently operated.
(d) Reports; Inspections.
(i) The Company shall deliver to the Trustee and the Purchaser
(A) upon request, copies of all such regular or periodic reports,
which are available for public inspection, which the Company may be
required to file with any federal or state department, bureau,
commission, or agency, (B) such financial data as the Trustee or the
Purchaser may reasonably request and which is reasonably available to
the Company, and (C) copies of any statements, notices, certificates,
and other information required to be furnished to the Authority under
this Agreement on the date such information is required to be so
furnished.
(ii) The Company shall permit, and shall cause each of its
Affiliates to permit, any Person designated by the Authority, the
Trustee or the Purchaser, at their own expense, to visit and inspect
the properties of the Company and each of its Affiliates and to
examine the books and records, including financial records of the
Company, its Affiliates, and make copies or extracts thereof, and to
discuss the affairs, finances, and accounts of the Company, its
Affiliates, with its and their officers, at such reasonable times as
the Authority or the Trustee may reasonably request.
(e) Investments in Affiliates, Etc. Neither the Company nor any
Affiliate shall purchase any capital stock or other security issued by, make any
loan, advance, or extension of credit to, purchase any of the business or
integral part of the business of, or otherwise make any investment in, any
Affiliate, or any other Person if, immediately before or after giving effect
thereto, there shall exist any Event of Default.
(f) Transactions with Related Parties. Neither the Company nor any
Affiliate shall engage in or effect any transactions with any Related Party on a
basis less favorable to the Company or such Affiliate, as the case may be, than
would be the case if such transaction had been effected with a Person which was
not a Related Party.
SECTION 1.4 Covenants of the Company and Guarantors. The Company and
each Guarantor agrees that, so long as any of the Bonds are outstanding or any
amounts are due under this Agreement or under any of the Bond Documents, it
shall comply and shall cause each of its Affiliates, including the Company, to
comply with the following provisions:
14
<PAGE>
(a) Compliance with Aqreement. Each Guarantor shall observe and
perform all of its obligations under this Agreement and the Bond Documents to
which it is a party.
(b) Notice of Default, Litigation, Etc.
(i) Each Guarantor shall furnish to the Trustee as soon as
possible and in any event within five (5) Business Days after the
discovery by any executive officer of such Guarantor of any Event of
Default, a certificate setting forth the details of such Event of
Default, and the action which such Guarantor proposes to take with
respect thereto.
(ii) Each Guarantor shall give prompt notice to the Trustee of
any litigation or governmental proceeding pending, involving or, to
its knowledge, threatened against such Guarantor or any Affiliate
which (A) involves an uninsured claim or the uninsured portion or
deductible of an insured claim which is over $500,000 or (B) if
adversely determined, would have a material adverse effect on the
business or financial condition of such Guarantor or any Affiliate.
(c) Corporate Existence. Each Guarantor covenants that it shall
maintain its corporate existence in good standing under the laws of its
jurisdiction of incorporation, shall cause each of its Affiliates to maintain
its corporate existence in good standing under the laws of its respective
jurisdiction of incorporation, and shall maintain, in each jurisdiction where
material to the business of such Guarantor or any of its Affiliates or the
maintenance of the Collateral, its and each of their right to transact business
in each jurisdiction in which the nature of its or their business or the
character of the properties which it or they own or lease requires qualification
as a foreign corporation and where failure to so qualify would permanently
preclude such Guarantor or any of its Affiliates, as the case may be, from
enforcing its rights with respect to its assets. No Affiliate shall be
incorporated in any jurisdiction if the laws of such jurisdiction would restrict
or otherwise adversely affect the ability of such Affiliate to perform its
obligations under the Guaranty. Each Guarantor and each Affiliate will comply in
all material respects with all applicable laws, ordinances, rules, regulations,
and requirements of governmental authorities, except where the necessity of
compliance therewith is contested in good faith by appropriate proceedings and
the effect of noncompliance during such contest will not have a material adverse
effect upon the business, properties, or condition, financial or otherwise, of
such Guarantor or any Affiliate or result in the imposition of any Lien on the
properties of any of them (unless the enforcement of any such Lien has been and
continues to be effectively stayed). Each Guarantor will and will cause its
Affiliates to preserve and keep in full force and effect all rights, licenses,
15
<PAGE>
registrations, and franchises necessary (i) to the proper conduct of
their business or affairs and (ii) to continue to operate their business as
presently operated.
(d) Acquisition, Merger of Consolidation; Sale of Substantially All
Assets. Neither the Company nor any Guarantor nor any Affiliate shall sell,
lease, assign, transfer, or otherwise dispose of any assets from and after the
date hereof (i) for less than fair value or (ii) if the combined total of the
net book value of all assets sold, leased, or otherwise assigned or disposed of
from and after the date hereof exceeds 25% of total combined assets of Holt and
all of its Affiliates, as the case may be. The Company shall not permit in any
event any such event to occur unless the Company has complied with the
provisions of Section 5.12. In addition, in the event of any sale of any
property subject to the lien of the Guarantor Mortgage or the Mortgage, or any
part thereof, Holt or the Company, as the case may be, shall make or set aside
in trust for prepayments or payments of Senior Indebtedness with a Lien senior
to the Bonds, or if no such Indebtedness is outstanding, the Bonds and any
Senior Indebtedness on a parity with the Bonds, in an amount equal to the
greater of (x) the sales price of such property sold or (y) 60% of the appraised
fair market value thereof. Notwithstanding the foregoing, neither the Company
nor any Guarantor nor any Affiliate shall sell, lease, or otherwise transfer or
dispose of any asset if, after giving effect to such sale, lease, or other
transfer or disposition, there shall exist any Event of Default.
Neither the Company nor any Guarantor nor any Affiliate shall merge or
consolidate with or into or acquire all or substantially all of the assets of
any other Person, provided that Holt or any Affiliate may merge or consolidate
with or into or acquire all or substantially all of such assets of another
corporation (i) if the acquiring corporation is a corporation duly organized in
good standing under the laws of a State of the United States, (ii) if the
surviving corporation is not Holt, the surviving corporation expressly assumes
all of the covenants and obligations of its predecessor under this Agreement and
each of the Bond Documents and otherwise in respect of the Bonds, (iii) Holt or
the surviving corporation could immediately after giving effect to the
transaction, incur at least $1.00 of Indebtedness pursuant to Section 1.4(h)
hereof, (iv) if the surviving corporation has rated debt securities, such debt
securities are rated by a nationally recognized credit rating agency and such
rating is investment grade or better (e.g., if by S & P, "BBB" or better and if
by Moody's, "Baa" or better), and (v) the Trustee shall have received an opinion
of Nationally Recognized Bond Counsel to the effect that such merger,
consolidation or acquisition of assets will not adversely affect the exemption
of interest on the Bonds from federal income taxation, a certificate of the
chief financial officer stating that none of the covenants contained in this
Agreement will be violated as a result of such merger, consolidation or
acquisition
16
<PAGE>
of assets, and such other agreements, certificates, opinions, and documents as
the Trustee shall have reasonably requested. The Company and each Guarantor
agrees to notify the Purchaser of such Guarantor's or the Company's intent to
merge, consolidate or acquire assets pursuant to this paragraph at least 10
days prior to entering into any binding agreements with respect to such
acquisition.
Notwithstanding the foregoing, Holt shall have the right at any time and
from time to time to (i) merge or consolidate any Affiliate with or into it
(provided Holt is the surviving corporation) or with or into any other
Affiliate, or (ii) acquire substantially all of the assets, or cause any other
Affiliate to acquire substantially all of the assets, of any Affiliate (other
than Holt), without regard to the provisions of the immediately preceding
paragraph of this Section 1.4(d), but subject to the provisions of Section 5.12.
(e) Financial Statements; Inspections.
(i) The Company and the Guarantors shall cause to be delivered to the
Trustee and the Purchaser (A) as soon as available but in any event within
120 days after the end of each Fiscal Year a combined and combining
comparative statement of income, reconciliation of capital accounts and
related balance sheets for Holt and its Affiliates, including the
Guarantors and the Company, for such year prepared in conformity with
generally accepted accounting principles consistently applied and in
reasonable detail (such combined statements to be audited and certified by
a firm of certified public accountants with an unqualified opinion and such
combining statements to be unaudited and certified by the chief financial
officer of Holt, whose certificate shall be satisfactory to the Trustee),
(B) as soon as available but in any event within 60 days after the end of
each of the first three fiscal quarters of each Fiscal Year, a combined
comparative statement of income, reconciliation of capital accounts, and
related balance sheet for such quarter and for the period from the
beginning of the then fiscal year to the end of such quarter, prepared in
accordance with generally accepted accounting principles consistently
applied (subject to year-end adjustments) and in reasonable detail (all of
which shall be unaudited and certified by the chief financial officer of
Holt, whose certificate shall be satisfactory to the Trustee) for Holt and
its Affiliates, including the other Guarantors and the Company, (C) upon
request, copies of all such regular or periodic reports, which are
available for public inspection, which any Guarantor may be required to
file with any federal or state department, bureau, commission, or agency,
(D) such other financial data as the Trustee or the Purchaser may
reasonably request and which is reasonably available to any Guarantor, and
(E) copies of any statements, notices, certificates, and other information
17
<PAGE>
required to be furnished to the Authority by such Guarantor under this
Agreement on the date such information is required to be so furnished. In
addition, Holt shall deliver within 90 days after the end of each of the first
three fiscal quarters of each Fiscal Year combining statements for any such
reporting period during which Holt's investment in any Affiliate shall account
for 15% or more of Combined Tangible Net Worth or 15% or more of combined sales
and revenues, such combining statements to be unaudited and certified by the
chief financial officer of Holt, whose certificate shall be satisfactory to the
Trustee and the Purchaser. All financial statements specified in clauses (A) and
(B) above shall be furnished in combined comparative form for Holt and its
Affiliates with comparative figures for the corresponding period in the
preceding year, and shall be accompanied by a certificate signed by the chief
financial officer of Holt, with appropriate documentation substantiating all
financial calculations, stating that there exists no Event of Default or, if any
such Event of Default exists, stating the nature thereof and what action Holt
proposes to take with respect thereto.
(ii) Each Guarantor shall permit, and shall cause each of its
Affiliates to permit, any Person designated by the Authority, the Trustee
or the Purchaser, at their own expense, to visit and inspect the properties
of such Guarantor and each of its Affiliates and to examine the books and
records, including financial records of such Guarantor and its Affiliates,
and make copies of extracts thereof, and to discuss the affairs, finances,
and accounts of such Guarantor and its Affiliates, with its and their
officers, at such reasonable times as the Authority or the Trustee may
reasonably request.
(iii) In addition to the information required under Section 1.4(e)(i),
in connection with a sale by the Purchaser of all or a portion of the Bonds
and any or all of its rights under the Guaranty to one or more subsequent
purchasers prior to the occurrence of an Exemption Event, or in connection
with any such sale by any subsequent purchaser prior to the occurrence of
an Exemption Event, each of the Guarantors shall deliver to such subsequent
purchaser, at the request of the Purchaser or any subsequent purchaser and
on the date specified in such request, the following information: (A) a
statement describing the nature of the business of the Guarantor and the
products and services it offers, (B) copies of the Guarantor's most recent
balance sheet and profit and loss and retained earnings statements (which
may be presented on a combined basis for the Company and all of the
Guarantors), (C) copies of the financial reports listed in (B) above for
two preceding fiscal years, which reports shall be audited to the extent
available, (D) any other information required pursuant to Rule 144A
18
<PAGE>
under the Securities Act of 1933, as it may be amended from time to time
and (E) a certificate, signed by an authorized officer of each Guarantor,
to the effect that the information set forth in clauses (A) through (D), as
of the date specified in the Purchaser's or subsequent purchaser's request,
is true, accurate and complete in all material respects, and no facts have
come to its attention which would lead the Guarantor to believe that such
information, as of the date of the certificate, contains any untrue
statement of a material fact or omits to state a material fact necessary to
make the statements therein, in light of the circumstances under which they
were made, not misleading.
(f) Restricted Payments. Neither Holt nor any of its Affiliates,
including the Company and the other Guarantors, shall make any Restricted
Payment or set aside any funds therefor unless, after giving effect thereto, the
aggregate of such Restricted Payments for all such purposes subsequent to the
Closing Date would not exceed the sum (as in effect from time to time,
hereinafter referred to as the 'Distribution Fund') of (i) 50% of Holt's
Cumulative Combined Net Income subsequent to December 31, 1991 so long as Holt's
combined Tangible Net Worth is greater than $31,051,000, (ii) the aggregate of
the net cash proceeds received by Holt from any issuance or sale of capital
shares of Holt subsequent to the Closing Date, and (iii) the aggregate of the
net cash proceeds received by Holt from any issuance of any Indebtedness of Holt
which has been converted into capital shares of Holt subsequent to the Closing
Date, which amount shall be added to the Distribution Fund only after such
conversion. Notwithstanding the foregoing, Holt may acquire its own capital
shares for an aggregate amount from and after the Closing Date equal to the
greater of (x) the sum of (i) 25% of the Cumulative Combined Net Income of Holt
subsequent to December 31, 1991, plus (ii) $500,000, or (y) the amount then
available under the Distribution Fund, which amount shall be charged to the
Distribution Fund. No Restricted Payment may be made in other than cash or
securities which are actively traded on a nationally recognized public market
and have a readily ascertainable market value (which value shall be the amount
of such Restricted Payment), unless Holt shall have received a report from an
independent recognized appraiser as to the fair value of the property to be
distributed or transferred, in which case the amount of such Restricted Payment
shall be deemed to be the greater of its fair value (as determined by such
appraiser) or its net book value on the books of Holt. Notwithstanding any of
the foregoing provisions of this paragraph, neither Holt nor any Affiliate shall
make any Restricted Payment if at the time or after giving effect thereto, there
shall exist any Event of Default.
(g) Maintenance of Combined Tangible Net Worth. Holt shall at all
times maintain a Combined Tangible Net Worth of (i) not less than $31,051,000,
plus 50% of Holt's Aggregate
19
<PAGE>
Combined Net Income at the end of each fiscal year subsequent to the
fiscal year ending December 31, 1991 and (ii) not less than 25% of Combined Long
Term Indebtedness but in no event less than $31,051,000.
(h) Limitation of Total Indebtedness. Neither Holt nor any of its
Affiliates, including the Company and the other Guarantors, shall incur
additional Indebtedness if, at the time such Indebtedness is incurred and after
giving effect thereto and to any concurrent reduction of Indebtedness, Combined
Indebtedness would exceed 400% of Combined Tangible Net Worth.
(i) Times Interest Earned. The ratio of (i) Holt's Combined Net Income
Before Interest and Taxes to (ii) Holt's Combined Interest Charges calculated as
of the end of each fiscal quarter beginning December 31, 1991 for the period
including such quarter and the immediately prior three fiscal quarters,
combined, will be at least 1.35 for each of said periods.
(j) Cash Flow. The Combined Cash Flow of Holt shall not be less than
$7,000,000 at the end of any Fiscal Year, commencing January 1, 1991.
(k) Limitation on Primary Debt. After the date hereof, neither Holt
nor any Affiliate, including the Company and any other Guarantors, nor
the Authority shall incur additional Indebtedness having a Lien on the Project
Facilities or the Guarantor Project Facilities, or any part thereof, senior to
any lien securing the Bonds or the obligations of the Company or any Guarantor
under this Agreement or any of the Bond Documents, provided that Holt or any
Affiliate may incur such Indebtedness with a senior Lien on the Guarantor
Project Facilities in an aggregate amount of up to $5,000,000 without regard to
any limitation or requirements otherwise stated under this Section 1.4(k),
provided there shall not exist any Event of Default. After the date hereof,
neither Holt nor any Affiliate, including the Company and the other Guarantors,
nor the Authority shall incur additional Indebtedness having a Lien on the
Project Facilities or the Guarantor Project Facilities, or any part thereof, of
equal priority with any lien securing the Bonds or the obligations of the
Company or any Guarantor under this Agreement or any of the Bond Documents if,
at the time it is incurred and after giving effect thereto, (i) the Security
Ratio would be less than 2.2 to 1; provided that no additional Senior
Indebtedness (including interest which has accrued and is being deferred) shall
be incurred without providing to the Trustee and to the Purchaser an appraisal
performed not more than two years prior to such incurrence by an independent
appraiser of recognized standing of the value of the property subject to the
lien of the Mortgage or the Guarantor Mortgage, as applicable; or (ii) if, at
the time of or after giving effect to the incurrence of such Indebtedness, there
shall exist any Event of Default. Prior to the incurrence of any Senior
Indebtedness by Holt or any
20
<PAGE>
Affiliate, Holt shall furnish to the Trustee and the Purchaser a
certificate of its chief financial officer demonstrating in reasonable detail
compliance by Holt and such Affiliate with the provisions of this Section
1.4(k). In connection with the incurrence of Senior Indebtedness meeting the
requirements of this Section 1.4(k), the Trustee shall execute and deliver a
subordination of the Guarantor Mortgage or a parity agreement with respect to
the Mortgage or the Guarantor Mortgage, as applicable, provided that no such
agreement shall amend or modify any provisions of the Mortgage or the Guarantor
Mortgage, but only the priority thereof.
(1) Investments in Affiliates, Etc. Neither the Company nor any
Guarantor nor any Affiliate shall purchase any capital stock or other security
issued by, make any loan, advance, or extension of credit to, purchase any of
the business or integral part of the business of, or otherwise make any
investment in, any Affiliate, or any other Person if, immediately before or
after giving effect thereto, there shall exist any Event of Default.
(m) Compliance with ERISA. The Company, each Guarantor and each of
their Affiliates shall meet all minimum funding requirements applicable
to any Plans which are subject to ERISA or to Section 412 of the Code and will
at all times comply in all material respects with the provisions of ERISA and
Section 412 of the Code which are applicable to the Plans. No Guarantor nor any
Affiliate will permit any event or condition to exist which would permit any of
the Plans which is not a multiemployer plan to be terminated under circumstances
which would cause the lien provided for in Section 4068 of ERISA to attach to
the assets of such Guarantor or any Affiliate. Promptly after the occurrence of
a "reportable event," as defined in Section 4043 of ERISA, or after any
Guarantor or a Affiliate receives notice that the Pension Benefit Guarantee
Corporation has instituted or intends to institute termination proceedings with
respect to any Plan, and prior to the termination of any Plan by the
administrator thereof, such Guarantor shall notify the Trustee and provide such
documentation, data and other information with respect thereto as the Trustee at
the written direction of the Owners of 25% in aggregate principal amount of the
Bonds Outstanding shall reasonably request. The Trustee shall give written
notice to the Owners of any notification received by it hereunder and shall
provide to any Owner requesting same, access to, copies of or extracts from any
documents, data or other written information received by it pursuant hereto.
(n) Transactions with Related Parties. No Guarantor nor any Affiliate
shall engage in or effect any transactions with any Related Party on a basis
less favorable to the Company or such Affiliate, as the case may be, than would
be the case if such transaction had been effected with a Person which was not a
Related Party.
21
<PAGE>
SECTION 1.5 Representations and Warranties of the Company and
Guarantors. The representations and warranties of the Company and the Guarantors
set forth in Section 2.2 of that certain Loan Agreement dated as of March 2,
1992, among New Jersey Economic Development Authority, 777 Pattison Ave., Inc.
and the Guarantors named therein are incorporated by reference herein and are
made a part hereof as if such representations and warranties were set forth
fully herein, except that each reference to the Company therein shall mean
Refrigerated Enterprises, Inc.
ARTICLE II
ACQUISITION OF PROJECT FACILITIES
SECTION 2.1 Acquisition of Project Facilities, Possession and Quiet
Enjoyment by Company. The Authority has acquired an interest in the Project
Facilities by means of warranty deed (which deed has been recorded in the Office
of Recorder of Deeds in and for the County). The Authority has delivered
possession of the Project Facilities to the Company and the Company has assumed
and does hereby continue to assume all risk of loss and damages with respect to
the same. The Authority agrees that so long as no Event of Default hereunder or
under the Indenture has occurred and is continuing, the Company, on performing
the covenants and conditions contained herein, shall and may peaceably and
quietly have, hold, enjoy and possess the Project Facilities, free from eviction
or disturbance by the Authority or by any other person or persons claiming the
same by, through or under the Authority. The Authority agrees that it will not
convey, suffer or permit the conveyance of its interest in the Project
Facilities, create any lien, encumbrance or charge upon the Project Facilities
(other than the security intended to be given to the Trustee to secure the
Authority's obligation under the Indenture) or grant any easement, license,
right of way or other right or privilege in the nature of an easement on the
Project Facilities, without the prior written consent of the Company; provided,
however, that nothing in this Section 2.1 shall restrict the remedies of the
Authority or its assigns if an Event of Default shall occur and be continuing.
SECTION 2.2 Provisions with Respect to Title. Subject to the provisions
of Sections 5.9 and 5.11 hereof, the Company agrees that title to the Project
Facilities will remain in the Authority until settlement pursuant to Section 4.7
hereof, and that the Authority's title to the Project Facilities shall
constitute ownership and not a security interest; provided, however, that, as
between the Authority and the Company, the Company shall be the "owner" of the
Project Facilities for federal, state and local income tax purposes and for
financial accounting purposes, and the Company alone shall be entitled to deduct
all depreciation on, and take any available tax credits in respect of, the
Project Facilities on the Company's income tax returns to the extent permitted
by law.
22
<PAGE>
SECTION 2.3 Compliance with Laws. The Company shall give or cause to be
given all notices and comply or cause compliance with all laws, ordinances,
municipal rules and regulations and requirements of any federal, state or local
governmental entity, authority or agency applying to or affecting the Bonds, the
Project Facilities, or any Additional Facilities, including compliance with any
federal tax law requirements now or hereafter required in order for the interest
payable on the Bonds to be excludable from the gross income of the Registered
Owners thereof for federal income tax purposes and the Company will defend and
save the Authority, its officers, members, agents and employees harmless from
all penalties, fines or liabilities arising from the Company's failure to comply
or cause compliance therewith. The Authority shall cooperate with the Company to
the extent reasonably necessary to enable the Company to fulfill its obligations
set forth in this Section 2.3; provided, however, that the Company shall have
first made provision, to the Authority's satisfaction to save the Authority and
its officers, members agents and employees harmless from all costs, expenses and
liabilities in connection therewith.
SECTION 2.4 Additions and Changes to the Project Facilities.
(a) The Company may undertake to acquire and/or construct Additional
Facilities. In such event and if no Event of Default has occurred and is
continuing and subject in all events to the Company's covenants contained in
Sections 1.4 and 3.4 hereof regarding, among other things, restrictive and
prohibitive uses and limitations on "capital expenditures," the Company may
request the Authority to, and the Authority may, at its election, proceed under
the provisions of the Act to issue additional bonds in order to finance such
Additional Facilities. If Additional Facilities are to be financed by the
Authority, the Company shall obtain the Authority's approval and, if required by
law or regulation, the approval of the Secretary of Commerce of the Commonwealth
prior to the commencement of acquisition and construction. With regard to
Additional Facilities to be financed pursuant to the terms of this Section
2.4(a), such Additional Facilities shall automatically become part of the
Project Facilities subject in all respects to this Agreement.
(b) Subject to Section 3.4 hereof, the Company may, at its option and
at its own cost and expense, at any time and from time to time, undertake to
acquire and/or construct such Additional Facilities to the Project Facilities as
it may deem to be desirable for its uses and purposes, provided that: (i) such
Additional Facilities shall constitute part of the Project Facilities and be
subject to the liens and security interest created by the Indenture; and (ii)
the Company shall not permit any alienation, removal, demolition, substitution,
improvement, alteration or deterioration of such Additional Facilities or any
other act that might materially impair or reduce the usefulness
23
<PAGE>
or value thereof, or the Authority's interest therein, or the security provided
under the Indenture, without the prior written consent of the Trustee.
(c) Upon written request of the Company, the Authority shall give a
bill of sale, in quitclaim form, to the Company, and the Trustee shall execute
termination statements for any filings made to perfect the security interests
created by the Indenture and by Section 4.2 hereof for any chattel or fixture
permanently removed or sold from the Project Facilities by the Company;
provided, that any chattel or fixture so removed or sold shall be replaced by
the Company by other property of similar value (but not necessarily having the
same function) so that the original cost of all such chattels and fixtures so
removed from the Project Facilities is never greater than the original cost of
the property replacing the same, and provided further that such removal, after
giving effect to such replacement, shall not materially impair the efficiency or
utility of the Project Facilities for the purposes of the Company.
ARTICLE III
CURRENT REFUNDING OF 1989 BONDS
SECTION 3.1 Issuance of Bonds. In order to currently refund the 1989
Bonds in their entirety, the Authority will issue and sell the 1992 Bonds. The
1992 Bonds will be issued under the Indenture and may be sold at such time, in
such an amount and for such price as may be approved by the Company. The
liability of the Authority under the 1992 Bonds shall be limited to, and
enforceable only to the extent of, its rights and duties hereunder or under the
Indenture, or any amendment or supplement hereto or thereto. The 1992 Bonds
shall be payable solely from payments made by the Company to the Trustee, as the
Authority's assignee, and from funds lawfully available under the Indenture, as
hereinafter provided; provided, however, that payments on the 1992 Bonds may be
made from other moneys, if any, accruing to the Trustee or to the Authority in
respect of the Project Facilities and there shall be no other liability or
recourse against the Authority or any other property or assets now or hereafter
owned by the Authority.
SECTION 3.2 Use of Proceeds. The proceeds of the 1992 Bonds will be
deposited with the Trustee, as assignee of the Authority, all as more fully set
forth in Section 3.02 of the Indenture, and shall thereafter be applied by the
Trustee, in the name and on behalf of the Authority, to the payment of all the
Authority's obligations under and pursuant to the Indenture.
SECTION 3.3 Compliance with Indenture. The Company covenants and agrees
to do all things within its power (and at its sole cost and expense) in order to
comply with and to enable the Authority to comply with all requirements and to
fulfill all covenants of the Indenture and to enable the Company and the
24
<PAGE>
Authority to comply on a continuing basis with all requirements of the Code and
the Act to assure that the interest on the Bonds shall not be includible in the
gross income of the holders of the Bonds for purposes of federal income
taxation. So long as an Event of Default has not occurred, the Authority agrees
that it will not amend or supplement the Indenture so as to increase the burdens
or liabilities of the Company without the consent of the Company.
SECTION 3.4 Bonds Not to Become Arbitrage Bonds and Compliance with Tax
Code Requirements. The Company and Authority hereby covenant with the holders of
the 1992 Bonds that it will (i) neither make nor instruct the Trustee to make
any investment or other use of the amounts held in any fund or account under the
Indenture, including the Bond Fund or Rebate Fund (as such terms are defined in
the Indenture) or other proceeds of the 1992 Bonds that would cause the 1992
Bonds to be "arbitrage bonds" under Section 148 of the Code and that they will
comply with the requirements of Section 4.04 of the Indenture and Section 148 of
the Code and regulations promulgated thereunder throughout the term of the 1992
Bonds and (ii) comply or cause compliance with the provisions of the Tax
Compliance Agreement and all laws, rules and regulations necessary in order for
the interest or the 1992 Bonds to be excludable from the gross income of the
holders of the 1992 Bonds.
ARTICLE IV
SALE AND PURCHASE OF THE PROJECT FACILITIES
SECTION 4.1 Sale and Purchase of the Project Facilities. The Authority
hereby agrees to sell to the Company, and the Company hereby agrees to purchase
from the Authority, the Project Facilities, under and subject nevertheless to
all easements, covenants, reversions, conditions and restrictions existing at
the time of settlement pursuant to Section 4.7 hereof, for the Purchase Price
set forth in Section 4.3 hereof. The Company and the Authority intend that all
the Project Facilities shall be sold by the Authority to the Company under and
pursuant to this Agreement.
SECTION 4.2 Security Interest. The Company, to secure its obligations
hereunder, hereby assigns, transfers, sets over and grants to the Authority a
security interest in all the Company's right, title and interest in and to the
Project Facilities (including, without limitation, all furnishings, furniture,
machinery, appliances, apparatus, equipment, structures, devices, fixtures and
all substitutions and replacements therefor which constitute furniture,
machinery or equipment), whether now owned or hereafter acquired by the Company
or the Authority and located on the Property, of every kind and description,
tangible or intangible, including any Additional Facilities, together with all
additions and accessions
25
<PAGE>
thereto, all cash and noncash proceeds therefrom (including insurance proceeds)
and all substitutions and replacements therefor; excluding, however all personal
property that is not a fixture.
SECTION 4.3 Payment of Purchase Price.
(a) The purchase price (the "Purchase Price") to be paid by the Company
for the Project Facilities will be an amount equal to the principal of, premium,
if any, and interest on the Bonds issued by the Authority. The Purchase Price
shall be payable in installments that, as to amount, correspond to the payments
of the principal of, premium, if any, and interest on the Bonds; provided,
however, that such installments shall be reduced to the extent that other moneys
are available for the payment of debt service in funds held by the Trustee on
such dates and a credit in respect thereof has been granted pursuant to the
terms of this Agreement and the Indenture. Payment of the Purchase Price shall
be made by the Company with the Company's funds, except to the extent a credit
in respect thereof has been granted pursuant to the terms of this Agreement and
the Indenture. It is the intention of the Authority and the Company that,
notwithstanding any other provision of this Agreement, the Authority shall
receive funds from the Company under this Agreement at such times and in such
amounts as will enable the Authority to meet all of its obligations under the
Bonds and the Indenture, including any such obligations surviving the payment of
the Bonds and the defeasance of the Indenture. The Purchase Price payable under
this Section 4.3(a) shall be appropriately reduced (i) after a redemption
required or permitted by the Indenture or the Bonds has been made and (ii) as
otherwise permitted under the Indenture.
(b) All payments of the Purchase Price and other sums due and payable
by the Company under this Agreement shall be absolutely net to the Authority or
the Trustee, as applicable, free of any taxes, costs, liabilities or other
deductions whatsoever with respect to the Project Facilities and the
maintenance, repair, rebuilding, use or occupation thereof or any portion
thereof, so that this Agreement shall yield all amounts due hereunder net to the
Authority or the Trustee throughout the term hereof.
(c) The Company hereby covenants to make all required payments into the
Rebate Fund as provided for in Section 4.04 of the Indenture.
SECTION 4.4 Acceleration of Payment to Redeem Bonds. Whenever the Bonds
are subject to optional redemption or extraordinary optional redemption pursuant
to the Indenture and the provisions hereof, the Authority will, upon request of
the Company, direct the Trustee to call the same for redemption as provided in
the Indenture. Whenever any series of Bonds is subject to mandatory sinking fund
redemption, mandatory redemption or special mandatory redemption pursuant to the
26
<PAGE>
Indenture, the Company will cooperate with the Authority and the Trustee in
effecting such redemption. In the event of any redemption of the Bonds, the
Company will pay to the Trustee an amount equal to the applicable redemption
price as a prepayment of that portion of the Purchase Price corresponding to the
Bonds to be redeemed together with interest accrued to the date of redemption.
In all events the Company agrees to pay all fees and expenses of the Authority
and the Trustee arising with respect to such redemption or otherwise which are
due and owing hereunder or under the Indenture.
SECTION 4.5 Extraordinary Redemptions; Special Mandatory Redemptions.
(a) If, during the term of this Agreement, (i) any federal, state or
local body exercising governmental or judicial authority shall have taken any
action that results in unreasonable burdens or excessive liabilities, including
without limitation taxes not presently levied, with respect to the Project
Facilities or the ownership or operation thereof, that in the Company's judgment
render the Project Facilities or the operation thereof impractical or uneconomic
or (ii) all or a part of the Project Facilities shall be subject to damage,
destruction or condemnation that in the Company's judgment render the Project
Facilities or the operation thereof impractical or uneconomic, then the Company
may, at its election, and within one (1) year after the date of such
governmental or judicial action, in the case of an event covered by clause (i)
above, or the Company may, at its election, in accordance with the provisions of
Section 5.5 hereof, in the case of an event covered by clause (ii) above,
request the Authority to direct the Trustee to call all Bonds then outstanding
for extraordinary optional redemption pursuant to the terms of the Bonds and of
the Indenture and shall pay the applicable redemption price in accordance with
the provisions hereof.
(b) If, during the term of this Agreement, the Trustee receives written
notice of a Determination of Taxability with respect to the Bonds outstanding
from the Company, the applicable determining authority or any holder of Bonds
who has received notice from the applicable determining authority of a
Determination of Taxability, the Trustee shall, as promptly as practicable and
in no event any later than one hundred fifty (150) days after receipt of such
notice, call all Bonds then outstanding for special mandatory redemption
pursuant to the terms of the Bonds and of the Indenture and the Company shall
pay the applicable redemption price in accordance with the provisions hereof.
SECTION 4.6 No Defense or Set-Off. The obligations of the Company to
make payments of the Purchase Price shall be absolute and unconditional without
any defense or set-off by reason of any default by the contractors under any
contracts regarding the Project Facilities or by the Authority under this
27
<PAGE>
Agreement or under any other agreement between the Company and the Authority or
for any other reason, including without limitation failure to complete the
Project Facilities, any acts or circumstances that may constitute failure of
consideration, destruction of or damage to the Project Facilities, invalidity or
unenforceability of the 1992 Bonds, commercial frustration of purpose or failure
of the Authority to perform and observe any agreement, whether express or
implied, or any duty, liability or obligation arising out of or connected with
this Agreement, it being the intention of the parties that the payments required
of the Company hereunder will be paid in full when due without any delay or
diminution whatsoever.
SECTION 4.7 Settlement. Settlement for the Project Facilities shall
take place within thirty (30) days after the date of final payment by the
Company of all amounts to be paid by the Company under the terms of this
Agreement (provided that the Authority shall have paid or provided for the
payment of all amounts due and owing under the Indenture and the Indenture shall
have been defeased in accordance with its terms), provided that the Company is
not in default hereunder and provided that settlement shall be held only after
the Company gives ten (10) days' prior written notice to the Authority of said
settlement. At settlement, the Authority will assign to the Company all of its
right, title and interest in and to the Project Facilities and will convey to
the Company by bill of sale the personal property that constitutes the Project
Facilities and by special warranty deed the real estate that constitutes the
Project Facilities, excepting, however, any part of the Project Facilities taken
by eminent domain (or conveyed by a bona fide sale in lieu thereof) during the
term of this Agreement and subject, nevertheless, to all easements, covenants,
reversions, conditions and restrictions existing at the time of the conveyance
to the Authority pursuant to Section 2.1 hereof, or thereafter created or
permitted by the Company or by the Authority with the Company's consent. The
Company agrees to pay all taxes, charges and costs, including but not limited to
real estate transfer taxes, if any, legal fees, recording fees, notary fees and
any other similar fees and charges that must be paid in order to complete
settlement and in connection with the conveyance of the interest of the
Authority in the Project Facilities from the Authority to the Company hereunder
and, with respect to the Indenture and any other mortgage created by the
Authority with the Company's consent, all mortgage satisfaction costs and fees.
In the event the Company refuses to take and record title to the Property within
the aforesaid thirty (30) day period, the Company shall pay to the Authority, or
its agent, a service charge of One Hundred Dollars and No Cents ($100.00) per
month until such time as the Company accepts and records title to the Property.
SECTION 4.8 Assignment of Authority's Rights. As security for the
payment of the Bonds, the Authority and the Company will assign to the Trustee
all their respective rights
28
<PAGE>
under this Agreement (except the rights of the Authority to receive payments
under Sections 5.4 and 5.6 hereof). The Company consents to such assignments and
agrees to make payments of the Purchase Price under Section 4.3 and Section 4.4
hereof directly to the Trustee without defense or set-off by reason of any
dispute between the Company and the Trustee.
ARTICLE V
SPECIAL COVENANTS OF THE COMPANY AND GUARANTORS
SECTION 5.1 Maintenance and Operation of the Project Facilities.
(a) During the term of this Agreement, the Company will at its own cost
and expense (i) keep and maintain, or cause to be kept and maintained, in good
repair and condition (excepting reasonable wear and tear) the Project Facilities
and all additions and improvements thereto, in accordance with all applicable
governmental laws, ordinances, approvals, rules and regulations and
requirements, including, but not limited to, zoning, sanitary, pollution,
environmental and safety ordinances, laws and rules and regulations promulgated
thereunder, and (ii) pay, or cause to be paid, any utility charges and other
costs and expenses arising out of its occupancy of the Project Facilities.
(b) The Company agrees to timely pay for any improvements to the
Project Facilities lawfully done or lawfully ordered to be done by any
municipal, state or federal authority and to comply in all material respects at
its own cost and expense with all lawful and enforceable notices received
(whether by the Authority or the Company) from public authorities from and after
the date hereof that affect the Project Facilities and the use and operation
thereof, other than those improvements, orders and notices, the amount, validity
or application of which is at the time being contested, in whole or in part, in
good faith by appropriate proceedings promptly initiated and diligently
conducted.
SECTION 5.2 Maintenance of Existence. So long as settlement pursuant to
Section 4.7 hereof has not occurred, the Company will maintain its existence as
a Pennsylvania corporation and its status as an entity authorized to conduct
business in the Commonwealth of Pennsylvania, except that it may consolidate,
merge, dissolve or otherwise dispose of all or substantially all of its assets
in accordance with Section 5.11 hereof.
SECTION 5.3 Payment of Trustee's Compensation and Expenses. The Company
will, under the provisions of this Agreement, pay the Trustee's reasonable
compensation and expenses under the Indenture (including without limitation fees
and expenses in connection with services rendered by the Trustee in
29
<PAGE>
accordance with Article VIII or IX of the Indenture), including all costs of
redeeming Bonds thereunder, and will indemnify the Trustee, as provided in
Section 9.04 of the Indenture.
SECTION 5.4 Payment of Authority's Expenses. The Company will, under
the provisions of this Agreement, pay the Authority's standard administration
fees and the reasonable expenses incurred by the Authority in connection with
the issuance of the Bonds and the performance by the Authority of its functions
and duties under this Agreement and the Indenture including but not limited to
(i) a monthly service charge of Four Hundred Dollars ($400), payable on the
first day of each month commencing June 1, 1992; (ii) in the event the Company
prepays all of a portion of the purchase price due hereunder, a prepayment
penalty in an amount equal to 1/2 of 1% of the amount prepaid; and (iii) any and
all other expenses incurred in connection with the authorization, issuance, sale
and delivery of any such Bonds or incurred by the Authority in connection with
any litigation which may at any time be instituted involving this Agreement, the
Bonds, the Indenture or any of the other documents contemplated thereby, or
incurred in connection with the supervision or inspection of the Agreement, or
otherwise in connection with this Agreement, the Indenture, the Bonds, or any
of the other documents, instruments or agreements in connection therewith.
Notwithstanding anything contained in this Section 5.4 to the contrary, the
Company shall not be required to pay a prepayment penalty as provided in
paragraph (ii) above, if (i) the Bonds are refunded by bonds issued by the
Authority or a successor thereof, or (ii) the Bonds are called for redemption
under Section 6.01(b) or 6.01(e), of the Indenture.
SECTION 5.5 Destruction, Damage and Eminent Domain; Disposition of
Casualty Insurance and Condemnation Award Proceeds.
(a) If the Project Facilities shall be wholly or partially destroyed or
damaged by fire or other casualty covered by insurance, or shall be wholly or
partially condemned, taken or injured by any Person, including any Person
possessing the right to exercise the power of or a power in the nature of
eminent domain or shall be transferred to such a Person by way of a conveyance
in lieu of the exercise of such power by such a Person, the Authority and the
Company covenant that they will take all actions and will do all things which
may be necessary to enable recovery to be made upon such policies of insurance
or on account of such taking, condemnation, conveyance, damage or injury. The
Company is authorized, in its own name, as trustee of an express trust, to
demand, collect, sue, settle claims, receipt and release monies which may be due
and payable under policies of insurance covering such damage or destruction or
on account of such condemnations, damage or injury. Any moneys recovered (i) on
policies of insurance required to be maintained hereunder or (ii) as a result of
any taking, condemnation, conveyance, damage or injury shall be deposited in a
separate
30
<PAGE>
trust fund to be held by the Trustee under the Indenture and shall be applied in
accordance with the provisions of this Section 5.5.
(b) Any appraisement or adjustment of loss or damage and any settlement
or payment therefore, shall be agreed upon by the Authority, the Company, and
the appropriate insurer or condemnor or Person, shall be evidenced to the
Authority and the Trustee by the certificate and approvals set forth in the
Indenture. The Authority and the Trustee may rely conclusively upon such
certificates.
(c) After the occurrence of loss or damage to, or after receipt of
notice of condemnation of, the Project Facilities, the Company shall within five
(5) Business Days thereof notify the Authority and the Trustee in writing, of
(i) the nature of such damage or loss or (ii) the receipt of such notice.
(d) As long as the Company is not in default under the terms of this
Agreement, the Company may elect, in its discretion, whether to apply the
proceeds of any casualty insurance coverage and/or condemnation awards to (i)
the repair, reconstruction or replacement of damaged, destroyed or injured
property comprising the Project Facilities or (ii) the redemption of Bonds
pursuant to the applicable provisions of the Indenture. Absent timely direction
from the Company as to the application of any casualty insurance coverage and/or
condemnation awards or if the Company shall be in default under the terms of
this Agreement, the Trustee may elect in its sole discretion to either apply the
proceeds thereof (i) to the extraordinary redemption of the Bonds pursuant to
the applicable provisions of the Indenture or (ii) to the repair, reconstruction
or replacement of damaged, destroyed or injured property comprising the Project
Facilities. For purposes of the preceding sentence, "timely direction" shall
mean 30 days after the Company has agreed, in connection with any damage to or
condemnation of the Project Facilities, upon the settlement or payment with
respect to any appraisement or adjustment of loss or damage, as appropriate.
SECTION 5.6 Indemnity Against Claims.
(a) The Company agrees that at all times it will protect and hold the
Authority and the Purchaser and their officers, members, employees and agents,
past, present and future, harmless and indemnified from and against all claims
for losses, damages or injuries to the Trustee or others, including death,
personal injury and property damage or loss, arising during the term hereof or
during any other period when the Authority has, had or shall have any interest
in the Project Facilities or arising out of the use thereof or any activity
conducted thereon or in any other manner connected therewith, directly or
indirectly, including but not limited to claims arising out of the acquisition,
construction, installation,
31
<PAGE>
equipping and operation of the Project Facilities; and the Authority and the
Purchaser, and their officers, members, employees and agents, past, present and
future, shall not be liable for any loss, damage or injury to the person or
property of the Company or its agents, servants or employees or any other person
who or that may be upon the Project Facilities or damaged or injured as a result
of any condition existing or activity occurring upon the Project Facilities or
any other matter connected directly or indirectly therewith due to any act or
negligence of any person, excepting only willful misconduct or gross negligence
of the Authority, and its officers, agents, members or employees, past, present
and future.
(b) The Company hereby covenants and agrees that it will indemnify the
Trustee against any and all claims arising out of the Trustee's exercise and
performance of powers and duties granted unto it by the Indenture and hereunder
in good faith and without negligence.
(c) The Company will indemnify, hold harmless and defend the Authority
and the Trustee and the respective officers, members, directors, employees and
agents of each of them, past, present and future (the "Indemnified Parties") and
the Purchaser, against all loss, costs, damages, expenses, suits, judgments,
actions and liabilities of whatever nature, including, specifically, (i) any
liability under any state or federal securities laws (including but not limited
to attorney's fees, litigation and court costs, amounts paid in settlement and
amounts paid to discharge judgments) (in case of such liability only as to the
Indemnified Parties) and (ii) any and all costs and expense arising out of, or
from, any state or federal environmental laws (including, without limitation,
costs of remediation, attorney's fees litigation and court costs, amounts paid
in settlement and amounts paid to discharge judgments) directly or indirectly
resulting from or arising out of or related to: (i) the design, construction,
installation, operation, use, occupancy, maintenance or ownership of the Project
Facilities (including compliance with laws, ordinances and rules and regulations
of public authorities relating thereto); or (ii) any statements or
representations made by the Company with respect to the Company, the Refunding
Project, this Agreement, the Bonds, the Indenture or any other document or
instrument delivered at or in connection with the closing held this day
(including any statements or representations made by the Company in connection
with the offer or sale thereof) made or given to the Authority, the Trustee or
any underwriters or purchasers of any of the Bonds, by the Company or any of its
directors, officers, agents or employees, including but not limited to,
statements or representations of facts, financial information or corporate
affairs. The Company also will pay and discharge and indemnify and hold harmless
the Authority and the Trustee from (i) any lien or charge upon payments by the
Company to the Authority and the Trustee under this Agreement and (ii) any taxes
(including, without limitation, any ad valorem
32
<PAGE>
taxes and sales taxes, assessments, impositions and other charges in respect of
any portion of the Project Facilities). If any such claim is asserted, or any
such lien or charge upon payments, or any such taxes, assessments, impositions
or other charges are sought to be imposed, the Authority or the Trustee will
give prompt notice to the Company, and the Company will have the sole right and
duty to assume, and will assume, the defense thereof, with full power to
litigate, compromise or settle the same in its sole discretion.
(d) If the indemnification provided herefor is for any reason
determined to be unavailable to the Authority, the Trustee or the Purchaser,
then, with respect to any such loss, claim, demand or liability, including
expenses in connection therewith, the Authority and the Trustee, as appropriate,
shall be entitled as a matter of right to contribution by the Company. The
amount of such contribution shall be in such proportion as is appropriate to
reflect relative culpability of the parties.
SECTION 5.7 Taxes, Other Governmental Charges, Utility Charges and
Payments in Lieu of Taxes and Assessments. The Company shall pay, or cause to be
paid, as the same become due, all taxes, assessments (whether general or
special) and governmental charges of any kind whatsoever that may at any time be
lawfully assessed or levied against or with respect to the Project Facilities,
including any equipment or related property installed or brought by the Company
therein or thereon (including without limitation any taxes levied upon or with
respect to the revenues or income of the Authority from the Project), and all
utility and other charges incurred in the operation, maintenance, use, occupancy
and upkeep of the Project Facilities; provided, that with respect to special
assessments or other governmental charges that lawfully may be paid in
installments over a period of years, the Company shall be obligated to pay only
such installments as are required to be paid during the term hereof. If the
Project Facilities are not taxed or assessed because of any interest the
Authority may have in respect thereof, the Company shall pay to the political
subdivisions, including the county, municipality and school district in which
the Project Facilities are located, an amount equal to the ad valorem taxes and
other assessments or tax levies that would be due and payable if title to the
Project Facilities were held in the name of the Company. Such amounts in lieu of
taxes and assessments shall be payable by the Company directly to the political
subdivisions in which the Project Facilities are located. The Company may, at
its expense, in good faith contest any such taxes, assessments and other charges
and, in the event of any such contest, may permit the taxes, assessments or
other charges so contested to remain unpaid during the period of such contest
and any appeal therefrom, unless by nonpayment of any such items the lien of the
Indenture will be materially endangered or the Project Facilities or any part
thereof will be subject to loss or forfeiture, in which event such taxes,
assessments or charges shall be paid promptly. The Authority will cooperate
fully with the Company in
33
<PAGE>
any such contest. The Company also agrees to comply at its own cost and expense
with all notices received from public authorities from and after the date
hereof. In the event that the Company shall fail to pay any of the foregoing
items required by this Section 5.7 to be paid by the Company, the Authority or
the Trustee may (but shall be under no obligation to) pay the same and any
amounts so advanced therefor by the Authority or the Trustee shall become an
additional obligation of the Company to the one making the advance, which
amounts, together with interest thereon at a rate equal to the then applicable
rate on the 1992 Bonds from the date thereof, the Company agrees and covenants
to pay, and such amounts and interest shall be considered to be additional
indebtedness secured hereby.
SECTION 5.8 Insurance.
(a) The Company covenants to provide and continuously maintain, unless
otherwise herein provided, adequate insurance on the Project Facilities and all
parts thereof and operations conducted therein and thereon in such manner and
against such loss, damage and liability, including liability to third parties,
as is customary with property owners in the same or similar business in the
Commonwealth. Without limiting the generality of the foregoing sentence, such
insurance shall include, without limitation:
(i) Public liability insurance insuring against any and all liability
or claims of liability out of, occasioned by, or resulting from any
accident or otherwise resulting in or about the Project Facilities, in a
minimum amount of $5,000,000 for the death of or bodily injury to one
person, $5,000,000 for the death of or bodily injury in any one accident or
occurrence and $5,000,000 for loss or damage to the property of any Person
or Persons, provided, however, that in the event the Company is unable at
any time to obtain such insurance in such amount, the failure of the
Company to obtain such insurance shall not constitute an Event of Default
hereunder so long as the Company obtains such insurance in such lesser
amounts as is available;
(ii) Property damage and broad form fire and extended coverage
insurance with respect to the Property and insurance insuring against such
other hazards, casualties and contingencies as the Authority and the
Purchaser may require, which insurance shall provide coverage at
replacement cost and with no provisions for coinsurance penalties and shall
be in an amount equal to the lesser of (i) $7,000,000, or (ii) the
aggregate principal amount of the 1992 Bonds and any Senior Indebtedness
secured by the Project Facilities; and
(iii) If the Property is required to be insured pursuant to the
National Flood Insurance Act of 1968, and the regulations promulgated
thereunder, flood
34
<PAGE>
insurance with respect to the Property in an amount not less than
$7,000,000 or the maximum limit of coverage available, whichever amount is
less.
(b) Any insurance hereunder shall be written by insurance companies
authorized or licensed to do business in the Commonwealth and shall be on such
forms and written by such companies as shall be approved by the Authority and
the Purchaser. Such insurance coverage may be effected under overall blanket or
excess coverage policies of the Company provided that the Company shall not be
deemed to be a co-insurer thereunder. Each insurance policy maintained pursuant
to this Agreement shall contain a provision to the effect that such policy shall
not be cancelled or altered unless the Trustee is notified at least fifteen (15)
days prior to such cancellation or alteration. At least thirty (30) days prior
to the expiration of any such policy, the Company shall furnish evidence
satisfactory to the Trustee that such policy has been renewed or replaced or is
no longer required by this Agreement.
(c) Each insurance policy maintained pursuant to this Agreement and
providing insurance against loss of or damage to property shall be written or
endorsed so as to name the Trustee and the Authority as additional insureds as
their interests may appear and to have the proceeds thereof payable directly to
the Trustee as loss payee. Each policy providing public liability coverage shall
be written or endorsed so as to name the Trustee and the Authority as additional
insureds.
(d) Duplicate copies of any insurance policies and evidence of renewal
or replacement thereof shall promptly be furnished to the Trustee for its
records. Evidence of the payment of the first year's premiums on such policies
shall be delivered to the Trustee on the Closing Date. Thereafter, the Company
shall deliver to the Trustee evidence of the payment of all additional premiums
prior to the expiration or renewal dates of all such policies.
(e) In the event of loss or damage to the Project Facilities, the
proceeds of any insurance provided hereunder shall be deposited with the Trustee
and applied as set forth in Section 5.5 hereof, and in the event of a public
liability occurrence, the proceeds of any insurance provided hereunder shall be
applied towards satisfaction of such liability.
SECTION 5.9 Prohibition of Liens. Without the prior written consent of
the Trustee, the Company shall not create or suffer to be created by any other
person any lien or charge upon the Project Facilities or any part thereof other
than in favor of the Authority or the Trustee. The Company further agrees to pay
or cause to be discharged or make adequate provision to satisfy and discharge,
within sixty (60) days after the same shall become due, any such lien or charge
and also all lawful claims or demands for labor, materials, supplies or other
charges that, if
35
<PAGE>
unpaid, might be or become a lien upon the Project Facilities or any part
thereof; provided, however, that nothing in this Section 5.9 shall require the
Company to pay or cause to be discharged or make provision for any such lien or
charge so long as the validity thereof shall be diligently contested in good
faith and so long as the Project Facilities or any part thereof are not subject
to loss or forfeiture. The Authority shall cooperate with the Company in any
such contest.
SECTION 5.10 Granting of Easements. If no Event of Default under this
Agreement has occurred and is continuing, the Company may, notwithstanding
anything contained herein to the contrary, at any time or times, with the prior
written consent of the Trustee (which shall not be unreasonably withheld), grant
easements, licenses, rights of way and other rights or privileges in the nature
of easements with respect to any property included in the Project Facilities,
free from the lien of this Agreement or the Indenture, or release existing
easements, licenses, rights of way and other rights or privileges, all with or
without consideration and upon such terms and conditions as the Company shall
determine, and the Authority agrees that, within a reasonable amount of time
following such grant or release, it will execute and deliver and will cause and
direct the Trustee, within a reasonable amount of time following such grant or
release, to execute and deliver any instrument necessary or appropriate to
confirm and grant or release any such easement, license, right of way or other
right or privilege, upon receipt by the Authority and the Trustee of:
(a) A copy of the instrument of grant or release;
(b) A written application signed by the Company requesting such
instrument; and
(c) A certificate executed by the Company, and such other persons as
the Authority or the Trustee may reasonably require, stating that such grant or
release is not detrimental to the proper conduct of the business of the Company
and that such grant or release will not impair the effective use or interfere
with the efficient and economical operation of the Project Facilities and will
not in any material respect weaken, diminish or impair the security intended to
be given by or under the Indenture.
If the instrument of grant shall so provide, any such easement or right
and rights of such other parties thereunder shall be superior to the rights of
the Authority and the Trustee under this Agreement and the Indenture and shall
not be affected by any termination of this Agreement or default on the part of
the Company hereunder. If no Event of Default has occurred and is continuing,
any payments or other consideration received by the Company for any such grant
shall be and remain the property of the Company, but if an Event of Default has
occurred and is
36
<PAGE>
continuing, all rights then existing of the Company with respect to or under
such grant shall inure to the benefit of and be exercisable by the Authority and
the Trustee.
SECTION 5.11 Merger and Consolidation; Liquidation and Dissolution. The
Company agrees that it will maintain its existence as a Pennsylvania
corporation, will maintain its status as an entity authorized to conduct
business in the Commonwealth of Pennsylvania, and will not sell, assign,
transfer or otherwise dispose of all or substantially all of its assets. The
Company may merge with or into or consolidate with another entity, and the
Project Facilities or this Agreement may be transferred without violating this
Section 5.11 provided (i) the net worth of the surviving, resulting or
transferee company following the merger consolidation or transfer is equal to or
greater than the net worth of the Company immediately preceding the merger,
consolidation or transfer; (ii) any litigation or investigations in which the
surviving, resulting or transferee company or its officers and directors are
involved, and any court, administrative or other orders to which the surviving,
resulting or transferee company or its officers and directors are subject,
relate to matters arising in the ordinary course of business; (iii) the merger,
consolidation or transfer shall not impair the excludability of interest paid on
the Bonds from the gross income of the Owners thereof for purposes of federal
income taxation pursuant to an opinion of Nationally Recognized Bond Counsel;
(iv) the surviving, resulting or transferee company assumes in writing the
obligations of the Company under this Agreement and the Bond Documents; (v)
after the merger, consolidation or transfer the Project Facilities shall be
operated as an authorized project under the Act and (vi) the provisions of
Section 1.4(d) are met.
SECTION 5.12 Compliance with Laws. With respect to the Project
Facilities and any additions, alterations or improvements thereto, the Company
will at all times comply with all applicable requirements of federal, state and
local laws and with all applicable lawful requirements of any agency, board, or
commission created under laws of the Commonwealth or of any other duly
constituted public authority, and will use, and permit the use of, the Project
Facilities only for such purposes as are lawful under the Act; provided,
however, that the Company shall be deemed in compliance with this Section 5.12
so long as it is contesting in good faith any such requirement by appropriate
legal proceedings.
SECTION 5.13 Recording Statements. This Agreement (or a memorandum
hereof) shall be recorded in the office for the recording of deeds in and for
the County, and in such other place or places as may be required by law, it
being the intention of the parties hereto that the Mortgage shall first be
recorded and that this Agreement (or a memorandum hereof) shall be recorded
immediately after such Mortgage. The Company shall, at its own expense, cause
financing statements under the Pennsylvania
37
<PAGE>
Uniform Commercial Code to be filed in the places required by law in order to
perfect the security interests created by Section 4.2 hereof, naming the Trustee
as secured party.
SECTION 5.14 Notice of Bankruptcy Case Commencement. The Company
covenants and agrees that it shall immediately notify the Authority and the
Trustee of the commencement of any case by or against it under the Bankruptcy
Code.
SECTION 5.15 Authority is Conduit Issuer; Company is Real Party in
Interest; Covenant Not to Sue.
(a) The Company hereby expressly acknowledges that the Authority is a
conduit issuer and that all of the, right, title and interest of the Authority
in and to this Agreement are to be assigned to the Trustee (except for the right
of the Authority to receive its reasonable fees and expenses and to
indemnification), naming the Trustee its true and lawful attorney for and in its
name to enforce the terms and conditions of this Agreement. Notwithstanding any
other provision contained herein, the Company hereby expressly agrees,
acknowledges and covenants that to the extent practicable it shall duly and
punctually perform or cause to be performed each and every duty and obligation
of the Authority hereunder and under the Indenture.
(b) The Company shall neither sue the Authority, or any of its members,
officers, agents or employees, past, present or future, for any costs, damages,
expenses, suits, judgments, liabilities, claims, losses, demands, actions or
nonactions based upon this financing or sustained in connection with or as a
result of this financing nor ever raise as a defense in any proceedings
whatsoever that the Authority is the true party in interest. Notwithstanding any
other provisions of this Agreement, the Company shall be entitled to (i) bring
an action of specific performance against the Authority to compel any action
required to be taken by the Authority hereunder or an action to enjoin the
Authority from performing any action prohibited by this instrument, but no such
action shall in any way impose pecuniary liability against the Authority or any
of its members, officers, agents or employees, past, present and future, (ii)
join the Authority in any litigation if such joinder is necessary to pursue any
of the Company's rights, provided that prior to such joinder, the Company shall
post such security as the Authority may require to further protect the Authority
from loss and (iii) pecuniary remuneration from the Authority for damage or loss
suffered by the Company by reason of the gross negligence or willful misconduct
of the Authority or any of its members, officers, agents or employees, past,
present or future.
SECTION 5.16 Certain Environmental Matters. (a) The Company represents
and warrants to the Authority that to the best of its knowledge there has been
no treatment, disposal or release of any Hazardous Substances (hereinafter
defined) at the Property and the Company covenants that, upon the request of the
Authority
38
<PAGE>
in the event that any liability is imposed on the Authority pursuant to, or any
remedial action is required by, an action arising out of 42 U.S.C. Section 9607
("CERCL") or any other applicable similar federal, state or local law
(collectively with CERCL, "Environmental Laws"), the Company will post a bond,
or obtain other security satisfactory to the Authority, in an amount equal to
the greater of: (i) 1.5 times the amount in controversy in a proceeding
commenced under such Environmental Laws, and (ii) the estimated cost of any
remedial action required to be taken by the Authority pursuant to an order or
mandate of a federal, state or local governmental body or agency under such
Environmental Laws.
SECTION 5.17 Indemnification for Hazardous Materials. The Company and
each Guarantor, jointly and severally, covenants and agrees, at its sole cost
and expense, to indemnify, protect and save the Indemnified Parties and the
Purchaser (the "Indemnitees") harmless against and from any and all damages,
losses, liabilities, obligations, penalties, claims, litigation, demands,
defenses, judgments, suits, proceedings, costs, disbursements or expenses
(including, without limitation, attorneys' and experts' reasonable fees and
disbursements) of any kind or of any nature whatsoever (collectively, the
"Indemnified Matters") which may at any time be imposed upon, incurred by or
asserted or awarded against Indemnitees and arising from or out of:
(a) any hazardous materials, as defined under any Laws as defined
below, on, in, under or affecting all or any portion of the property subject to
the Mortgage or any surrounding areas (but in the case of hazardous materials in
surrounding areas, only if the source of such materials is or is alleged to be
the Company, any Guarantor or the Mortgaged Premises), or
(b) the enforcement of this paragraph or the assertion by the Company
or any Guarantor of any defense to its obligations hereunder (except the
successful defense of actual performance not subject to further appeal),
whether any of such matters arise before or after the Closing Date or before or
after foreclosure of the Mortgage or other taking of title to the Company's or
any Guarantor's interest in all or any portion of the Mortgaged Premises by
Indemnitees or any affiliate of Indemnitees. Indemnified Matters shall include,
without limitation, all of the following: (i) the costs of removal of any and
all hazardous materials from all or any portion of the property or any
surrounding areas (except that the indemnity provided for under this paragraph
shall not cover the costs of such removal unless either (a) such removal is
required by any federal or state law, regulation or regulatory agency ("Laws")
or (b) any present or future use, operation, development, construction,
alteration or reconstruction of all or any portion of the Mortgaged Premises is
or would be conditioned
39
<PAGE>
in any way upon, or is or would be limited in any way until the completion of,
such removal in accordance with any Laws), (ii) additional costs required to
take necessary precautions as required by law to protect against the release of
hazardous materials on, in, under or affecting the Mortgages Premises into the
air, any body of water, any other public domain or any surrounding areas and
(iii) costs incurred to comply, in connection with all or any portion of the
Mortgaged Premises or any surrounding areas, with all applicable laws with
respect to hazardous materials. If any Indemnitee or any affiliate of an
Indemnitee takes title to the Company's or any Guarantor's interest in the
Guarantor Project Facilities at a foreclosure sale, at a sale pursuant to a
power of sale under the Guarantor Mortgage or by deed in lieu of foreclosure or
otherwise, then the indemnity provided for under this paragraph shall not apply
to hazardous materials which are initially placed on, in or under all or any
portion of the Guarantor Project Facilities after the date Indemnitee or such
affiliate so takes title to such interest in the Guarantor Project Facilities.
At any time during the six months prior to any such foreclosure sale, sale
pursuant to a power of sale under the Guarantor Mortgage or by deed in lieu of
foreclosure or otherwise by which any Indemnitee or affiliate takes title to
such interest in the Guarantor Project Facilities, such Indemnitee or affiliate
shall have the right, at its sole discretion and at the Company's and the
Guarantor's sole cost and expense, to have performed an environmental site
assessment of the Guarantor Project Facilities to determine whether any
hazardous materials are present.
SECTION 5.18 Additional Covenants of the Guarantors.
(a) Taxes, Other Governmental Charges and Utility Charges.
(i) Each of the Guarantors covenants that it and each of its
Affiliates shall duly and punctually pay all taxes, assessments
(including deficiency assessments), and governmental charges or levies
of any kind whatsoever ("Taxes") imposed on it or on its respective
income or profits or on any of its respective properties or assets,
including, without limiting the generality of the foregoing, any taxes
levied upon the Guarantor Project Facilities which, if not paid, will
become a Lien or charge upon the Guarantor Project Facilities or upon
any payment pursuant to this Installment Sale Agreement, prior to the
date on which penalties attach thereto. Each of the Guarantors shall
also pay all utility, water and sewer rents, and other charges
incurred in connection with the Guarantor Project Facilities and all
assessments and charges lawfully made by any governmental body for
public improvements that may be secured by a Lien on the Guarantor
Project Facilities or any of its assets.
40
<PAGE>
(ii) Any Guarantor may, at its own expense and in its own name
and in good faith, contest any such taxes, assessments, and other
charges, provided that such contest shall not result in a lien being
placed on the Guarantor Project Facilities or any part thereof or
result in the Guarantor Project Facilities being subject to loss or
forfeiture, and further provided that such Guarantor gives notice in
writing of such contest to the Trustee. Nothing herein shall preclude
any Guarantor, at its own expense and in its own name and behalf, from
applying for any tax exemption allowed by the federal government, the
State, or any political subdivision which grants or may grant such tax
exemption.
(b) Insurance Required.
(i) Holt and 777 Pattison Ave., Inc. covenant to provide and
continuously maintain, unless otherwise herein provided, adequate
insurance on the Guarantor Project Facilities and all parts thereof
and operations conducted therein and thereon in such manner and
against such loss, damage and liability, including liability to third
parties, as is customary with property owners in the same or similar
business in the State of New Jersey. Limiting the generality of the
foregoing sentence, such insurance shall include, without limitation:
(1) Public liability insurance insuring against any and all
liability or claims of liability out of, occasioned by, or
resulting from any accident or otherwise resulting in or about
the Guarantor Project Facilities, in a minimum amount of
$5,000,000 for the death of or bodily injury to one person,
$5,000,000 for the death of or bodily injury in any one accident
or occurrence and $5,000,000 for loss or damage to the property
of any Person or Persons, provided, however, that in the event
Holt and 777 Pattison Ave., Inc. are unable at any time to obtain
such insurance in such amount, the failure of Holt and 777
Pattison Ave., Inc. to obtain such insurance shall not constitute
an Event of Default hereunder so long as Holt and 777 Pattison
Ave., Inc. obtain such insurance in such lesser amounts as is
available;
(2) Property damage and broad form fire and extended
coverage insurance with respect to the New Jersey Facilities and
insurance insuring against such other hazards, casualties and
contingencies as the Authority and the Purchaser may require,
which insurance shall provide coverage at replacement cost and
with no provisions for coinsurance penalties and shall be in an
amount equal to the lesser of
41
<PAGE>
(i) $40,000,000, or (ii) the aggregate principal amount of the
1992 Bonds and any Senior Indebtedness secured by the Guarantor
Project Facilities; and
(3) If the New Jersey Facilities are required to be insured
pursuant to the Flood Disaster Protection Act of 1973 or the
National Flood Insurance Act of 1968, and the regulations
promulgated thereunder, flood insurance with respect to the New
Jersey Facilities in an amount not less than $7,000,000 or the
maximum limit of coverage available, whichever amount is less.
(ii) Any insurance hereunder shall be written by insurance
companies authorized or licensed to do business in the State of New
Jersey and shall be on such forms and written by such companies as
shall be approved by the Purchaser. Such insurance coverage may be
effected under overall blanket or excess coverage policies of Holt and
777 Pattison Ave., Inc. provided that Holt and 777 Pattison Ave., Inc.
shall not be deemed to be a co-insurer thereunder. Each insurance
policy maintained pursuant to this Agreement shall contain a provision
to the effect that such policy shall not be cancelled or altered
unless the Trustee is notified at least fifteen (15) days prior to
such cancellation or alteration. At least thirty (30) days prior to
the expiration of any such policy, Holt and 777 Pattison Ave., Inc.
shall furnish evidence satisfactory to the Trustee that such policy
has been renewed or replaced or is no longer required by this
Agreement.
(iii) Each insurance policy maintained pursuant to this Agreement
and providing insurance against loss of or damage to property shall be
written or endorsed so as to name the Trustee as an additional insured
as its interest may appear and to have the proceeds thereof payable
directly to the Trustee as loss payee. Each policy providing public
liability coverage shall be written or endorsed so as to name the
Trustee as an additional insured.
(iv) Duplicate copies of any insurance policies and evidence of
renewal or replacement thereof shall promptly be furnished to the
Trustee for its records. Evidence of the payment of the first year's
premiums on such policies shall be delivered to the Trustee on the
Closing Date. Thereafter, Holt and 777 Pattison Ave., Inc. shall
deliver to the Trustee evidence of the payment of all additional
premiums prior to the expiration or renewal dates of all such
policies.
(v) In the event of loss or damage to the Guarantor Project
Facilities, the proceeds of any insurance provided hereunder shall be
deposited with the Trustee and applied as set forth in Section 5.18(c)
hereof, and in the
42
<PAGE>
event of a public liability occurrence, the proceeds of any insurance
provided hereunder shall be applied towards satisfaction of such
liability.
(c) Destruction Damage and Eminent Domain; Disposition of Casualty
insurance and Condemnation Award Proceeds.
(i) If the Guarantor Project Facilities shall be wholly or
partially destroyed or damaged by fire or other casualty covered by
insurance, or shall be wholly or partially condemned, taken or injured
by any Person, including any Person possessing the right to exercise
the power of or a power in the nature of eminent domain or shall be
transferred to such a Person by way of a conveyance in lieu of the
exercise of such power by such a Person, Holt and 777 Pattison Ave.,
Inc. covenant that they will take all actions and will do all things
which may be necessary to enable recovery to be made upon such
policies of insurance or on account of such taking, condemnation,
conveyance, damage or injury. Holt and 777 Pattison Ave., Inc. are
authorized, in their own names, as trustee of an express trust, to
demand, collect, sue, settle claims, receipt and release the Net
Proceeds which may be due and payable under policies of insurance
covering such damage or destruction or on account of such
condemnations, damage or injury. Any Net Proceeds recovered (i) on
policies of insurance required to be maintained hereunder or (ii) as a
result of any taking, condemnation, conveyance, damage or injury shall
be deposited in a separate trust fund to be held by the Trustee under
the Indenture and shall be applied in accordance with the provisions
of this Section 5.18(c).
(ii) Any appraisement or adjustment of loss or damage and any
settlement or payment therefore, shall be agreed upon by Holt and 777
Pattison Ave., Inc., the Company, and the appropriate insurer or
condemnor or Person, shall be evidenced to the Trustee by the
certificate and approvals set forth in the Indenture. The Trustee may
rely conclusively upon such certificates.
(iii) After the occurrence of loss or damage to, or after receipt
of notice of condemnation of, the Guarantor Project Facilities, Holt
and 777 Pattison Ave., Inc. shall within five (5) Business Days
thereof notify the Authority and the Trustee in writing, of (a) the
nature of such damage or loss or (b) the receipt of such notice.
(iv) As long as there is no Event of Default under the terms of
this Agreement, Holt and 777 Pattison Ave., Inc. may elect, in their
discretion, whether to apply the Net Proceeds of any casualty
insurance coverage and/or condemnation awards to (a) the repair,
reconstruction or replacement of damaged, destroyed or injured
property
43
<PAGE>
comprising the Guarantor Project Facilities or (b) the redemption of
Bonds pursuant to the applicable provisions of the Indenture. Absent
timely direction from Holt and 777 Pattison Ave., Inc. as to the
application of any casualty insurance coverage and/or condemnation
awards or if there shall be an Event of Default under the terms of
this Agreement, the Trustee may elect in its sole discretion to either
apply the Net Proceeds thereof (y) to the extraordinary redemption of
the Bonds pursuant to the applicable provisions of the Indenture or
(z) to the repair, reconstruction or replacement of damaged, destroyed
or injured property comprising the Guarantor Project Facilities. For
purposes of the preceding sentence, "timely direction" shall mean 30
days after Holt and 777 Pattison Ave., Inc. have agreed, in connection
with any damage to or condemnation of the Guarantor Project
Facilities, upon the settlement or payment with respect to any
appraisement or adjustment of loss or damage, as appropriate.
(v) Notwithstanding the foregoing, the Net Proceeds from a
certain action pending in the Superior Court of New Jersey, Law
Division, Camden County, Docket No. L-8037-90, and entitled "State of
New Jersey, by the Commissioner of Transportation, Plaintiff v. Holt
Hauling and Warehousing System, Inc., a corporation of Pennsylvania,
et al., Defendants" shall be paid directly to Holt and shall not be
subject to the provisions of Paragraphs (i) through (iv) of this
Section 5.18(c).
(d) Indemnification for Hazardous Materials. The Company and each
Guarantor, jointly and severally, covenants and agrees, at its sole cost and
expense, to indemnify, protect and save the Indemnified Parties and the
Purchaser (the "Indemnitees") harmless against and from any and all damages,
losses, liabilities, obligations, penalties, claims, litigation, demands,
defenses, judgments, suits, proceedings, costs, disbursements or expenses
(including, without limitation, attorneys' and experts' reasonable fees and
disbursements) of any kind or of any nature whatsoever (collectively, the
"Indemnified Matters") which may at any time be imposed upon, incurred by or
asserted or awarded against Indemnitees and arising from or out of:
(i) any hazardous materials, as defined under any Laws as defined
below, on, in, under or affecting all or any portion of the property
subject to the Guarantor Mortgage or any surrounding areas (but in the
case of hazardous materials in surrounding areas, only if the source
of such materials is or is alleged to be the Company, any Guarantor or
the Guarantor Project Facilities), or
44
<PAGE>
(ii) the enforcement of this paragraph or the assertion by the
Company or any Guarantor of any defense to its obligations hereunder
(except the successful defense of actual performance not subject to
further appeal),
whether any of such matters arise before or after the Closing Date or before or
after foreclosure of the Guarantor Mortgage or other taking of title to the
Company's or any Guarantor's interest in all or any portion of the Guarantor
Project Facilities by Indemnitees or any affiliate of Indemnitees. Indemnified
Matters shall include, without limitation, all of the following: (i) the costs
of removal of any and all hazardous materials from all or any portion of the
property or any surrounding areas (except that the indemnity provided for under
this paragraph shall not cover the costs of such removal unless either (a) such
removal is required by any federal or state law, regulation or regulatory agency
("Laws") or (b) any present or future use, operation, development, construction,
alteration or reconstruction of all or any portion of the Guarantor Project
Facilities is or would be conditioned in any way upon, or is or would be limited
in any way until the completion of, such removal in accordance with any Laws),
(ii) additional costs required to take necessary precautions as required by law
to protect against the release of hazardous materials on, in, under or affecting
the Guarantor Project Facilities into the air, any body of water, any other
public domain or any surrounding areas and (iii) costs incurred to comply, in
connection with all or any portion of the Guarantor Project Facilities or any
surrounding areas, with all applicable laws with respect to hazardous materials.
If any Indemnitee or any affiliate of an Indemnitee takes title to the Company's
or any Guarantor's interest in the Guarantor Project Facilities at a foreclosure
sale, at a sale pursuant to a power of sale under the Guarantor Mortgage or by
deed in lieu of foreclosure or otherwise, then the indemnity provided for under
this paragraph shall not apply to hazardous materials which are initially placed
on, in or under all or any portion of the Guarantor Project Facilities after the
date Indemnitee or such affiliate so takes title to such interest in the
Guarantor Project Facilities. At any time during the six months prior to any
such foreclosure sale, sale pursuant to a power of sale under the Guarantor
Mortgage or by deed in lieu of foreclosure or otherwise by which any Indemnitee
or affiliate takes title to such interest in the Guarantor Project Facilities,
such Indemnitee or affiliate shall have the right, at its sole discretion and at
the Company's and the Guarantor's sole cost and expense, to have performed an
environmental site assessment of the Guarantor Project Facilities to determine
whether any hazardous materials are present.
45
<PAGE>
ARTICLE VI
EVENTS OF DEFAULTS AND REMEDIES
SECTION 6.1 Events of Default; Acceleration. Each of the following
events is hereby defined as, and is declared to be and to constitute, an "Event
of Default".
(a) Failure by the Company to make any payment required to be made
under Section 4.3 hereof on or before the corresponding principal, redemption or
interest payment dates of the Bonds; or
(b) Failure by the Company or any Guarantor to observe and perform any
covenant, condition or agreement on its part to be observed or performed under
this Agreement or any other Bond Document, other than as referred to in Section
6.1(a) or Section 6.1(k) for a period of ninety (90) days after such failure
first becomes known to any officer of the Company or such Guarantor; or
(c) Notice by the Trustee to the Authority and the Company that an
"Event of Default" has occurred under the Indenture.
(d) If any warranty or representation by or on behalf of the Company or
any Guarantor contained in this Agreement, the Indenture, the Bond Purchase
Agreement, the Bond Documents, the Guaranty, or in any instrument or certificate
furnished in compliance with same proves false or misleading in any material
respect as of the time it was made; or
(e) Failure by the Company or any Guarantor to make one or more
payments due with respect to aggregate Indebtedness exceeding $500,000 within
any applicable periods for cure; or if any event shall occur or any condition
shall exist, the effect of which event or condition is to cause more than
$500,000 of aggregate Indebtedness or other securities of the Company or any
Guarantor to become due or subject to mandatory redemption or repurchase before
its (or their) stated maturity or before its (or their) regularly scheduled
dates of payment, redemption or purchaser; or
(f) If a custodian, receiver or liquidator is appointed for the Company
or any Guarantor or the Company or any Guarantor is adjudicated bankrupt or
insolvent; or any order of relief is entered under the Federal Bankruptcy Code
against the Company or any Guarantor or any of its property is sequestered by
court order and the order remains in effect for more than 60 days; or a petition
is filed against the Company or any Guarantor under any bankruptcy,
reorganization, arrangement, insolvency, readjustment of debt, dissolution or
liquidation law or any jurisdiction, whether now or subsequently in effect, and
is not dismissed within 60 days after filing; or
46
<PAGE>
(g) If the Company or any Guarantor commences a voluntary case or files
a petition in voluntary bankruptcy where seeking relief under any provision of
the Federal Bankruptcy Code or any other bankruptcy, reorganization,
arrangement, insolvency, readjustment of debt, dissolution or liquidation law of
any jurisdiction, whether now or subsequently in effect; or consents to the
filing of any petition against it under any such law; or applies for or consents
to the appointment of or taking possession by a custodian, receiver, trustee or
liquidator of the Company or any Guarantor of all or any part of its property;
or makes an assignment for the benefit of its creditors; or admits in writing
its inability to pay its debt generally as they become due; or
(h) Any of the Bond Documents shall not be, or shall cease to be, the
legal, valid, binding and enforceable obligations of each of the parties thereto
in accordance with its terms, or any of the Bond Documents shall not be or shall
cease to be in full force and effect; or
(i) There shall exist any Affiliate of Holt or the Company which has
not, within 90 days after becoming an Affiliate, duly authorized, executed and
delivered to the Trustee, a counterpart of the Guaranty or a document evidencing
its agreement to be bound by the Guaranty which is the legal, valid, binding and
enforceable obligation of such Affiliate in accordance with its terms.
(j) There shall occur a foreclosure with respect to any of the
following mortgages, as amended and supplemented:
(i) Mortgage dated March 15, 1984 between the Company and the
City of Gloucester City,
(ii) Mortgage dated April 18, 1984 between the Company and the
City of Gloucester City,
(iii) Mortgage dated August 22, 1984 between the Company and the
City of Gloucester City,
(iv) Mortgage and Security Agreement dated as of August 1, 1986
between the Company and Bankers Trust Company, as trustee,
(v) Mortgage and Security Agreement dated as of December 1, 1986
between the Company and Bankers Trust Company, as trustee,
(vi) The Series G Mortgage,
47
<PAGE>
(vii) The Series H Mortgage, or
(viii) The 1992 Refunding Series Mortgage.
(k) Failure by the Company or any Guarantor to observe and perform the
covenant set forth in Section 1.4(d) hereof.
Section 6.2 Trustee's Remedies Upon Event of Default. Whenever any
Event of Default referred to in Section 6.1 hereof shall have happened and be
continuing, the Trustee may (subject in the case of the Trustee to its mandatory
obligations upon the occurrence of certain Events of Default) take one or any
combination of the following remedial steps:
(a) If the Trustee has declared the Bonds immediately due and payable
pursuant to Section 8.02 of the Indenture, by written notice to the Company,
declare an amount equal to all amounts then due and payable on the Bonds,
whether by acceleration of maturity (as provided in the Indenture) or otherwise,
to be immediately due and payable as liquidated damages under this Agreement and
not as a penalty, whereupon the same shall become immediately due and payable;
(b) Have reasonable access to and inspect, examine and make copies of
the books and records and any and all accounts, data and income tax and other
tax returns of the Company and the Guarantors during regular business hours of
the Company and the Guarantors if reasonably necessary in the opinion of the
Trustee; or
(c) Take whatever action at law or in equity that may appear necessary
or desirable to collect the amounts then due and thereafter to become due, or to
enforce performance and observance of any obligation, agreement or covenant of
the Company or the Guarantors under this Agreement, the Indenture, the Guaranty
and the other Bond Documents; or
(d) Exercise any and all rights and remedies of a creditor or secured
party under the Uniform Commercial Code or other applicable law.
Any amounts collected pursuant to action taken under this Section shall
be paid into the Bond Fund and applied in accordance with the provisions of the
Indenture. The rights specified in this Section 6.2 are in addition to, and not
in limitation of, any other obligations of the Company which may arise upon a
default or acceleration in respect of the Bonds, including without limitation,
under Section 4.3 hereof.
48
<PAGE>
Section 6.3 (INTENTIONALLY OMITTED)
Section 6.4 Specific Performance. In addition to the rights and
remedies provided for in Section 6.2 hereof, if the Company or any Guarantor
commits a breach or threatens to commit a breach of any of the provisions of
this Agreement, the Indenture or the Bond Documents, the Authority and the
Trustee shall each have the right, without posting bond or other security, to
seek injunctive relief or specific performance, it being acknowledged and agreed
that any such breach or threatened breach will cause irreparable injury to the
Authority and the Trustee and that money damages will not provide an adequate
remedy.
Any amounts collected pursuant to action taken under this Section shall
be paid into the Bond Fund and applied in accordance with the provisions of the
Indenture.
Section 6.5 No Remedy Exclusive. Subject to Section 9.18 of the
Indenture, no remedy herein conferred upon or reserved to the Authority or the
Trustee is intended to be exclusive of any other available remedy or remedies,
but each and every such remedy shall be cumulative and shall be in addition to
every other remedy given under this Agreement or now or hereafter existing at
law or in equity. No delay or omission to exercise any right or power accruing
upon any Event of Default shall impair any such right or power or shall be
construed to be a waiver thereof, but any such right or power may be exercised
from time to time and as often as may be deemed expedient. In order to entitle
the Authority or the Trustee to exercise any remedy reserved to it in this
Article, it shall not be necessary to give any notice, other than such notice as
may be required in this Article. Such rights and remedies as are given the
Authority hereunder shall also extend to the Trustee, and the Trustee and the
Owners of the Bonds, subject to the provisions of the Indenture, shall be
entitled to the benefit of all covenants and agreements herein contained.
Section 6.6 Agreement to Pay Attorneys' Fees and Expenses. In the event
the Company or any Guarantor should default under any of the provisions of this
Agreement and the Authority or the Trustee should employ attorneys or incur
other expenses for the collection of payments required hereunder or the
enforcement of performance or observance of any obligations or agreement on the
part of the Company or any Guarantor herein contained, the Company and each
Guarantor agrees that it will on demand therefor pay to the Authority the
reasonable fee of such attorneys and such other expenses so incurred by the
Authority.
Section 6.7 No Additional Waiver Implied by One Waiver. In the event
any agreement contained in this Agreement should be breached by either party and
thereafter waived by the
49
<PAGE>
other party, such waiver shall be limited to the particular breach so waived and
shall not be deemed to waive any other breach hereunder.
ARTICLE VII
MISCELLANEOUS
SECTION 7.1 Limitation of Liability of the Authority. In the event of
any default by the Authority hereunder, and notwithstanding any provision or
obligation to the contrary hereinbefore or hereinafter set forth, the liability
of the Authority, its incorporator, officers, members, agents and employees,
past, present or future, shall be limited to its interest in the Project
Facilities, the improvements thereon, the rents, issues and profits therefrom,
and the lien of any judgment shall be restricted thereto. The Authority, its
incorporator, officers, members, agents and employees, past, present or future,
do not assume general liability nor specific liability for the repayment of any
mortgage or other loan, or for the costs, fees, penalties, taxes, interest,
commissions, charges, insurance or any other payments therein recited or therein
set forth, or incurred in any way in connection therewith. Other than as set
forth hereinabove in this Section 7.1, there shall be no other recourse for
damages of any kind or nature by the Company or any other entity against the
Authority, its incorporator, officers, members, agents and employees, past,
present or future, or any of the property or other assets now or hereafter owned
by it or them, either directly or indirectly; and all such recourse or liability
is hereby expressly waived and released as a condition of and in consideration
for execution and delivery of this Agreement by the Authority.
SECTION 7.2 No Recourse as to the Authority. No recourse under or upon
any obligation, covenant or agreement contained herein or in any Bond shall be
had against the Authority or any member, officer, employee or agent, past,
present or future, of the Authority or of any successor of the Authority under
this Agreement, any other agreement, any rule of law, statute or constitutional
provision, or by enforcement of any assessment or by any legal or equitable
proceeding or otherwise, it expressly being agreed and understood that the
obligations of the Authority hereunder, and under the Bonds and elsewhere, are
solely corporate obligations of the Authority to the extent specifically limited
in the Act and that no personal liability whatsoever shall attach to or shall be
incurred by the Authority or such members, officers, employees or agents, past,
present or future, of the Authority or of any successor of the Authority, or any
of them, because of such indebtedness or by reason of any obligation, covenant
or agreement contained herein, in the Bonds or implied therefrom.
50
<PAGE>
SECTION 7.3 Notices. Notice hereunder shall be effective upon receipt
and shall be given by personal service or by certified mail, return receipt
requested, to:
The Authority - PHILADELPHIA AUTHORITY FOR INDUSTRIAL
DEVELOPMENT
123 South Broad Street
22nd Floor
Philadelphia, Pennsylvania 19109
Attention: Chairman
The Company or - REFRIGERATED ENTERPRISES, INC.
any Guarantor 701 North Broadway
Gloucester City, New Jersey 08030
Attention: John A. Evans, Esquire
The Trustee - FIDELITY BANK, NATIONAL ASSOCIATION
123 South Broad Street
Philadelphia, Pennsylvania 19109
Attention: Corporate Trust Administration
The Purchaser - FIDELITY SPARTAN PENNSYLVANIA MUNICIPAL
PORTFOLIO
c/o Fidelity Management and Research
Company, Inc.
82 Devonshire Street
Boston, Massachusetts 02109
Attention: Mr. James Valone
SECTION 7.4 Severability. If any provision hereof is found by a court
of competent jurisdiction to be prohibited or unenforceable, it shall be
ineffective only to the extent of such prohibition or unenforceability, and such
prohibition or unenforceability shall not invalidate the balance of such
provision to the extent it is not prohibited or unenforceable or invalidate the
other provisions hereof, all of which shall be liberally construed in favor of
the Authority or its assignee in order to effect the provisions of this
Agreement.
SECTION 7.5 Applicable Law. This Agreement shall be deemed to be a
contract made in the Commonwealth and governed by the domestic internal law (but
not the law of conflict of laws) of the Commonwealth.
SECTION 7.6 Assignment. The Company shall not assign this Agreement or
any interest of the company herein, either in whole or in part, except in
accordance with this Agreement and with the prior written approvals of the
Authority and the Trustee and provided further that (i) the assignee assumes in
writing all of the obligations of the Company hereunder and is a corporation
51
<PAGE>
organized under the laws of one of the states, or of the United States of
America, or of the District of Columbia, and is duly qualified to do business in
the Commonwealth and (ii) such assignment shall not result in a violation of
Section 5.12 hereof or any other provision of this Agreement.
SECTION 7.7 Amendments.
(a) This Agreement may not be amended except by an instrument in
writing signed by the parties and, if such amendment occurs after the issuance
of any of the Bonds, consented to by the Trustee.
(b) Notwithstanding Section 7.7(a) hereof, this Agreement shall be
amended by such additions, deletions or modifications that may be necessary to
assure compliance with Section 144(a)(4) of the Code relating to qualified small
issue obligations, Section 147 of the Code relating to certain requirements
applicable to private activity bonds, Section 148(d)(3) of the Code relating to
the 150% limitation on investments or Section 148(f) of the Code relating to the
required rebate to the United States of "excess investment earnings" (as such
term is defined in the Code) or otherwise as may be necessary to assure the
exemptions from federal income taxation of the interest on the Bonds. A copy of
any such amendment shall be given to the Trustee.
SECTION 7.8 Term of Agreement. This Agreement and the respective
obligations of the parties hereto shall be in full force and effect from the
date hereof until all principal of, premium, if any, and interest on the Bonds
shall have been paid or provision for such payment shall have been made pursuant
to the terms and provisions of the Indenture.
SECTION 7.9 No Warranty of Condition or Suitability by the Authority.
The Authority makes no warranty, either express or implied, as to the condition
of the Project Facilities or any part thereof or that they will be suitable for
the Company's purposes or needs. The Company acknowledges and agrees that the
Authority is not a dealer in property of such kind, and that the Authority has
not made, and does not hereby make any representation or warranty or covenant,
except as otherwise set forth herein, with respect to the condition or
suitability of the Project Facilities in any respect or in connection with or
for the purposes and uses of the Company or its tenants, or any representation
or warranty or covenant of any kind or character, express or implied, with
respect thereto.
SECTION 7.10 Adjustments. The Company agrees to pay all charges and
costs that are required and whenever required in connection with the Authority's
acquisition of the Project Facilities and in connection with the conveyance of
the Project Facilities from the Authority to the Company. The Company agrees
that the Authority shall not be responsible for any inaccuracies
52
<PAGE>
in any settlement sheet in connection with the foregoing and shall hold the
Authority harmless from any liabilities or damages arising therefrom.
SECTION 7.11 Zoning/Subdivision. The Authority makes no representation
or warranty that it has satisfied itself regarding the validity of any
subdivision of the Project Facilities, the lawful uses to which the Project
Facilities may be put and the legality of the use of the Project Facilities
intended by the Company and the Company waives any right or claim it may have
against the Authority regarding representations concerning the Project
Facilities.
SECTION 7.12 Company's Federal Income Taxation. Consistent with the
terms and conditions of this Agreement, the Authority agrees that the Company
shall be deemed the "owner" of the Project Facilities for federal income tax
purposes and further agrees to cooperate fully with the Company (at the
Company's sole cost and expense) in obtaining favorable federal income tax
treatment of this sale and the Project Facilities subject hereto. For such
purposes, the parties acknowledge their intent to create a valid installment
purchase agreement herein, with legal title to the Project Facilities held by
the Authority prior to transfer (as provided herein) of such title to the
Company upon completion of its obligations hereunder.
SECTION 7.13 Amounts Remaining in Bond Fund. It is agreed by the
parties hereto that any amounts remaining in the Bond Fund established under the
Indenture upon expiration or sooner termination of this Agreement after payment
in full of the Bonds (or provision for payment thereof having been made in
accordance with the provisions of the Indenture) and of the fees, charges and
expenses of the Trustee and the Authority in accordance with the Indenture,
shall, be paid to the Company by the Trustee as overpayment of the Purchase
Price.
SECTION 7.14 Survival of Covenants, Conditions and Representations. All
covenants, conditions and representations of the Company contained herein that,
by nature, imply or expressly involve performance in any particular manner after
the delivery of the Authority's deed or that cannot be ascertained to have been
performed until after the said delivery, shall survive said delivery. Without
intending to limit the generality of the foregoing, the Company's covenant to
indemnify the Authority and the Trustee, as set forth in Sections 2.3 and 5.6
hereof, shall survive settlement under Section 4.7 hereof or any termination of
this Agreement.
SECTION 7.15 Agreement To Constitute Security Agreement. For purposes
of the Pennsylvania Uniform Commercial Code, this Agreement is hereby declared
to be a "security agreement" and the phrase "security interest" when used herein
shall have the meaning given thereto in the Pennsylvania Uniform Commercial
Code. The Company shall execute and file or cause to
53
<PAGE>
be filed all such financing statements as the Trustee may reasonably require to
perfect and keep perfected all security interests herein granted.
SECTION 7.16 Headings. The captions or headings in this Agreement are
for convenience of reference only and shall not control or affect the meaning or
construction of any provision hereof.
SECTION 7.17 Multiple Counterparts. This Agreement may be executed in
multiple counterparts, each of which shall be regarded for all purposes as an
original and such counterparts shall constitute but one and the same instrument.
IN WITNESS WHEREOF, the parties hereto, intending to be legally bound,
have caused this Agreement to be executed and delivered as of the date first
written above.
PHILADELPHIA AUTHORITY FOR
INDUSTRIAL DEVELOPMENT
By [ILLEGIBLE]
---------------------------------
Chair
Attest: [ILLEGIBLE]
----------------------------
Secretary
(SEAL)
REFRIGERATED ENTERPRISES, INC
By /s/ Bernard Gelman
----------------------------
Vice President
Attest: John Evans
-------------------------
(Assistant) Secretary
(SEAL)
HOLT HAULING AND WAREHOUSING
SYSTEM, INC.
/s/ John Evans By: /s/ Bernard Gelman
- ----------------------- ----------------------------------
John Evans, Secretary Bernard Gelman,
Vice President
ATTEST: B.H. SOBELMAN CO.
John Evans By: /s/ Bernard Gelman
- ------------------------ ----------------------
54
================================================================================
HOLT HAULING AND WAREHOUSING SYSTEM, INC.
and
777 PATTISON AVE., INC.,
as Mortgagors
AND
NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY,
as Mortgagee
SERIES K MORTGAGE AND SECURITY AGREEMENT
Dated as of February 1, 1997
================================================================================
This Mortgage and Security Agreement also constitutes a fixture filing
under Article 9 of the Uniform Commercial Code-Secured Transactions, N.J.S.A.
12A:9-402(3) and (6).
Return and Record To:
M. Jeremy Ostow, Esq.
Wolff & Samson
A Professional Corporation
5 Becker Farm Road
Roseland, New Jersey 07068
<PAGE>
THIS SERIES K MORTGAGE AND SECURITY AGREEMENT is dated as of February 1,
1997 (the "Mortgage") and is made by HOLT HAULING AND WAREHOUSING SYSTEM, INC.,
a Pennsylvania corporation, having an address at 701 N. Broadway, Gloucester
City, New Jersey 08030 ("Holt") and 777 PATTISON AVE., INC., a Pennsylvania
corporation having an address at 701 N. Broadway, Gloucester City, New Jersey
08030 ("777" and, together with Holt, the "Mortgagors"), as mortgagors, in
favor of the NEW JERSEY ECONOMIC DEVELOPMENT AUTHORITY, a public body corporate
and politic constituting an instrumentality of the State of New Jersey, as
mortgagee (the "Mortgagee"). All capitalized terms used herein and not otherwise
defined shall have the meanings set forth in the Agreement (as hereinafter
defined) and the Indenture (as hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Mortgagee intends to issue its Senior Mortgage Economic
Development Revenue Refunding Bonds (Holt Hauling and Warehousing System, Inc. -
1983 Project) 1997 Series K (the "Bonds") in the aggregate principal amount of
Twenty-Seven Million Two Hundred Fifty Thousand Dollars ($27,250,000), maturing
March 1, 2027, pursuant to an Indenture of Trust dated as of February 1, 1997
(as amended and supplemented from time to time, the "Indenture") between the
Mortgagee and The Bank of New York, as trustee (the "Trustee"), and in
accordance with the provisions of the New Jersey Economic Development Authority
Act, as amended, N.J.S.A. ss.34:1B-1, et seq. (the "Act), the proceeds from the
sale of which are to be loaned to Holt in order to assist Holt in refunding the
Series D Bonds and Series E Bonds, all with respect to a project located in the
City of Gloucester City, Camden County, New Jersey, all pursuant to a Series K
Loan Agreement dated as of February 1, 1997 (as amended from time to time, the
"Agreement") between the Mortgagee and Holt; and
WHEREAS, all of the Mortgagee's rights under the Agreement (except for such
rights as are specifically reserved) and under this Mortgage are to be assigned
to the Trustee pursuant to the Indenture and the Assignment; and
WHEREAS, in connection with the issuance of the Bonds, certain affiliates
of Holt (the "Guarantors") have entered into a Series K Guaranty Agreement dated
as of February 1, 1997 (as amended from time to time, the "Guaranty");
NOW, THEREFORE, to equally and ratably secure (without preference or
priority) payment of the principal of, premium (if any) and interest on the
Bonds, Holt's payment obligations pursuant to paragraphs (a), (b) and (d) of
Section 4.2 of the Agreement (herein called the "Loan Obligations"), and the
payment of any and all other amounts required to be paid pursuant to, and the
performance of all covenants, agreements and obligations required
<PAGE>
to be performed by the Mortgagors or the Guarantors under this Mortgage,
the Guaranty, the Agreement and the other Loan Documents (collectively, the
"Secured Agreements"), whether direct or indirect, absolute or contingent, due
or to become due, now existing or hereafter arising and howsoever evidenced,
plus all expenses of enforcing this Mortgage, each Mortgagor, for and in
consideration of Ten Dollars and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, does by these presents
GRANT, BARGAIN, SELL, CONVEY AND MORTGAGE unto the Mortgagee and its respective
successors and assigns, all of its right, title and interest in and to the
following property, interests and rights (collectively, the "Mortgaged
Property,"):
THAT certain parcel of real estate described in Exhibit A hereto (the
"Site");
TOGETHER with all and singular the ways, easements, rights, privileges and
appurtenances belonging or in any wise appertaining to the Site;
TOGETHER with the buildings and improvements now erected and hereafter to
be erected upon the Site, including any repairs, restorations or replacements
thereof or any changes, alterations or additions thereto (collectively, the
"Improvements");
TOGETHER with all right, title and interest, if any, of each Mortgagor in
and to any land lying in the bed of any street, avenue or alley adjoining the
Site to the center line thereof;
TOGETHER with the fixtures, building equipment and other personal property
owned by each Mortgagor and located on and used in connection with the
maintenance of the Improvements, including, without limitation, the equipment as
described in Exhibit B hereto but excluding any personal property or equipment
which is not a fixture but is used in connection with the business conducted on
the Mortgaged Property and excluding specifically container cranes, forklifts,
trucks and other vehicles (subject to such exclusions, collectively, the
"Equipment"); and
TOGETHER with all the rents, issues and profits of the Mortgaged Property,
and all the estate, right, title, interest and all claim and demand whatsoever,
at law or in equity, of each Mortgagor in and to the same, including but not
limited to:
(a) All rents, issues, profits, revenues, royalties, rights and benefits
derived from the Mortgaged Property from time to time accruing, whether under
leases or tenancies or contracts of sale now existing or hereafter created,
reserving to each Mortgagor, however, so long as there is no "Default" under the
Indenture, the right to receive and retain all such rents, issues and profits.
-2-
<PAGE>
(b) All judgments, awards of damages, insurance proceeds and settlements
hereafter made resulting from condemnation proceedings or the taking of the
Mortgaged Property or any part thereof under the power of eminent domain, or for
any damage (whether caused by such taking or otherwise) to the Mortgaged
Property or any part thereof, or to any rights appurtenant thereto, including
any award for change of grade of streets; and
TOGETHER with all of the Mortgagor's leasehold interest in the property
financed with the proceeds of the $24,500,000 Camden County Improvement
Authority (Camden County, New Jersey) Lease Revenue Bonds (Holt Hauling and
Warehousing System, Inc. Project) 1996 Series A.
TO HAVE AND TO HOLD the above granted and described property equally and
ratably unto the Mortgagee and its respective successors and assigns,
forever. The Mortgagors do hereby fully warrant good and marketable fee
simple title to the Site, the Improvements, and the Equipment and will defend
the same against the lawful claims of all persons whomsoever, subject only to
the Permitted Encumbrances, and that it has good and lawful authority to
sell, convey, mortgage and grant a security interest in the Mortgaged
Property.
PROVIDED, ALWAYS that if the Mortgagors or their successors or assigns
shall pay to the Mortgagee or its respective successors or assigns all
amounts secured hereby, including without limitation the Loan Obligations,
all amounts due under the Secured Agreements, and all other amounts due
hereunder, and shall perform, observe and comply with all of the terms,
conditions, covenants and agreements contained herein and in the Secured
Agreements, and if no Bonds remain Outstanding, then this Mortgage shall be
absolutely void; otherwise the same shall remain in full force and effect.
This Mortgage is subject and subordinate to (i) a certain Mortgage dated
March 15, 1984 between Holt and the City of Gloucester City and recorded in
the Camden County Register's Office in Book 2785, Page 543, (ii) a certain
Mortgage dated April 18, 1984 between Holt and the City of Gloucester City
and recorded in the Camden County Register's Office in Book 2793, Page 937
and (iii) a certain Mortgage dated August 22, 1984 between Holt and the City
of Gloucester City recorded in the Camden County Register's Office in Book
2823, Page 135; provided, however, that this Mortgage shall enjoy the
benefits, pari passu with the mortgages described in the next paragraph, of
that certain Subordination Agreement dated as of August 1, 1986 among Holt,
the City of Gloucester and Bankers Trust Company and recorded September 25,
1986 in Mortgage Book 3050, Page 0644.
This Mortgage and the lien created hereby is pari passu and equal in all
respects to the lien created by certain other
-3-
<PAGE>
mortgages, all as more fully described in that certain Amendment to
Senior Indebtedness Coordinate Lien Agreement dated as of February 1, 1997 by
and among the Mortgagors, Dockside Refrigerated Warehouses, Inc., The Bank of
New York, as Series J Trustee, The Bank of New York, as CCIA Series Trustee
and the Mortgagee and that certain Amended and Restated Coordinate Lien
Agreement dated as of February 1, 1997 by and among Holt, The Bank of New
York, as Series J. Trustee and The Bank of New York, as Series K Trustee.
PROVIDED FURTHER, however, that the Mortgagee agrees that from and after
the date hereof, the Camden County Improvement Authority ("CCIA") shall have,
during the term of that certain Ground Lease Agreement dated as of January
15, 1996 by and between Holt and CCIA (the "Ground Lease"), quiet use and
enjoyment of the Project Site (as defined in the Ground Lease) (the "1996
CCIA Project Site"), and CCIA shall during such term peaceably and quietly
have and hold and enjoy the 1996 CCIA Project Site and each and every part
thereof, without suit, trouble, molestation or hindrance from the Mortgagee
or any successors or assigns, or any party claiming under or through the
Mortgagee, including, without limitation, any purchaser at a foreclosure sale
under this Mortgage, any transferee who acquires possession or title to the
1996 CCIA Project Site by deed in lieu of foreclosure or other means and the
successors and assigns of such purchasers and/or transferees, and the
Mortgagee shall, at the request of CCIA and at CCIA's sole cost and expense,
join in any legal action in which CCIA asserts its right to such possession
and enjoyment; provided, however, that the provisions of this sentence shall
cease to apply under the following circumstances: (i) all of the CCIA's Lease
Revenue Bonds (Holt Hauling and Warehousing System, Inc. Project) 1996 Series
A in the aggregate principal amount of $24,500,000 (the "1996 CCIA Bonds")
shall have theretofore actually been paid in full, at maturity or upon
redemption or acceleration prior to maturity, (ii) all of the 1996 CCIA Bonds
shall have been defeased and shall no longer be deemed "Outstanding" under
the Indenture of Trust dated as of January 15, 1996 between CCIA and The Bank
of New York (NJ), as trustee (the "1996 CCIA Trustee") and there shall have
been delivered to the 1996 CCIA Trustee an opinion of bond counsel to the
effect that any divestiture or reduction of CCIA's interest in the 1996 CCIA
Project Site pursuant to or at any time after such defeasance shall not cause
interest on the 1996 CCIA Bonds to be or to become includable in the gross
income of the holders thereof for federal income tax purposes, or (iii) the
1996 CCIA Trustee, on behalf of the holders of at least 66 2/3% in aggregate
principal amount of the 1996 CCIA Bonds, shall have consented to such action.
Nothing herein, however, shall be deemed or construed to impair or limit the
Mortgagee's lien on and rights with respect to the proceeds derived from a
condemnation, foreclosure sale or other sale or disposition of the 1996 CCIA
Project Site.
-4-
<PAGE>
The Mortgagors further covenant and agree as follows:
1. Payment. The Mortgagors shall pay all sums, including interest,
secured hereby when due, as provided for in the Secured Agreements and in
this Mortgage, and any renewal, extension or modification of any thereof.
2. Compliance with Laws. The Mortgagors shall comply with all present
and future laws, ordinances, rules, regulations, covenants, conditions and
restrictions affecting the Mortgagors, the Mortgaged Property or the use and
occupancy thereof, and not suffer or permit any violation thereof.
3. Maintenance and Modification of Mortgaged Property by the Mortgagor.
The Mortgagors agree that at all times, the Mortgagor will maintain, preserve
and keep the Mortgaged Property or cause the Mortgaged Property to be
maintained, preserved and kept, with the appurtenances and every part and
parcel thereof in good repair, working order, and condition as more
particularly described in Section 5.2 of the Agreement, and that the
Mortgagors will from time to time make or cause to be made all repairs,
replacements and renewals deemed proper and necessary by it.
In addition, the Mortgagors shall have the privilege of remodeling the
Mortgaged Property or, subject to the limitations imposed by Section 5.2 of
the Agreement, making substitutions, modifications and improvements to the
Mortgaged Property from time to time as the Mortgagors, in their discretion,
may deem to be desirable for the Mortgagors' use for such purposes as shall
be permitted by the Act, the costs of which remodeling, substitutions,
modifications and improvements shall be paid by the Mortgagors, and the same
shall be the property of the Mortgagors and be included under the terms of
this Mortgage as part of the Mortgaged Property; provided, however, that such
remodeling, substitutions, modifications and improvements shall not interfere
with the operation of the Mortgaged Property in the manner contemplated in
the Application and in the Agreement or in any way damage the Mortgaged
Property, and provided that the Mortgaged Property, as remodeled, improved or
altered, upon completion of such remodeling, substitutions, modifications and
improvements made pursuant to this Section, shall be of a value not less than
the value of the Mortgaged Property immediately prior to the remodeling or
the making of substitutions, modifications and improvements. Any property for
which a substitution or replacement is made pursuant to this Section may be
disposed of by the Mortgagors in any manner and in the sole discretion of the
Mortgagors.
4. Liens. The Mortgagors will not permit any mechanic's or other lien
other than Permitted Encumbrances to be established or remain against the
Mortgaged Property, provided that if the Mortgagors shall first notify the
Mortgagee of its intention to do
-5-
<PAGE>
so, the Mortgagors may in good faith contest at the Mortgagors' expense
any mechanic's or other lien filed or established against the Mortgaged
Property, and in such event may permit the item so contested to remain
undischarged and unsatisfied during the period of such contest and any appeal
therefrom unless by nonpayment of any such item the security afforded by this
Mortgage will be materially endangered or the Mortgaged Property or any part
thereof will be subject to loss or forfeiture, in which event the Mortgagors
shall promptly pay and cause to be satisfied and discharged such unpaid item.
5. Taxes and Governmental and Utility Charges. The Mortgagors will pay
or cause to be paid, as the same respectively become due, all taxes and
governmental charges of any kind whatsoever that may at any time be lawfully
assessed or levied against or with respect to the Mortgaged Property or any
part thereof, including without limiting the generality of the foregoing, all
ad valorem taxes levied against the Mortgaged Property and any other taxes
levied upon the Mortgaged Property which, if not paid, will become a charge
on the receipts from the Mortgaged Property or a lien against the Mortgaged
Property or any interest therein or the revenues derived therefrom; all
utility and other charges incurred in the operation, maintenance, use,
occupancy and upkeep of the Mortgaged Property; and all assessments and
charges lawfully made by any governmental body for public improvements that
may be secured by a lien on the Mortgaged Property, provided that with
respect to special assessments or other governmental charges that may
lawfully be paid in installments over a period of years, the Mortgagors shall
be obligated to pay only such installments when and as they are required to
be paid.
The Mortgagors may, at the Mortgagors' expense, in good faith contest
any such taxes, assessments and other charges, all in the manner and subject to
the conditions set forth in Section 5.3(b) of the Agreement.
6. Casualty and Other Insurance. The Mortgagors agree to insure or cause
to be insured the Mortgaged Property against loss or damage by fire and other
hazards as more particularly described in Sections 5.4 and 5.5 of the
Agreement. The Mortgagors will not do or suffer to be done anything which
will increase the risk of fire or other hazard to the Mortgaged Property or
any part thereof without first causing such increased risk to be fully and
adequately covered by insurance.
7. Worker's Compensation Coverage. The Mortgagors shall maintain
worker's compensation coverage or cause the same to be maintained to the
extent required by applicable law.
8. Self-Insurance. Notwithstanding the provisions of Sections 6 and 7,
but subject to the requirements of Article V of
-6-
<PAGE>
the Agreement, if the Mortgagors shall insure similar properties by
self-insurance, the Mortgagors, at the Mortgagors' election, may insure the
Mortgaged Property, partially or wholly by means of an adequate
self-insurance fund set aside and maintained out of its earnings, or in
conjunction with other companies through an insurance trust or other
arrangement.
9. Condemnation. The net proceeds of any taking by the power of eminent
domain of all or a portion of the Mortgaged Property shall be applied as
provided in Section 6.2 of the Agreement.
10. Advances. If the Mortgagors fail to pay, subject to any right
hereunder to contest, any claim, lien, or encumbrance (other than Permitted
Encumbrances), or, prior to delinquency, any tax or assessment, or, when due,
any insurance premium, or to keep the Mortgaged Property in repair, or shall
commit or permit waste, or if there shall be commenced any action or
proceeding affecting the Mortgaged Property or the title thereto, or the
interest of the Mortgagee therein, including, but not limited to, eminent
domain and bankruptcy or reorganization proceedings, then the Mortgagee, at
its option, may pay said claim, lien, encumbrance, tax assessment or premium,
with right of subrogation thereunder, may make such repairs and take such
steps as it deems advisable to prevent or cure such waste, and may appear in
any such action or proceeding and retain counsel therein, and take such
action therein as the Mortgagee deems advisable, and for any of said purposes
the Mortgagee may advance such sums of money, including all costs, reasonable
attorneys' fees and other items of expense as it deems necessary. The
Mortgagors shall pay to the Mortgagee all sums of money so advanced by the
Mortgagee together with interest on each such advance at two percent (2%) in
excess of the Prime Rate, and the repayment of such advances shall be secured
hereby. In making any payment or securing any performance relating to any
obligation of the Mortgagors under the Mortgage, the Mortgagee, so long as it
acts in good faith, shall be the sole judge of the legality, validity and
amount of any lien or encumbrance and of all other matters necessary to be
determined in satisfaction thereof. No such action of the Mortgagee shall
ever be considered as a waiver of any right accruing to it hereunder. The
Mortgagee shall not ever be held accountable for any delay in making any such
payment, which delay may result in any additional interest, costs, charges or
expenses.
11. Attorneys' Fees. In case of any action or any proceedings in any
court to collect any sums payable or secured by this Mortgage or to protect
the lien of the Mortgagee or in any other case permitted by law in which
attorneys' fees may be collected from the Mortgagors or charged upon the
Mortgaged Property, the Mortgagors agree to pay reasonable attorneys' fees.
-7-
<PAGE>
12. Remedies. Subject always to the provisions of Section 13 hereof,
upon the occurrence of a "Default" as defined and specified in the Indenture
and the declaration of an acceleration of the Bonds pursuant to the
Indenture, the Mortgagee may exercise one or more of the following remedies
(no remedy hereunder intended to be exclusive of any other remedy hereunder,
under any of the Secured Agreements or under the Indenture):
(a) The Mortgagee may require the Mortgagors, upon demand of the
Mortgagee, to forthwith surrender, and the Mortgagee may, to the extent
permitted by applicable law, by such officer, agent or receiver as it may
appoint, all without regard to the value of the security hereof, take
possession of, all or any part of the Mortgaged Property together with the
books, papers and accounts of the Mortgagors pertaining thereto, and make all
needful repairs and improvements as the Mortgagee shall deem necessary or
appropriate, and lease or sell the Mortgaged Property or any part thereof in
the name and for the account of the Mortgagors and collect, receive and
sequester the rental therefrom, and out of the same and any moneys received
from any receiver pay, or set up proper reserves for the payment of, all
paper costs and expenses of so taking, holding, leasing, selling and
managing the same, including reasonable compensation to the Mortgagee, its
agents and counsel, and any charges of the Mortgagee hereunder, and any taxes
and assessments and other charges due and payable which the Mortgagee may
deem it wise to pay, and all expenses of such repairs and improvements, and
apply the remainder of the moneys so received to the payment of the
indebtedness secured hereby. Whenever all that is due upon the indebtedness
secured hereby shall have been paid and all defaults made good, the Mortgagee
shall surrender whatever possession the Mortgagee shall retain to the
Mortgagors; the same right of entry, however, shall exist upon any subsequent
default.
(b) The Mortgagee may enter and take possession of the Mortgaged
Property, and lease the Mortgaged Property for the account of the Mortgagors,
holding the Mortgagors liable for all payments due to the effective date of
such leasing and for the difference in the rent and other amounts paid by the
lessee pursuant to such lease and the amounts payable by the Mortgagors on
account of the indebtedness secured hereby.
(c) Subject to any mandatory requirements of applicable law, the
Mortgagee may sell the Mortgaged Property as an entirety or from time to time
in part to the highest bidder at public auction at such place and at such
time (which sale may be adjourned from time to time in the discretion of the
Mortgagee by announcement at the time and place fixed for such sale, without
further notice) and upon such terms as the Mortgagee may fix and briefly
specify in a notice of sale to be published once each week for four (4)
successive weeks prior to such sale in a newspaper of
-8-
<PAGE>
general circulation in the county in which the Mortgaged Property is
located, and in such event the Mortgagee may bid for or become the purchaser
of the Mortgaged Property at the public auction and be entitled to have the
purchase price payable at the public auction payable by credit for the
balance due and payable hereunder in respect of the indebtedness secured
hereby.
(d) The Mortgagee may foreclose this Mortgage by judicial proceedings
in the manner provided by the laws of the State of New Jersey for the
foreclosure of mortgages, and in such event the Mortgagee may bid for or
become the purchaser of the Mortgaged Property at the foreclosure sale and be
entitled to have the purchase price payable at foreclosure sale payable by
credit to the judgment for the balance, if any, due and payable hereunder in
respect of the indebtedness secured hereby.
(e) The Mortgagee may exercise all rights and remedies available to
secured creditors under the Uniform Commercial Code as in effect in the State
of New Jersey.
13. Option To Release Certain Real Estate. Notwithstanding any other
provisions of this Mortgage, the Mortgagee hereby agrees, subject to the
provisions of the Agreement, at any time and from time to time, to release
from this Mortgage (i) any unimproved part of the Site, provided such release
shall not adversely affect the value of the Mortgaged Property, or (ii) any
part of the Site with respect to which fee title is to be conveyed to a
railroad, public utility or public body in order that railroad service,
utility services or roads may be provided for the Mortgaged Property, upon
receipt of:
(a) Copies of the instrument of release, in recordable form.
(b) A certificate of the Mortgagors (i) stating that no "Default" or
any condition or event which, with the giving of notice or the passage of
time or both would constitute a "Default" has occurred under the Secured
Agreements or the Indenture, (ii) giving an adequate legal description of
that portion of the Site to be released, (iii) stating the purpose for which
the release is desired, (iv) requesting such release, and (v) approving such
release.
(c) If applicable, a copy of the instrument conveying the portion of
the Site to be released.
(d) Any instrument or instruments required by the terms of such
release.
(e) A certificate of an independent engineer acceptable to the
Mortgagee dated not more than sixty (60) days prior to the
-9-
<PAGE>
date of the release and stating that, in the opinion of such engineer
(i) the portion of the Site so proposed to be released is necessary or
desirable in order to obtain railroad service, utility services or roads to
benefit the Mortgaged Property, or is not otherwise needed for the efficient
operation of the Mortgaged Property for the purpose stated in the Agreement
and (ii) the release so proposed to be made will not impair the usefulness of
the Mortgaged Property as a facility for the purposes for which it was
designed and for such purposes as shall be permitted by the Act and will not
destroy the means of ingress thereinto and egress therefrom.
Provided, however, that if the portion of the Site to be released has
transportation or utility facilities located upon it, the Mortgagors shall
retain an easement to use such facilities to the extent necessary for the
efficient operation of the Mortgaged Property.
The Mortgagee agrees that upon receipt of the items required in this
Section to be furnished by the Mortgagors, it will promptly execute and
deliver the proposed release covering the portion of the Site to be released.
In the event of any such release, the Mortgagors shall not be entitled to any
postponement, abatement or diminution of amounts payable on account of the
indebtedness secured hereby.
14. Release of Items of Equipment. In any instance where the Mortgagors
in their sole discretion determine that any items of the Equipment have
become obsolete, worn out, unsuitable, inappropriate or unnecessary for its
purposes, and so long as no "Default" or any condition or event which, with
the giving of notice or the passage of time or both would constitute a
"Default" has occurred under the Secured Agreements or the Indenture, the
Mortgagors may remove such Equipment from the Mortgaged Property and sell,
trade-in, exchange or otherwise dispose of such Equipment (as a whole or in
part) without any responsibility or accountability to the Mortgagee therefor,
provided that the Mortgagors shall substitute and install anywhere in the
Mortgaged Property other machinery or equipment having equal or greater
utility or value (but not necessarily having the same function) in the
operation of the Mortgaged Property as a modern facility, all of which
substituted machinery or equipment shall be free of all liens and
encumbrances (other than Permitted Encumbrances) and shall become a part of
the Mortgaged Property.
The removal from the Mortgaged Property of any portion of the Equipment
pursuant to the provisions of this Section shall not entitle the Mortgagors
to any postponement, abatement or diminution in amounts payable on account of
the indebtedness secured hereby.
-10-
<PAGE>
Upon the request of either Mortgagor, the Mortgagee shall deliver or
cause to be delivered to such Mortgagor, such instruments as are reasonably
necessary to confirm the release of removed items of the Equipment from the
lien of this Mortgage and cancel any security interest with respect thereto,
provided that such request is accompanied by a certificate of an officer of
such Mortgagor to the effect that such release complies in all respects with
this Section.
15. Granting of Easements. If no "Default" or any condition or event
which, with the giving of notice or the passage of time or both would
constitute a "Default" has occurred under the Secured Agreements or the
Indenture, the Mortgagors may at any time or times, grant easements,
licenses, rights-of-way (including the dedication of public highways) and
other rights or privileges in the nature of easements with respect to any
property or rights included in the Mortgaged Property, free from the lien and
security interest afforded by or under this Mortgage, or the Mortgagors may
reconvey existing easements, licenses, rights-of-way and other rights and
privileges with or without consideration, and the Mortgagee agrees to execute
and deliver or cause to be executed and delivered any instruments necessary
or appropriate to confirm and grant or convey any such easement, license,
right-of-way or other grant or privilege upon receipt of: (1) a copy of the
instrument of grant or reconveyance; (2) a written statement signed by an
officer of the Mortgagors stating (i) that such grant or reconveyance will
not impair the effective use or interfere with the operation of the Mortgaged
Property and (ii) that such grant or reconveyance is not detrimental to the
proper conduct of the business of the Mortgagors; and (3) an opinion of
independent counsel that such grant or reconveyance will not materially
weaken, diminish or impair the security afforded pursuant to the terms of
this Mortgage, and will not violate the terms, covenants or conditions of any
agreement or grant which the Mortgagors or the Mortgagee may have with the
United States, the State of New Jersey or any agency, department or political
subdivision thereof with respect to the Mortgaged Property or the Indenture.
16. No Waiver. No failure, forbearance or delay by the Mortgagee in
exercising any right or remedy hereunder, under any Secured Agreement, or
under the Indenture, or otherwise afforded by law, shall operate as a waiver
thereof or preclude the exercise thereof in accordance herewith or therewith.
No waiver by the Mortgagee of any default shall constitute a waiver of or
consent to subsequent defaults. No withdrawal or abandonment of foreclosure
proceedings by the Mortgagee shall be taken or construed as a waiver of its
right to exercise any right or remedy hereunder by reason of any past,
present or future default; and, in like manner, the procurement of insurance
or the payment of taxes or other liens or charges by the Mortgagee shall not
be taken or construed as a waiver of its rights or remedies hereunder.
-11-
<PAGE>
17. Waiver of Mortgagor. Each Mortgagor, on behalf of itself and all
persons now or hereafter interested in the Mortgaged Property, to the fullest
extent permitted by applicable law, hereby waives all rights under all
appraisement, homestead, moratorium, valuation, exemption, stay, extension,
redemption and marshalling statutes, laws or equities now or hereafter
existing, and each Mortgagor agrees that no defense, claim or right based on
any thereof will be asserted, or may be enforced, in any action enforcing or
relating to this Mortgage or any of the Mortgaged Property. Without limiting
the generality of the preceding sentence, each mortgagor, on its own behalf
and on behalf of each and every person acquiring any interest in or title to
the Mortgaged Property subsequent to the date of this Mortgage, hereby
irrevocably waives any and all rights of redemption from sale under any power
contained herein or under any sale pursuant to any statute, order, decree or
judgment of any court.
18. Definitions. In this Mortgage, all words and terms defined in the
Agreement and the Indenture shall have the respective meanings and be
construed as provided therein unless a different meaning clearly appears from
the context. Reference herein to, or citation herein of, any provisions of
the Agreement or the Indenture shall be deemed to incorporate such provisions
as a part hereof in the same manner and with the same effect as if the same
were fully set forth herein.
19. Severability. In the event that any one or more of the provisions
contained in this Mortgage shall for any reason be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Mortgage, but
this Mortgage shall be construed as if such invalid, illegal or unenforceable
provision had never been contained herein or therein.
20. Successors and Assigns. Unless otherwise expressly stated, the terms
"Mortgagor" and "Mortgagee" as used herein include each of their respective
successors in interest and assigns.
21. Notices. All notices, certificates or other communications hereunder
shall be sufficiently given and shall be deemed given when delivered or
mailed by certified or registered mail, postage prepaid, addressed as
follows: if to the Mortgagors, to Holt Hauling and Warehousing System, Inc.
or 777 Pattison Ave., Inc., P.O. Box 8698, Philadelphia, Pennsylvania 19101,
Attention: Mr. Bernard Gelman, Vice President; if to the Mortgagee, 200 South
Warren Street, Capital Place One, CN 990, Trenton, New Jersey 08625,
Attention: Executive Director; and if to the Trustee, The Bank of New York,
385 Rifle Camp Road, West Paterson, New Jersey 07424. Any party hereto may,
by written notice given hereunder,
-12-
<PAGE>
designate any further or different addresses to which subsequent notices,
certificates or other communications shall be sent.
22. New Jersey Uniform Commercial Code Security Interest and Financing
Statement. This instrument is intended to be a security agreement pursuant to
the New Jersey Uniform Commercial Code covering any of the items or types of
property included as part of the Mortgaged Property that may be subject to a
security interest pursuant to the New Jersey Uniform Commercial Code, and the
Mortgagors hereby grant to the Mortgagee, its successors and assigns a
security interest in such items or types of property. This Mortgage or a
reproduction hereof is deemed to constitute a fixture filing to be filed of
record in the real estate records maintained by the Clerk of Camden County,
pursuant to N.J.S.A. 12A:9-402 (3) and (6). In addition, the Mortgagors will
execute, deliver and file any financing statements or amendments thereof or
continuation statements thereto that may be required to perfect or to
continue the perfection of a security interest in said items or types of
property. The Mortgagors shall pay all reasonable costs of the preparation
and filing of such instruments.
23. Amendments. Except as may otherwise be specifically provided herein,
no charge, amendment, modification, cancellation or discharge hereof, or any
part hereof, shall be valid unless in writing and signed by the parties
hereto.
24. Relation Back. The parties to this Mortgage may mutually agree to
change the interest rate, due date or other term or terms of this Mortgage or
of the obligations secured by this Mortgage. If the parties mutually agree to
a change, which change is a "modification" as defined in New Jersey P.L.
1985, c. 353, this Mortgage shall be subject to the priority provisions of
that law.
25. Captions. The captions herein are inserted only for convenience of
reference and in no way define, limit or describe the scope or intent of this
Mortgage or any particular paragraph or section hereof, nor the proper
construction hereof.
26. Governing Law. This Mortgage is to be governed and construed
according to the laws of the State of New Jersey.
27. RECEIPT. THE MORTGAGORS HEREBY ACKNOWLEDGE RECEIPT OF A TRUE COPY OF
THIS MORTGAGE, WITHOUT CHARGE.
28. Other. For purposes of preserving the priority of the Series D
Mortgage and the Series E Mortgage, this Mortgage shall be deemed to amend
and restate the Series D Mortgage and the Series E Mortgage in their
entirety.
-13-
<PAGE>
IN WITNESS WHEREOF, each Mortgagor has caused this instrument to be
executed in its name by one of its duly authorized officers; and the
Mortgagee has evidenced its acceptance of this instrument by having caused
this instrument to be executed in its corporate name by one of its duly
authorized officers, as of the date first above written.
[SEAL] HOLT HAULING AND WAREHOUSING
SYSTEM, INC., a Pennsylvania
corporation
Attest:
/s/ John Evans By: /s/ Bernard Gelman
- -------------------------------- ----------------------------------
John Evans Bernard Gelman
Secretary Vice President
[SEAL] 777 PATTISON AVE., INC., a
Pennsylvania corporation
Attest:
/s/ John Evans By: /s/ Bernard Gelman
- -------------------------------- ----------------------------------
John Evans Bernard Gelman
Secretary Vice President
SIGNATURE PAGE TO MORTGAGE
-14-
WOLFF A SAMSON DRAFT
APRIL 1, 1994
CONTRACT OF SALE
by and between
HOLT HAULING AND WAREHOUSING
SYSTEM, INC., as Seller
and
CAMDEN COUNTY IMPROVEMENT AUTHORITY,
as Purchaser
April _, 1994
<PAGE>
TABLE OF CONTENTS
Page
----
1 Conveyance of Property ...................................... 3
2 Title ....................................................... 5
3 Closing of Title ............................................ 5
4 Purchase Price .............................................. 5
5 Closing Documents ........................................... 5
6 Re-Sale Certificate of Occupancy ............................ 6
7 Environmental Matters ....................................... 6
8 Seller's Representations, Warranties and Covenants........... 6
9 Authority's Obligations Hereunder; Indemnification........... 7
10 Limited Liability of Authority; Costs and Expenses........... 8
11 Survival .................................................... 9
12 Notices ..................................................... 9
13 Governing Law ............................................... 10
14 Successors and Assigns ...................................... 10
15 Execution ................................................... 10
16 Headings .................................................... 10
17 Severability ................................................ 10
18 Broker ...................................................... 10
19 Interpretation .............................................. 10
Exhibit A. Legal Description
(i)
<PAGE>
CONTRACT OF SALE
THIS CONTRACT OF SALE (the "Contract") is dated April , 1994 by and between
HOLT HAULING AND WAREHOUSING SYSTEM, INC., a Pennsylvania corporation having an
address of 701 N. Broadway, Gloucester City, New Jersey 08030 (the "Seller") and
CAMDEN COUNTY IMPROVEMENT AUTHORITY, a body politic and corporate constituting
an instrumentality exercising public and essential governmental functions,
having an address of 6983 North Park Drive, East Building, Suite 304,
Pennsauken, New Jersey 08109-4212 (the "Authority").
W I T N E S S E T H:
WHEREAS, the Authority was created pursuant to the County Improvement
Authorities Act, constituting Chapter 183 of the Pamphlet Laws of 1960, as
amended (the "Act"), for the purposes, among other things, of providing within
the County, structures, franchises, equipment and facilities for operation of
public transportation or for terminal purposes, including development and
improvements of port terminal structures, facilities and equipment, for public
use in counties, in, along or through which a navigable river flows; and
WHEREAS, the Authority is authorized, pursuant to the Act, to issue its
bonds for the purpose of financing the cost of any public facility or
facilities; and
WHEREAS, the Authority proposes to undertake a certain project ("Project")
consisting of the purchase, pursuant to this Contract, of a newly constructed
refrigerated warehouse facility of
<PAGE>
approximately 312,000 square feet on land to be leased to the Issuer
within the marine terminal complex owned by the Seller, in the City of
Gloucester City, County of Camden and State of New Jersey, to be leased to
Dockside Refrigerated Warehouses, Inc. (the "Company"); and
WHEREAS, the Authority proposes to issue its Lease Revenue Bonds (Dockside
Refrigerated Warehouses, Inc. Project) Series 1994 in the aggregate principal
amount of $18,500,000 (the "Bonds") pursuant to an Indenture of Trust (the
"Indenture") between the Authority The Bank of New York NA, as trustee (the
"Trustee") and proposes to apply the proceeds of the sale of the Bonds to
finance the acquisition of the Project; and
WHEREAS, the Authority proposes to lease the Project to the Company
pursuant to a Lease Agreement dated as of March 15, 1994 (the "Lease Agreement";
capitalized terms used but not defined herein shall have the meanings given to
them in the Indenture or the Lease Agreement), pursuant to which the Company
shall covenant to make lease payments to the Authority sufficient to pay all
principal, premium, if any, and interest when due on the Bonds and other amounts
payable in connection with the Bonds; and
WHEREAS, the Bonds shall be secured by the pledge of payments to be made by
the Company under the Lease Agreement and by a leasehold mortgage lien on the
Project and a security interest in certain machinery and equipment constituting
fixtures of the Company, and the Bonds and obligations of the Company under the
Lease Agreement shall be guaranteed by the Seller, B.H. Sobelman
-2-
<PAGE>
Co., Inc., Refrigerated Distribution Center, Inc., Oregon Avenue Enterprises,
Incorporated, Holt Cargo Systems, Inc., The Riverfront Development Corp.,
CRT, Inc., Triple Seven Ice, Inc., 777 Pattison Ave., Inc., Pattison Avenue
Warehousing Corp., and Refrigerated Enterprises, Inc. and any other person
required to be a Guarantor (collectively, the "Guarantor") pursuant to the
Guaranty (as such term is hereinafter defined); and
WHEREAS, the Bonds shall be further secured by a mortgage on the Project
and a leasehold mortgage on the Land from the Authority to the Trustee dated as
of March 15, 1994, subject and subordinate to the Senior Mortgage Debt (as
defined in the Indenture) and pari passu and on a parity with the Parity
Mortgage Debt (as defined in the Indenture); and
WHEREAS, the Guaranty shall be secured by a mortgage on the entire marine
terminal complex located in the Project Municipality from the Seller to the
Trustee dated as of March 15, 1994, subject and subordinate to the Senior
Mortgage Debt (as defined in the Indenture) and pari passu and on a parity with
the Parity Mortgage Debt (as defined in the Indenture); and
WHEREAS, the Seller and the Authority have the power to enter into this
Indenture and to execute and deliver this Contract.
IN CONSIDERATION of the mutual covenants and agreements hereinafter set
forth, the parties hereto agree as follows:
1. Conveyance of Property.
(a) Seller shall sell and convey to the Authority and the Authority
shall purchase from Seller, all in accordance with
-3-
<PAGE>
the terms of this Contract, fee simple title to the Improvements (as
hereinafter defined) located on certain real property in the City of Gloucester
City, County of Camden and State of New Jersey, being known and designated as
Block 2 and Lot 1 on the Tax Map of the City of Gloucester City, but all as more
fully described on Exhibit A annexed hereto and made a part hereof (the "Real
Property").
(b) As used herein, the term "Improvements" means the approximately
312,000 square foot refrigerated warehouse building situate and existing on the
Real Property, including without limitation all alterations, improvements,
replacements, modifications, redecorations and additions thereto to which title
has vested in Seller, the foundations and footings thereof and all fixtures,
including without limitation all furnaces, boilers, refrigeration equipment,
machinery, engines, motors, compressors, elevators, fittings, pipings,
connectives, conduits, ducts, partitions, equipment and apparatus of every kind
and description now or hereafter affixed or attached to such building; IT BEING
UNDERSTOOD AND AGREED, however, that the term "Improvements" shall specifically
not include, and Seller shall not convey fee simple title and shall not be
obligated to convey to the Authority fee simple title pursuant hereto, to the
Real Property or any of Seller's right, title and interest therein or thereto
other than the conveyance by Seller to the Authority of a leasehold interest in
the Real Property pursuant to a Ground Lease Agreement dated as of March 15,
1994 between Seller and the Authority, pursuant to
-4-
<PAGE>
which Seller grants to the Authority a leasehold estate in the Real Property.
2. Title. Title to the Improvements shall be conveyed by Seller by Bargain
and Sale Deed with Covenant as to Grantor's Acts. The title to be conveyed shall
be free and clear of any Liens other than Permitted Encumbrances and shall be
marketable and insurable at regular rates by a title insurance company of the
Authority's choice authorized to do business in the State of New Jersey.
3. Closing of Title. The closing of title for transfer of the Improvements
shall take place at the offices of Wolff & Samson, P.A., 5 Becker Farm Road,
Roseland, New Jersey 07068 on the date hereof.
4. Purchase Price. The Authority shall pay to Seller, as and for the
purchase price for the Improvements, the sum of $18,150,000, subject to no
adjustments, (the "Purchase Price"), payable in immediately available funds on
the Closing Date.
5. Closing Documents.
(a) At or prior to the Closing, Seller shall deliver to the Authority
the following items with respect to the Improvements:
(i) Bargain and Sale Deed with Covenant as to Grantor's Acts
conveying fee title to the Improvements to the Authority or its assigns, free
and clear of all liens, claims and encumbrances, except for the Permitted
Exceptions;
(ii) Bill of Sale, to the extent required to convey to Buyer all
or any of the Improvements as contemplated hereby;
(iii) A standard form Affidavit of Title;
-5-
<PAGE>
(iv) A letter of non-applicability or a "no further action letter"
from the New Jersey Department of Environmental Protection and Energy
("NJDEPE") with respect to the Improvements stating that the transfer and
conveyance of the Improvements is not subject to the terms and conditions of
the Industrial Site Recovery Act, N.J.S.A. 13:1K-6 et seq or, if applicable,
a negative declaration;
(v) A corporate resolution of Seller authorizing Seller to execute
and deliver the Deed, Affidavit of Title and other documents required hereby
and to consummate the transactions contemplated hereby and thereby;
(vi) Such other documents as may be reasonably required by the
Authority; and
(ix) Any other documents required to be delivered by Seller
hereunder if not theretofore delivered.
6. Re-Sale Certificate of Occupancy. In the event the City of Gloucester
City requires that a re-sale certificate of occupancy be obtained in
connection with the transfer of the Improvements, Seller shall obtain such
re-sale certificate of occupancy and deliver same to the Authority at or
prior to the Closing.
7. Environmental Matters. The Authority acknowledges that no
environmental testing of the Improvements or the Real Property is necessary
as a condition to the Authority's obligations hereunder.
8. Seller's Representations, Warranties and Covenants. In addition to
the representations, warranties and covenants set forth
-6-
<PAGE>
elsewhere in this Contract, Seller represents, warrants and covenants as
follows:
(a) Seller is a corporation duly organized, validly existing and in
good standing under the laws of the Commonwealth of Pennsylvania, and is duly
qualified to transact business in the State of New Jersey. Seller has full
power and authority, in accordance with law, to enter into this Contract and
to carry out the transactions contemplated hereby. All proceedings required
to be taken by or on behalf of Seller to authorize Seller to make, deliver
and carry out this Contract have been duly and properly taken. Neither the
execution and delivery of this Contract nor the consummation of the
transactions provided for herein will constitute a violation or breach by
Seller of any provisions of any agreement or other instrument to which Seller
is a party, or will result in or constitute a violation or breach of any
judgment, order, writ, injunction or decree issued against or binding upon
Seller;
(b) This Contract has been duly executed and delivered by Seller and
constitutes a valid and binding agreement of Seller, enforceable in
accordance with its terms; and
(c) The Federal Taxpayer Identification Number of Seller is
23-1464716.
9. Authority's Obligations Hereunder; Indemnification. Seller hereby
agrees to indemnify, defend and hold harmless the Authority and any mortgagee
of the Authority and their officers, directors, employees, agents, attorneys
and representatives and
-7-
<PAGE>
their respective heirs, successors and assigns (collectively, the "Indemnified
Parties") from and against any and all damages, losses, deficiencies, costs,
liabilities, claims, demands, charges, counsel fees and other expenses of any
kind or nature whatsoever incurred or to be incurred by any Indemnified Party
as a result of, arising out of or in connection with (a) a breach of
any representation, warranty or covenant made by Seller herein, (b) the
condition of the Improvements or the Real Property, including without
limitation the physical condition of the Improvements or the presence of any
environmental condition on the Improvements or the Real Property, (c) the
quality of title to the Improvements, (d) the failure of Seller to comply
with any applicable laws, ordinances, rules or regulations in connection with
the conveyance of the Improvements as contemplated hereby or (e) any act or
omission of Seller prior to or after the Closing Date relating to the
transactions contemplated hereby.
10. Limited Liability of Authority; Costs and Expenses. All costs and
expenses in connection with the transactions contemplated herein, including,
without limitation, title insurance and recording fees, shall, as between the
Seller and the Purchaser, be the responsibility of the Seller. In addition,
the obligation of the Authority to pay the Purchase Price hereunder shall be
limited to the proceeds from the sale of the Bonds and shall be subject to
and contingent upon the sale of the Bonds.
-8-
<PAGE>
11. Survival. The representations, warranties and obligations of
Seller under this Agreement shall survive the Closing without limitation.
12. Notices. All notices, demands or other communications which are
required or permitted to be given hereunder (each, a "Notice") shall be in
writing and shall be deemed duly given when hand delivered, when mailed by
registered or certified mail, postage prepaid, return receipt requested or
when sent by overnight delivery service providing delivery confirmation,
addressed to the respective parties as follows.
If to Seller: Holt Hauling and Warehousing
System, Inc.
King and Essex Streets
Gloucester City, New Jersey 08030
Attention: Mr. Bernard Gelman
with a copy to: Holt Hauling and Warehousing
System, Inc.
King and Essex Streets
Gloucester City, New Jersey 08030
Attention: John A. Evans, Esq.
If to the Authority: Camden County Improvement
Authority 6983 North Park Drive
East Building, Suite 304
Pennsauken, New Jersey 08109-4212
Attention: Executive Director
with a copy to: Veronica, Meloni & Vecchio
100 Grove Street
P.O. Box 472
Haddonfield, New Jersey 08033
Attention: Louis R. Meloni, Esq.
Anyone may change his or its address for notice purpose by giving Notice of
the new address to all parties listed above in the manner specified herein.
-9-
<PAGE>
13. Governing Law. This Contract and all matters pertaining hereto shall
be governed by and construed in accordance with the laws of the State of New
Jersey.
14. Successors and Assigns. The covenants, conditions and agreements in
this Contract shall be binding upon and shall inure to the benefit of Seller
and the Authority and their respective successors and assigns.
15. Execution. This Contract may be executed in any number of
counterparts, each of which, when so executed and delivered, shall be deemed
an original, but such counterparts together shall constitute but one and the
same instrument so long as same are identical.
16. Headings. The paragraph headings herein are for convenience only and
shall not be construed to limit or affect any provisions of this Contract.
17. Severability. In the event that any one of more of the provisions of
this Contract shall be determined to be void or unenforceable by a court of
competent jurisdiction or by law, such determination will not render this
Contract invalid or unenforceable and the remaining provisions hereof shall
remain in full force and effect.
-10-
<PAGE>
18. Broker. Each party represents to the other that it has dealt with no
broker, agent or finder in connection with this transaction.
19. Interpretation. Words in the singular number shall be held to include
the plural and vice versa and words of one gender shal1 be held to include the
other genders as the context requires. The terms "hereof", "herein" and
"herewith" and words of similar import shall be construed to refer to this
Contract in its entirety and not to any particular provisions unless otherwise
stated. The "person" shall mean any natural person, partnership, corporation and
any other form of business or legal entity.
IN WITNESS WHEREOF, the parties have executed this Contract on the date
and year first above written.
ATTEST: SELLER:
HOLT HAULING AND WAREHOUSING
SYSTEM, INC.
/s/ John Evans By: /s/ Bernard Gelman
- ---------------------------- -------------------------------
John Evans, Secretary Bernard Gelman
Vice President
ATTEST: AUTHORITY:
CAMDEN COUNTY IMPROVEMENT
AUTHORITY
/s/ Philip P. Rowan By: /s/ Jamed J. Kelly
- ---------------------------- -------------------------------
Philip P. Rowan James J. Kelly
Executive Director Vice Chairman
and Secretary
-11-
================================================================================
HOLT HAULING AND WAREHOUSING SYSTEM, INC.
as Mortgagor
AND
THE BANK OF NEW YORK
as Trustee
FIRST LEASEHOLD MORTGAGE AND SECURITY AGREEMENT
Dated as of June 1, 1997
================================================================================
This First Leasehold Mortgage and Security Agreement also constitutes a
fixture filing under Article 9 of the Uniform Commercial Code-Secured
Transactions, N.J.S.A. 12A-9-402(3) and (6).
Record and Return To:
M. Jeremy Ostow, Esq.
Wolff & Samson
A Professional Corporation
5 Becker Farm Road
Roseland, New Jersey 07068
<PAGE>
THIS FIRST LEASEHOLD MORTGAGE AND SECURITY AGREEMENT is dated as of
June 1, 1997 (the "Mortgage") made by HOLT HAULING AND WAREHOUSING SYSTEM, INC.,
a Pennsylvania corporation having an address at 701 N. Broadway, Gloucester
City, New Jersey 08030, as mortgagor (the "Mortgagor"), in favor of THE BANK OF
NEW YORK, a banking corporation organized and existing under the laws of the
State of New Jersey, having an address at 385 Rifle Camp Road, West Paterson,
New Jersey 07424, as Trustee under the Indenture referred to below (the
"Trustee"). All capitalized terms used but not otherwise defined herein shall
have the meanings set forth in the Lease Agreement or in the Indenture (both as
hereinafter defined).
W I T N E S S E T H:
WHEREAS, the Camden County Improvement Authority (the "Issuer") was
created pursuant to the Act for the purposes, among other things, of providing
within the County structures, franchises, equipment and facilities for operation
of public transportation or for terminal purposes, including development and
improvement of port terminal structures, facilities and equipment, for public
use in counties, in, along or through which a navigable river flows; and
WHEREAS, the Issuer is authorized, pursuant to the Act, to issue its
bonds for the purpose of financing the cost of any public facility or
facilities; and
WHEREAS, the Issuer proposes to provide financial and other assistance
in connection with a certain project ("Project") consisting of the purchase of
approximately 6.5 acres of land and the existing eight story building situated
thereon and the leasing of such land and building to the Mortgagor for
development and use by the Company as a public dock and wharf facility (the
"Project Facility"), including (i) the renovation by the Company of the building
for use as an approximately 288,000 square foot refrigerated warehouse, (ii)
landfill, dredging and the construction by the Company of approximately 1,130
lineal feet of piers to accommodate ocean-going vessels importing and exporting
cargo, and (iii) the construction by the Company of parking, vehicle access and
storage areas and other related improvements, all to be located in the City and
County of Camden, State of New Jersey; and
WHEREAS, the Issuer proposes to issue its Lease Revenue Bonds (Kaighn
Point Marine Terminal Project) 1997 Series A in the aggregate principal amount
of $17,890,000 (the "Series A Bonds") and its Lease Revenue Bonds (Kaighn Point
Marine Terminal Project) 1996 Series B (Taxable) in the aggregate principal
amount of $1,660,000 (the "Series B Bonds" and, together with the Series A
Bonds, the "Bonds") pursuant to an Indenture of Trust dated as of June 1, 1997
(the "Indenture") between the Issuer and the Trustee
<PAGE>
and proposes to apply the proceeds of the sale of the Bonds to finance
the cost of the Project; and
WHEREAS, the Issuer proposes to lease the Project Facility to the
Mortgagor pursuant to a Lease Agreement dated as of June 1, 1997 (the "Lease
Agreement"), pursuant to which the Mortgagor shall covenant to make lease
payments to the Issuer sufficient to pay, among other things, all principal,
premium, if any, and interest when due on the Bonds and other amounts payable in
connection with the Bonds; and
WHEREAS, the Bonds shall be secured by the pledge of payments to be
made by the Mortgagor under the Lease Agreement; and
WHEREAS, the obligations of the Mortgagor under the Lease Agreement and
the payment of the Bonds shall be guaranteed by the Mortgagor, B.H. Sobelman &
Co., Inc., Refrigerated Distribution Center, Inc., Oregon Avenue Enterprises,
Incorporated, Holt Cargo Systems, Inc., The Riverfront Development Corp., CRT,
Inc., Triple Seven Ice, Inc., Pattison Avenue Warehousing Corp., Refrigerated
Enterprises, Inc., 777 Pattison Ave., Inc., Dockside International Fish Co.,
Inc., Murphy Marine Services, Inc., Wilmington Stevedores, Inc. and any other
person required to be a Guarantor (collectively, the "Guarantors") pursuant to
the Guaranty; and
WHEREAS, the Bonds shall be further secured by a first mortgage from
the Issuer to the Trustee on the Mortgaged Property and a security interest in
certain machinery and equipment constituting fixtures; and
WHEREAS, the Bonds shall be further secured by this first leasehold
mortgage on the Mortgaged Property from the Mortgagor to the Trustee; and
WHEREAS, the Mortgagor and the Trustee each have full right and lawful
authority to enter into this Mortgage, and to perform and observe the provisions
hereof on their respective parts to be performed and observed.
NOW, THEREFORE, to equally and ratably secure (without preference or
priority) payment of the principal of, premium (if any) and interest on the
Bonds, the Mortgagor's and the Guarantors' respective obligations under the
Lease Agreement and the Guaranty, and the payment of any and all other amounts
required to be paid pursuant to, and the performance of all covenants,
agreements and obligations required to be performed by the Mortgagor under this
Mortgage, the Lease Agreement and the Guaranty (collectively, the "Secured
Agreements"), whether direct or indirect, absolute or contingent, due or to
become due, now existing or hereafter arising and howsoever evidenced, plus all
expenses of enforcing this Mortgage, the Mortgagor, for and in
-2-
<PAGE>
or any part thereof under the power of eminent domain, or for any damage
(whether caused by such taking or otherwise) to the Mortgaged Property or any
part thereof, or to any rights appurtenant thereto, including any award for
change of grade of streets.
TO HAVE AND TO HOLD the above granted and described property equally
and ratably unto the Trustee and its respective successors and assigns, forever.
The Mortgagor does hereby fully warrant that it is the lawful owner of the
leasehold estate in the Project Site and the Project pursuant to the Lease
Agreement and will defend the same against the lawful claims of all persons
whomsoever, subject only to the Permitted Encumbrances, and that it has good and
lawful authority to sell, convey, mortgage and grant a security interest in the
Mortgaged Property.
PROVIDED, ALWAYS that if the Mortgagor or its successors or assigns
shall pay to the Trustee or its respective successors or assigns all amounts
secured hereby, including without limitation all amounts due under the Secured
Agreements, and all other amounts due hereunder, and shall perform, observe and
comply with all of the terms, conditions, covenants and agreements contained
herein and in the Secured Agreements, and if no Bonds remain Outstanding, then
this Mortgage shall be absolutely void; otherwise the same shall remain in full
force and effect.
The Mortgagor further covenants and agrees as follows:
1. Payment. The Mortgagor shall pay all sums, including interest,
secured hereby when due, as provided for in the Secured Agreements and in this
Mortgage, and any renewal, extension or modification of any thereof.
2. Compliance with Laws. The Mortgagor shall comply with all present
and future laws, ordinances, rules, regulations, covenants, conditions and
restrictions affecting the Mortgagor, the Mortgaged Property or the use and
occupancy thereof, and not suffer or permit any violation thereof.
3. Maintenance and Modification of Mortgaged Property by the Mortgagor.
The Mortgagor agrees that at all times, the Mortgagor will maintain, preserve
and keep the Mortgaged Property or cause the Mortgaged Property to be
maintained, preserved and kept, with the appurtenances and every part and parcel
thereof in good repair, working order, and condition, and that the Mortgagor
will make or cause to be made from time to time all necessary and proper
repairs, replacements and renewals.
In addition, the Mortgagor shall have the privilege of remodeling the
Mortgaged Property or making substitutions, modifications and improvements to
the Mortgaged Property from time
-4-
<PAGE>
to time as the Mortgagor, in its discretion, may deem to be desirable for the
Mortgagor's use for such purposes as shall be permitted by the Act, and shall
not adversely impact the tax-exemption on the Series A Bonds, the costs of which
remodeling, substitutions, modifications and improvements shall be paid by the
Mortgagor, and the same shall be the property of the Mortgagor or the Issuer, as
the case may be, and be included under the terms of this Mortgage as part of the
Mortgaged Property; provided, however, that such remodeling, substitutions,
modifications and improvements shall not interfere with the operation of the
Mortgaged Property or in any way damage the Mortgaged Property, and provided
that the Mortgaged Property, as remodeled, improved or altered, upon completion
of such remodeling, substitutions, modifications and improvements made pursuant
to this Section shall be of a value not less than the value of the Mortgaged
Property immediately prior to the remodeling or the making of substitutions,
modifications and improvements. Any property for which a substitution or
replacement is made pursuant to this Section may be disposed of by the Mortgagor
in any manner and in the sole discretion of the Mortgagor.
4. Liens. The Mortgagor will not permit any mechanic's or other lien
other than Permitted Encumbrances to be established or remain against the
Mortgaged Property, provided that if the Mortgagor shall first notify the
Trustee of its intention to do so, the Mortgagor may in good faith contest at
the Mortgagor's expense any mechanic's or other lien filed or established
against the Mortgaged Property, and in such event may permit the item so
contested to remain undischarged and unsatisfied during the period of such
contest and any appeal therefrom unless by nonpayment of any such item the
security afforded by this Mortgage will be materially endangered or the
Mortgaged Property or any part thereof will be subject to loss or forfeiture, in
which event the Mortgagor shall promptly pay and cause to be satisfied and
discharged such unpaid item.
5. Taxes and Governmental and Utility Charges. The Mortgagor will pay
or cause to be paid, as the same respectively become due, all taxes and
governmental charges of any kind whatsoever that may at any time be lawfully
assessed or levied against or with respect to the Mortgaged Property or any part
thereof, including, without limiting the generality of the foregoing, all ad
valorem taxes or payments in lieu of taxes levied against the Mortgaged Property
and any other taxes levied upon the Mortgaged Property which, if not paid, will
become a charge on the receipts from the Mortgaged Property or a lien against
the Mortgaged Property or any interest therein or the revenues derived
therefrom; all utility and other charges incurred in the operation, maintenance,
use, occupancy and upkeep of the Mortgaged Property; and all assessments and
charges lawfully made by any governmental body for public improvements that may
be
-5-
<PAGE>
secured by a lien on the Mortgaged Property, provided that with respect to
special assessments or other governmental charges that may lawfully be paid in
installments over a period of years, the Mortgagor shall be obligated to pay or
cause to be paid only such installments when and as they are required to be
paid.
The Mortgagor may, at the Mortgagor's expense, in good faith contest
any such taxes, assessments and other charges, provided that such contest shall
not result in a lien being placed on the Mortgaged Property or any part thereof
or result in the Mortgaged Property being subject to loss or forfeiture, and
further provided that the Mortgagor gives notice in writing of such contest to
the Trustee.
6. Casualty and Other Insurance. The Mortgagor agrees to insure or
cause to be insured the Mortgaged Property against loss or damage by fire and
other hazards of the nature and in accordance with the requirements set forth in
Article VII of the Lease Agreement. The Mortgagor will not do or suffer to be
done anything which will increase the risk of fire or other hazard to the
Mortgaged Property or any part thereof without first causing such increased risk
to be fully and adequately covered by insurance.
7. Worker's Compensation Coverage. The Mortgagor shall maintain
worker's compensation, longshoreman's and harbor worker's coverage or cause the
same to be maintained to the extent required by applicable law.
8. [INTENTIONALLY OMITTED]
9. Casualty or Condemnation. The net proceeds of any casualty to or any
taking by the power of eminent domain of all or a portion of the Mortgaged
Property shall be applied as provided in Section 8.2 of the Lease Agreement.
10. Advances. If the Mortgagor fails to pay, or cause to be paid,
subject to any right hereunder to contest, any claim, lien, or encumbrance
(other than Permitted Encumbrances), or, prior to delinquency, any tax or
assessment, or, when due, any insurance premium, or to keep the Mortgaged
Property in repair, or shall commit or permit waste, or if there shall be
commenced any action or proceeding affecting the Mortgaged Property or the title
thereto, or the interest of the Trustee therein, including, but not limited to,
eminent domain and bankruptcy or reorganization proceedings, then the Trustee,
at its option, may pay said claim, lien, encumbrance, tax, assessment or
premium, with right of subrogation thereunder, may make such repairs and take
such steps as it deems advisable to prevent or cure such waste, and may appear
in any such action or proceeding and retain counsel therein, and take such
action therein as the Trustee deems
-6-
<PAGE>
advisable, and for any of said purposes the Trustee may advance such sums of
money, including all costs, reasonable attorneys, fees and other items of
expense as it deems necessary. The Mortgagor shall pay to the Trustee all sums
of money so advanced by the Trustee together with interest on each such advance
at the highest rate of interest then in effect on the Bonds, and the repayment
of such advances shall be secured hereby. In making any payment or securing any
performance relating to any obligation of the Mortgagor under this Mortgage, the
Trustee, so long as it acts in good faith, shall be the sole judge of the
legality, validity and amount of any lien or encumbrance and of all other
matters necessary to be determined in satisfaction thereof. No such action of
the Trustee shall ever be considered as a waiver of any right accruing to it
hereunder. The Trustee shall not ever be held accountable for any delay in
making any such payment, which delay may result in additional interest, costs,
charges or expenses.
11. Attorneys' Fees. In case of any action or any proceedings in any
court to collect any sums payable or secured by this Mortgage or to protect the
lien of the Trustee or in any other case permitted by law in which attorneys,
fees and expenses may be collected from the Mortgagor or the Issuer or charged
upon the Mortgaged Property, the Mortgagor shall pay reasonable attorneys' fees
and expenses.
12. Remedies. Subject always to the provisions of Section 13 hereof,
upon the occurrence of a "Default" as defined and specified in the Indenture and
the declaration of an acceleration of the Bonds pursuant to the Indenture, or of
the Mortgagor's payment obligations under the Lease Agreement, the Trustee may
exercise one or more of the following remedies (no remedy hereunder intended to
be exclusive of any other remedy hereunder, under any of the Secured Agreements
or under the Indenture):
(a) The Trustee may require the Mortgagor, upon demand of the Trustee,
to forthwith surrender, and the Trustee may, to the extent permitted by
applicable law, by such officer, agent or receiver as it may appoint, all
without regard to the value of the security hereof, take possession of, all or
any part of the Mortgaged Property together with the books, papers and accounts
of the Mortgagor or the Issuer pertaining thereto, and make all needed repairs
and improvements as the Trustee shall deem necessary or appropriate, and lease
or sell the Mortgaged Property or any part thereof in the name and for the
account of the Mortgagor and the Issuer and collect, receive and sequester the
rental therefrom, and out of the same and any moneys received from any receiver
pay, or set up proper reserves for the payment of all proper costs and expenses
of so taking, holding, leasing, selling and managing the same, including
reasonable compensation to the Trustee, its agents and counsel, and any charges
of the Trustee hereunder, and any
-7-
<PAGE>
taxes and assessments and other charges due and payable which the
Trustee may deem it wise to pay, and all expenses of such repairs and
improvements, and apply the remainder of the moneys so received to the payment
of the indebtedness secured hereby. Whenever all that is due upon the
indebtedness secured hereby shall have been paid and all defaults made good, the
Trustee shall surrender whatever possession the Trustee shall retain to the
Mortgagor; the same right of entry, however, shall exist upon any subsequent
default.
(b) The Trustee may enter and take possession of the Mortgaged Property
or any part thereof, and lease the Mortgaged Property or any part thereof for
the account of the Mortgagor, holding the Mortgagor liable for all payments due
to the effective date of such leasing and for the difference in the rent and
other amounts paid by the lessee pursuant to such lease and the amounts payable
by the Mortgagor on account of the indebtedness secured hereby.
(c) Subject to any mandatory requirements of applicable law, the
Trustee may sell the Mortgaged Property as an entirety or from time to time in
part to the highest bidder at public auction at such place and at such time
(which sale may be adjourned from time to time in the discretion of the Trustee
by announcement at the time and place fixed for such sale, without further
notice) and upon such terms as the Trustee may fix and briefly specify in a
notice of sale to be published once each week for four (4) successive weeks
prior to such sale in a newspaper of general circulation in the county in which
the Mortgaged Property is located and in such event the Trustee may bid for or
become the purchaser of the Mortgaged Property at the public auction and be
entitled to have the purchase price payable at the public auction payable by
credit for the balance due and payable hereunder in respect of the indebtedness
secured hereby.
(d) The Trustee may foreclose this Mortgage by judicial proceedings in
the manner provided by the laws of the State of New Jersey for the foreclosure
of mortgages, and in such event the Trustee may bid for or become the purchaser
of the Mortgaged Property or any part thereof at the foreclosure sale and be
entitled to have the purchase price payable at foreclosure sale payable by
credit to the judgment for the balance, if any, due and payable hereunder in
respect of the indebtedness secured hereby.
(e) The Trustee may exercise all rights and remedies available to
secured creditors under the Uniform Commercial Code as in effect in the State of
New Jersey.
13. Option To Release Certain Real Estate. Notwithstanding any other
provisions of this Mortgage, the Trustee hereby agrees, at the request of the
Mortgagor at any time and from time to time,
-8-
<PAGE>
to release from this Mortgage (i) any unimproved part of the Project Site, or
(ii) any part of the Project Site with respect to which fee title is to be
conveyed to a railroad, public utility or public body in order that railroad
service, utility services or roads may be provided for the Mortgaged Property,
upon receipt of:
(a) Copies of the instrument of release, in recordable form.
(b) A certificate of the Mortgagor (i) stating that no "Default" or
"Event of Default" or any condition or event which, with the giving of notice or
the passage of time or both would constitute a "Default" or "Event of Default"
has occurred under the Secured Agreements or the Indenture, (ii) giving an
adequate legal description of that portion of the Project Site to be released,
(iii) stating the purpose for which the release is desired, (iv) requesting such
release, and (v) approving such release.
(c) If applicable, a copy of the instrument conveying the portion of
the Project Site to be released.
(d) Any instrument or instruments required by the terms of such
release.
(e) A certificate of an independent engineer not unacceptable to the
Trustee in its reasonable discretion dated not more than sixty (60) days prior
to the date of the release and stating that, in the opinion of such engineer (i)
the portion of the Project Site so proposed to be released is necessary or
desirable in order to obtain railroad service, utility services or roads to
benefit the Mortgaged Property, or is not otherwise needed for the efficient
operation of the Mortgaged Property for the purpose stated in the Lease
Agreement and (ii) the release so proposed to be made will not impair the
usefulness of the Mortgaged Property as a facility for the purposes for which it
was designed and for such purposes as shall be permitted by the Act and will not
destroy the means of ingress thereinto.
It is understood and agreed, however, that if the portion of the
Project Site to be released has transportation or utility facilities located
upon it, the Mortgagor shall retain an easement to use such facilities to the
extent necessary for the efficient operation of the Mortgaged Property.
The Trustee agrees that upon receipt of the items required in this
Section to be furnished by the Mortgagor, it will promptly execute and deliver
the proposed release covering the portion of the Project Site to be released. In
the event of any such release, the Mortgagor shall not be entitled to any
postponement,
-9-
<PAGE>
abatement or diminution of amounts payable on account of the
indebtedness secured hereby.
14. Release of Items of Equipment. In any instance where the Mortgagor
in its sole discretion determines that any items of Equipment have become
obsolete, worn out, unsuitable, inappropriate or unnecessary for its purposes,
and so long as no "Default" or "Event of Default" or any condition or event
which, with the giving of notice or the passage of time or both would constitute
a "Default" or "Event of Default" has occurred under the Secured Agreements, the
Mortgagor may remove such Equipment from the Mortgaged Property and sell,
trade-in, exchange or otherwise dispose of such Equipment (as a whole or in
part) without any responsibility or accountability to the Trustee therefor,
provided that the Mortgagor shall substitute and install anywhere in the
Mortgaged Property other machinery or equipment having equal or greater utility
or value (but not necessarily having the same function) in the operation of the
Mortgaged Property as a modern facility, all of which substituted machinery or
equipment shall be free of all liens and encumbrances (other than Permitted
Encumbrances) and shall become a part of the property secured hereunder.
The removal from the Mortgaged Property of any portion of the Equipment
pursuant to the provisions of this Section shall not entitle the Mortgagor to
any postponement, abatement or diminution in amounts payable on account of the
indebtedness secured hereby.
Upon the request of the Mortgagor, the Trustee shall deliver and cause
to be delivered to the Mortgagor, such instruments as are reasonably necessary
to confirm the release of removed items of the Equipment from the lien of this
Mortgage and cancel any security interest with respect thereto, provided that
such request is accompanied by a certificate of an officer of the Mortgagor to
the effect that such release complies in all respects with this Section.
15. Granting of Easements. If no "Default" or "Event of Default" or
any condition or event which, with the giving of notice or the passage of time
or both would constitute a "Default" or "Event of Default" has occurred under
the Secured Agreements, the Mortgagor and the Issuer may at any time or times
and at the request of the Mortgagor, grant easements, licenses, rights-of-way
(including the dedication of public highways) and other rights or privileges in
the nature of easements with respect to any property or rights included in the
Mortgaged Property, free from the lien and security interest afforded by or
under this Mortgage or the Mortgagor or the Issuer may reconvey existing
easements, licenses, rights-of-way and other rights and privileges with or
without consideration, and the Trustee agrees to execute and deliver or cause to
be executed and delivered any instrument necessary or
-10-
<PAGE>
appropriate to confirm and grant or convey any such easement, license,
right-of-way or other grant or privilege upon receipt of: (1) a copy of the
instrument of grant or reconveyance; and (2) a written statement signed by an
officer of the Mortgagor or the Issuer stating that such grant or reconveyance
will not impair the effective use or value or interfere with the operation of
the Mortgaged Property.
16. No Waiver. No failure, forbearance or delay by the Trustee in
exercising any right or remedy hereunder, under any Secured Agreement, under the
Indenture or otherwise afforded by law, shall operate as a waiver thereof or
preclude the exercise thereof in accordance herewith or therewith. No waiver by
the Trustee of any default shall constitute a waiver of or consent to subsequent
defaults. No withdrawal or abandonment of foreclosure proceedings by the Trustee
shall be taken or construed as a waiver of its right to exercise any right or
remedy hereunder by reason of any past, present or future default; and, in like
manner, the procurement of insurance or the payment of taxes or other liens or
charges by the Trustee shall not be taken or construed as a waiver of its rights
or remedies hereunder.
17. Waiver of Mortgagor. The Mortgagor, on behalf of itself and all
persons now or hereafter interested in the Mortgaged Property, to the fullest
extent permitted by applicable law, hereby waives all rights under all
appraisement, homestead, moratorium, valuation, exemption, stay, extension,
redemption and marshaling statutes, laws or equities now or hereafter existing,
and the Mortgagor agrees that no defense, claim or right based on any thereof
will be asserted, or may be enforced, in any action enforcing or relating to
this Mortgage or any of the Mortgaged Property. Without limiting the generality
of the preceding sentence, the Mortgagor, on its own behalf and on behalf of
each and every person acquiring any interest in or title to the Mortgaged
Property subsequent to the date of this Mortgage, hereby irrevocably waives any
and all rights of redemption from sale under any power contained herein or under
any sale pursuant to any statute, order, decree or judgment of any court.
18. Definitions. In this Mortgage, all words and terms defined in the
Lease Agreement, the Guaranty and the Indenture shall have the respective
meanings and be construed as provided therein unless a different meaning clearly
appears from the context. Reference herein to, or citation herein of, any
provisions of the Lease Agreement, the Guaranty or the Indenture shall be deemed
to incorporate such provisions as a part hereof in the same manner and with the
same effect as if the same were fully set forth herein.
19. Severability. In the event that any one or more of the provisions
contained in this Mortgage shall for any reason be held
-11-
<PAGE>
to be invalid, illegal or unenforceable in any respect, such invalidity,
illegality or unenforceability shall not affect any other provision of this
Mortgage, but this Mortgage shall be construed as if such invalid, illegal or
unenforceable provision had never been contained herein or therein.
20. Successors and Assigns. Unless otherwise expressly stated, the
terms "Mortgagor" and "Trustee" as used herein include each of their respective
successors in interest and assigns.
21. Notices. All notices, certificates or other communications
hereunder shall be sufficiently given and shall be deemed given when delivered
or mailed by certified or registered mail, postage prepaid, addressed as
follows: if to the Mortgagor, Holt Hauling and Warehousing System, Inc., P.O.
Box 8698, Philadelphia, Pennsylvania 19101, Attention: Mr. Bernard Gelman, Vice
President; and if to the Trustee, The Bank of New York, 385 Rifle Camp Road,
West Paterson, New Jersey 07424, Attention: Corporate Trust Department. Any
party hereto may, by written notice given hereunder, designate any further or
different addresses to which subsequent notices, certificates or other
communications shall be sent. Copies of all notices shall be given to the Issuer
at 224 Barclay Pavilion, Route 70 East, Cherry Hill, New Jersey 08034,
Attention: Executive Director, or such further or different addresses as the
Issuer shall designate.
22. New Jersey Uniform Commercial Code Security Interest and Financing
Statement. This instrument is intended to be a security agreement pursuant to
the New Jersey Uniform Commercial Code covering any of the items or types of
property included as part of the Mortgaged Property that may be subject to a
security interest pursuant to the New Jersey Uniform Commercial Code, and the
Mortgagor hereby grants to the Trustee, its successors and assigns a security
interest in such items or types of property.
This Mortgage or a reproduction hereof is deemed to constitute a
fixture filing to be filed of record in the real estate records maintained by
the Clerk of Camden County, pursuant to N.J.S.A. 12A:9-402(3) and (6). In
addition, the Mortgagor will execute, deliver and file any financing statements
or amendments thereof or continuation statements thereto that may be required to
perfect or to continue the perfection of a security interest in said items or
types of property. The Mortgagor shall pay all reasonable costs of the
preparation and filing of such instruments.
23. Amendments. Except as may otherwise be specifically provided
herein, no charge, amendment, modification, cancellation or discharge hereof, or
any part hereof, shall be valid unless in writing and signed by the parties
hereto.
24. Modifications. The parties to this Mortgage may mutually agree to
change the interest rate, due date or other term
-12-
<PAGE>
or terms of this Mortgage or of the obligations secured by this
Mortgage. If the parties mutually agree to a change, which change is a
"modification" as defined in New Jersey P.L. 1985, c. 353, this Mortgage shall
be subject to the priority provisions of that law.
25. Captions. The captions herein are inserted only for convenience of
reference and in no way define, limit or describe the scope or intent of this
Mortgage or any particular paragraph or section hereof, nor the proper
construction hereof.
26. Governing Law. This Mortgage is to be governed and construed
according to the laws of the State of New Jersey.
27. Receipt. THE MORTGAGOR HEREBY ACKNOWLEDGES RECEIPT OF A TRUE COPY
OF THIS MORTGAGE, WITHOUT CHARGE.
-13-
<PAGE>
IN WITNESS WHEREOF, the Mortgagor has caused this instrument to be
executed in its name by one of its duly authorized officers; and the Trustee has
evidenced its acceptance of this instrument by having caused this instrument to
be executed in its corporate name by one of its duly authorized officers, as of
the date first above written.
[SEAL] HOLT HAULING AND WAREHOUSING
Attest: SYSTEM, INC.
/s/John Evans /s/ Bernard Gelman
______________________________ By:________________________________
John Evans Bernard Gelman
[SEAL] THE BANK OF NEW YORK,
as Trustee
Attest:
/s/Joseph Matz /s/Paul F. Anatrella
_______________________________ By:________________________________
Joseph Matz Paul F. Anatrella
Assistant Vice President Assistant Vice President
Signature Page to Company Mortgage
SECURITY AGREEMENT
THIS SECURITY AGREEMENT (this "Security Agreement") dated January 24,
1997 by Holt Cargo Systems, Inc. (the "Borrower"), a Delaware Corporation having
its principal place of business and chief executive office at 701 N. Broadway,
Gloucester City, NJ 08030, in favor of Transamerica Business Credit Corporation,
a Delaware corporation (the "Lender"), having its principal office at Riverway
II, West Office Tower, 9399 West Higgins Road, Rosemont, Illinois 60018.
WHEREAS, concurrently herewith, the Borrower is executing a note, of
even date herewith (as amended, supplemented or otherwise modified from time to
time, the "Note"), in favor of the Lender in an original amount of
$1,311,588.00.
NOW, THEREFORE, in consideration of the premises and to induce the
Lender to extend credit, the Borrower hereby agrees with the Lender as follows:
SECTION 1. DEFINITIONS.
As used herein, the following terms shall have the following meanings,
and shall be equally applicable to both the singular and plural forms of the
terms defined:
Applicable Law shall mean the laws of the State of Illinois (or any other
jurisdiction whose laws are mandatorily applicable notwithstanding the parties'
choice of Illinois law) or the laws of the United States of America, whichever
laws allow the greater interest, as such laws now exist or may be changed or
amended or come into effect in the future.
Business Day shall mean any day other than a Saturday, Sunday or public holiday
or the equivalent for banks in New York City.
Event of Default shall mean any event specified in Section 6 of this Security
Agreement.
GAAP shall mean generally accepted accounting principles in the United States of
America, as in effect from time to time.
Loan Documents shall mean, collectively, this Security Agreement, the Note and
all other documents, agreements, certificates, instruments and opinions executed
and delivered in connection herewith and therewith, as the same may be modified,
extended, restated or supplemented from time to time.
Material Adverse Change shall mean, with respect to any Person, a material
adverse change in the business, prospects, operations, results of operations,
assets, liabilities or condition (financial or otherwise) of such Person taken
as a whole.
Material Adverse Effect shall mean, with respect to any Person, a material
adverse effect on the business, prospects, operations, results of operations,
assets, liabilities or condition (financial or otherwise) of such Person taken
as a whole.
Obligations shall mean all indebtedness, obligations and liabilities of the
Borrower under the Note and under this Security Agreement, whether on account of
principal, interest, indemnities, fees (including, without limitation,
attorneys' fees, remarketing fees, origination fees, collection fees and all
other professionals' fees), costs, expenses, taxes or otherwise.
Person shall mean any individual, sole proprietorship, partnership, joint
venture, trust, unincorporated organization, association, corporation,
institution, entity, party or government (including any division, agency or
department thereof), and the successors, heirs and assigns of each.
SECTION 2. CREATION OF SECURITY INTEREST; COLLATERAL. The Borrower
hereby assigns and grants to the Lender a continuing general, first priority
lien on and security interest in, all the Borrower's right, title and interest
in and to the collateral described in the next sentence (the "Collateral") to
secure the payment and performance of all the Obligations. The Collateral
consists of all equipment set forth on Schedule A hereto (the "Equipment"),
together with all present and future additions, parts, accessories,
<PAGE>
attachments, substitutions, repairs, improvements and replacements thereof or
thereto, and any and all proceeds thereof, including, without limitation,
proceeds of insurance.
SECTION 3. THE BORROWER'S REPRESENTATIONS AND WARRANTIES.
SECTION 3.1. Good Standing; Qualified to do Business. The Borrower
(i) if a corporation or a partnership, is duly organized, validly existing and
in good standing under the laws of its State of incorporation or formation, (ii)
has the power and authority to own its properties and assets and to transact the
businesses in which it is presently, or proposes to be, engaged and (iii) is
duly qualified and authorized to do business and is in good standing in every
jurisdiction in which the failure to be so qualified could have a Material
Adverse Effect on (a) the Borrower, (b) the Borrower's ability to perform its
obligations under the Loan Documents or (c) the rights of the Lender hereunder.
SECTION 3.2. Due Execution, etc. The execution, delivery and
performance by the Borrower of each of the Loan Documents to which it is a party
are within the powers of the Borrower, do not contravene the organizational
documents, if any, of the Borrower, and do not (i) violate any law or
regulation, or any order or decree of any court or governmental authority, (ii)
conflict with or result in a breach of, or constitute a default under, any
material indenture, mortgage or deed of trust or any material lease, agreement
or other instrument binding on the Borrower or any of its properties, or (iii)
require the consent, authorization by or approval of or notice to or filing or
registration with any governmental authority or other Person. This Security
Agreement is, and each of the other Loan Documents to which the Borrower is or
will be a party, when delivered hereunder or thereunder, will be, the legal,
valid and binding obligation of the Borrower enforceable against the Borrower in
accordance with its terms.
SECTION 3.3. Solvency; No Liens. The Borrower is solvent, is
paying its debts as they become due and has sufficient capital to conduct its
business; the fair saleable value of the Borrower's assets is in excess of the
total amount of its liabilities (including contingent liabilities) as they
become absolute and matured; the security interests granted herein constitute
and shall at all times constitute the first and only liens on the Collateral;
and the Borrower is, or will be at the time additional Collateral is acquired by
it, the absolute owner of the Collateral with full right to pledge, sell,
consign, transfer and create a security interest therein, free and clear of any
and all claims or liens in favor of any other Person.
SECTION 3.4. No Judgments, Litigation. No judgments are
outstanding against the Borrower nor is there now pending or, to the best of the
Borrower's knowledge after diligent inquiry, threatened any litigation,
contested claim, or governmental proceeding by or against the Borrower except
judgments and pending or threatened litigation, contested claims and
governmental proceedings which would not, in the aggregate, have a Material
Adverse Effect on the Borrower.
SECTION 3.5. No Defaults. The Borrower is not in default under any
material contract, lease, or commitment to which it is a party or by which it is
bound. The Borrower knows of no dispute regarding any contract, lease, or
commitment which could have a Material Adverse Effect on the Borrower.
SECTION 3.6. Collateral Locations. On the date hereof, the
collateral is located at the place of business specified in Schedule A hereto.
SECTION 3.7. No Events of Default. No Event of Default has
occurred and is continuing nor has any event occurred which, with the giving of
notice or the passage of time, or both, would constitute an Event of Default.
SECTION 3.8. No Limitation on Lender's Rights. Except as permitted
herein, none of the Collateral is subject to contractual obligations that may
restrict or inhibit the Lender's rights or abilities to sell or dispose of the
Collateral or any part thereof after the occurrence of an Event of Default.
SECTION 3.9. Perfection and Priority of Security Interest. This
Security Agreement creates a valid and, upon completion of all required filings
of financial statements, perfected and, first priority and exclusive security
interest in the Collateral, securing the payment of all the Obligations.
-2-
<PAGE>
SECTION 3.10. Model and Serial Numbers. Schedule A hereto sets
forth the true and correct model number and serial number of each item of
equipment that constitutes Collateral.
SECTION 4. COVENANTS OF THE BORROWER.
SECTION 4.1. Existence, etc. The Borrower will maintain its
existence, its current yearly accounting cycle, and shall maintain in full force
and effect all licenses, bonds, franchises, leases, trademarks, patents,
contracts and other rights necessary or desirable to the profitable conduct of
its business, shall continue in, and limit its operations to, the same general
lines of business as those presently conducted by it and shall comply with all
applicable laws and regulations of any federal, state or local governmental
authority, except for such laws and regulations the violations of which would
not, in the aggregate, have a Material Adverse Effect on the Borrower.
SECTION 4.2. Notice to the Lender. As soon as possible, and in any
event within five days after the Borrower learns of the following, the Borrower
will give written notice to the Lender of (i) any proceeding instituted or
threatened to be instituted by or against the Borrower in any federal, state,
local or foreign court or before any commission or other regulatory body
(federal, state, local or foreign), (ii) the occurrence of any Material Adverse
Change with respect to the Borrower and (iii) the occurrence of any Event of
Default or event or condition which, with notice or lapse of time or both, would
constitute an Event of Default, together with a statement of the action which
the Borrower has taken or proposes to take with respect thereto.
SECTION 4.3. Maintenance of Books and Records. The Borrower will
maintain books and records pertaining to the Collateral in such detail, form and
scope as the Lender shall require in its commercially reasonable judgment. The
Borrower agrees that the Lender or its agents may enter upon the Borrower's
premises at any time and from time to time during normal business hours, and at
any time on and after the occurrence of an Event of Default, for the purpose of
inspecting the Collateral and any and all records pertaining thereto.
SECTION 4.4. Insurance. The Borrower will maintain insurance on
the Collateral under such policies of insurance, with such insurance companies,
in such amounts and covering such risks as are at all times satisfactory to the
Lender. All such policies shall be made payable to the Lender, in case of loss,
under a standard non-contributory "lender" or "secured party" clause and are to
contain such other provisions as the Lender may reasonably require to protect
the Lender's interests in the Collateral and to any payments to be made under
such policies. True copies of all original insurance policies are to be
delivered to the Lender, premium prepaid, with the loss payable endorsement in
the Lender's favor, and shall provide for not less than thirty days' prior
written notice to the Lender, of any alteration or cancellation of coverage. If
the Borrower fails to maintain such insurance, the Lender may arrange for (at
the Borrower's expense and without any responsibility on the Lender's part for)
obtaining the insurance. Unless the Lender shall otherwise agree with the
Borrower in writing, the Lender shall have the sole right, in the name of the
Lender or the Borrower, to file claims under any insurance policies, to receive
and give acquittance for any payments that may be payable thereunder, and to
execute any endorsements, receipts, releases, assignments, reassignments or
other documents that may be necessary to effect the collection, compromise or
settlement of any claims under any such insurance policies.
SECTION 4.5. Taxes. The Borrower will pay, when due, all taxes,
assessments, claims and other charges (herein "taxes") lawfully levied or
assessed against the Borrower or the Collateral other than taxes that are being
diligently contested in good faith by the Borrower by appropriate proceedings
promptly instituted and for which an adequate reserve is being maintained by the
Borrower in accordance with GAAP. If any taxes remain unpaid after the date
fixed for the payment thereof, or if any lien shall be claimed therefor, then,
without notice to the Borrower, but on the Borrower's behalf, the Lender may pay
such taxes, and the amount thereof shall be included in the Obligations.
SECTION 4.6. Borrower to Defend Collateral Against Claims; Fees on
Collateral. The Borrower will defend the Collateral against all claims and
demands of all Persons at any time claiming the same or any interest therein.
The Borrower will not permit any notice creating or otherwise relating to liens
on the Collateral or any portion thereof to exist or be on file in any public
office. The Borrower shall promptly pay, when due, all
-3-
<PAGE>
transportation, storage and warehousing charges and license fees, registration
fees, assessments, charges, permit fees and taxes (municipal, state and federal)
which may now or hereafter be imposed upon the ownership, leasing, renting,
possession, sale or use of the Collateral, excluding however, all taxes on or
measured by the Lender's income.
SECTION 4.7. No Change of Location, Structure or Identity. The
Borrower will not (i) change the location of its chief executive office or
establish any place of business other than those specified herein or (ii) move
or permit the movement of any Collateral from the location specified in Schedule
A hereto, except that the Borrower may change its chief executive office and
keep Collateral at other locations within the United States provided that the
Borrower has delivered to the Lender (A) prior written notice thereof and (B)
duly executed financing statements and other agreements and instruments (all in
form and substance satisfactory to the Lender) necessary or, in the opinion of
the Lender, desirable to perfect and maintain in favor of the Lender a first
priority security interest in the Collateral. Notwithstanding anything to the
contrary in the immediately preceding sentence, the Borrower may keep any
Collateral consisting of motor vehicles or rolling stock at any location in the
United States provided that the Lender's security interest in any such
Collateral is conspicuously marked on the certificate of title thereof and the
Borrower has complied with the provisions of Section 4.9.
SECTION 4.8. Use of Collateral; Licenses. The Collateral shall be
operated by competent, qualified personnel in connection with the Borrower's
business purposes, for or the purpose for which the Collateral was designed and
in accordance with applicable operating instructions, laws and government
regulations, and the Borrower shall use every reasonable precaution to prevent
loss or damage to the Collateral from fire and other hazards. The Collateral
shall not be used or operated for personal, family or household purposes. The
Borrower shall procure and maintain in effect a11 orders, licenses,
certificates, permits, approvals and consents required by federal, state or
local laws or by any governmental body, agency or authority in connection with
the delivery, installation, use and operation of the Collateral.
SECTION 4.9. Further Assurances. The Borrower will, promptly upon
request by the Lender, execute and deliver or use its best efforts to obtain any
document required by the Lender (including, without limitation, warehouseman or
processor disclaimers, mortgagee waivers, landlord disclaimers, or subordination
agreements with respect to the Obligations and the Collateral), give any
notices, execute and file any financing statements, mortgages or other documents
(all in form and substance satisfactory to the Lender), mark any chattel paper,
deliver any chattel paper or instruments to the Lender, and take any other
actions that are necessary or, in the opinion of the Lender, desirable to
perfect or continue the perfection and the first priority of the Lender's
security interest in the Collateral, to protect the Collateral against the
rights, claims, or interests of any Persons, or to effect the purposes of this
Security Agreement. The Borrower hereby authorizes the Lender to file one or
more financing or continuation statements, and amendments thereto, relating to
all or any part of the Collateral without the signature of the Borrower where
permitted by law. A carbon, photographic or other reproduction of this Security
Agreement or any financing statement covering the Collateral or any part thereof
shall be sufficient as a financing statement where permitted by law. To the
extent required under this Security Agreement, the Borrower will pay all costs
incurred in connection with any of the foregoing.
SECTION 4.10. No Disposition of Collateral. The Borrower will not
in any way hypothecate or create or permit to exist any lien, security interest,
charge or encumbrance on or other interest in any of the Collateral, except for
the lien and security interest granted hereby, and the Borrower will not sell,
transfer, assign, pledge, collaterally assign, exchange or otherwise dispose of
any of the Collateral. In the event the Collateral, or any part thereof, is
sold, transferred, assigned, exchanged, or otherwise disposed of in violation of
these provisions, the security interest of the Lender shall continue in such
Collateral or part thereof notwithstanding such sale, transfer, assignment,
exchange or other disposition, and the Borrower will hold the proceeds thereof
in a separate account for the benefit of the Lender. Following such a sale, the
Borrower will transfer such proceeds to the Lender in kind.
SECTION 4.11. No Limitation on Lender's Rights. The Borrower will
not enter into any contractual obligations which may restrict or inhibit the
Lender's rights or ability to sell or otherwise dispose of the Collateral or any
part thereof.
-4-
<PAGE>
SECTION 4.12. Protection of Collateral. The Lender shall have the
right at any time to make any payments and do any other acts the Lender may deem
necessary to protect its security interests in the Collateral, including,
without limitation, the rights to satisfy, purchase, contest or compromise any
encumbrance, charge or lien which, in the reasonable judgment of the Lender,
appears to be prior to or superior to the security interests granted hereunder,
and appear in and defend any action or proceeding purporting to affect its
security interests in, or the value of, any of the Collateral. The Borrower
hereby agrees to reimburse the Lender for all payments made and expenses
incurred under this Security Agreement including fees, expenses and
disbursements of attorneys and paralegals (including the allocated costs of
in-house counsel) acting for the Lender, including any of the foregoing payments
under, or acts taken to protect its security interests in, any of the
Collateral, which amounts shall be secured under this Security Agreement, and
agrees it shall be bound by any payment made or act taken by the Lender
hereunder absent the Lender's gross negligence or willful misconduct. The Lender
shall have no obligation to make any of the foregoing payments or perform any of
the foregoing acts.
SECTION 4.13. Delivery of Items. The Borrower will promptly (but
in no event later than one Business Day) after its receipt thereof deliver to
the Lender any documents or certificates of title issued with respect to any
property included in the Collateral, and any promissory notes, letters of credit
or instruments related to or otherwise in connection with any property included
in the Collateral, which in any such case come into the possession of the
Borrower, or shall cause the issuer thereof to deliver any of the same directly
to the Lender, in each case with any necessary endorsements in favor of the
Lender.
SECTION 4.14. Fundamental Changes. Without the prior written
consent of the Lender, the Borrower shall not merge or consolidate with any
other Person, or amend or modify its name, capital structure, status or
existence, or sell or otherwise dispose of all or substantially all of its
assets.
SECTION 5. FINANCIAL STATEMENTS. Until the payment and satisfaction in
full of all Obligations, the Borrower shall deliver to the Lender the following
financial information:
SECTION 5.1. Annual Financial Statements. As soon as available,
but not later than 120 days after the end of each fiscal year of the Borrower
and its consolidated subsidiaries, the consolidated balance sheet, income
statement and statements of cash flows and shareholders equity for the Borrower
and its consolidated subsidiaries (the "Financial Statements") for such year,
reported on by independent certified public accountants without an adverse
qualification; and
SECTION 5.2. Quarterly Financial Statements. As soon as available,
but not later than 60 days after the end of each of the first three fiscal
quarters in any fiscal year of the Borrower and its consolidated subsidiaries,
the Financial Statements for such fiscal quarter, together with a certification
duly executed by a responsible officer of the Borrower that such Financial
Statements have been prepared in accordance with GAAP and are fairly stated in
all material respects (subject to normal year-end audit adjustments).
SECTION 6. EVENTS OF DEFAULT. The occurrence of any of the following
events shall constitute an Event of Default hereunder:
(a) failure of the Borrower to pay any of the Obligations when
payable whether at stated maturity, by acceleration, or otherwise; and such
failure shall continue for ten (10) days after Lender gives notice to Borrower;
(b) failure of the Borrower or any guarantor of any or all of the
Obligations (together with the Borrower, the "Loan Parties") to perform, comply
with or to observe* any term, covenant or agreement applicable to it contained
in any of the Loan Documents;
(c) any representation or warranty made or deemed made by any of
the Loan Parties hereunder, under or in connection with the Financial
Statements, under any other Loan Document or under any other agreement between
any of the Loan Parties and the Lender, or under any document, instrument or
certificate executed by any of the Loan Parties in favor of the Lender, shall
prove to have been false or incorrect in any material respect when made; *,
within ten (10) days the same is due,
-5-
<PAGE>
*unless such tax is being contested in good faith and such lien does not, in
Lender's sole and absolute discretion, adversely impact Lender's security
interest provided herein or Borrower's ability to perform hereunder.
(d) any provision of any Loan Document to which any of the Loan
Parties is a party shall for any reason cease to be valid and binding on such
Loan Party, or any of the Loan Parties shall so assert in writing;
(e) dissolution, liquidation, winding up or cessation of any of
the Loan Parties' business, or the failure of any of the Loan Parties to pay its
debts as they mature; or the admission in writing by any of the Loan Parties of
its inability to pay its debts as they mature; or the calling of a meeting of
any of the Loan Parties' creditors for purposes of compromising any of the Loan
Parties, debts;
(f) the commencement by or against any of the Loan Parties of any
bankruptcy, insolvency, arrangement, reorganization, receivership or similar
proceedings under any federal or state law and, in the case of any such
involuntary proceeding, such proceeding remains undismissed or unstayed for
forty-five days following the commencement thereof, or any action by any of the
Loan Parties is taken authorizing any such proceedings;
(g) any of the Loan Parties suffers or sustains a Material Adverse
Change;
(h) an assignment for the benefit of creditors is made by any of
the Loan Parties, whether voluntary or involuntary, or any of the Loan Parties
consents to the appointment of a trustee or receiver, or if a trustee or
receiver is appointed for any of the Loan Parties or for a substantial part of
its property;
(i) any of the Loan Parties shall (i) default in the payment of
principal of or interest on any indebtedness (other than the Obligations) beyond
the period of grace, if any, provided in the instrument or agreement under which
such indebtedness was created; or (ii) default in the observance or performance
of any other agreement or condition relating to any such indebtedness or
contained in any instrument or agreement relating thereto, or any other event
shall occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such indebtedness
to cause, with the giving of notice if required, such indebtedness to become due
prior to its stated maturity;
(j) any Federal tax lien is filed of record against any of the
Loan Parties and is not bonded or discharged within thirty (30) days*
(k) any judgment shall be rendered against any of the Loan Parties
which shall not be stayed, vacated, bonded or discharged within sixty days,**
which in Lender's sole and absolute discretion, does not adversely impact
Lender's security interest provided herein or Borrower(s) ability to perform
hereunder.
(l) any material covenant, agreement or obligation of any of the
Loan Parties contained in or evidenced by any of the Loan Documents shall cease
to be enforceable, or shall be determined to be unenforceable, in accordance
with its terms; any of the Loan Parties shall deny or disaffirm its obligations
under any of the Loan Documents or any liens granted in connection therewith; or
any liens granted on any of the collateral shall be determined to be void,
voidable or invalid, are subordinated or are not given the priority contemplated
by this Security Agreement;
(m) this Security Agreement shall for any reason (other than
pursuant to the terms hereof) cease to create a valid and perfected first
priority lien on the Collateral purported to be covered hereby;
(n) there is a change in the ownership of any equity interests of
any of the Loan Parties or any of such interests becomes subject to any
contractual, judicial or statutory lien, charge, security interest or
encumbrance; or
SECTION 7. REMEDIES. If any Event of Default shall have occurred and be
continuing:
(a) the Lender may, without prejudice to any of its other rights
under any Loan Document or applicable law, declare all Obligations to be
immediately due and payable (except with respect to any Event of Default set
forth in Section 6.1(f) hereof, in which case all Obligations shall
automatically become immediately due and payable without
-6-
<PAGE>
necessity of any declaration) without presentment, representation, demand of
payment or protest, which are hereby expressly waived.
(b) the Lender may take possession of the Collateral and, for that
purpose may enter, with the aid and assistance of any person or persons, any
premises where the Collateral or any part hereof is, or may be placed, and
remove the same.
(c) the obligation of the Lender, if any, to give additional (or
to continue) financial accommodations of any kind to the Borrower shall
immediately terminate.
(d) The Lender may exercise in respect of the Collateral, in
addition to other rights and remedies provided for herein (or in any Loan
Document) or otherwise available to it, all the rights and remedies of a secured
party under the Uniform Commercial Code (the "Code") whether or not the Code
applies to the affected Collateral and also may (i) require the Borrower to, and
the Borrower hereby agrees that it will at its expense and upon request of the
Lender forthwith, assemble all or part of the Collateral as directed by the
Lender and make it available to the Lender at a place to be designated by the
Lender that is reasonably convenient to both parties and (ii) without notice
except as specified below, sell the Collateral or any part thereof in one or
more parcels at public or private sale, at any of the Lender's offices or
elsewhere, for cash, on credit or for future delivery, and upon such other terms
as the Lender may deem commercially reasonable. The Borrower agrees that, to the
extent notice of sale shall be required by law, at least ten days' notice to the
Borrower of the time and place of any public sale or the time after which any
private sale is to be made shall constitute reasonable notification. The Lender
shall not be obligated to make any sale of Collateral regardless of notice of
sale having been given. The Lender may adjourn any public or private sale from
time to time by announcement at the time and place fixed therefor, and such sale
may, without further notice, be made at the time and place to which it was so
adjourned.
(e) A11 cash proceeds received by the Lender in respect of any
sale of, collection from, or other realization upon all or any part of the
Collateral may, in the discretion of the Lender, be held by the Lender as
collateral for, or then or at any time thereafter applied in whole or in part by
the Lender against, all or any part of the obligations in such order as the
Lender shall elect. Any surplus of such cash or cash proceeds held by the Lender
and remaining after the full and final payment of all the Obligations shall be
paid over to the Borrower or to such other Person to which the Lender may be
required under applicable law, or directed by a court or competent jurisdiction,
to make payment of such surplus.
SECTION 8. MISCELLANEOUS PROVISIONS.
SECTION 8.1. Notices. Except as otherwise provided herein, all
notices, approvals, consents, correspondence or other communications required or
desired to be given hereunder shall he given in writing and shall be delivered
by overnight courier, hand delivery or certified or registered mail, postage
prepaid, if to the Lender, then to 13760 Noel Road, Suite 1100, Dallas, Texas
75420, Attention: Division Operations Manager, with a copy to the Lender at
Riverway II, West Office Tower, 9399 West Higgins Road, Rosemont, Illinois
60018, Attention: Legal Department or such other address as shall be designated
by the Lender to the Borrower. A11 such notices and correspondence shall be
effective when received.
SECTION 8.2. Headings. The headings in this Security Agreement are
for purposes of reference only and shall not affect the meaning or construction
of any provision of this Security Agreement.
SECTION 8.3. Assignments. The Borrower shall not have the right to
assign the Note or this Security Agreement or any interest therein. The Lender
may assign its rights and delegate its obligations under the Note or this
Security Agreement.
SECTION 8.4. Amendments, Waivers and Consents. Any amendment or
waiver of any provision of this Security Agreement and any consent to any
departure by the Borrower from any provision of this Security Agreement shall be
effective only by a writing signed by the Lender and shall bind and benefit the
Borrower and the Lender and their respective successors and assigns, subject, in
the case of the Borrower, to the first sentence of Section 8.3.
-7-
<PAGE>
SECTION 8.5. Interpretation of Agreement. Time is of the essence
in each provision of this Security Agreement of which time is an element. All
terms nor defined herein or in the Note shall have the meaning set forth in the
applicable Code, except where the context otherwise requires. To the extent a
term or provision of this Security Agreement conflicts with the Note and is not
dealt with herein with more specificity, this Security Agreement shall control
with respect to the subject matter of such term or provision. Acceptance of or
acquiescence in a course of performance rendered under this Security Agreement
shall not be relevant in determining the meaning of this Security Agreement even
though the accepting or acquiescing party had knowledge of the nature of the
performance and opportunity for objection.
SECTION 8.6. Continuing Security Interest. This Security Agreement
shall create a continuing security interest in the Collateral and shall (i)
remain in full force and effect until the indefeasible payment in full of the
Obligations, (ii) be binding upon the Borrower and its successors and assigns
and (iii) inure, together with the rights and remedies of the Lender hereunder,
to the benefit of the Lender and its successors, transferees and assigns.
SECTION 8.7. Reinstatement. To the extent permitted by law, this
Security Agreement and the rights and powers granted to the Lender hereunder and
under the Loan Documents shall continue to be effective or be reinstated if at
any time any amount received by the Lender in respect of the Obligations is
rescinded or must otherwise be restored or returned by the Lender upon the
insolvency, bankruptcy, dissolution, liquidation or reorganization of the
Borrower or upon the appointment of any receiver, intervenor, conservator,
trustee or similar official for the Borrower or any substantial part of its
assets, or otherwise, all as though such payments had not been made.
SECTION 8.8. Survival of Provisions. All representations,
warranties and covenants of the Borrower contained herein shall survive the
execution and delivery of this Security Agreement, and shall terminate only upon
the full and final payment and performance by the Borrower of the Obligations
secured hereby.
SECTION 8.9. Indemnification. The Borrower agrees to indemnify and
hold harmless the Lender and its directors, officers, agents, employees and
counsel from and against any and all costs, expenses, claims, or liability
incurred by the Lender or such Person hereunder and under any other Loan
Document or in connection herewith or therewith, unless such claim or liability
shall be due to willful misconduct or gross negligence on the part of the Lender
or such Person.
SECTION 8.10. GOVERNING LAW. THE VALIDITY, INTERPRETATION AND
ENFORCEMENT OF THIS SECURITY AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF ILLINOIS WITHOUT GIVING EFFECT TO THE
CONFLICT OF LAW PRINCIPLES THEREOF.
SECTION 8.11. Venue; Service of Process. ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THIS SECURITY AGREEMENT OR ANY OTHER LOAN DOCUMENT
MAY BE BROUGHT IN THE COURTS OF THE STATE OF ILLINOIS SITUATED IN COOK COUNTY,
OR OF THE UNITED STATES OF AMERICA FOR THE NORTHERN DISTRICT OF ILLINOIS, AND,
BY EXECUTION AND DELIVERY OF THIS SECURITY AGREEMENT, THE BORROWER HEREBY
ACCEPTS FOR ITSELF AND IN RESPECT OF ITS PROPERTY, GENERALLY AND
UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID COURTS. THE BORROWER HEREBY
IRREVOCABLY WAIVES, IN CONNECTION WITH ANY SUCH ACTION OR PROCEEDING, (A) ANY
OBJECTION INCLUDING, WITHOUT LIMITATION, ANY OBJECTION TO THE LAYING OF VENUE OR
BASED ON THE GROUNDS OF FORUM NON CONVENIENS, THAT IT MAY NOW OR HEREAFTER HAVE
TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS AND (B) THE RIGHT TO INTERPOSE ANY NONCOMPULSORY SETOFF,
COUNTERCLAIM OR CROSS-CLAIM. THE BORROWER IRREVOCABLY CONSENTS TO THE SERVICE OF
PROCESS OF ANY OF THE AFOREMENTIONED COURTS IN ANY SUCH ACTION OR PROCEEDING BY
THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE PREPAID,
TO THE BORROWER AT THE ADDRESS FOR IT SPECIFIED IN SECTION 8.1 HEREOF. NOTHING
HEREIN SHALL AFFECT THE RIGHT OF THE LENDER TO SERVE PROCESS IN ANY OTHER MANNER
PERMITTED BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST
THE BORROWER IN ANY OTHER JURISDICTION, SUBJECT IN EACH INSTANCE TO THE
PROVISIONS HEREOF WITH RESPECT TO RIGHTS AND REMEDIES.
SECTION 8.12. Delays; Partial Exercise of Remedies. No delay or
omission of the Lender to exercise any right or remedy hereunder, whether before
or after the happening of any Event of Default, shall impair any such right or
shall operate as a waiver thereof or as a waiver of any such Event of Default.
No single or partial exercise by the
-8-
<PAGE>
Lender of any right or remedy shall preclude any other or further exercise
thereof, or preclude any other right or remedy.
SECTION 8.13. WAIVER OF JURY TRIAL. THE BORROWER AND THE LENDER
IRREVOCABLY WAIVE ALL RIGHT TO TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS SECURITY AGREEMENT, ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
SECTION 8.14. Entire Agreement. The Borrower and the Lender agree
that this Security Agreement and the Schedule hereto are the complete and
exclusive statement and agreement between the parties with respect to the
subject matter hereof, superseding all proposals and prior agreements, oral or
written, and all other communications between the parties with respect to the
subject matter hereof.
IN WITNESS WHEREOF, the undersigned Borrower has caused this
Security Agreement to be duly executed and delivered by its proper and duly
authorized officer as of the date first set forth above.
Holt Cargo Systems, Inc.
------------------------
(Name)
By: /s/ Bernard Gelman
--------------------
Name: Bernard Gelman
Title: Vice President
FED ID NO. 23-1646716
----------
Accepted as of the
31st day of January, 1997
- ---- -------- -
TRANSAMERICA BUSINESS CREDIT CORPORATION
By: /s/ Sean D. McAlister
---------------------
Name: Sean D. McAlister
Title: V.P. Region Credit Manager
CLIENT SERVICES AGREEMENT
This Client Services Agreement ("Agreement") is made by and between S L S
Services. Inc. d/b/a Holt Oversight & Logistical Technologies, Inc. ("HOLT") and
Wilmington Stevedores, Inc. ("WSI") this Tenth day of July, 1995.
Recital
HOLT is engaged in the business of providing to its clients a full complement of
services normally performed by business entities in the conduct of their
affairs.
WSI desires to enter into an agreement with HOLT for the furnishing of such
services required for the conduct of its business activities.
NOW THEREFORE, and in consideration of the premises, the parties agree to as
follows:
1. Purpose. WSI will purchase and HOLT will provide to WSI the services
designated on Exhibit A hereto (hereinafter "Services") and such other
services WSI requests HOLT to perform with respect to the normal business
activities of WSI. In addition to providing the personnel required to
perform the Services, HOLT shall provide all equipment, office computer,
and otherwise necessary to perform the Services.
2. Term. The term of this Agreement shall commence effective the date of
signing and shall continue from year to year unless terminated in
accordance with this Agreement.
3. Independent Contractor. HOLT shall be an independent Contractor in the
performance of its obligations under this Agreement. Any employees of HOLT
who perform Services shall be the employees of HOLT solely and WSI shall
not be a joint employer of any of HOLT's employees. To that end HOLT shall
have the exclusive right and duty to supervise and direct the day to day
activities of its employees, including without limitation, the
responsibility to determine and pay their wages and benefits and to pay all
Federal, State and local taxes or contributions imposed or required under
unemployment, workers' compensation, social security, Medicare, wage and
income tax laws with respect to them. HOLT shall have the sole right to
add, remove or replace any of its employees performing any of the Services.
WSI shall have the right to request HOLT to remove, replace or reassign any
of its personnel based upon a legitimate need to do so but such
determination shall be made in the sole discretion of HOLT.
4. Compensation. As compensation for the Services WSI shall pay a fee to HOLT
equal to Five percent (5%) of WSI's gross revenues. The fee shall be paid
monthly on the 30th day of each month following the month for which such
fee is determined.
5. Consultations. In addition to the Services provided, HOLT shall designate
and make available to meet and consult with the Board of Directors and the
officers of WSI the appropriate personnel at reasonable times concerning
matters pertaining to the organization of WSI's work force, the fiscal
policy of WSI, the relationship of WSI with
1
<PAGE>
its employees or with any organization representing its employees and in general
concerning any material problems arising in connection with the business affairs
of WSI.
6. Standard of Care. HOLT will discharge its obligations under this Agreement
with that level of care which a similarly situated administrative services
provider would exercise under similar circumstances. HOLT shall not be
liable to any party for any mistake of judgment or other action taken in
good faith or for any liability, expense, or loss whatsoever, unless it is
found in a final judgment by a court of competent jurisdiction (not subject
to further appeal) to have resulted directly and solely from the fraud,
criminality, or willful misconduct of HOLT.
7. Insurance. HOLT shall obtain and provide WSI with evidence of comprehensive
General Liability insurance coverage in an amount no less than One Million
Dollars ($1,000,000.00) in which WSI shall be named as an additional
insured. HOLT shall furnish to WSI a Certificate of Insurance evidencing
such insurance coverage which shall be underwritten by an insurance carrier
reasonably satisfactory to WSI and shall maintain such coverage during the
term of this Agreement. Such insurance shall provide that WSI shall be
furnished with thirty (30) days written notice prior to the date of any
cancellation of such coverage.
8. Remedies. Should HOLT become incapable of continuing performance of the
Services, whether due to circumstances within or outside of its control,
WSI may terminate this Agreement. Should WSI be in default of compensation
owing at any time under this Agreement. WSI shall be deemed to be in
default of this Agreement and HOLT has available to it all legal remedies
and process.
9. Termination. This Agreement shall continue until terminated by either party
as herein provided. Besides electing to terminate this Agreement as an
exercise of its remedies as stated above, either party may elect to
terminate this Agreement by giving written notice to the other party as
stated below:
TO WSI: Mr. M. Murphy
President
Wilmington Stevedores, Inc.
601 Christina Avenue
Wilmington, DE 19899
TO HOLT: Mr. Thomas J. Holt, Jr.
President
Holt Oversight & Logistical Technologies
P.O. Box 8268
Philadelphia, PA 19101
Such notice shall be given at least ninety days prior to the proposed
termination of the Agreement. HOLT shall deliver immediately to WSI all of
the records in its possession of WSI pertaining to and related to the
Services. HOLT agrees to keep confidential, and shall not disclose to any
third party or make use of, any information regarding WSI of any nature
which HOLT may acquire during the term of this Agreement. HOLT agrees that
if it violates this provision relating to
2
<PAGE>
confidentiality, the remedy at law for such violation will be inadequate
and that WSI will suffer irreparable harm. Therefore, in addition to any
other remedy which WSI may have under this Agreement, WSI shall be entitled
to apply to any court of competent jurisdiction for equitable relief,
including specific performance and injunctions restraining HOLT from
committing or continuing any such violation of this Agreement without the
necessity of proving actual damages.
10. Entire Agreement. This Agreement constitutes the entire Agreement between
the parties and may not be amended except by an instrument in writing
executed by both of the parties hereto. This Agreement supersedes any and
all written or verbal agreements between the parties.
Attest: SLS Services, Inc.
d/b/a Holt Oversight & Logistical
BY: /s/ John Illegible Technologies, Inc.
-------------------------
BY: /s/ Thomas J. Holt, Sr.
-------------------------------
Date: 7/10/95
-------
Attest: Wilmington Stevedores, Inc.
BY: John Illegible BY: /s/ Illegible
------------------------- -------------------------------
Date: 7/10/95
-------
3
<PAGE>
Exhibit A
Description of Services for Client
Accounting: Preparation and maintenance of books of original entry including
but not limited to, cash receipts journal, cash disbursements journal. purchase
journal, accounts payable journal, payroll journal, sales journal, preparation
and maintenance intermediate books of entry, final book of entry i.e. general
ledger; preparation of monthly trial balances and financial statements (balance
sheet, statement of income and retained earnings and source and use of cash), if
needed, but in no event not less than on a quarterly basis, no less then sixty
(60) days after the end of the first three quarters of a year and one hundred
twenty (120) days after the end of the fiscal year; processing of sales
invoices, mailing to customers, collection of payments due and deposit of
collections into client's bank account as designated.
Management Information Processing: Collection, assembly and computer processing
of data dealing with, but not limited to, and necessary to perform the
accounting services described herein; preparation of operational reports as
required by client's customers including, but not limited to, inventory reports,
productivity reports; the writing and periodic review of computer programs
necessary, and the acquisition and maintenance of any and all computer equipment
necessary to accomplish the management information processing functions
contemplated herein and the professional training of staff so that the
management information processing functions can be completed in a professional
and competent manner.
Insurance: Review of property, personal injury, business and financial risks
normally associated with operations engaged in by client and the procurement
of insurance coverage with reputable insurance companies to cover such risks
and limit client's financial risk therefore; investigation, processing
settlement the providing of assistance to counsel of insurance carriers and the
communication to underwriters of personal injury and property claims;
investigation, processing, coordinating with outside counsel for the defense of
workmen's compensation claims.
Marketing: Identifying and soliciting potential customers for client; traveling
to potential market areas to meet with prospective customers for client; quoting
and negotiating of rates and follow-up with customers to insure customer
satisfaction.
4
CLIENT SERVICES AGREEMENT
This Client Services Agreement ("Agreement") is made by and between S L S
Services, Inc. d/b/a Holt Oversight & Logistical Technologies, Inc. ("HOLT") and
Holt Cargo Systems, Inc. ("HCS") this First day of April, 1994.
Recital
HOLT is engaged in the business of providing to its clients a full
complement of services normally performed by business entities in the conduct of
their affairs.
HCS desires to enter into an agreement with HOLT for the furnishing of such
services required for the conduct of its business activities.
NOW THEREFORE, and in consideration of the premises, the parties agree to as
follows:
1. Purpose. HCS will purchase and HOLT will provide to HCS the services
designated on Exhibit A hereto and such other services HCS requests
HOLT to perform with respect to the normal business activities of HCS.
In addition to providing the personnel required to perform the
Services, HOLT shall provide all equipment, office, computer, and
otherwise necessary to perform the Services.
2. Term. The term of this Agreement shall commence effective the date of
signing and shall continue from year to year unless terminated in
accordance with this Agreement.
3. Independent Contractor. HOLT shall be an independent Contractor in the
performance of its obligations under this Agreement. Any employees of
HOLT who perform Services shall be the employees of HOLT solely and
HCS shall not be a joint employer of any of HOLT's employees. To that
end HOLT shall have the exclusive right and duty to supervise and
direct the day to day activities of its employees, including without
limitation, the responsibility to determine and pay their wages and
benefits and to pay all Federal, State and local taxes or
contributions imposed or required under unemployment, workers'
compensation, social security, Medicare, wage and income tax laws with
respect to them. HOLT shall have the sole right to add, remove or
replace any of its employees performing any of the Services. HCS shall
have the right to request HOLT to remove, replace or reassign any of
its personnel based upon a legitimate need to do so but such
determination shall be made in the sole discretion of HOLT.
1
<PAGE>
4. Compensation. As compensation for the Services HCS shall pay a fee to
HOLT equal to Five percent (5%) of HCS' gross revenues. The fee shall
be paid monthly on the 30th day of each month following the month for
which such fee is determined.
5. Consultations. In addition to the Services provided, HOLT shall
designate and make available to meet and consult with the Board of
Directors and the officers of HCS the appropriate personnel to at
reasonable times concerning matters pertaining to the organization of
HCS' work force, the fiscal policy of HCS, the relationship of HCS
with its employees or with any organization representing its employees
and in general concerning any material problems arising in connection
with the business affairs of HCS.
6. Standard of Care. HOLT will discharge its obligations under this
Agreement with that level of care which a similarly situated
administrative services provider would exercise under similar
circumstances. HOLT shall not be liable to any party for any mistake
of judgment or other action taken in good faith or for any liability
expense or loss whatsoever, unless it is found in a final judgment by
a court of competent jurisdiction (not subject to further appeal) to
have resulted directly and solely from the fraud criminality or
willful misconduct of HOLT.
7. Insurance. HOLT shall obtain and provide HCS with evidence of
comprehensive General Liability insurance coverage in an amount no
less than One Million Dollars ($1,000,000.00) in which HCS shall be
named as an additional insured. HOLT shall furnish to HCS a
Certificate of Insurance evidencing such insurance coverage which
shall be underwritten by an insurance carrier reasonably satisfactory
to HCS and shall maintain such coverage during the term of this
Agreement. Such insurance shall provide that HCS shall be furnished
with thirty (30) days written notice prior to the date of any
cancellation of such coverage.
8. Remedies. Should HOLT become incapable of continuing performance of
the Services, whether due to circumstances within or outside of its
control, HCS may terminate this Agreement. Should HCS be in default of
compensation owing at any time under this Agreement, HCS shall be
deemed to be in default of this Agreement and HOLT has available to it
all legal remedies and process.
9. Termination This Agreement shall continue until terminated by either
party as herein provided. Besides electing to terminate this Agreement
as an exercise of its remedies as stated above, either party may elect
to terminate this Agreement by giving written notice to the other
party as stated below:
TO HCS: Mr. Thomas J. Holt, Sr.
President
Holt Cargo Systems, Inc.
P.O. Box 8698
Phila., PA, 19101
TO: HOLT: Mr. Thomas J. Holt, Jr.
President
2
<PAGE>
Holt Oversight & Logistical Technologies
PO Box 8268
Phila., PA 19101
Such notice shall be given at least ninety days prior to the proposed
termination of the Agreement. HOLT shall deliver immediately to HCS
all of the records in its possession of HCS pertaining to and related
to the Services. HOLT agrees to keep confidential, and shall not
disclose to any third party or make use of, any information regarding
HCS of any nature which HOLT may acquire during the term of this
Agreement. HOLT agrees that if it violates this provision relating to
confidentiality, the remedy at law for such violation will be
inadequate and that HCS will suffer irreparable harm. Therefore, in
addition to any other remedy which HCS may have under this Agreement,
HCS shall be entitled to apply to any court of competent jurisdiction
for equitable relief, including specific performance and injunctions
restraining HOLT from committing or continuing any such violation of
this Agreement without the necessity of proving actual damages.
10. Entire Agreement This Agreement constitutes the entire Agreement
between the parties and may not be amended except by an instrument in
writing executed by both of the parties hereto. This Agreement
supersedes any and all written or verbal agreements between the
parties.
Attest: SLS Services, Inc
-------------------------- d/b/a Holt Oversight & Logistical
Technologies, Inc.
BY: BY: /s/ Thomas J. Holt, Jr.
----------------------------- ------------------------------
Date: 04/01/94
----------------------------
Attest: Holt Cargo Systems, Inc.
--------------------------
BY: BY:
------------------------------ ------------------------------
Date: 04/01/94
----------------------
3
<PAGE>
Exhibit A
Description of Services for Client
Accounting: Preparation and maintenance of books of original entry
including but not limited to, cash receipts journal, cash disbursements journal,
purchase journal, accounts payable journal, payroll journal, sales journal,
preparation and maintenance intermediate books of entry, final book of entry
i.e. general ledger; preparation of monthly trial balances and financial
statements (balance sheet, statement of income and retained earnings and source
and use of cash), if needed, but in not event not less than on a quarterly
basis, no less than sixty (60) days after the end of the first three quarters of
a year and one hundred twenty (120) days after the end of the fiscal year;
processing of sales invoices, mailing to customers, collection of payments due
and deposit of collections into client's bank account as designated.
Management Information Processing: Collection, assembly and computer
processing of data dealing with, but not limited to, necessary to perform the
accounting services described herein; as required by client's customers
including, but no limited to, inventory reports, productivity reports; the
writing and periodic review of computer programs necessary to accomplish the
management information processing functions contemplated herein; the acquisition
and maintenance of any and all computer equipment necessary to accomplish the
management information processing functions contemplated herein and the
professional training of staff so that the management information processing
functions can be completed in a professional and competent manner.
Insurance: Review of property, personal injury, business and financial risks
normally associated with operations engaged in by client and the procurement of
insurance coverage with reputable insurance companies to cover such risks and
limit client's financial risk therefore: investigation, processing settlement
the providing of assistance to counsel of insurance carriers and the
communication to underwriters of personal injury and property claims;
investigation, processing, coordinating with outside counsel for the defense of
workmen's compensation claims.
Marketing. Identifying and soliciting potential customers for client; traveling
to potential market areas to meet with prospective customers for client; quoting
and negotiating of rates and follow-up with customers to insure customer
satisfaction.
4
CLIENT SERVICES AGREEMENT
This Client Services Agreement ("Agreement") is made by and between S L S
Services, Inc. d/b/a Holt Oversight & Logistical Technologies, Inc. ("HOLT") and
Holt Hauling & Warehousing Systems, Inc. ("HHW") this First day of April, 1994.
Recital
HOLT is engaged in the business of providing to its clients a full
complement of services normally performed by business entities in the conduct
of their affairs.
HHW desires to enter into an agreement with HOLT for the furnishing of such
services required for the conduct of its business activities.
NOW THEREFORE, and in consideration of the premises, the parties agree to as
follows:
1. Purpose. HHW will purchase and HOLT will provide to HHW the services
designated on Exhibit A hereto and such other services HHW requests
HOLT to perform with respect to the normal business activities of HHW.
In addition to providing the personnel required to perform the
Services, HOLT shall provide all equipment, office, computer, and
otherwise necessary to perform the Services.
2. Term. The term of this Agreement shall commence effective the date of
signing and shall continue from year to year unless terminated in
accordance with this Agreement.
3. Independent Contractor. HOLT shall be an independent Contractor in the
performance of its obligations under this Agreement. Any employees of
HOLT who perform Services shall be the employees of HOLT solely and
HHW shall not be a joint employer of any of HOLT's employees. To that
end HOLT shall have the exclusive right and duty to supervise and
direct the day to day activities of its employees, including without
limitation, the responsibility to determine and pay their wages and
benefits and to pay all Federal, State and local taxes or
contributions imposed or required under unemployment, workers'
compensation, social security, Medicare, wage and income tax laws with
respect to them. HOLT shall have the sole right to add, remove or
replace any of its employees performing any of the Services. HHW shall
have the right to request HOLT to remove, replace or reassign any of
its personnel based upon a legitimate need to do so but such
determination shall be made in the sole discretion of HOLT.
1
<PAGE>
4. Compensation. As compensation for the Services HHW shall pay a fee to
HOLT equal to Four percent (4%) of HHW' gross revenues. The fee shall
be paid monthly on the 30th day of each month following the month for
which such fee is determined.
5. Consultations. In addition to the Services provided, HOLT shall
designate and make available to meet and consult with the Board of
Directors and the officers of HHW the appropriate personnel to at
reasonable times concerning matters pertaining to the organization of
HHW' work force, the fiscal policy of HHW, the relationship of HHW
with its employees or with any organization representing its employees
and in general concerning any material problems arising in connection
with the business affairs of HHW.
6. Standard of Care. HOLT will discharge its obligations under this
Agreement with that level of care which a similarly situated
administrative services provider would exercise under similar
circumstances. HOLT shall not be liable to any party for any mistake
of judgment or other action taken in good faith or for any liability
expense or loss whatsoever, unless it is found in a final judgment by
a court of competent jurisdiction (not subject to further appeal) to
have resulted directly and solely from the fraud criminality or
willful misconduct of HOLT.
7. Insurance. HOLT shall obtain and provide HHW with evidence of
comprehensive General Liability insurance coverage in an amount no
less than One Million Dollars ($1,000,000.00) in which HHW shall be
named as an additional insured. HOLT shall furnish to HHW a
Certificate of Insurance evidencing such insurance coverage which
shall be underwritten by an insurance carrier reasonably satisfactory
to HHW and shall maintain such coverage during the term of this
Agreement. Such insurance shall provide that HEW shall be furnished
with thirty (30) days written notice prior to the date of any
cancellation of such coverage.
8. Remedies. Should HOLT become incapable of continuing performance of
the Services, whether due to circumstances within or outside of its
control, HHW may terminate this Agreement. Should HHW be in default of
compensation owing at any time under this Agreement, HHW shall be
deemed to be in default of this Agreement and HOLT has available to it
all legal remedies and process.
9. Termination. This Agreement shall continue until terminated by either
party as herein provided. Besides electing to terminate this Agreement
as an exercise of its remedies as stated above, either party may elect
to terminate this Agreement by giving written notice to the other
party as stated below:
TO HHW: Mr. Thomas J. Holt, Sr.
President
Holt Hauling & Warehousing Systems, Inc.
P.O. Box 8698
Phil., PA, 19101
TO: HOLT: Mr. Thomas J. Holt, Jr.
2
<PAGE>
President
Holt Oversight & Logistical Technologies
P.O. Box 8268
Phil., PA 19101
Such notice shall be given at least ninety days prior to the proposed
termination of the Agreement. HOLT shall deliver immediately to HHW
all of the records in its possession of HHW pertaining to and related
to the Services. HOLT agrees to keep confidential, and shall not
disclose to any third party or make use of, any information regarding
HHW of any nature which HOLT may acquire during the term of this
Agreement. HOLT agrees that if it violates this provision relating to
confidentiality, the remedy at law for such violation will be
inadequate and that HHW will suffer irreparable harm. Therefore, in
addition to any other remedy which HHW may have under this Agreement,
HEW shall be entitled to apply to any court of competent jurisdiction
for equitable relief, including specific performance and injunctions
restraining HOLT from committing or continuing any such violation of
this Agreement without the necessity of proving actual damages.
10. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties and may not be amended except by an instrument in
writing executed by both of the parties hereto. This Agreement
supersedes any and all written or verbal agreements between the
parties.
Attest: [Illegible] SLS Services, Inc
-------------------------- d/b/a Holt Oversight & Logistical
Technologies, Inc.
BY: BY: Thomas J. Holt, Jr.
----------------------------- -----------------------------
Date: 04/01/94
----------------------------
Attest: Holt Hauling and Warehousing
-------------------------- Systems, Inc.
BY: [Illegible] BY:
------------------------------ ------------------------------
Date: 04/01/94
----------------------------
3
<PAGE>
Exhibit A
Description of Services for Client
Accounting: Preparation and maintenance of books of original entry
including but not limited to, cash receipts journal, cash disbursements journal,
purchase journal, accounts payable journal, payroll journal, sales journal,
preparation and maintenance intermediate books of entry, final book of entry
i.e. general ledger; preparation of monthly trial balances and financial
statements (balance sheet, statement of income and retained earnings and source
and use of cash), if needed, but in not event not less than on a quarterly
basis, no less then sixty (60) days after the end of the first three quarters of
a year and one hundred twenty (120) days after the end of the fiscal year;
processing of sales invoices, mailing to customers, collection of payments due
and deposit of collections into client's bank account as designated.
Management Information Processing: Collection, assembly and computer
processing of data dealing with, but not limited to, necessary to perform the
accounting services described herein; as required by client's customers
including, but no limited to, inventory reports, productivity reports; the
writing and periodic review of computer programs necessary to accomplish the
management information processing functions contemplated herein; the acquisition
and maintenance of any and all computer equipment necessary to accomplish the
management information processing functions contemplated herein and the
professional training of staff so that the management information processing
functions can be completed in a professional and competent manner.
Insurance: Review of property, personal injury, business and financial
risks normally associated with operations engaged in by client and the
procurement of insurance coverage with reputable insurance companies to cover
such risks and limit client's financial risk therefore: investigation.
processing settlement the providing of assistance to counsel of insurance
carriers and the communication to underwriters of personal injury and property
claims; investigation, processing, coordinating with outside counsel for the
defense of workmen's compensation claims.
Marketing: Identifying and soliciting potential customers for client;
traveling to potential market areas to meet with prospective customers for
client; quoting and negotiating of rates and follow-up with customers to
insure customer satisfaction.
4
CLIENT SERVICES AGREEMENT
This Client Services Agreement ("Agreement") is made by and between S L S
Services, Inc. d/b/a Holt Oversight & Logistical Technologies, Inc. ("HOLT") and
Murphy Marine Services, Inc. ("MURPHY") this First day of July, 1994.
Recital
HOLT is engaged in the business of providing to its clients a full complement of
services normally performed by business entities in the conduct of their
affairs.
MURPHY desires to enter into an agreement with HOLT for the furnishing of such
services required for the conduct of its business activities.
NOW THEREFORE, and in consideration of the premises, the parties agree to as
follows:
1. Purpose. MURPHY will purchase and HOLT will provide to MURPHY the
services designated on Exhibit A hereto (hereinafter "Services") and
such other services MURPHY requests HOLT to perform with respect to
the normal business activities of MURPHY. In addition to providing the
personnel required to perform the Services, HOLT shall provide all
equipment, office computer, and otherwise necessary to perform the
Services.
2. Term. The term of this Agreement shall commence effective the date of
signing and shall continue from year to year unless terminated in
accordance with this Agreement.
3. Independent Contractor. HOLT shall be an independent Contractor in the
performance of its obligations under this Agreement. Any employees of
HOLT who perform Services shall be the employees of HOLT solely and
MURPHY shall not be a joint employer of any of HOLT's employees. To
that end HOLT shall have the exclusive right and duty to supervise and
direct the day to day activities of its employees, including without
limitation, the responsibility to determine and pay their wages and
benefits and to pay all Federal, State and local taxes or
contributions imposed or required under unemployment, workers'
compensation, social security, Medicare, wage and income tax laws with
respect to them. HOLT shall have the sole right to add, remove or
replace any of its employees performing any of the Services. MURPHY
shall have the right to request HOLT to remove, replace or reassign
any of its personnel based upon a legitimate need to do so but such
determination shall be made in the sole discretion of HOLT.
4. Compensation. As compensation for the Services MURPHY shall pay a fee
to HOLT equal to Five (5)% of MURPHY's gross revenues. The fee shall
be paid monthly on the 30th day of each month following the month for
which such fee is determined.
5. Consultations. In addition to the Services provided, HOLT shall
designate and make available to meet and consult with the Board of
Directors and the officers of MURPHY the appropriate personnel at
reasonable times concerning matters pertaining to the organization of
MURPHY's work force, the fiscal policy of MURPHY, the
1
<PAGE>
relationship of MURPHY with its employees or with any organization
representing its employees and in general concerning any material
problems arising in connection with the business affairs of MURPHY.
6. Standard of Care. HOLT will discharge its obligations under this
Agreement with that level of care which a similarly situated
administrative services provider would exercise under similar
circumstances. HOLT shall not be liable to any party for any mistake
of judgment or other action taken in good faith or for any liability,
expense, or loss whatsoever, unless it is found in a final judgment by
a court of competent jurisdiction (not subject to further appeal) to
have resulted directly and solely from the fraud, criminality, or
willful misconduct of HOLT.
7. Insurance. HOLT shall obtain and provide MURPHY with evidence of
comprehensive General Liability insurance coverage in an amount no
less than One Million Dollars ($1,000,000.00) in which MURPHY shall be
named as an additional insured. HOLT shall furnish to MURPHY a
Certificate of Insurance evidencing such insurance coverage which
shall be underwritten by an insurance carrier reasonably satisfactory
to MURPHY and shall maintain such coverage during the term of this
Agreement. Such insurance shall provide that MURPHY shall be furnished
with thirty (30) days written notice prior to the date of any
cancellation of such coverage.
8. Remedies. Should HOLT become incapable of continuing performance of
the Services, whether due to circumstances within or outside of its
control, MURPHY may terminate this Agreement. Should MURPHY be in
default of compensation owing at any time under this Agreement, MURPHY
shall be deemed to be in default of this Agreement and HOLT has
available to it all legal remedies and process.
9. Termination. This Agreement shall continue until terminated by either
party as herein provided. Besides electing to terminate this Agreement
as an exercise of its remedies as stated above, either party may elect
to terminate this Agreement by giving written notice to the other
party as stated below:
TO MURPHY: Mr. M. Murphy
President
Murphy Marine Services, Inc.
P. O. Box 208
Wilmington, DE 19899
TO: HOLT: Mr. Thomas J. Holt, Jr.
President
Holt Oversight & Logistical Technologies
P.O. Box 8268
Philadelphia., PA 19101
Such notice shall be given at least ninety days prior to the proposed
termination of the Agreement. HOLT shall deliver immediately to MURPHY all of
the records in its possession of MURPHY pertaining to and related to the
Services. HOLT agrees to keep confidential, and shall not disclose to any third
party or make use of, any information regarding MURPHY of any nature which
2
<PAGE>
HOLT may acquire during the term of this Agreement. HOLT agrees that
if it violates this provision relating to confidentiality, the remedy
at law for such violation will be inadequate and that MURPHY will
suffer irreparable harm. Therefore, in addition to any other remedy
which MURPHY may have under this Agreement, MURPHY shall be entitled
to apply to any court of competent jurisdiction for equitable relief
including specific performance and injunctions restraining HOLT from
committing or continuing any such violation of this Agreement without
the necessity of proving actual damages.
10. Entire Agreement. This Agreement constitutes the entire Agreement
between the parties and may not be amended except by an instrument in
writing executed by both of the parties hereto. This Agreement
supersedes any and a written or verbal agreements between the parties.
Attest: SLS Services, Inc.
d/b/a Holt Oversight & Logistical
BY: /s/ John ????? Technologies, Inc.
-------------------------
BY: /s/ ??????????????
---------------------------------
Date: July 1, 1994
-------------------------------
Attest: Murphy Marine Services, Inc.
BY: /s/ ???????????? BY: /s/ ???????????????
------------------------- ----------------------------------
Date: July 1, 1994
--------------------------------
3
<PAGE>
Exhibit A
Description of Services for Client
Accounting: Preparation and maintenance of books of original entry including but
not limited to, cash receipts journal, cash disbursements journal, purchase
journal, accounts payable journal, payroll journal, sales journal, preparation
and maintenance intermediate books of entry, final book of entry i.e. general
ledger; preparation of monthly trial balances and financial statements (balance
sheet, statement of income and retained earnings and source and use of cash), if
needed, but in not event not less than on a quarterly basis, no less then sixty
(60) days after the end of the first three quarters of a year and one hundred
twenty (120) days after the end of the fiscal year; processing of sales
invoices, mailing to customers, collection of payments due and deposit of
collections into client's bank account as designated.
Management Information Processing: Collection, assembly and computer processing
of data dealing with, but not limited to, and necessary to perform the
accounting services described herein; preparation of operational reports as
required by client's customers including, but not limited to, inventory,
reports, productivity reports; the writing and periodic review of computer
programs necessary, and the acquisition and maintenance of any and all computer
equipment necessary to accomplish the management information processing
functions contemplated herein and the professional training of staff so that the
management information processing functions can be completed in a professional
and competent manner.
Insurance: Review of property, personal injury, business and financial risks
normally associated with operations engaged in by client and the procurement of
insurance coverage with reputable insurance companies to cover such risks and
limit client's financial risk therefore; investigation processing settlement the
providing of assistance to counsel of insurance carriers and the communication
to underwriters of personal injury and property claims investigation,
processing, coordination with outside counsel for the defense of workmen's
compensation claims.
Marketing. Identifying and soliciting potential customers for client; traveling
to potential market areas to meet with prospective customers for client; quoting
and negotiating of rates and follow-up with customers to insure customer
satisfaction.
4
CLIENT SERVICES AGREEMENT
This Client Services Agreement ("Agreement") is made by and between S L S
Services, Inc. d/b/a Holt Oversight & Logistical Technologies, Inc. ("HOLT") and
The Riverfront Development Corporation, Inc. ("Riverfront") this First day of
April, 1994.
Recital
HOLT is engaged in the business of providing to its clients a full complement of
services normally performed by business entities in the conduct of their
affairs.
RIVERFRONT desires to enter into an agreement with HOLT for the furnishing of
such services required for the conduct of its business activities.
NOW THEREFORE, and in consideration of the premises, the parties agree to
as follows:
1. Purpose. RIVERFRONT will purchase and HOLT will provide to RIVERFRONT
the services designated on Exhibit A hereto and such other services
RIVERFRONT requests HOLT to perform with respect to the normal
business activities of RIVERFRONT. In addition to providing the
personnel required to perform the Services, HOLT shall provide all
equipment, office, computer, and otherwise necessary to perform the
Services.
2. Term. The term of this Aareement shall commence effective the date of
signing and shall continue from year to year unless terminated in
accordance with this Agreement.
3. Independent Contractor. HOLT shall be an independent Contractor in the
performance of its obligations under this Agreement. Any employees of
HOLT who perform Services shall be the employees of HOLT solely and
RIVERFRONT shall not be a joint employer of any of HOLT's employees.
To that end HOLT shall have the exclusive right and duty to supervise
and direct the day to day activities of its employees, including
without limitation, the responsibility to determine and pay their
wages and benefits and to pay all Federal, State and local taxes or
contributions imposed or required under unemployment, workers'
compensation, social security, Medicare, wage and income tax laws with
respect to them. HOLT shall have the sole right to add, remove or
replace any of its employees performing any of the Services.
RIVERFRONT shall have the right to request HOLT to remove, replace or
reassign any of its personnel based upon a legitimate need to do so
but such determination shall be made in the sole discretion of HOLT.
1
<PAGE>
4. Compensation. As compensation for the Services RIVERFRONT shall pay a
fee to HOLT equal to Four percent (4%) of RIVERFRONT's gross revenues.
The fee shall be paid monthly on the 30th day of each month following
the month for which such fee is determined.
5. Consultations. In addition to the Services provided, HOLT shall
designate and make available to meet and consult with the Board of
Directors and the officers of RIVERFRONT the appropriate personnel to
at reasonable times concerning matters pertaining to the organization
of RIVERFRONT's work force, the fiscal policy of RIVERFRONT, the
relationship of RIVERFRONT with its employees or with any organization
representing its employees and in general concerning any material
problems arising in connection with the business affairs of
RIVERFRONT.
6. Standard of Care. HOLT will discharge its obligations under this
Agreement with that level of care which a similarly situated
administrative services provider would exercise under similar
circumstances. HOLT shall not be liable to any party for any mistake
of judgment or other action taken in good faith or for any liability
expense or loss whatsoever, unless it is found in a final judgment by
a court of competent jurisdiction (not subject to further appeal) to
have resulted directly and solely from the fraud criminality or
willful misconduct of HOLT.
7. Insurance. HOLT shall obtain and provide RIVERFRONT with evidence of
comprehensive General Liability insurance coverage in an amount no
less than One Million Dollars ($1,000,000.00) in which RIVERFRONT
shall be named as an additional insured. HOLT shall furnish to
RIVERFRONTT a Certificate of Insurance evidencing such insurance
coverage which shall be underwritten by an insurance carrier
reasonably satisfactory to RIVERFRONT and shall maintain such coverage
during the term of this Agreement. Such insurance shall provide that
RIVERFRONT shall be furnished with thirty (30) days written notice
prior to the date of any cancellation of such coverage.
8. Remedies. Should HOLT become incapable of continuing performance of
the Services, whether due to circumstances within or outside of its
control, RIVERFRONT may terminate this Agreement. Should RIVERYRONT be
in default of compensation owing at any time under this Agreement,
RIVERFRONT shall be deemed to be in default of this Agreement and HOLT
has available to it all legal remedies and process.
9. Termination. This Agreement shall continue until terminated by either
party as herein provided. Besides electing to terminate this Agreement
as an exercise of its remedies as stated above, either party may elect
to terminate this Agreement by giving written notice to the other
party as stated below:
TO RIVERFRONT: Mr. Thomas J. Holt, Sr,
President
The Riverfront Development Corporation
701 N. Broadway Ave.,
Gloucester City, NJ 08030
2
<PAGE>
TO: HOLT: Mr. Thomas J. Holt, Jr.
President
Holt Oversight & Logistical Technologies
PO Box 8268
Phil., PA 19101
Such notice shall be given at least ninety days prior to the proposed
termination of the Agreement. HOLT shall deliver immediately to
RIVERFRONT all of the records in its possession of RIVERFRONT
pertaining to and related to the Services. HOLT agrees to keep
confidential, and shall not disclose to any third party or make use
of, any information regarding RIVERFRONT of any nature which HOLT may
acquire during the term of this Agreement. HOLT agrees that if it
violates this provision relating to confidentiality, the remedy at law
for such violation will be inadequate and that RIVERFRONT will suffer
irreparable harm. Therefore, in addition to any other remedy which
RIVERFRONT may have under this Agreement, RIVERFRONT shall be entitled
to apply to any court of competent jurisdiction for equitable relief,
including specific performance and injunctions restraining HOLT from
committing or continuing any such violation of this Agreement without
the necessity of proving actual damages.
10. Entire Agreement This Agreement constitutes the entire Agreement
between the parties and may not be amended except by an instrument in
writing executed by both of the parties hereto. This Agreement
supersedes any and all written or verbal agreements between the
parties.
Attest: SLS Services, Inc
--------------------------- d/b/a Hol t Oversight & Logistical
BY: /s/ Shirley A. Watson Technologies, Inc.
------------------------------
BY:/s/ Thomas J. Holt, Jr.
-------------------------------
Date: April 1, 994
-----------------------------
Attest: Shirley A. Watson The Riverfront Development
--------------------------- Corporation, Inc.
BY: BY: ????????????
------------------------------- ------------------------
Date: April 1, 994
-----------------------------
3
<PAGE>
Exhibit A
Description of Services for Client
Accounting: Preparation and maintenance of books of original entry including but
not limited to, cash receipts journal, cash disbursements journal, purchase
journal, accounts payable journal, payroll journal, sales journal, preparation
and maintenance intermediate books of entry, final book of entry i.e. general
ledger, preparation of monthly trial balances and financial statements (balance
sheet, statement of income and retained earnings and source and use of cash), if
needed, but in not event not less than on a quarterly basis, no less then sixty
(60) days after the end of the first three quarters of a year and one hundred
twenty (120) days after the end of the fiscal year, processing of sales
invoices, mailing to customers, collection of payments due and deposit of
collections into client's bank account as designated.
Management Information Processing: Collection, assembly and computer processing
of data dealing with but not limited to, necessary to perform the accounting
services described herein; as required by client's customers including, but no
limited to. inventory reports, productivity reports; the writing and periodic
review of computer programs necessary to accomplish the management information
processing functions contemplated herein; the acquisition and maintenance of any
and all computer equipment necessary to accomplish the management information
processing functions contemplated herein and the professional training of staff
so that the management information processing functions can be completed in a
professional and competent manner.
Insurance: Review of property, personal injury, business and financial risks
normally associated with operations engaged in by client and the procurement of
insurance coverage with reputable insurance companies to cover such risks and
limit client's financial risk therefore; investigation, processing settlement
the providing of assistance to counsel of insurance carriers and the
communication to underwriters of personal injury and property claims;
investigation, processing, coordinating with outside counsel for the defense of
workmen's compensation claims,
Marketing. Identifying and soliciting potential customers for client; traveling
to potential market areas to meet with prospective customers for client; quoting
and negotiating of rates and follow-up with customers to insure customer
satisfaction.
4
AMENDMENT NO. 1 TO CLIENT SERVICES AGREEMENTS
This AMENDMENT NO. 1 TO CLIENT SERVICES AGREEMENTS (this "First Amendment")
is made this ____ day of January, 1998 by and among SLS SERVICES, INC. d/b/a
HOLT OVERSIGHT AND LOGISTICAL TECHNOLOGIES, INC. ("SLS") and HOLT CARGO SYSTEMS,
INC. ("HCS"), HOLT HAULING AND WAREHOUSING SYSTEM, INC. ("HHW"), MURPHY MARINE
SERVICES, INC. ("MURPHY"), THE RIVERFRONT DEVELOPMENT CORPORATION
("Riverfront"), and WILMINGTON STEVEDORES, INC. (WSI) (collectively, "the Holt
Companies").
BACKGROUND
On April 1, 1994, SLS and HCS entered into a Client Services Agreement (the
"HCS Agreement"). On April 1, 1994, SLS and HHW entered into a Client Services
Agreement the "HHW Agreement"). On April 1, 1994, SLS and Riverfront entered
into a Client Services Agreement (the "Riverfront Agreement"). On July 1, 1994,
SLS and MURPHY entered into a Client Services Agreement (the "MURPHY
Agreement"). On July 10, 1995, SLS and WSI entered into a Client Services
Agreement (the "WSI Agreement").
Pursuant to these five Client Services Agreements (collectively, the
"Agreements") SLS furnishes certain services required by the Holt Companies for
the conduct of their business activities, as more particularly set forth
therein.
The parties desire to amend the Agreements, as more particularly set forth
herein below, in order to extend the term of the Agreements.
In conjunction with the extension of the Agreements, SLS is willing to
agree to certain restrictions on SLS's rights to license certain software to
competitors of the Holt Companies, as more particularly described within.
NOW, THEREFORE, in consideration of the extension of the Agreements and
other good and valuable consideration, the receipt of which is hereby
acknowledged, and intending to be legally bound hereby, the parties hereto agree
as follows:
1. Term Amendment. SLS and the Holt Companies hereby substitute and amend
Paragraph 2 of the Agreements to read as follows:
"2. Term. The term of this Agreement shall commence effective the date
of signing, and shall expire December 31, 2002."
2. Exclusive License
a. SLS and HCS hereby amend the HCS Agreement to add a new paragraph 5A
to read as follows:
1
<PAGE>
"5A. Exclusive License SLS covenants and agrees that during the Term of
the Agreement, it shall not, without the prior consent of the HCS,
license its Computer Tracking System ("CTS") software or Computer
Container System software to any person or entity which competes with
the HCS, provided however that nothing contained in this Section 5A will
restrict the ability of SLS to license CTS and the Computer Container
System software to any current or future affiliate of HCS."
b. SLS and HHW hereby amend the HHW Agreement to add a new paragraph 5A
to read as follows:
"5A. Exclusive License SLS covenants and agrees that during the Term of
the Agreement, it shall not, without the prior consent of the HHW,
license its Computer Tracking System ("CTS") software or Computer
Container System software to any person or entity which competes with
the HHW, provided however that nothing contained in this Section 5A will
restrict the ability of SLS to license CTS and the Computer Container
System software to any current or future affiliate of HHW."
c. SLS and Riverfront hereby amend the Riverfront Agreement to add a new
paragraph 5A to read as follows:
"5A. Exclusive License SLS covenants and agrees that during the Term of
the Agreement, it shall not, without the prior consent of the
Riverfront, license its Computer Tracking System ("CTS") software or
Computer Container System software to any person or entity which
competes with the Riverfront, provided however that nothing contained in
this Section 5A will restrict the ability of SLS to license CTS and the
Computer Container System software to any current or future affiliate of
Riverfront."
d. SLS and MURPHY hereby amend the MURPHY Agreement to add a new paragraph
5A to read as follows:
"5A. Exclusive License SLS covenants and agrees that during the Term of
the Agreement, it shall not, without the prior consent of the MURPHY,
license its Computer Tracking System ("CTS") software or Computer
Container System software to any person or entity which competes with
the MURPHY, provided however that nothing contained in this Section 5A
will restrict the ability of SLS to license CTS and the Computer
Container System software to any current or future affiliate of MURPHY."
-2-
<PAGE>
e. SLS and WSI hereby amend the WSI Agreement to add a new paragraph 5A
to read as follows:
"5A. Exclusive License SLS covenants and agrees that during the Term of
the Agreement, it shall not, without the prior consent of the WSI,
license its Computer Tracking System ("CTS") software or Computer
Container System software to any person or entity which competes with
the WSI, provided however that nothing contained in this Section 5A will
restrict the ability of SLS to license CTS and the Computer Container
System software to any current or future affiliate of WSI."
3. Confirmation of Agreement. Except as amended or supplemented by this
First Amendment, the Agreements are in all respects ratified and confirmed and
continue in full force and effect, and as so amended and supplemented, all of
the rights, remedies, terms, conditions, covenants and agreements contained in
the Agreements shall apply and remain in full force and effect.
4. Governing Law. This First Amendment shall be governed by and interpreted
and enforced in accordance with the substantive laws of the Commonwealth of
Pennsylvania without regard to the conflicts of law doctrine thereof.
IN WITNESS WHEREOF, the parties hereto have duly executed this Amendment
No. 1 to Client Services Agreements on the date first written above.
Attest: SLS SERVICES, INC.
d/b/a Holt Oversight & Logistical
Technologies, Inc.
By: /s/ John A. Evans By: /s/ Thomas J. Holt, Jr.
------------------------- -------------------------------
Name: John A. Evans Name: Thomas J. Holt, Jr.
Title: Secretary Title: President
Attest: HOLT CARGO SYSTEMS, INC.
By: /s/ John A. Evans By: /s/ Thomas J. Holt, Sr.
------------------------- -------------------------------
Name: John A. Evans Name: Thomas J. Holt, Sr.
Title: Secretary Title: President
[EXECUTIONS CONTINUED]
-3-
<PAGE>
Attest: HOLT HAULING AND WAREHOUSING
SYSTEM, INC.
By: /s/ John A. Evans By: /s/ Thomas J. Holt, Sr.
------------------------- ------------------------------
Name: John A. Evans Name: Thomas J. Holt, Sr.
Title: Secretary Title: President
Attest: MURPHY MARINE SERVICES, INC.
By: /s/ John A. Evans By: /s/ Mark Murphy
------------------------- -------------------------------
Name: John A. Evans Name: Mark Murphy
Title: Secretary Title: President
Attest: THE RIVERSIDE DEVELOPMENT
CORPORATION
By: /s/ John A. Evans By: /s/ Thomas J. Holt, Sr.
------------------------- -------------------------------
Name: John A. Evans Name: Thomas J. Holt, Sr.
Title: Secretary Title: President
Attest: WILMINGTON STEVEDORES, INC.
By: /s/ John A. Evans By: /s/ Mark Murphy
------------------------- -------------------------------
Name: John A. Evans Name: Mark Murphy
Title: Secretary Title: President
-4-
EXHIBIT 21
----------
SUBSIDIARIES OF REGISTRANT
STATE OR OTHER OTHER NAMES
JURISDICTION OF UNDER WHICH
CORPORATION OR SUBSIDIARY DOES
NAME OF SUBSIDIARY ORGANIZATION BUSINESS
- --------------------------------------------------------------------------------
Holt Cargo Systems, Inc. Delaware
Holt Hauling and Warehousing Pennsylvania
Systems, Inc.
Murphy Marine Services, Inc. Delaware
Wilmington Stevedores, Inc. Delaware
NPR, Inc. Delaware Navieras
NPR - Navieras Receivables, Inc. Delaware
NPR Holding Corporation Delaware
NPR, S.A., Inc. Delaware
CONSENT OF INDEPENDENT
CERTIFIED PUBLIC ACCOUNTANTS
The Holt Group, Inc.
Gloucester City, New Jersey 08030
We hereby consent to the use in this Form S-4 Registration Statement of
our reports dated April 24, 1998, relating to the consolidated financial
statements of The Holt Group, Inc. and Subsidiaries and the consolidated
financial statements of NPR Holding Corporation and Subsidiaries which are
contained in such Registration Statement.
We also consent to all references to us contained in such Registration
Statement.
BDO SEIDMAN, LLP
Philadelphia, PA
May 13, 1998
================================================================================
FORM T-1
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
STATEMENT OF ELIGIBILITY
UNDER THE TRUST INDENTURE ACT OF 1939 OF A
CORPORATION DESIGNATED TO ACT AS TRUSTEE
CHECK IF AN APPLICATION TO DETERMINE
ELIGIBILITY OF A TRUSTEE PURSUANT TO
SECTION 305(b)(2) |__|
--------------------
THE BANK OF NEW YORK
---------------------------------------------------
(Exact name of trustee as specified in its charter)
New York 13-5160382
- -------------------------- -------------------
(State of incorporation if (I.R.S. employer
not a U.S. national bank) identification no.)
48 Wall Street, New York, N.Y. 10286
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
--------------------
THE HOLT GROUP, INC.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 23-2932358
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
701 North Broadway
Gloucester City, New Jersey 08030
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
--------------------
<PAGE>
Holt Cargo Systems, Inc.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 23-1664146
- -------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
701 North Broadway
Gloucester City, New Jersey 08030
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
--------------------
Holt Hauling and Warehousing System, Inc.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Pennsylvania 22-1646716
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
701 North Broadway
Gloucester City, New Jersey 08030
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
--------------------
Murphy Marine Services, Inc.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 51-0355907
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
701 North Broadway
Gloucester City, New Jersey 08030
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
--------------------
- 2 -
<PAGE>
Wilmington Stevedores, Inc.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 51-0123806
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
701 North Broadway
Gloucester City, New Jersey 08030
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
--------------------
NPR, Inc.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 22-3357134
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
212 Fernwood Ave.
Edison, New Jersey 08837
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
--------------------
NPR-Navieras Receivables, Inc.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 22-3357120
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
212 Fernwood Ave.
Edison, New Jersey 08837
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
--------------------
- 3 -
<PAGE>
NPR Holding Corporation
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware 22-3351317
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
212 Fernwood Ave.
Edison, New Jersey 08837
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
--------------------
NPR, S.A., INC.
---------------------------------------------------
(Exact name of obligor as specified in its charter)
Delaware
- ------------------------------- -------------------
(State or other jurisdiction of (I.R.S. employer
incorporation or organization) identification no.)
212 Fernwood Ave.
Edison, New Jersey 08837
- ---------------------------------------- ----------
(Address of principal executive offices) (Zip code)
--------------------
9-3/4% Senior Notes due 2006
-----------------------------------
(Title of the indenture securities)
==============================================================================
- 4 -
<PAGE>
1. General information. Furnish the following information as to the Trustee:
(a) Name and address of each examining or supervising authority to which it
is subject.
- --------------------------------------------------------------------------------
Name Address
- --------------------------------------------------------------------------------
Superintendent of Banks of the State of 2 Rector Street, New York,
New York N.Y. 10006, and Albany, N.Y.
12203
Federal Reserve Bank of New York 33 Liberty Plaza, New York,
N.Y. 10045
Federal Deposit Insurance Corporation Washington, D.C. 20429
New York Clearing House Association New York, New York 10005
(b) Whether it is authorized to exercise corporate trust powers.
Yes.
2. Affiliations with Obligor.
If the obligor is an affiliate of the trustee, describe each such
affiliation.
None.
16. List of Exhibits.
Exhibits identified in parentheses below, on file with the Commission, are
incorporated herein by reference as an exhibit hereto, pursuant to Rule 7a-29
under the Trust Indenture Act of 1939 (the "Act") and 17 C.F.R. 229.10(d).
1. A copy of the Organization Certificate of The Bank of New York (formerly
Irving Trust Company) as now in effect, which contains the authority to
commence business and a grant of powers to exercise corporate trust
powers. (Exhibit 1 to Amendment No. 1 to Form T-1 filed with Registration
Statement No. 33-6215, Exhibits 1a and 1b to Form T-1 filed with
Registration Statement No. 33-21672 and Exhibit 1 to Form T-1 filed with
Registration Statement No. 33-29637.)
4. A copy of the existing By-laws of the Trustee. (Exhibit 4 to Form T-1
filed with Registration Statement No. 33-31019.)
6. The consent of the Trustee required by Section 321(b) of the Act. (Exhibit
6 to Form T-1 filed with Registration Statement No. 33-44051.)
7. A copy of the latest report of condition of the Trustee published pursuant
to law or to the requirements of its supervising or examining authority.
- 5 -
<PAGE>
SIGNATURE
Pursuant to the requirements of the Act, the Trustee, The Bank of New
York, a corporation organized and existing under the laws of the State of New
York, has duly caused this statement of eligibility to be signed on its behalf
by the undersigned, thereunto duly authorized, all in The City of New York, and
State of New York, on the 9th day of April, 1998.
THE BANK OF NEW YORK
By: /s/ JAMES W.P. HALL
--------------------------
Name: JAMES W.P. HALL
Title: VICE PRESIDENT
-6-
<PAGE>
EXHIBIT 7
- -------------------------------------------------------------------------------
Consolidated Report of Condition of
THE BANK OF NEW YORK
of 48 Wall Street, New York, N.Y. 10286
And Foreign and Domestic Subsidiaries,
a member of the Federal Reserve System, at the close of business September 30,
1997, published in accordance with a call made by the Federal Reserve Bank of
this District pursuant to the provisions of the Federal Reserve Act.
Dollar Amounts
in Thousands
--------------
ASSETS
Cash and balances due from depository institutions:
Noninterest-bearing balances and currency and coin ............ $ 5,004,638
Interest-bearing balances ..................................... 1,271,514
Securities:
Held-to-maturity securities ................................... 1,105,782
Available-for-sale securities ................................. 3,164,271
Federal funds sold and Securities purchased under agreements
to resell ..................................................... 5,723,829
Loans and lease financing receivables:
Loans and leases, net of unearned income ........... 34,916,196
LESS: Allowance for loan and lease losses .......... 581,177
LESS: Allocated transfer risk reserve .............. 429
Loans and leases, net of unearned income, allowance, and
reserve ..................................................... 34,334,590
Assets held in trading accounts ................................. 2,035,284
Premises and fixed assets (including capitalized leases) ........ 671,664
Other real estate owned ......................................... 13,306
Investments in unconsolidated subsidiaries and associated
companies ..................................................... 210,685
Customers' liability to this bank on acceptances outstanding .... 1,463,446
Intangible assets ............................................... 753,190
Other assets .................................................... 1,784,796
-----------
Total assets .................................................... $57,536,995
===========
LIABILITIES
Deposits:
In domestic offices ........................................... $27,270,824
Noninterest-bearing ................................ 12,160,977
Interest-bearing ................................... 15,109,847
In foreign offices, Edge and Agreement subsidiaries, and IBFs.. 14,687,806
Noninterest-bearing ................................ 657,479
Interest-bearing ................................... 14,030,327
Federal funds purchased and Securities sold under agreements
to repurchase.................................................. 1,946,099
Demand notes issued to the U.S. Treasury......................... 283,793
Trading liabilities.............................................. 1,553,539
Other borrowed money:
With remaining maturity of one year or less.................... 2,245,014
With remaining maturity of more than one year through
three years.................................................. 0
With remaining maturity of more than three years............... 45,664
Bank's liability on acceptances executed and outstanding......... 1,473,588
Subordinated notes and debentures................................ 1,018,940
Other liabilities................................................ 2,193,031
-----------
Total liabilities................................................ 52,718,298
-----------
EQUITY CAPITAL
Common stock..................................................... 1,135,284
Surplus.......................................................... 731,319
Undivided profits and capital reserves........................... 2,943,008
Net unrealized holding gains (losses) on available-for-sale
securities..................................................... 25,428
Cumulative foreign currency translation adjustments.............. (16,342)
-----------
Total equity capital............................................. 4,818,697
-----------
Total liabilities and equity capital............................. $57,536,995
===========
I, Robert E. Keilman, Senior Vice President and Comptroller of the above-named
bank do hereby declare that this Report of Condition has been prepared in
conformance with the instructions issued by the Board of Governors of the
Federal Reserve System and is true to the best of my knowledge and belief.
Robert E. Keilman
We, the undersigned directors, attest to the correctness of this Report of
Condition and declare that it has been examined by us and to the best of our
knowledge and belief has been prepared in conformance with the instructions
issued by the Board of Governors of the Federal Reserve System and is true
and correct.
J. Carter Bacot }
Thomas A. Renyi } Directors
Alan R. Griffith }
- -------------------------------------------------------------------------------
LETTER OF TRANSMITTAL
THE HOLT GROUP, INC.
Offer to Exchange
all of its
9 3/4% Senior Notes due 2006
for a new series of its
9 3/4% Senior Notes due 2006
Which Have Been Registered Under the Securities Act of 1933
Pursuant to the Prospectus dated ______ __, 1998
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON ______ __ , 1998,
UNLESS EXTENDED.
- --------------------------------------------------------------------------------
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
<TABLE>
<S> <C> <C>
By Registered of Certified Mail: By Hand/Overnight Express: By Facsimile:
The Bank of New York The Bank of New York (212) 815-6339
101 Barclay Street 101 Barclay Street, 7E
Corporate Trust Services Window New York, New York 10286 To confirm by Telephone
Ground Level Attention: Reorganization Section or for Information Call:
New York, New York 10286 (212) 815-2742
Attention: Reorganization Section
</TABLE>
<PAGE>
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH
ABOVE, OR TRANSMISSION OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN THE ONE
LISTED ABOVE, WILL NOT CONSTITUTE A VALID DELIVERY. THE INSTRUCTIONS CONTAINED
HEREIN SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS COMPLETED.
The undersigned acknowledges receipt of the Prospectus, dated ______
__, 1998 ("Exchange Offer"), of The Holt Group, Inc., a Delaware corporation
(the "Company"), relating to the offer of the Company, upon the terms and
subject to the conditions set forth in the Exchange Offer and in this Letter of
Transmittal and the instructions hereto (which together with the Exchange Offer
and the instructions hereto constitute the "Offer"), to exchange a new series of
its 9 3/4% Senior Notes due 2006 (the "New Notes") which have been registered
under the Securities Act of 1933 (the "Securities Act") for any and all of its
outstanding 9 3/4% Senior Notes due 2006 ("Old Notes"), at the rate of $1,000
principal amount of the New Notes for each $1,000 principal amount of the Old
Notes. Capitalized terms used but not defined herein have the meanings given to
them in the Exchange Offer.
The undersigned has completed the appropriate boxes below and signed
this Letter of Transmittal to indicate the action the undersigned desires to
take with respect to the Offer.
This Letter of Transmittal is to be used whether the Old Notes are to
be physically delivered herewith, or whether guaranteed delivery procedures or
book-entry delivery procedures are being used, pursuant to the procedures set
forth under "The Exchange Offer" in the Exchange Offer. If delivery of Old Notes
is to be made by book-entry transfer to the account maintained by the Exchange
Agent at The Depository Trust Company ("DTC"), this Letter of Transmittal need
not be manually executed, provided, however, that tenders of Old Notes must be
effected in accordance with the procedures mandated by DTC and the procedures
set forth in the Exchange Offer under the caption "The Exchange Offer --
Procedures for Tendering Old Notes -- Book Entry Delivery." If a person or
entity in whose name Old Notes are registered on the books of the Registrar (a
"Registered Holder") desires to tender Old Notes and such Old Notes are not
immediately available or time will not permit all documents required by the
Offer to reach the Exchange Agent (or such Registered Holder is unable to
complete the procedure for book-entry transfer on a timely basis) prior to 5:00
P.M. New York City time on _________ __, 1998 (the "Expiration Date"), a tender
may be effected in accordance with the guaranteed delivery procedures set forth
in the Exchange Offer under the caption "The Exchange Offer -- Procedures for
Exchanging Old Notes -- Guaranteed Delivery Procedures." See Instruction 1.
DELIVERY OF DOCUMENTS TO THE BOOK-ENTRY TRANSFER FACILITY
DOES NOT CONSTITUTE DELIVERY TO THE EXCHANGE AGENT
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
LADIES AND GENTLEMEN:
Upon the terms and subject to the conditions of the Offer, the
undersigned hereby tenders to the Company the principal amount of the Old Notes
indicated below. Subject to, and effective upon, the acceptance for exchange of
the Old Notes tendered hereby, the undersigned hereby irrevocably sells, assigns
and transfers to or upon the order of the Company all right, title and interest
in and to such Old Notes and hereby irrevocably constitutes and appoints the
Exchange Agent the true and lawful agent and attorney-in-fact of the undersigned
(with full knowledge that said exchange agent also acts as the agent of the
Company) with respect to such Old Notes, with full power of substitution (such
power of attorney being deemed to be an irrevocable power coupled with an
interest), to take such further action as may be required in connection with the
delivery, tender and exchange of the Old Notes.
The undersigned acknowledges that this Offer is being made in reliance
on an interpretation by the staff of the Securities and Exchange Commission (the
"SEC") that the New Notes issued pursuant to the Exchange Offer in exchange for
the Old Notes may be offered for resale, resold and otherwise transferred by
holders thereof (other than
-2-
<PAGE>
(i) a broker-dealer who purchased Old Notes directly from the Company for resale
pursuant to Rule 144A under the Securities Act, or (ii) a person that is an
"affiliate" of the Company or any Guarantor within the meaning of Rule 405 under
the Securities Act) without compliance with the registration and prospectus
delivery provisions of the Securities Act provided that such New Notes are
acquired in the ordinary course of such holders' business and such holders have
no arrangement with any person to participate in the distribution of such New
Notes. See Morgan Stanley & Co. Inc.," SEC No-Action Letter (available June 5,
1991); The Exchange Offer under the caption "The Exchange Offer -- Resales of
the New Notes."
The undersigned acknowledges that the New Notes have not been
registered or qualified under any state securities laws. This Offer is being
made to: (i) U.S. persons pursuant to exemptions from such laws for sales to
institutional investors, and (ii) non-U.S. persons (within the meaning of
Regulation S under the Securities Act), as state securities laws do not apply to
sales to persons who are not residents of any state. The undersigned hereby
represents and warrants that the undersigned is either (i) a "qualified
institutional buyer" within the meaning of Rule 144A under the Securities Act,
(ii) an institutional "accredited investor" within the meaning of subparagraph
(a)(1), (2), (3) or (7) of Rule 501 under the Securities Act or (iii) a non-U.S.
person (within the meaning of Regulation S under the Securities Act).
THE UNDERSIGNED UNDERSTANDS AND AGREES THAT THE COMPANY RESERVES THE
RIGHT NOT TO ACCEPT TENDERED OLD NOTES FROM ANY TENDERING HOLDER IF THE COMPANY
DETERMINES, IN ITS SOLE AND ABSOLUTE DISCRETION, THAT SUCH ACCEPTANCE COULD
RESULT IN A VIOLATION OF APPLICABLE SECURITIES LAWS.
The undersigned, if the undersigned is a beneficial holder, represents,
or, if the undersigned is a broker, dealer, commercial bank, trust company or
other nominee, represents that it has received representations from the
beneficial owners of the Old Notes stating, (as defined in the Exchange Offer)
that (i) the New Notes to be acquired in connection with the Exchange Offer by
the Holder and each Beneficial Owner of the Old Notes are being acquired by the
Holder (as defined in the Exchange Offer) and each Beneficial Owner in the
ordinary course of business of the Holder and each Beneficial Owner, (ii) the
Holder and each Beneficial Owner are not participating, do not intend to
participate, and have no arrangement or understanding with any person to
participate, in the distribution (within the meaning of the Securities Act) of
the New Notes, (iii) the Holder and each Beneficial Owner acknowledge and agree
that any person participating in the Exchange Offer for the purpose of
distributing the New Notes must comply with the registration and prospectus
delivery requirements of the Securities Act in connection with a secondary
resale transaction of the New Notes acquired by such person and cannot rely on
the position of the staff of the Commission set forth in no-action letters that
are discussed in the Exchange Offer under the caption "The Exchange Offer --
Resales of the New Notes," (iv) that if the Holder is a broker-dealer holding
Old Notes acquired for its own account as a result of market-making activities
or other trading activities, it will deliver a prospectus meeting the
requirements of the Securities Act in connection with any resale of New Notes
received in respect of such Old Notes pursuant to the Exchange Offer; provided
that the delivery of a Prospectus in connection with the exchange of Old Notes
by such Holder will not be deemed an admission that such Holder is an
underwriter (within the meaning of the Securities Act), (v) the Holder and each
Beneficial Owner understand that a secondary resale transaction described in
clause (iii) above should be covered by an effective registration statement
containing the selling security holder information required by item 507 of
Regulations S-K of the Securities Act and (vi) neither the Holder nor any
Beneficial Owner is an "affiliate," as defined under Rule 405 of the Securities
Act, of the Company or any of the Guarantors.
In addition, if the undersigned is not a broker-dealer, the undersigned
represents that it is not engaged in, and does not intend to engage in, a
distribution of New Notes. If the undersigned is a broker-dealer holding Old
Notes acquired for its own account as a result of market-making activities or
other trading activities, it will deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of New Notes received in
respect of such Old Notes pursuant to the Exchange Offer; provided, however,
that by so acknowledging and by delivering a prospectus, the undersigned will
not be deemed to admit that it is an underwriter (within the meaning of the
Securities Act).
-3-
<PAGE>
The Company has agreed, subject to the provisions of the Registration
Rights Agreement, the Prospectus, as it may be amended or supplemented from time
to time, may be used by a Participating Broker-Dealer (as defined below) in
connection with resales of New Notes received in exchange for Old Notes, where
such Old Notes were acquired by such broker-dealer for its own account as a
result of market-making activities or other trading activities, for a period
ending 180 days after the Expiration Date [(subject to extension under certain
limited circumstances described in the Prospectus)] or, if earlier, when all
such New Notes have been disposed of by such participating broker-dealer. In
that regard, each broker-dealer who acquired Old Notes for its own account as a
result of market-making or other trading activities (a "Participating
Broker-Dealer"), by tendering such Old Notes and executing this Letter of
Transmittal, agrees that, upon receipt of notice from the Company of the
occurrence of any event or the discovery of any fact which makes any statement
contained or incorporated by reference in the Prospectus untrue in any material
respect or which causes the Prospectus to omit to state a material fact
necessary in order to make the statements contained or incorporated by reference
therein, in light of the circumstances under which they were made, not
misleading or of the occurrence of certain other events specified in the
Registration Rights Agreement, such Participating Broker-Dealer will suspend the
sale of New Notes pursuant to the Prospectus until the Company have amended or
supplemented the Prospectus to correct such misstatement or omission and the
Company has furnished copies of the amended or supplemented Prospectus to the
Participating Broker-Dealer or the Company has given notice that the sale of the
New Notes may be resumed, as the case may be. If the Company gives such notice
to suspend the sale of the New Notes, they shall extend the 180-day period
referred to above during which Participating Broker-Dealers are entitled to use
the Prospectus in connection with the resale of New Notes by the number of days
during the period from and including the date of the giving of such notice to
and including the date when Participating Broker-Dealers shall have received
copies of the supplemented or amended Prospectus necessary to permit resales of
the New Notes up to and including the date on which the Company has given notice
that the sale of New Notes may be resumed, as the case may be.
The undersigned understands and acknowledges that the Company reserves
the right in its sole discretion to purchase or make offers for any Old Notes
that remain outstanding subsequent to the Expiration Date or as set forth in the
Exchange Offer under the caption "The Exchange Offer -- Conditions of the
Exchange Offer," to terminate the Exchange Offer and, to the extent permitted by
applicable law, purchase Old Notes in the open market, in privately negotiated
transactions or otherwise. The term of any such purchases or offers could differ
from the terms of the Exchange Offer.
The undersigned hereby represents and warrants that the undersigned
accepts the terms and conditions of the Offer, has full power and authority to
tender, exchange, assign and transfer the Old Notes tendered hereby, and that
when the same are accepted for exchange by the Company, the Company will acquire
good and unencumbered title thereto, free and clear of all liens, restrictions,
charges and encumbrances and not subject to any adverse claim or right. The
undersigned will, upon request, execute and deliver any additional documents
deemed by the Exchange Agent or the Company to be reasonably necessary or
desirable to complete the sale, assignment and transfer the Old Notes tendered
hereby.
The undersigned agrees that all authority conferred or agreed to be
conferred by this Letter of Transmittal and every obligation of the undersigned
hereunder shall be binding upon the successors, assigns, heirs, executors,
administrations, trustees in bankruptcy and legal representatives of the
undersigned and shall not be affected by, and shall survive, the death or
incapacity of the undersigned.
The undersigned understands that tenders of the Old Notes pursuant to
any one of the procedures described under "The Exchange Offer -- Procedures for
Tendering Old Notes" in the Exchange Offer and in the instructions hereto will
constitute a binding agreement between the undersigned and the Company in
accordance with the terms and subject to the conditions of the Offer.
The undersigned understands that by tendering Old Notes pursuant to one
of the procedures describe in the Exchange Offer and the instructions thereto,
the tendering holder will be deemed to have waived the right to receive any
payment in respect of interest on the Old Notes accrued up to the date of
issuance of the New Notes.
-4-
<PAGE>
The undersigned recognizes that, under certain circumstances set forth
in the Exchange Offer, the Company may not be required to accept for exchange
any of the Old Notes tendered. Old Notes not accepted for exchange or withdrawn
will be returned to the undersigned as the address set forth below unless
otherwise indicated under "Special Delivery Instructions" below.
Unless otherwise indicated herein in the box entitled "Special Exchange
Instructions" below, the undersigned hereby directs that the New Notes be issued
in the name(s) of the undersigned or, in the case of a book-entry transfer of
Old Notes, that such New Notes be credited to the account indicated above
maintained at DTC. If applicable, substitute certificates representing the Old
Notes not exchanged or not accepted for exchange will be issued to the
undersigned or, in the case of a book-entry transfer of Old Notes, will be
credited to the account indicated above maintained at DTC. Similarly, unless
otherwise indicated under "Special Delivery Instructions," the undersigned
hereby directs that the New Notes be delivered to the undersigned at the address
shown below the undersigned's signature. The undersigned recognizes that the
Company has no obligation pursuant to the "Special Exchange Instructions" to
transfer any Old Notes from the name of the Registered Holder thereof if the
Company does not accept for exchange any of the principal amount of such Old
Notes so tendered.
-5-
<PAGE>
THE UNDERSIGNED BY COMPLETING THE BOX "DESCRIPTION OF OLD NOTES" BELOW
AND SIGNING THIS LETTER, WILL BE DEEMED TO HAVE TENDERED THE OLD NOTES AND MADE
CERTAIN REPRESENTATIONS DESCRIBED HEREIN AND IN THE EXCHANGE OFFER.
PLEASE SIGN HERE
(TO BE COMPLETED BY ALL TENDERING HOLDERS)
(SEE INSTRUCTIONS 1 AND 3 AND THE FOLLOWING PARAGRAPH)
(IMPORTANT: ALSO COMPLETE SUBSTITUTE FORM W-9 ON PAGE [__])
________________________________________________________________________________
________________________________________________________________________________
SIGNATURE(S) OF OWNER(S)
Dated: ______________________________________________, 1998
If the holder(s) is/are tendering any Old Notes, this Letter of Transmittal must
be signed by the Registered Holder(s) as the name(s) appear(s) on the Old Notes
or on a security position listing or by person(s) authorized to become
Registered Holder(s) by endorsements and documents transmitted herewith. If
signature is by a trustee, executor, administrator, guardian, officer or other
person acting in a fiduciary or representative capacity, please set forth full
title. See Instruction 3.
Name(s) ________________________________________________________________________
________________________________________________________________________________
(Please type or print)
Capacity: ______________________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
(Including Zip Code)
Area Code and Telephone Number _________________________________________________
________________________________________________________________________________
Tax Identification or Social Security No(s)
(COMPLETE SUBSTITUTE FORM W-9 ON PAGE [___])
SIGNATURE GUARANTEE
(IF REQUIRED BY INSTRUCTION 3)
Signature(s) Guaranteed by
an Eligible Institution:
Authorized Signature: __________________________________________________________
Printed Name: __________________________________________________________________
Title: _________________________________________________________________________
Firm: __________________________________________________________________________
Address: _______________________________________________________________________
Area Code and Telephone Number: ________________________________________________
Dated:__________________________, 1998
IMPORTANT: THIS LETTER OR A FACSIMILE HEREOF (TOGETHER WITH THE OLD NOTES OR A
NOTICE OF GUARANTEED DELIVERY AND ALL OTHER REQUIRED DOCUMENTS) MUST BE RECEIVED
BY THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY TIME, ON THE EXPIRATION
DATE.
-6-
<PAGE>
List below the Old Notes to which this Letter of Transmittal relates.
If the space provided below is inadequate, the certificate numbers and principal
amounts should be listed on a separate signed schedule affixed thereto. See
Instruction 7. The minimum permitted tender is $1,000 principal amount of Old
Notes; all other tenders must be in integral multiples of $1,000.
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF OLD NOTES
- ------------------------------ -------------------- --------------------------------- ------------------------------
<S> <C> <C> <C>
Name(s) and Address(es) of Certificate Aggregate Principal Amount Principal Amount Tendered**
Holder(s) (Please Fill in, Number(s)* Represented
if Blank)
- ------------------------------ -------------------- --------------------------------- ------------------------------
-------------------- --------------------------------- ------------------------------
-------------------- --------------------------------- ------------------------------
-------------------- --------------------------------- ------------------------------
-------------------- --------------------------------- ------------------------------
Total
- --------------------------------------------------------------------------------------------------------------------
* Need not be completed if Old Notes are being tendered by book-entry holders.
** Unless otherwise indicated in the column labeled "Principal Amount Tendered" and subject to the terms and
conditions of the Offer, the undersigned will be deemed to have tendered the entire aggregate principal
amount represented by the Old Notes indicated in the column labeled "Aggregate Principal Amount Represented."
See Instruction 8.
</TABLE>
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(BOXES BELOW TO BE CHECKED BY ELIGIBLE INSTITUTIONS ONLY)
[ ] CHECK HERE IF TENDERED OLD NOTES ARE ENCLOSED HEREWITH.
[ ] CHECK HERE AND ENCLOSE A PHOTOCOPY OF THE NOTICE OF GUARANTEED
DELIVERY IF TENDERED OLD NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE
OF GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE EXCHANGE AGENT AND
COMPLETE THE FOLLOWING (See Instructions 1 and 3):
Name(s) of Registered Holder(s): ______________________________________
Window Ticket Number (if any): ________________________________________
Date of Execution of Notice of Guaranteed Delivery: ___________________
Name of Eligible Institution that Guaranteed Delivery: ________________
If Guaranteed Delivery is to be made by Book-Entry Transfer:
Name of Tendering Institution: ______________________
Account Number: _____________________________________
-7-
<PAGE>
Transaction Code Number: ____________________________
[ ] CHECK HERE IF YOU ARE A BROKER-DEALER WHO ACQUIRED THE OLD NOTES FOR
ITS OWN ACCOUNT AS A RESULT OF MARKET MAKING OR OTHER TRADING
ACTIVITIES (A "PARTICIPATING BROKER-DEALER") AND WISH TO RECEIVE 10
ADDITIONAL COPIES OF THE PROSPECTUS AND 10 COPIES OF ANY AMENDMENTS OR
SUPPLEMENTS THERETO.
Name: _________________________________________________________________
Address: ______________________________________________________________
______________________________________________________________
[ ] CHECK HERE IF TENDERED OLD NOTES ARE BEING DELIVERED BY BOOK-ENTRY
TRANSFER MADE TO THE ACCOUNT MAINTAINED BY THE EXCHANGE AGENT WITH THE
BOOK-ENTRY TRANSFER FACILITY AND COMPLETE THE FOLLOWING:
Name of Tendering Institution: ________________________________________
Account Number: _______________________________________________________
Transaction Code Number: ______________________________________________
[ ] CHECK HERE IF TENDERED BY BOOK-ENTRY TRANSFER AND NON-EXCHANGED OLD
NOTES ARE TO BE RETURNED BY CREDITING THE BOOK-ENTRY TRANSFER FACILITY
ACCOUNT NUMBER SET FORTH ABOVE.
If delivery of Old Notes is to be made by book-entry transfer to the
account maintained by the Exchange Agent at DTC, then tenders of Old Notes must
be effected in accordance with the procedures mandated by DTC and the procedures
set forth in the Exchange Offer under the caption "The Exchange Offer --
Procedures for Tendering Old Notes -- Book Entry Delivery."
-8-
<PAGE>
SPECIAL EXCHANGE INSTRUCTIONS
(See Instructions 4 and 5)
To be completed ONLY if Old Notes in a principal amount not exchanged and/or New
Notes are to be registered in the name of or issued to someone other than the
person or persons whose signature(s) appear(s) on this Letter of Transmittal
above.
Issue and mail: (check appropriate box(es)):
[ ] New Notes to: [ ] Old Notes not tendered to:
Name(s): _______________________________________________________________________
(Please type or print)
________________________________________________________________________________
Address: _______________________________________________________________________
(Please type or print)
________________________________________________________________________________
(Zip Code)
________________________________________________________________________________
Tax Identification or Social Security No(s)
(COMPLETE SUBSTITUTE FORM W-9 ON PAGE [___])
SPECIAL DELIVERY INSTRUCTIONS
(See Instructions 4 and 5)
To be completed ONLY if Old Notes in a principal amount not exchanged and/or New
Notes are to be sent to someone other than the person or persons whose
signature(s) appear(s) on this Letter of Transmittal above or to such person or
persons at an address other than that shown in the box entitled "Description of
Old Notes" on this Letter of Transmittal above.
Mail and deliver: (check appropriate box(es)):
[ ] New Notes to: [ ] Old Notes not tendered to:
Name(s): _______________________________________________________________________
(Please type or print)
________________________________________________________________________________
(Please type of print)
Address: _______________________________________________________________________
________________________________________________________________________________
(Zip Code)
________________________________________________________________________________
Tax Identification or Social Security No(s)
-9-
<PAGE>
SUBSTITUTE FORM W-9
TO BE COMPLETED BY ALL EXCHANGING HOLDERS
(See Instruction 5)
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------------------------------------
PAYER'S NAME: THE BANK OF NEW YORK
- ------------------------------- --------------------------------------------------- --------------------------------
<S> <C> <C>
SUBSTITUTE Part 1 - PLEASE PROVIDE YOUR TIN IN THE BOX AT Social security number(s)
Form W-9 RIGHT AND CERTIFY BY SIGNING AND DATING BELOW. OR __________________________
Employer Identification
Numbers
------------------------------------------------------------------------------------
Department of the Part 2 - Certificates - Under penalties of perjury, I certify that:
Treasury (1) The number shown on this form is my correct taxpayer identification
Internal Revenue Service number (or I am waiting for a number to be issued for me), and
Payer's Request for (2) I am not subject to backup withholding because: (a) I am exempt from
Taxpayer Identification backup withholding, or (b) I have not been notified by the internal Revenue
Number ("TIN") Service (IRS) that I am subject to backup withholding as a result of a failure to
report all interest or dividends, or (c) the IRS has notified me that I am no
longer subject to backup withholding.
CERTIFICATION INSTRUCTIONS - You must cross out item (2) above if you have been
notified by the IRS that you are currently subject to backup withholding because
of underreporting interest or dividends on your tax return.
--------------------------------------------------- --------------------------------
SIGNATURE _______________________ DATE_____ Part 3 - Awaiting TIN / /
- ------------------------------- --------------------------------------------------- --------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP
WITHHOLDING OF 31 PERCENT OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE
OFFER. PLEASE REVIEW THE ENCLOSED GUIDELINES FOR CERTIFICATION OF
TAXPAYER IDENTIFICATION NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL
DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN
PART 3 OF THE SUBSTITUTE FORM W-9.
- -------------------------------------------------------------------------------
CERTIFICATE OF AWAITING TAXPAYER IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number has
not been issued to me, and either (1) I have mailed or delivered an application
to receive a taxpayer identification number to the appropriate Internal Revenue
Service Center or Social Security Administration Office or (2) I intend to mail
or deliver an application in the near future. I understand that if I do not
provide a taxpayer identification number by the time of payment, 31% of all
payments of the Purchase Price made to me thereafter will be withheld until I
provide a number.
Signature ________________________________ Date______________________
- -------------------------------------------------------------------------------
-10-
<PAGE>
INSTRUCTIONS
Forming Part of the Terms and Conditions of the Offer
1. Delivery of this Letter of Transmittal and Old Notes: Guaranteed
Delivery Procedures. To be effectively tendered pursuant to the Offer, the Old
Notes, together with a properly completed Letter of Transmittal (or manually
signed facsimile hereof) duly executed by the Registered Holder thereof, and any
other documents required by this Letter of Transmittal must be received by the
Exchange Agent at one of its addresses set forth on the front page of this
Letter of Transmittal and tendered Old Notes must be received by the Exchange
Agent at one of such addresses on or prior to the Expiration Date; provided,
however, that book-entry transfers of Old Notes may be effected in accordance
with the procedures set forth in the Exchange Offer under the caption "The
Exchange Offer -- Procedures For Tendering Old Notes --Book Entry Delivery." If
the Beneficial Owner of any Old Notes is not the Registered Holder, then such
person may validly tender such person's Old Notes only by obtaining and
submitting to the Exchange Agent a properly completed Letter of Transmittal from
the Registered Holder. LETTERS OF TRANSMITTAL OF OLD NOTES SHOULD BE DELIVERED
ONLY BY HAND OR BY COURIER, OR TRANSMITTED BY MAIL, AND ONLY TO THE EXCHANGE
AGENT AND NOT TO THE COMPANY OR TO ANY OTHER PERSON.
THE METHOD OF DELIVERY OF OLD NOTES AND ALL OTHER REQUIRED DOCUMENTS TO
THE EXCHANGE AGENT IS AT THE ELECTION AND RISK OF THE HOLDER, AND IF SUCH
DELIVERY IS BY MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED,
REGISTERED MAIL WITH RETURN RECEIPT REQUESTED. IF OLD NOTES ARE SENT BY MAIL, IT
IS SUGGESTED THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE OF THE EXPIRATION
DATE TO PERMIT DELIVERY TO THE EXCHANGE AGENT PRIOR TO 5:00 P.M., NEW YORK CITY
TIME, ON THE EXPIRATION DATE.
If a holder desires to tender Old Notes and such holder's Old Notes are
not immediately available or time will not permit such holder to complete the
procedures for book-entry transfer on a timely basis or time will not permit
such holder's Letter of Transmittal and other required documents to reach the
Exchange Agent on or before the Expiration Date, such holder's tender may be
effected if:
(a) such tender is made by or through an Eligible Institution
(as defined below);
(b) on or prior to the Expiration Date, the Exchange Agent has
received a telegram, facsimile transmission or letter from such
Eligible Institution setting forth the name and address of the holder
of such Old Notes, the certificate number(s) of such Old Notes (except
in the case of book-entry tenders) and the principal amount of Old
Notes tendered and stating that the tender is being made thereby and
guaranteeing that, within three business days after the Expiration
Date, a duly executed Letter of Transmittal, or facsimile thereof,
together with the Old Notes, and any other documents required by this
Letter of Transmittal and Instructions, will be deposited by such
Eligible Institution with the Exchange Agent; and
(c) this Letter of Transmittal, or a manually signed facsimile
hereof, and Old Notes, in proper form for transfer (or a Book-Entry
confirmation with respect to such Old Notes), and all other required
documents are received by the Exchange Agent within three business days
after the Expiration Date.
2. Withdrawal of Tenders. Tendered Old Notes may be withdrawn at any
time prior to 5:00 p.m., New York City time, on the Expiration Date.
-11-
<PAGE>
To be effective, a written, telegraphic or facsimile transmission
notice of withdrawal must (i) be timely received by the Exchange Agent at one of
its addresses set forth on the first page of this Letter of Transmittal before
the Exchange Agent receives notice of acceptance from the Company, (ii) specify
the name of the person who tendered the Old Notes, (iii) contain the description
of the Old Notes to be withdrawn, the certificate number(s) of such Old Notes
(except in the case of book-entry tenders) and the aggregate principal amount
represented by such Old Notes or a Book-Entry Confirmation with respect to such
Old Notes, and (iv) be signed by the holder of such Old Notes in the same manner
as the original signature appears on this Letter of Transmittal (including any
required signature guarantees) or be accompanied by evidence satisfactory to the
Company that the person withdrawing the tender has succeeded to the beneficial
ownership of the Old Notes. The signature(s) on the notice of withdrawal must be
guaranteed by an Eligible Institution unless such Old Notes have been tendered
(i) by a Registered Holder (which term for purposes of this document shall
include any participant tendering by book-entry transfer) of Old Notes who has
not completed either the box entitled "Special Exchange Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal or (ii)
for the account of an Eligible Institution. If the Old Notes have been tendered
pursuant to the procedure for book-entry tender set forth in the Exchange Offer
under the caption "Exchanging Book Entry Old Notes," a notice of withdrawal is
effective immediately upon receipt by the Exchange Agent of a written,
telegraphic or facsimile transmission notice of withdrawal even if physical
release is not yet effected. In addition, such notice must specify, in the case
of Old Notes tendered by delivery of such Old Notes, the name of the Registered
Holder (if different from that of the tendering holder) to be credited with the
withdrawn Old Notes. Withdrawals may not be rescinded, and any Old Notes
withdrawn will thereafter be deemed not validly tendered for purposes of the
Offer. However, properly withdrawn Old Notes may be retendered by following one
of the procedures described under "The Exchange Offer -- Procedures for
Tendering Old Notes" in the Exchange Offer at any time on or prior to the
applicable Expiration Date.
3. Signatures on this Letter of Transmittal, Bond Powers and
Endorsements; Guarantee of Signatures. If this Letter of Transmittal is signed
by the Registered Holder of the Old Notes tendered hereby, the signature must
correspond exactly with the name as written on the face of the Old Notes without
any change whatsoever.
If any Old Notes tendered hereby are owned of record by two or more
joint owners, all such owners must sign this Letter of Transmittal.
If any Old Notes tendered hereby are registered in different names, it
will be necessary to complete, sign and submit as many separate copies of this
Letter of Transmittal as there are different registrations of Old Notes.
When this Letter of Transmittal is signed by the Registered Holder or
Holders specified herein and tendered hereby, no endorsements of such Old Notes
or separate bond powers are required. If, however, New Notes are to be issued,
or any untendered principal amount of Old Notes are to be reissued to a person
other than the Registered Holder, then endorsements of any Old Notes transmitted
hereby or separate bond powers are required.
If this Letter of Transmittal is signed by a person other than the
Registered Holder or Holders, such Old Notes must be endorsed or accompanied by
appropriate bond powers, in either case signed exactly as the name or names of
the Registered Holder or Holders appear(s) on the Old Notes.
If this Letter of Transmittal or a Notice of Guaranteed Delivery or any
Old Notes or bond powers are signed by trustees, executors, administrators,
guardians, attorneys-in-fact, officers of corporations or others acting in a
fiduciary or representative capacity, such persons should so indicate when
signing, and, unless waived by the Company, proper evidence satisfactory to the
Company of their authority so to act must be submitted.
Except as describe in this paragraph, signatures on this Letter of
Transmittal or a notice of withdrawal, as the case may be, must be guaranteed by
an Eligible Institution which is a firm which is a member of a registered
national securities exchange or the National Association of Securities Dealers,
Inc., a commercial bank or trust company having an office or correspondent in
the United States or otherwise be an "eligible guarantor institution"
-12-
<PAGE>
within the meaning of Rule 17Ad-15 under the Exchange Act (each an "Eligible
Institution"). Signatures on this Letter of Transmittal or a notice of
withdrawal, as the case may be, need not be guaranteed if the Old Notes tendered
pursuant hereto are tendered (i) by a Registered Holder of Old Notes who has not
completed either the box entitled "Special Exchange Instructions" or the box
entitled "Special Delivery Instructions" on this Letter of Transmittal or (ii)
for the account of an Eligible Institution.
Endorsement on Old Notes or signatures on bond forms required by this
Instruction 3 must be guaranteed by an Eligible Institution.
4. Special Issuance and Delivery Instructions. Tendering holders should
indicate in the applicable box the name and address to which New Notes and/or
substitute Old Notes for the principal amounts not exchanged are to be issued or
sent, if different from the name and address of the person signing this Letter
of Transmittal. In the case of issuance in a different name, the employer
identification or social security number of the person named must also be
indicated. If no such instructions are given, such Old Notes not exchanged will
be returned to the name and address of the person signing this Letter of
Transmittal.
5. Taxpayer Identification Number and Backup Withholding. Federal
income tax law of the United States requires that a holder of Old Notes whose
Old Notes are accepted for exchange provide the Company with such holder's
correct taxpayer identification number, which, in the case of a holder who is an
individual, is the holder's social security number, or otherwise establish an
exemption from backup withholding. If the Company is not provided with the
holder's correct taxpayer identification number, the exchanging holder of Old
Notes may be subject to a penalty imposed by the Internal Revenue Service. In
addition, interest on the New Notes acquired pursuant to the Offer may be
subject to backup withholding in an amount equal to 31 percent of any interest
payment. If withholding occurs and results in an overpayment of taxes, a refund
may be obtained from the Internal Revenue Service by filing a return.
To prevent backup withholding, each exchanging holder of Old Notes
subject to backup withholding must provide his correct taxpayer identification
number by completing the Substitute Form W-9 provided in this Letter of
Transmittal, certifying that the taxpayer identification number provided is
correct (or that the exchanging holder of Old Notes is awaiting a taxpayer
identification number) and that either (a) the exchanging holder has not been
notified by the Internal Revenue Service that he is subject to backup
withholding as a result of failure to report all interest or dividends or (b)
the Internal Revenue Service has notified the exchanging holder that he is no
longer subject to backup withholding.
Certain exchanging holders of Old Notes (including, among others, all
corporations and certain foreign individuals) are not subject to these backup
withholding requirements. A foreign individual and other exempt holders (e.g.,
corporations) should certify, in accordance with the enclosed Guidelines for
Certification of Taxpayer Identification Number on Substitute Form W-9, to such
exempt status on the Substitute Form W-9 provided in this Letter of Transmittal.
Nonresident aliens should submit Form W-8, available from the Exchange Agent
upon request.
6. Transfer Taxes. Holders tendering pursuant to the Offer will not be
obligated to pay brokerage commissions or fees or to pay transfer taxes with
respect to their exchange under the Offer unless the box entitled "Special
Issuance Instructions" in this Letter of Transmittal has been completed, or
unless the securities to be received upon exchange are to be issued to any
person other than the holder of the Old Notes tendered for exchange. The Company
will pay all other charges or expenses in connection with the Offer. If holders
tender Old Notes for exchange and the Offer is not consummated, such Old Notes
will be returned to the holders at the Company expense.
Except as provided in this Instruction 6, it will not be necessary for
transfer tax stamps to be affixed to the Old Notes specified in this Letter of
Transmittal.
-13-
<PAGE>
7. Inadequate Space. If the space provided herein is inadequate, the
aggregate principal amount of the Old Notes being tendered and the security
numbers (if available) should be listed on a separate schedule attached hereto
and separately signed by all parties required to sign this Letter of
Transmittal.
8. Partial Tenders. Tenders of Old Notes will be accepted only in
integral multiples of $1,000. If tenders are to be made with respect to less
than the entire principal amount of any Old Notes, fill in the principal amount
of Old Notes which are tendered in column (iv) of the "Description of Old
Notes." In the case of partial tenders, the Old Notes in fully registered form
for the remainder of the principal amount of the Old Notes will be sent to the
persons(s) signing this Letter of Transmittal, unless otherwise indicated in the
appropriate place on this Letter of Transmittal, as promptly as practicable
after the expiration or termination of the Offer.
Unless otherwise indicated in column (iv) in the box labeled
"Description of Old Notes," and subject to the terms and conditions of the
Offer, tenders made pursuant to this Letter of Transmittal will be deemed to
have been made with respect to the entire aggregate principal amount represented
by the Old Notes indicated in column (iii) of such box.
9. Mutilated, Lost, Stolen or Destroyed Old Notes. Any holder whose Old
Notes have been mutilated, lost, stolen or destroyed should contact the Exchange
Agent at the address indicated above for further instructions.
10. Validity and Acceptance of Tenders. All questions as to the
validity, form, eligibility (including time of receipt), acceptance and
withdrawal of Old Notes tendered for exchange will be determined by the Company
in its sole discretion, which determination shall be final and binding. The
Company reserves the absolute right to reject any and all Old Notes not properly
tendered and to reject any Old Notes the Company's acceptance of which might, in
the judgment of the Company or its counsel, be unlawful. The Company also
reserves the absolute right to waive any defects or irregularities or conditions
of the Exchange Offer as to particular Old Notes either before or after the
Expiration Date (including the right to waive the ineligibility of any holder
who seeks to tender Old Notes in the Exchange Offer). The interpretation of the
terms and conditions of the Exchange Offer (including the Letter of Transmittal
and the instructions thereto) by the Company shall be final and binding on all
parties. Unless waived, any defects or irregularities in connection with tenders
of Old Notes for exchange must be cured within such period of time as the
Company shall determine. The Company will use reasonable efforts to give
notification of defects or irregularities with respect to tenders of Old Notes
for exchange but shall not incur any liability for failure to give such
notification. Tenders of the Old Notes will not be deemed to have been made
until such irregularities have been cured or waived.
11. Requests for Assistance or Additional Copies. First Union National
Bank is the Exchange Agent. All tendered Old Notes, executed Letters of
Transmittal and other related documents should be directed to the Exchange Agent
at the addresses or facsimile number set forth on the first page of this Letter
of Transmittal. Questions and requests for assistance and requests for
additional copies of the Prospectus, the Letter of Transmittal and other related
documents should be addressed to the Exchange Agent as follows:
The Bank of New York
101 Barclay Street, 7E
New York, New York 10286
Attention: Reorganization Section
Facsimile Transmission:
(212) 815-8339
To Confirm Receipt:
(212) 815-2742
-14-
<PAGE>
THE HOLT GROUP, INC.
Offer to Exchange
all of its
9 3/4% Senior Notes due 2006
for a new series of its
9 3/4% Senior Notes due 2006
Which Have Been Registered Under the Securities Act of 1933
Pursuant to the Prospectus dated ______ __, 1998
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON ________ __, 1998
UNLESS EXTENDED.
- --------------------------------------------------------------------------------
To Our Clients:
Enclosed for your consideration is a Prospectus dated _____ __, 1998
("Prospectus") and the related Letter of Transmittal (which, together with any
amendments or supplements thereto, collectively constitute the "Exchange Offer")
relating to an offer by The Holt Group, Inc., a Delaware corporation
("Company"), to exchange all its outstanding 9 3/4% Senior Notes due 2006 ("Old
Notes") for a new series of its 9 3/4% Senior Notes due 2006 upon the terms and
subject to the conditions set forth in the Exchange Offer.
WE ARE THE HOLDER OF RECORD OF OLD NOTES HELD BY US FOR YOUR ACCOUNT. A
TENDER FOR EXCHANGE OF SUCH OLD NOTES CAN BE MADE ONLY BY US AS THE HOLDER OF
RECORD AND PURSUANT TO YOUR INSTRUCTIONS. THE LETTER OF TRANSMITTAL IS FURNISHED
TO YOU FOR YOUR INFORMATION ONLY AND CANNOT BE USED BY YOU TO TENDER FOR
EXCHANGE OLD NOTES HELD BY US FOR YOUR ACCOUNT.
We request instructions as to whether you wish to have us tender for
exchange on your behalf any or all of such Old Notes held by us for your
account, pursuant to the terms and subject to the conditions set forth in the
Exchange Offer.
Your attention is directed to the following:
1. The Exchange Offer and withdrawal rights will expire at
5:00 P.M., New York City time, on ________ __ , 1998, unless the Exchange Offer
is extended. Your instructions to us should be forwarded to us in ample time to
permit us to submit a tender on your behalf.
2. The Exchange Offer is made for all Old Notes outstanding,
constituting $140,000,000 aggregate principal amount as of the date of the
Prospectus.
<PAGE>
3. The minimum permitted tender is $1,000 principal amount of
Old Notes, and all tenders must be in integral multiples of $1,000.
4. The Offer is conditioned upon the satisfaction of certain
conditions set forth in the Prospectus under the caption "The Exchange Offer --
Conditions of the Exchange Offer." The Exchange Offer is not conditioned upon
any minimum principal amount of Old Notes being tendered for exchange.
5. Tendering Holders (as defined in the Prospectus) will not
be obligated to pay brokerage fees or commissions or, except as set forth in
Instruction 6 of the Letter of Transmittal, transfer taxes applicable to the
exchange of Old Notes pursuant to the Exchange Offer.
6. In all cases, exchange of Old Notes tendered and accepted
for exchange pursuant to the Exchange Offer will be made only after timely
receipt by The Bank of New York ("Exchange Agent") of (i) certificates
representing such Old Notes or timely confirmation of a book-entry transfer of
such Old Notes into the Exchange Agent's account at The Depository Trust Company
("Book-Entry Transfer Facility") pursuant to the procedures set forth in the
Prospectus under the caption "The Exchange Offer -- Procedures for Tendering Old
Notes," (ii) the Letter of Transmittal (or a facsimile thereof), properly
completed and duly executed, with any required signature guarantees, or an
Agent's Message (as defined in the Prospectus) in connection with a book-entry
transfer, and (iii) any other documents required by the Letter of Transmittal.
Accordingly, payment may be made to tendering Holders at different times if
delivery of the Old Notes and other required documents occurs at different
times.
The Exchange Offer is being made solely by the Prospectus and the
related Letter of Transmittal and is being made to all Holders of Old Notes. The
Company is not aware of any state where the making of the Exchange Offer is
prohibited by administrative or judicial action pursuant to any valid state
statute. If the Company becomes aware of any valid state statute prohibiting the
making of the Exchange Offer or the acceptance of Old Notes tendered for
exchange pursuant thereto, the Company will make a good faith effort to comply
with any such state statute or seek to have such statute declared inapplicable
to the Exchange Offer. If, after such good faith effort, the Company cannot
comply with such state statute the Exchange Offer will not be made to, nor will
tenders be accepted from or on behalf of, the holders of Old Notes in such
state. In any jurisdiction where the securities, blue sky or other laws require
the Exchange Offer to be made by a licensed broker or dealer, the Exchange Offer
shall be deemed to be made on behalf of the Company by one or more registered
brokers or dealers that are licensed under the laws of such jurisdiction.
If you wish to have us tender any or all of the Old Notes held by us
for your account, please instruct us by completing, executing and returning to
us the instruction form contained in this letter. If you authorize a tender for
exchange of your Old Notes, the entire aggregate principal amount of such Old
Notes will be tendered for exchange unless otherwise specified in such
instruction form. YOUR INSTRUCTIONS SHOULD BE FORWARDED TO US IN AMPLE TIME TO
PERMIT US TO SUBMIT A TENDER ON YOUR BEHALF PRIOR TO THE EXPIRATION OF THE
EXCHANGE OFFER.
-2-
<PAGE>
INSTRUCTIONS TO REGISTERED HOLDER AND/OR BOOK-ENTRY
TRANSFER PARTICIPANT FROM OWNER WITH RESPECT TO THE
THE HOLT GROUP, INC.
Offer to Exchange
all of its
9 3/4% Senior Notes Due 2006
for a new series of its
9 3/4% Senior Notes Due 2006
To Registered Holder and/or Participant of the Book-Entry Transfer Facility:
The undersigned acknowledge(s) receipt of your letter enclosing the
Prospectus dated _____ __, 1998, and the related Letter of Transmittal (which,
together with any amendments or supplements thereto, collectively constitute the
"Exchange Offer") pursuant to an offer by The Holt Group, a Delaware
corporation, to exchange all of its outstanding 9 3/4% Senior Notes due 2006
("Old Notes") for a new series of its 9 3/4% Senior Notes due 2006 ("New
Notes"). Capitalized terms used but not defined herein have the meanings
ascribed to them in the Prospectus.
This will instruct you to tender the principal amount of Old Notes
indicated below (or, if no number is indicated below, the entire aggregate
principal amount) which are held by you for the account of the undersigned, upon
the terms and subject to the conditions set forth in the Exchange Offer.
The aggregate face amount of the Old Notes held by you for the account
of the undersigned is (fill in amount):
$______________ of the 9 3/4% Senior Notes Due 2006.
With respect to the Exchange Offer, the undersigned hereby instructs
you (check appropriate box):
// To TENDER the following Old Notes held by you for the account of the
undersigned (insert principal amount of Old Notes to be tendered (if
any)*:
$______________ of the 9 3/4% Senior Notes Due 2006.
// NOT to TENDER any old Notes held by you for the account of the
undersigned.
If the undersigned instructs you to tender the Old Notes held by you
for the account of the undersigned, it is understood that you are authorized (a)
to make, on behalf of the undersigned (and the undersigned, by its signature
below, hereby makes to you), the representation and warranties contained in the
Letter of Transmittal that are to be made with respect to the undersigned as a
beneficial owner, including but not limited to the representations, that (i) the
New Notes acquired pursuant to the Exchange Offer are being obtained in the
ordinary course of business of
- -----------
*Unless otherwise indicated, it will be assumed that the entire principal amount
of the Old Notes held by us for your account are to be tendered for exchange.
The minimum permitted tender is $1,000 principal amount of Old Notes; all other
tenders must be in integral multiples of $1,000.
<PAGE>
the undersigned, (ii) neither the undersigned nor any such other person has an
arrangement or understanding with any person to participate in the distribution
of such New Notes, (iii) if the undersigned is not a broker-dealer, or is a
broker-dealer but will not receive New Notes for its own account in exchange for
Old Notes, neither the undersigned nor any such other person is engaged in or
intends to participate in the distribution of such New Notes and (iv) neither
the undersigned nor any such other person is an "affiliate" of the Company
within the meaning of Rule 405 under the Securities Act of 1933, as amended (the
"Securities Act") or, if the undersigned is an "affiliate," that the undersigned
will comply with the registration and prospectus delivery requirements of the
Securities Act to the extent applicable. If the undersigned is a broker-dealer
(whether or not it is also an "affiliate") that will receive New Notes for its
own account in exchange for Old Notes, it represents that such Old Notes were
acquired as a result of marketing-making activities or other trading activities,
and it acknowledges that it will deliver a prospectus meeting the requirements
of the Securities Act in connection with any resale of such new Notes. By
acknowledging that it will deliver and by delivering a prospectus meeting the
requirements of the Securities Act in connection with any resale of such New
Notes, the undersigned is not deemed to admit that it is an "underwriter" within
the meaning of the Securities Act.
SIGN HERE
Name of Beneficial Owner(s): ___________________________________________________
Signature(s): __________________________________________________________________
Name(s) (please print): ________________________________________________________
Address: _______________________________________________________________________
________________________________________________________________________________
Telephone Number: ______________________________________________________________
Taxpayer identification or Social Security Number: _____________________________
________________________________________________________________________________
Date: __________________________________________________________________________
-2-
<PAGE>
THE HOLT GROUP, INC.
OFFER TO EXCHANGE
ALL OF ITS OUTSTANDING
9 3/4% SENIOR NOTES DUE 2006
FOR A NEW SERIES OF ITS
9 3/4% SENIOR NOTES DUE 2006
- --------------------------------------------------------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON __________ __, 1998,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
- --------------------------------------------------------------------------------
To Brokers, Dealers, Commercial Banks,
Trust Companies and Other Nominees:
The Holt Group, Inc., a Delaware corporation ("Company"), is offering
to exchange all of its outstanding 9 3/4% Senior Notes due 2006 ("Old Notes")
for a new series of its 9 3/4% Senior Notes due 2006 upon the terms and subject
to the conditions set forth in the Prospectus dated ______ __, 1998
("Prospectus") and in the related Letter of Transmittal (which, together with
any amendment or supplements thereto, collectively constitute the "Exchange
Offer") enclosed herewith.
The Exchange Offer is conditioned upon satisfaction of certain
conditions set forth in the Prospectus under the caption "The Exchange Offer --
Conditions of the Exchange Offer." The Exchange Offer is not conditioned upon
any minimum principal amount of Old Notes being tendered for exchange.
Enclosed herewith for your information and forwarding to your clients
for whose accounts you hold Old Notes registered in your name or in the name of
your nominee are copies of the following documents:
1. The Prospectus dated _______ __, 1998.
2. The blue Letter of Transmittal to tender Old Notes
for exchange (for your use and for the information of
your clients). Facsimile copies of the Letter of
Transmittal may be used to tender Old Notes for
exchange.
3. The gray Notice of Guaranteed Delivery (to be used to
tender Old Notes for exchange if certificates for Old
Notes are not immediately available or if such
certificates for Old Notes and all other required
documents cannot be delivered to The Bank of New York
("Exchange Agent") on or prior to the Expiration Date
or if the procedures for book-entry transfer cannot
be completed on a timely basis).
<PAGE>
4. A yellow printed form of letter which may be sent to
your clients for whose accounts you hold Old Notes
registered in your name or in the name of your
nominee, with space provided for obtaining such
clients' instructions with regard to the Exchange
Offer.
5. Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9.
6. A return envelope addressed to the Exchange Agent.
YOUR PROMPT ACTION IS REQUESTED. WE URGE YOU TO CONTACT YOUR CLIENTS
AS PROMPTLY AS POSSIBLE. PLEASE NOTE THAT THE EXCHANGE OFFER AND WITHDRAWAL
RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON __________ __, 1998,
UNLESS THE EXCHANGE OFFER IS EXTENDED.
In order for Old Notes to be validly tendered pursuant to the Exchange
Offer, (i) a duly executed and properly completed Letter of Transmittal (or a
facsimile thereof) together with any required signature guarantees, or an
Agent's Message (as defined in the Prospectus) in connection with a book-entry
delivery of Old Notes, and any other documents required by the Letter of
Transmittal, must be received by the Depositary on or prior to the Expiration
Date, and (ii) either certificates representing tendered Old Notes must be
received by the Exchange Agent or such Old Notes must be tendered by book-entry
transfer into the Exchange Agent account maintained at the Book-Entry Transfer
Facility (as described in the Prospectus), and Book-Entry Confirmation must be
received by the Exchange Agent, all in accordance with the instructions set
forth in the Letter of Transmittal and the Prospectus
If Holder (as defined in the Prospectus) desires to tender Old Notes
for exchange pursuant to the Exchange Offer and such Holder's Old Note
certificates are not immediately available or such Holder cannot deliver the Old
Note certificates and all other required documents to the Exchange Agent on or
prior to the Expiration Date, or such Holder cannot complete the procedure for
delivery by book-entry transfer on a timely basis, such Old Notes may
nevertheless be tendered for exchange by following the guaranteed delivery
procedures specified in the Prospectus under the caption "The Exchange Offer --
Procedures for Tendering Old Notes -- Guaranteed Delivery Procedures."
The Company will not pay any fees or commissions to any broker or
dealer or any other person for soliciting tenders of Old Notes pursuant to the
Exchange Offer. The Company will, however, upon request, reimburse you for
customary mailing and handling expenses incurred by you in forwarding any of the
enclosed materials to your clients. The Company will pay or cause to be paid any
transfer taxes applicable to the exchange of Old Notes pursuant to the Exchange
Offer, except as otherwise provided in Instruction 6 of the Letter of
Transmittal.
Any inquiries you may have with respect to the Exchange Offer should be
addressed to the Exchange Agent, at its address and telephone numbers set forth
on the back cover of the Prospectus. Additional copies of the enclosed material
may be obtained from the Exchange Agent.
Very truly yours,
The Holt Group, Inc.
NOTHING CONTAINED HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE
YOU OR ANY OTHER PERSON THE AGENT OF THE COMPANY OR THE EXCHANGE AGENT, OR ANY
AFFILIATE OF ANY OF THEM, OR AUTHORIZE YOU OR ANY OTHER PERSON TO MAKE ANY
STATEMENT OR USE ANY DOCUMENT ON BEHALF OF ANY OF THEM IN CONNECTION WITH THE
EXCHANGE OFFER OTHER THAN THE ENCLOSED DOCUMENTS AND THE STATEMENTS THEREIN.
-2-
NOTICE OF GUARANTEED DELIVERY
THE HOLT GROUP, INC.
Offer to Exchange
all of its
9 3/4% Senior Notes due 2006
for a new series of its
9 3/4% Senior Notes due 2006
Which Have Been Registered Under the Securities Act of 1933
Pursuant to the Prospectus dated ______ __, 1998
As set forth in Prospectus described below, this Notice of Guaranteed
Delivery or one substantially equivalent hereto must be used to tender for
exchange 9 3/4% Senior Notes due 2006 ("Old Notes"), of The Holt Group, Inc., a
Delaware corporation ("Company"), pursuant to the Exchange Offer (as defined
below) if certificates for Old Notes are not immediately available or the
certificates for Old Notes and all other required documents cannot be delivered
to the Exchange Agent on or prior to the Expiration Date (as defined in the
Prospectus), or if the procedures for delivery by book-entry transfer cannot be
completed on a timely basis. This instrument may be delivered by hand or
transmitted by facsimile transmission or mail to the Exchange Agent.
The Exchange Agent for the Exchange Offer is:
THE BANK OF NEW YORK
By Registered or Certified Mail: By Hand/Overnight Express:
The Bank of New York The Bank of New York
101 Barclay Street, 7E 101 Barclay Street
New York, New York 10286 Corporate Trust Services Window
Attention: Reorganization Section Ground Level
New York, New York 10286
Attention: Reorganization Section
By Facsimile Transmission:
(212) 815-6339
Confirm by telephone:
(212) 815-2742
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN AS SET FORTH ABOVE
OR TRANSMISSIONS OF INSTRUCTIONS VIA A FACSIMILE NUMBER OTHER THAN AS SET FORTH
ABOVE WILL NOT CONSTITUTE A VALID DELIVERY.
This Notice of Guaranteed Delivery is not to be used to guarantee
signatures. If a signature on a Letter of Transmittal is required to be
guaranteed by an Eligible Institution under the Instructions to the Letter of
Transmittal, such signature guarantee must appear in the applicable space
provided in the signature box in the Letter of Transmittal.
------------------------------
THE EXCHANGE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY
TIME, ON _______ __, 1998, UNLESS THE EXCHANGE OFFER IS EXTENDED.
------------------------------
<PAGE>
Ladies and Gentlemen:
The undersigned hereby tenders to the Company, upon the terms and
subject to the conditions set forth in the Prospectus dated ______ __, 1998
("Prospectus") and in the related Letter of Transmittal (which, together with
any amendments or supplements thereto, collectively constitute the "Exchange
Offer"), receipt of each of which is hereby acknowledged, the principal amount
of Old Notes indicated below pursuant to the guaranteed delivery procedures set
forth in the Prospectus under the caption "The Exchange Offer -- Procedures for
Tendering Old Notes -- Guaranteed Delivery Procedures."
Signature(s)____________________________________________________________________
Name(s) of Eligible Holders_____________________________________________________
PLEASE TYPE OR PRINT
Principal Amount of Old Notes Tendered for Exchange $___________________________
Old Note Certificate No(s). (If available)______________________________________
Dated _______________, 199__
Address(es)_____________________________________________________________________
Zip Code
Area Code and Tel. No.(s)_______________________________________________________
(Check box if shares will be tendered by book-entry transfer)
/ / The Depository Trust Company
DTC Account Number_________________________________
-2-
<PAGE>
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, an Eligible Institution (as defined in the
Prospectus), having an office or correspondent in the United States, hereby (a)
represents that the above named person(s) "own(s)" the Old Notes tendered hereby
within the meaning of Rule 14e-4 promulgated under the Securities Exchange Act
of 1934, as amended ("Rule 14e-4"), (b) represents that such tender of Old Notes
complies with Rule 14e-4, and (c) guarantees to either deliver to the Exchange
Agent the certificates representing all the Old Notes tendered hereby, in proper
form for transfer, or to deliver such Old Notes pursuant to the procedure for
book-entry transfer into the Exchange Agent's account at The Depository Trust
Company, in either case together with the Letter of Transmittal (or a facsimile
thereof), properly completed and duly executed, with any required signature
guarantees or an Agent's Message (as defined in the Prospectus) in the case of a
book-entry transfer, and any other required documents, all within three New York
Stock Exchange trading days after the date hereof.
- ------------------------------------- ---------------------------------------
Name of Firm Authorized Signature
- ------------------------------------- ---------------------------------------
Address Please Type or Print
- ------------------------------------- ---------------------------------------
Zip Code Date
NOTE: DO NOT SEND CERTIFICATES FOR OLD NOTES WITH THIS NOTICE. CERTIFICATES
SHOULD BE SENT WITH YOUR LETTER OF TRANSMITTAL.
-3-
