First Union National Bank
1339 Chestnut Street, 4th Floor
PA 4810
Philadelphia, PA 19107
November 22, 2000
Summit Business Capital Corp.
99 Park Avenue
19th Floor
New York, NY 10016
Re: Payment Undertaking
Ladies/Gentlemen:
We refer you to transactions closed on or about this day among
MATLACK LEASING CORPORATION ("MLC") and MATLACK, INC. ("MI") and
MATLACK (DE), INC. ("DE") and MATLACK LEASING, L.L.C. ("LLC") and
SUMMIT BUSINESS CAPITAL CORP. ("Summit"), (collectively, the
"Parties").
BACKGROUND
A. MLC and MI (for limited purposes) and LLC are parties to that
certain Purchase of Assets Agreement dated as of November 10, 2000
(the "Purchase Agreement") pursuant to which MLC and MI agreed to
sell certain of its assets (the "Sale Assets") to LLC. Certain of
the Sale Assets consist of vehicles and/or trailers, ownership of
which is evidenced by certificates of title issued by the state in
which each such vehicle or trailer is registered.
B. MLC, MI, DE and various of its affiliates of the foregoing are
parties to a Credit Agreement dated as of August 19, 1998 (as amended
from time to time through and after the date hereof, the "Credit
Agreement") with First Union National Bank, as agent (the "Agent")
and the other banks (including First Union National Bank, as a bank)
party thereto (collectively, the "Banks") pursuant to which the Agent
and the Banks made certain credit facilities available to, among
others, MLC, DE and MI. In order to secure their obligations under
the Credit Agreement, MLC and MI granted in favor of the Agent liens
on, among other things, the 268 vehicles/trailers described on
Exhibit A attached hereto (the "Pledged Vehicles"), which constitute
part of the Sale Assets.
C. As of the date of this Agreement, the original certificates of
title for the Pledged Vehicles are located at the department/bureau
of motor vehicles for the states in which such Pledged Vehicles are
registered being processed to reflect the lien of the Agent thereon.
Therefore, as of the date of this Agreement, MLC and/or MI cannot
deliver to LLC the original certificates of title for the Pledged
Vehicles.
D. Pursuant to the terms of the Purchase Agreement, the Pledged
Vehicles have been sold and delivered by MLC and/or MI to LLC, but
may be returned in accordance with the terms hereof.
E. The parties hereto have agreed that $4,180,000 of the Purchase
Price (as such term is dated in the Purchase Agreement) paid by LLC
to MLC and MI, and in turn paid by MLC and MI to the Agent to be
applied to MLC and MI's obligations under the Credit Agreement
represents proceeds of the Pledged Vehicles.
F. MLC and MI as sellers, and LLC as buyer, by their assent hereto,
hereby confirm that in the event of a "Title Defect" as defined
herein, as to a Pledged Vehicle, such Pledged Vehicle and all of
LLC's rights therein shall be returned and assigned to MLC in
exchange for delivery of the Vehicle Cost, all in accordance with the
terms and conditions set forth herein.
G. NOW, THEREFORE, in consideration of the premises, mutual
covenants, terms conditions and procedures contained herein,
incorporating the Background Section herein and for other good and
valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, the parties hereto agree as follows:
1. Undertaking by the Agent. In accordance with the terms and
conditions of this letter agreement, the Agent shall pay to Summit
and its successors and assigns, but to no other party or person, the
sum of $15,311.36 (the "Vehicle Cost") with respect to any and each
Pledged Vehicle, promptly upon written notice that such Pledged
Vehicle has been determined to suffer from a "Title Defect" pursuant
to the terms hereof.
2. Undertaking by Other Parties. Simultaneously with any
payments by the Agent pursuant to Section 1 above, (i) Summit and LLC
shall cause: (A) the Pledged Vehicles associated with such payments
to be returned to MLC or MI and (B) if not in the possession of the
Agent or its certificate of title processor, the certificates of
title with respect to such Pledged Vehicles to be delivered to the
Agent with such endorsements and accompanying transfer documents of
LLC and/or Summit as the Agent may require; and (ii) such payments
shall constitute loans under the Credit Agreement and the principal
amount outstanding under the Credit Agreement shall increase by an
amount equal to such payments and shall be secured by the Pledged
Vehicles and all other collateral securing amounts outstanding under
the Credit Agreement.
3. Title Defect. Except as otherwise provided in subsections
(a) through (d) of this Section 3, a "Title Defect" shall exist with
respect to a Pledged Vehicle if, and only if, on May 15, 2001 or such
later date as may be agreed to in writing by the parties hereto (the
"Closure Date") (or earlier pursuant to subsection (c) below), the
certificate of title for such Pledge Vehicle shall not note Summit or
its nominee or its successors or assigns as the first lien holder
thereof.
(a) Provided, however, no Title Defect may ever exist with
respect to any Pledged Vehicle for which an original certificate
of title, which term includes an original duplicate or
replacement certificate of title issued by the appropriate state
authority, has been delivered to the law firm of Wolf, Block,
Schorr & Solis-Cohen, LLP, as counsel for Summit, which
indicates that the Agent is the sole holder of a lien on such
Pledged Vehicle and bears the endorsement of the Agent on such
certificate of title or is accompanied by other documentation
sufficient to effectuate the release by the Agent of its lien
thereon.
(b)(1) Provided further, no Title Defect may ever exist with
respect to a Pledged Vehicle for which an original certificate
of title has been delivered to the law firm of Wolf, Block,
Schorr & Solis-Cohen, LLP, as counsel for Summit, which does not
indicate that the Agent is the holder of a lien on such Pledged
Vehicle, if Summit submits such certificate of title to the
appropriate department/bureau of motor vehicles or to a
reputable title processing agent to have a lien in favor of
Summit recorded on such certificate of title and Summit (or its
agent) receives back from the appropriate department/bureau of
motor vehicles of such certificate of title reflecting the lien
of Summit as the sole lienholder. Summit hereby agrees to
provide written notice to Fleet of its lien on any such
certificate of title promptly after either LLC or Summit
receives such certificate of title indicating Summit's lien.
(2) In addition, if Summit fails to provide the Agent with
written evidence, within fourteen (14) days of such delivery
from Agent of a certificate of title as described in Section
3(b)(1) above, that it has submitted such certificate of title
to the appropriate department/bureau of motor vehicles or to a
reputable title processing agent for notation of its lien, then
Agent by notice to Summit and LLC, may declare that no Title
Defect may ever exist for such Pledged Vehicle, and such
declaration shall become effective if, but only if, Summit fails
to provide such evidence to the Agent within five (5) business
days of such declaration.
(c) Further, unless excluded under subsection (a) or (b)
above, a "Title Defect" shall exist prior to the Closure Date
for any Pledged Vehicle, if and at the time that the Agent
receives: (i) evidence that a first priority lien in favor of
Summit cannot be recorded on the certificate of title for a
Pledged Vehicle together with the certificate of title for such
Pledged Vehicle (with such endorsements and accompanying
transfer documents of LLC and/or Summit as the Agent may
require) if such certificate of title is not in the possession
of the Agent or its certificate of title processor and (ii)
evidence that such Pledged Vehicle has been resold to returned
or delivered to the possession of MLC or MI, as appropriate
(which latter evidence may be a receipt signed by MLC or MI).
LLC shall assign to MLC or MI, as appropriate, any insurance
coverage or proceeds which may be available in connection with
such Pledged Vehicle as of the date of such delivery as a result
of any damage to such Pledged Vehicle which occurred during the
time period from the date hereof to the date of delivery of such
Pledged Vehicle back to MLC or MI.
(d) On the Closure Date and in exchange for delivery to
Summit of the Vehicle Cost therefor, LLC shall return to MLC or
MI as appropriate, each Pledged Vehicle for which Summit or its
successors or assigns has not received a certificate of title
under either subsection (a) or (b) above or which has not been
returned under subsection (c) above. LLC shall assign to MLC or
MI, as appropriate, any insurance coverage or proceeds which may
be available in connection with such Pledged Vehicle as of the
date of such delivery as a result of any damage to such Pledged
Vehicle which occurred during the time period from the date
hereof to the date of delivery of such Pledged Vehicle back to
MLC or DE.
4. Certain Agreements of MLC, MI, DE and LLC. LLC, MLC, MI, DE
and Summit hereby acknowledge and agree to each of the following: (i)
the Pledged Vehicles have been sold and delivered by MLC or MI to LLC
and have been accepted by LLC; and (ii) the sale described in the
Purchase Agreement has been fully consummated, subject to LLC's right
to repayment of a certain portion of the Purchase Price under the
terms and conditions of this Agreement.
5. Release. The Agent agrees that upon its receipt of the
proceeds described in Recital E above, it shall release to Summit and
assign to Summit its security interest in all Pledged Vehicles, and
shall execute lien releases on certificates of title and appropriate
UCC releases, but no other party or person may require such release
or enforce the provisions of this Section 5.
6. All parties hereto undertake to perform only such duties as
are expressly set forth herein and no implied duties or obligations
shall be read into this Agreement for, by or against any party
hereto.
7. Governing Law. This Agreement shall be governed by and
construed in accordance with the internal laws of The Commonwealth of
Pennsylvania.
8. Successors and Assigns. This Agreement shall bind the
parties hereto and their respective heirs, executors, administrators,
successors and assigns.
9. Integration; Amendment. This Agreement constitutes the
entire undertaking of the Agent with respect to the subject matter
hereof. It is expressly understood that this Agreement may not be
altered, amended, modified, or otherwise changed in any respect or
particular whatsoever, except in a writing duly executed by an
authorized representative of the party or parties against whom such
waiver, alteration, amendment or modification is to be enforced.
10. Severability of Provisions. Any provision in this Agreement
that is held to be inoperative, unenforceable, void or invalid in any
jurisdiction or which is negated by action of a party or any other
person or persons shall, as to that jurisdiction, be ineffective,
unenforceable, void or invalid without affecting the remaining
provisions in that jurisdiction or the operation, enforce ability, or
validity of that provision in any other jurisdiction, and to this end
and the provisions of this Agreement are declared to be severable.
11. Judicial Proceedings. The parties agree that any suit,
action or proceeding, whether claim or counterclaim, brought or
instituted by any of them or their respective successors or assigns,
on or with respect in this Agreement or the dealings of the parties
with respect hereto, shall be tried only by a court and not by a
jury. THE PARTIES HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY
WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY SUCH SUIT, ACTION OR
PROCEEDING. EACH OF THE PARTIES ACKNOWLEDGES AND AGREES THAT THIS
SECTION IS A SPECIFIC AND MATERIAL ASPECT OF THIS ESCROW AGREEMENT
AND THAT THE OTHER PARTIES WOULD NOT ENTER INTO THIS AGREEMENT IF THE
WAIVERS SET FORTH IN THIS SECTION WERE NOT A PART OF THIS AGREEMENT.
12. Notices. Any notice given pursuant to this Agreement or
pursuant to any document comprising or relating to this Agreement
shall be in writing, including facsimiles and must be given by either
facsimile or overnight courier. Notice given by facsimile or other
electronic mail shall be deemed to have been given and received when
electronic acknowledgment of receipt has been obtained by the sender.
Notice given by overnight mail courier shall be deemed to have been
given and received on the date specified in the notice of delivery or
other record of delivery issued by the overnight courier service
retained by the party sending such Notice. Notices shall be
addressed as set forth on Exhibit B attached hereto, or to such other
address that a party may specify by Notice.
13. Counterparts, Fax. This Agreement may be executed in any
number of counterparts and by different parties hereto on separate
counterparts, each of which when so executed and delivered shall be
an original and all of which together shall constitute one and the
same instrument. Any party hereto may deliver its executed
counterpart hereof by fax.
Very truly yours,
FIRST UNION NATIONAL BANK
By: /s/ Don D. Mishler
Name: Don D. Mishler
Title: Senior Vice President
Accepted and Agreed as of the day and year first above written.
SUMMIT BUSINESS CAPITAL CORP.
By: /s/ Richard Stern
Name: Richard Stern
Title: Vice President
MATLACK LEASING CORPORATION
By: /s/ John R. Jenchura
Name: John R. Jenchura
Title: Vice President
MATLACK, INC.
By: /s/ John R. Jenchura
Name: John R. Jenchura
Title: Vice President
MATLACK (DE), INC.
By: /s/ John R. Jenchura
Name: John R. Jenchura
Title: Vice President
MATLACK LEASING, LLC
By: /s/ Richard Parrillo
Name: Richard Parrillo
Title: Managing Member
EXHIBIT "A"
PLEDGED VEHICLES
See attached list of 273 Vehicles
EXHIBIT "B"
NOTICE ADDRESSES
First Union National Bank
Capital Markets Special Situations
1339 Chestnut Street, 4th Floor
PA 4810
Philadelphia, PA 19107
Attn: Don D. Mishler, Senior Vice President