FOURTH AMENDMENT TO
CREDIT AGREEMENT
This FOURTH AMENDMENT TO CREDIT AGREEMENT (the "Agreement") is entered
into as of October 9, 2000 between MATLACK (DE), INC. (the "Company"),
MATLACK, INC. ("MI") for itself and as successor by merger to Specialized
Dedicated Fleets, Inc. and Brite-Sol Services, Inc., MATLACK LEASING
CORPORATION ("ML"), MATLACK SYSTEMS, INC. ("Systems") and MATLACK
PROPERTIES, INC. ("MP") formerly known as Super Service, Inc. (the Company,
MI, ML, Systems and MP are each referred to individually as a "Borrower" and
collectively as the "Borrowers") and FIRST UNION NATIONAL BANK, a national
banking association ("First Union") and the other banks identified on the
signature pages hereto (each individually a "Bank" and individually and
collectively, "Banks") and First Union as agent for the Banks ("Agent").
BACKGROUND
A. The Borrower, the Banks and the Agent are parties to that certain
Credit Agreement dated August 19, 1998, as amended by Amendment No.1 to
Credit Agreement dated February 12, 1999, as further amended by Amendment
No. 2 to Credit Agreement dated August 10, 1999, and as further amended by
Amendment No. 3 to Credit Agreement dated December 20, 1999 (collectively,
the "Credit Agreement") pursuant to which the Banks agreed to make available
to the Borrowers various credit facilities upon the terms and conditions
specified in the Credit Agreement.
B. The Borrowers have provided the Banks with information indicating
that, as more particularly set forth herein, they are in default under
certain provisions set forth in the Credit Agreement.
C. The Borrowers have requested, and the Banks have agreed to,
subject to the terms and conditions hereof, certain amendments and waivers
under the Credit Agreement as set forth herein.
D. All terms capitalized but not otherwise defined herein shall have
the meanings ascribed to them in the Credit Agreement.
AGREEMENT
NOW, THEREFORE, incorporating the Background Section herein, and for
other good and valuable consideration, the receipt and sufficiency of which
are hereby acknowledged, and intending to be legally bound hereby, the
parties hereby agree as follows:
Section 1. Joinder of Matlack Systems, Inc. Matlack Systems, Inc.
is hereby added as a "Borrower" under the Credit Agreement and hereby joins
in and becomes a party to the Credit Agreement as a Borrower and assumes and
agrees to perform and to become jointly and severally liable for all of the
obligations of a Borrower under the Credit Agreement.
Section 2. Acknowledgment of Events of Default; Waiver of Notice;
Waiver of Defaults; Validity and Enforceability of Documents.
2.1 Each Borrower acknowledges and agrees that Events of Default exist
and are continuing under the Credit Agreement and each of the other Loan
Documents (the "Existing Defaults") as described on Schedule 1.1 attached
hereto and made a part hereof. Each Borrower acknowledges and agrees that
the Existing Defaults are material in nature, and waives any defenses, set-
offs or counterclaims that exist in connection with the Existing Defaults.
The Banks and the Agent hereby waive the Existing Defaults and their rights
to exercise any of the remedies available to them in connection with the
Existing Defaults under the Loan Documents and under applicable law.
Notwithstanding the foregoing sentence, nothing contained herein shall
constitute or be deemed to constitute a waiver by the Banks or the Agent of
any of their rights or remedies in connection with any Events of Default,
other than the Existing Defaults, whether presently existing or occurring
subsequent to the date hereof.
2.2 Except as amended and supplemented hereby, all of the terms and
provisions of the Credit Agreement and the other Loan Documents shall remain
in full force and effect and, except as expressly amended hereby, are hereby
ratified and confirmed. The Borrowers hereby ratify and confirm that the
Credit Agreement and the other Loan Documents, as amended or supplemented
hereby, are valid and binding obligations, enforceable in accordance with
their respective terms subject only to bankruptcy, insolvency,
reorganization, moratorium or other laws or equitable principles affecting
creditors rights generally. All obligations presently or hereafter
outstanding under the Credit Agreement, the Notes and the other Loan
Documents shall continue to be secured by, among other things, the
Collateral, and this Agreement does not constitute a novation of the Credit
Agreement or the Notes. Nothing contained herein shall alter, amend,
modify, or extinguish the obligations of each Borrower to repay the Loans.
Section 3. Acknowledgment of Obligations. Each Borrower acknowledges
and agrees that, as of the date hereof, each Borrower is indebted to the
Banks in the total principal amounts reflected on Schedule 2 attached hereto
(which principal amounts the Borrowers acknowledge may increase as a result
of borrowings under the Revolving Credit Loan) together with accrued and
unpaid interest, expenses and fees, all without offset, counterclaims, or
defenses of any kind.
Section 4. Acknowledgment of Liens. Each Borrower acknowledges and
agrees that the Agent holds security interests in and liens on the
Collateral, and that the liens and security interests of the Agent secure
the Loans.
Section 5. Amendments to the Credit Agreement.
5.1 The definition of "Base Rate Loans" in Section 1.1 of the Credit
Agreement is amended and restated as follows:
"Base Rate Loan" shall mean a Loan, or any portion
thereof, that bears interest at an annual rate based
upon the Base Rate.
5.2 Subsection (iii) of the definition of "Change of Control" in
Section 1.1 of the Credit Agreement is amended and restated as follows:
(iii) the Rollins family or any of the related trusts
(excluding the estate of John W. Rollins, Sr.) cease to
own, in the aggregate, 90% of the interests held by
such family members or related trusts as of April 1,
2000, as set forth on Schedule 1.1A hereof.
5.3 The definition of the term "Collateral" contained in Section 1.1
of the Credit Agreement is amended and restated in its entirety as follows:
"Collateral" shall mean all real and personal property
of any Borrower upon which the Banks and/or First Union
were or, in the future, are granted a pledge, security
interest, lien or other interest of any kind, pursuant
to a Security Agreement, a Mortgage or otherwise, to
secure payment and performance by the Borrowers of the
Obligations.
5.4 The definition of the term Loan Documents contained in Section 1.1
of the Credit Agreement is amended and restated in its entirety as follows:
"Loan Documents" shall mean this Agreement, the Notes, the
Security Agreement, the Mortgages, the Deposit Pledge Agreement
dated as of the date of the Fourth Amendment, the Account and
Agency Agreement dated as of the date of the Fourth Amendment,
and all other documents executed in connection with any of the
foregoing or related to or incidental to the foregoing, the Loans
or the Collateral.
5.5 Paragraphs (f), (g) and (i) contained in the definition of
"Permitted Liens" in Section 1.1 of the Credit Agreement are amended and
restated in their entirety as follows:
". . . (f) Liens (other than Liens on the Collateral)
on the property of any of the Borrowers or any
Subsidiary securing (i) the non-delinquent performance
of bids, trade contracts (other than for borrowed
money), leases or statutory obligations which do not
exceed $2,000,000 in the aggregate; (ii) other non-
delinquent obligations of a like nature; in each case,
incurred in the ordinary course of business, provided
all such Liens in the aggregate would not (even if
enforced) cause a material Adverse Effect; (g) Liens
(other than Liens on the Collateral) consisting of
judgment or judicial attachment liens, provided that
the enforcement of such liens is effectively stayed and
all such liens in the aggregate at any time outstanding
for any Borrower and its Subsidiaries do not exceed
$2,000,000. . . "
". . . (i) purchase money security interests on any
property, which is a replacement or substitution for
any property (other than revenue generating property)
held by the Borrowers or any Subsidiary as of the date
of the Fourth Amendment, acquired or held by any
Borrower or any Subsidiary in the ordinary course of
business, securing Indebtedness incurred or assumed for
the purpose of financing all (or any part) of the cost
of acquiring such property; provided that (1) any such
Lien attaches to such property concurrently with or
within 60 days after the acquisition thereof, (2) such
Lien attaches solely to the property so acquired in
such transaction, (3) the principal amount of the debt
secured thereby does not exceed 100% of the cost of
such property, and (4) the aggregate amount of such
Indebtedness incurred after the date of the Fourth
Amendment in connection with this subsection (i) shall
not exceed $2,000,000 in principal amount outstanding
at any time; and provided further that the amount of
purchase money security interests permitted under this
subsection (i) and the amount of the Liens permitted
under subsection (g) shall not, in the aggregate,
exceed $2,000,000 ."
5.6 The definition of the term "Security Agreement" contained in
Section 1.1 of the Credit Agreement is amended and restated in its entirety
as follows:
"Security Agreement" shall mean, collectively, those certain
Security Agreements dated August 3, 1999 between First Union and
certain of the Borrowers and those certain Security Agreements
dated September 8, 1999 between First Union and certain of the
Borrowers and that certain Amended and Restated Security
Agreement dated as of October 9, 2000 between First Union and
each of the Borrowers together with any amendments, restatements
or modifications thereto and together with any additional
security agreements, pledge agreements and/or assignment
agreements executed by any Borrower in favor of First Union or
the Banks, whether currently existing or executed subsequent to
the date hereof.
5.7 Section 1.1 of the Credit Agreement is supplemented by adding the
following Definitions thereto:
"Aged Receivables Proceeds" shall mean, as of the end of a
particular month and for a particular account receivable which
has been outstanding for a period of ninety (90) days or longer,
the amount of proceeds representing the net decrease in the
amount of such receivable (pursuant to collection and exclusive
of accounting adjustments) between the amount outstanding as of
the end of such calendar month and the amount outstanding as of
the end of the immediately preceding calendar month.
"Amendment and Waiver Fee" shall have the meaning set forth in
Section 2.6(c) of this Agreement.
"Cash Collateral Account" shall have the meaning set forth in
Section 2.9(e) of this Agreement.
"Excess Cash Flow" shall mean, as of any given date, the amount
by which the aggregate amount of cash held by all Borrowers,
whether located in bank accounts or elsewhere, exceeds
$2,900,000.
"Excess Receivables Proceeds" shall mean the amount by which the
Aged Receivables Proceeds with respect to Pre-June Receivables
exceed $500,000 in the aggregate subsequent to August 31, 2000.
"Fourth Amendment" shall mean that certain Fourth Amendment to
Credit Agreement dated as of October 9, 2000 by and between the
Borrowers, First Union and the Banks.
"Mortgages" shall mean those certain mortgages and deeds of trust
(as appropriate), in form and substance satisfactory to the Banks
and First Union, dated as of the date of the Fourth Amendment by
a Borrower in favor of First Union pursuant to which First Union
shall be granted a first priority mortgage lien on each parcel of
real property described on Schedule 8(d) of the Fourth Amendment,
together with all amendments, modifications, exhibits, schedules
thereto as may be in effect from time to time and together with
any and all other mortgages, deeds of trust or similar agreements
executed subsequent to the date hereof by any Borrower.
"Non-Operational Cash Flow" shall mean the following amounts:
(i) any payments or other amounts received by any Borrower
outside such Borrower's ordinary course of business (including,
without limitation, any and all tax refunds and insurance
settlement proceeds); and (ii) all proceeds from sales of assets
(both real and personal property assets) other than from sales in
the ordinary course of such Borrower's business and other than
from a sale of the assets of ML or a sale of the real property
located in Long Beach, California; and (iii) the Excess
Receivables Proceeds.
"Pre-June Receivables" shall mean all accounts receivable of any
Borrower invoiced prior to June 1, 2000.
"Prepayment Amounts" shall have the meaning set forth in Section
2.13 of this Agreement.
"Retained Non-Operational Cash Flow" shall mean the portion of
the Non-Operational Cash Flow and the portion of the Specific
Asset Proceeds which do not constitute Prepayment Amounts.
"Specific Asset Proceeds" shall mean the proceeds from the sale
of ML and the proceeds from the sale of the real property located
in Long Beach California.
5.8 Exhibit A, which is referred to in the introductory paragraph of
Section 2.1 of the Credit Agreement, is amended and restated in its entirety
by the Amended and Restated Exhibit A which is attached hereto and made a
part hereof.
5.9 Subsection 2.1(a) of the Credit Agreement is amended and restated
in its entirety as follows:
(a) Revolving Credit Loans. Borrowers may not request
Revolving Credit Loans subsequent to the Revolver Termination
Date. Revolving Credit Loans shall be Base Rate Loans.
Beginning on November 15, 2000 and continuing on the fifteenth
day of each calendar month thereafter through and including
January 15, 2001, the Borrowers shall make monthly principal
payments each in an amount equal to $400,000. On February 15,
2001, all principal amounts outstanding under the Revolving
Credit Loans and all accrued and outstanding interest, fees and
expenses shall be due and payable in full. In addition to the
foregoing principal payments, beginning on November 5, 2000 and
continuing on the fifth day of each calendar month thereafter
through and including February 5, 2001, the Borrowers shall make
a principal payment equal to fifty percent (50%) of the lesser
of: (i) the Excess Cash Flow as of the end of the immediately
preceding month; or (ii) the Excess Cash Flow as of the end of
the calendar month immediately preceding the immediately
preceding calendar month.
5.10 Subsection 2.1(b) of the Credit Agreement is deleted in its
entirety.
5.11 Subsection 2.1(c) of the Credit Agreement is deleted in its
entirety.
5.12 Subsection 2.1(e) of the Credit Agreement is supplemented by
adding the following sentence thereto:
Notwithstanding anything to the contrary contained herein,
subsequent to the Revolver Termination Date, all outstanding LIBO
Rate Loans (if any) shall be converted to Base Rate Loans upon
the termination of their respective Interest Periods.
5.13 Subsection 2.1(i) of the Credit Agreement is deleted in its
entirety.
5.14 The first paragraph of Section 2.2 of the Credit Agreement is
supplemented by adding the following sentence thereto:
Subsequent to the Revolver Termination Date, the following
terms and conditions shall apply with respect to Standby Letters
of Credit: (i) no additional Standby Letters of Credit shall be
issued; (ii) Standby Letter of Credit #SM411638 may be increased
in face amount by an amount of up to $1,200,000 in First Union's
and the Banks" discretion at the request of the Borrowers; and
(iii) provided that no Event of Default has occurred and
continues to exist and provided that no event which, with the
passage of time or the giving of notice or both, would constitute
an Event of Default has occurred and continues to exist, the
expiration date of Standby Letters of Credit existing as of such
date shall be extended for one year upon the request of the
Borrowers; provided, however, that the First Union and the Banks
shall not release or otherwise terminate their security
interests, liens and/or other interests in and on any of the
Collateral until all Obligations have been paid in full and all
Standby Letters of Credit have been either terminated or
canceled.
5.15 Subsection 2.4(a) of the Credit Agreement is supplemented with the
following sentence:
Subsequent to the Revolver Termination Date, no Loan may be
renewed as or converted to a LIBO Rate Loan and all
outstanding Loans shall be Base Rate Loans.
5.16 Subsection 2.5(a) of the Credit Agreement is amended and restated
as follows:
(a) Base Rate Loans. Each Base Rate Loan shall bear interest on the
unpaid principal balance thereof from day to day at a rate per annum which
shall at all times be equal to: (i) the Base Rate during the period prior
to the date of the Fourth Amendment; and (ii) the Base Rate plus 1% from and
after the date of the Fourth Amendment. Interest on Loans shall be computed
on the basis of a year of 365 or 366 days, as applicable, if the Base Rate
is based upon the prime rate of First Union. Interest shall be payable
monthly in arrears on the first day of each calendar month; except, however,
that although interest shall accrue at a per annum rate at all times equal
to the Base Rate plus 1% from and after the date of the Fourth Amendment,
the Borrowers shall make monthly interest payments during such time period
in an amount which is based upon a per annum rate equal to the Base Rate and
the additional monthly interest of 1% per annum shall accrue each month and
become due and payable in full on February 15, 2001.
5.17 Subsection 2.5(c) of the Credit Agreement is supplemented by
adding the following sentence thereto:
Notwithstanding anything to the contrary contained herein,
subsequent to the Revolver Termination Date, all LIBO Rate Loans
(if any) shall automatically convert to Base Rate Loans upon
termination of their respective applicable Interest Periods.
5.18 Subsection 2.5(d) of the Credit Agreement is supplemented by
adding the following sentence thereto:
Notwithstanding anything contained herein to the contrary,
subsequent to the Revolver Termination Date, no Loan may be
renewed as or converted to a LIBO Rate Loan.
5.19 Subsection 2.6(g) of the Credit Agreement is deleted in its
entirety.
5.20 Section 2.6 of the Credit Agreement is supplemented by adding the
following Subsections 2.6(c) and (d) thereto:
(c) Renegotiation and Extension Fee. In connection with the
Fourth Amendment, the Borrowers shall pay to First Union and the
Banks a renegotiation and extension fee ("Renegotiation and
Extension Fee"), $100,000 of which shall be due and payable on
the date of closing of the Fourth Amendment. The balance of the
Renegotiation and Extension Fee, in the amount of up to $250,000,
will accrue in $50,000 increments on each of the following dates:
(i) on the date of closing of the Fourth Amendment; (ii)
November 1, 2000; (iii) December 1, 2000; (iv) January 1, 2001;
and (v) February 1, 2001, and shall be due and payable, to the
extent accrued, on the date on which the Obligations are paid in
full or February 15, 2001, whichever first occurs.
(d) Agent's Fee. Immediately upon execution of the Fourth
Amendment, First Union's annual fee will be increased to $100,000
per year and payable in equal monthly installments in the amount
of $8,333.33 each payable on the first day of each calendar month
with the first such installment due and owing on the date of
closing of the Fourth Amendment.
5.21 Section 2.9 of the Credit Agreement is supplemented by adding the
following Subsection 2.9(e) thereto:
(e) Cash Collateral Account. The Borrowers shall maintain
a cash collateral account with First Union (the "Cash Collateral
Account"). To the extent that the cash balances of the Borrowers
in bank accounts other than the Cash Collateral Account exceed an
aggregate amount of $1,900,000 as of the close of business for a
particular business week, the amount of such excess shall be
immediately deposited by the Borrowers into the Cash Collateral
Account. The funds contained in the Cash Collateral Account
shall be made available to the Borrowers for use in normal course
business operations, provided the use of such cash is consistent
with both the cash flow projections approved by the Banks and the
assumptions used in creating such projections. The Borrowers
each authorize First Union (but First Union shall not be
obligated) to deduct from the Cash Collateral Account, or any
other account maintained by any Borrower at First Union National
Bank, any amount payable hereunder on or after the date upon
which such amount is due and payable. Such authorization shall
include but not be limited to amounts payable with respect to
principal, interest, fees and reasonable expenses. If the Banks
exercise the rights available to them under this Section 2.9(e),
the Banks shall endeavor to provide the Borrowers with an
estimate (if possible) of the expenses described herein; except,
however, that the failure by the Banks to provide the Borrowers
with such an estimate shall not in any way affect the Borrowers'
obligations to pay such expenses.
5.22 Article 2 of the Credit Agreement is supplemented by adding the
following Section 2.13 thereto:
2.13 Mandatory Prepayments. Subsequent to October 1, 2000,
each Borrower shall pay to First Union, within forty-eight (48)
hours after receipt thereof, the following amounts (collectively,
the "Prepayment Amounts"): (a) 90% of the Non-Operational Cash
Flow; and (b) 95% of the Specific Asset Proceeds. The Retained
Non-Operational Cash Flow must be deposited into the Cash
Collateral Account. The Prepayment Amounts shall be held by the
Borrowers in trust for First Union until payment of such amounts
to First Union. On or before October 15, 2000 (the "Receivables
Calculation Date"), the Borrowers shall develop a method for
calculating and reporting to First Union the Aged Receivables
Proceeds for all accounts receivable of the Borrowers which have
been outstanding for a period of ninety (90) days or longer. To
the extent that Excess Receivables Proceeds exist as of the
Receivables Calculation Date, the Borrowers shall pay to First
Union, on October 15, 2000, that portion of the Excess
Receivables Proceeds which constitute Prepayment Amounts. Any
and all mandatory prepayments received by First Union or the
Banks in accordance with this provision shall be applied to the
amount outstanding in connection with the Revolving Credit Loans
in the manner deemed appropriate by First Union and the Banks,
including, without limitation, as permanent reductions to the
Aggregate Loan Commitment or for payment of accrued and unpaid
interest, fees and expenses; provided, however, that such
prepayments shall have no effect on amount or payment dates of
the monthly principal payments due and owing under Section 2.1(a)
of this Credit Agreement.
5.23 Subsection 5.1(c) of the Credit Agreement is amended and restated
in its entirety as follows:
(c) Monthly Statements. (i) As soon as available, but not
later than thirty (30) days after the end of each calendar month,
a copy of the unaudited consolidated balance sheet of the Company
as of the end of such calendar month and the related consolidated
statements of income, shareholders equity and cash flows for the
period commencing on the first day and ending on the last day of
such month and a calculation of the Retained Non-Operational Cash
Flow and Excess Receivables Proceeds from July 1, 2000 through
the end of such calendar month together with any other financial
information reasonably requested by the Banks or First Union, all
of the foregoing to be certified by a Responsible Officer as
fairly presenting, in accordance with GAAP (subject to ordinary,
good faith year-end audit adjustments), the financial position
and the results of operations of the Borrowers and the
Subsidiaries; and (ii) as soon as available, but not later than
fifteen (15) days after the end of each calendar month, a report,
in form and substance satisfactory to First Union and the Banks,
containing the information set forth on Schedule 5.1(c) hereof.
5.24 Subsection 5.2(b) of the Credit Agreement is amended and restated
in its entirety as follows:
(b) Receivables Agings. On Monday of each week, a
receivables-aging summary report as of the end of the immediately
preceding week, and by the eighth Business Day following the end
of each calendar month, a detailed receivables aging report as of
the end of the immediately preceding calendar month, each of the
foregoing being in form and substance acceptable to First Union
and the Banks;
5.25 Section 5.9 of the Credit Agreement is supplemented by adding the
following sentence thereto:
The Borrowers shall from time to time, upon request by First
Union, promptly furnish or cause to be furnished to First Union
evidence, in form and substance acceptable to First Union, of the
maintenance of all insurance required to be maintained under this
Credit Agreement and the other Loan Documents. The Borrowers
shall use their best efforts to cause each hazard insurance
policy to provide, and the insurer issuing each such policy to
certify to First Union that (a) if such insurance be proposed to
be canceled or materially changed for any reason whatsoever, such
insurer will promptly notify First Union and such cancellation or
change shall not be effective for 30 days after receipt by First
Union of such notice, unless the effect of such change is to
extend or increase coverage under the policy; (b) First Union
shall be named as lender loss payee with respect to personal
property and mortgagee with respect to real property; and (c)
First Union will have the right, at its election, to remedy any
default in the payment of premiums within 30 days of notice from
the insurer of such default.
5.26 The last sentence of Section 5.12 of the Credit Agreement is
deleted in its entirety and replaced with the following two sentences:
Upon one Business Days' prior notice, the Borrowers shall permit,
and shall cause each Subsidiary to permit, representatives and
independent contractors of the Banks to visit and inspect any of
their respective properties, to examine or audit their respective
corporate, financial and operating records, and make copies
thereof or abstracts therefrom, and to discuss their respective
affairs, finances and accounts with their respective officers
during normal business hours and as often as may be reasonably
desired at the expense of the Borrowers; provided, however, that
upon the occurrence and continuance of an Event of Default all of
the foregoing shall be permitted without advance notice. The
Borrowers shall also permit, and shall cause each Subsidiary to
permit, representatives and independent contractors of the Banks
to perform appraisals of any assets of the Borrowers or
Subsidiaries, which appraisals shall be at the expense of the
Borrowers. If the Banks exercise the rights available to them
under this Section 5.12, the Banks shall endeavor to provide the
Borrowers with an estimate (if possible) of the expenses
described herein; except, however, that the failure by the Banks
to provide the Borrowers with such an estimate shall not in any
way affect the Borrowers' obligations to pay such expenses.
5.27 Article 5 of the Credit Agreement is supplemented by adding the
following Sections 5.18, 5.19, 5.20, 5.21, 5.22, 5.23 and 5.24 thereto:
5.18. Deposit Accounts. Except for those accounts listed
on Schedule 5.18 attached hereto, the Borrowers shall maintain
their depository accounts at First Union or any Bank. The
Borrowers shall not change the cash management services and
accounts currently maintained at Mellon Bank, N.A. without the
prior written consent of First Union, which consent shall not be
unreasonably withheld. In addition, the Borrowers shall
cooperate with First Union and the Banks and use their best
efforts to obtain from Mellon Bank, N.A. an account and agency
agreement or blocked account agreement, which is in form and
substance acceptable to First Union and the Banks.
5.19 Tax Refunds. Upon request by First Union, execute
documentation, in form and substance satisfactory to First Union
and the Banks, to assign to First Union, for the benefit of the
Banks, any and all federal, state, or other tax returns to which
any Borrower is entitled.
5.20 Employment of Consultant. Until all Obligations have
been paid in full, the Borrowers shall employ a financial
consulting firm acceptable to First Union on terms and conditions
acceptable to First Union and the Borrowers. First Union and the
Borrowers agree that Richter Consulting, Inc. ("Richter") is
acceptable and that Richter's monitoring of the operations,
refinancing and asset sales of the Borrowers on a monthly
reporting basis meets the provisions of this Section.
5.21 Delivery of Business Plan. On or before September 14,
2000, deliver to the Banks and First Union the final business
plan of the Borrowers for their fiscal year ending September 30,
2001, which business plan must be in form and substance
acceptable to the Banks and First Union, and on or before
September 21, 2000, deliver to the Banks and First Union a
written report prepared by Richter, in form and substance
satisfactory to the Banks and First Union, setting forth an
analysis of the viability and practicality of such business plan.
The Banks and the Borrowers agree that the Business Plan
delivered by the Borrowers to the Banks on September 14, 2000 and
the report prepared by Richter and delivered to First Union and
the Banks on September 15, 2000 satisfy the requirements of this
Section.
5.22 Delivery of Titles. On or before October 13, 2000,
Borrowers shall deliver to First Union all original titles for
any trailer with a net book value of $3,000 or more owned by any
Borrower on which First Union does not have a lien and which was
not delivered to First Union as of the date of the Fourth
Amendment, together with the fully executed documentation
required for the Agent to perfect a lien on such assets.
5.23 Title Insurance. On or before the date which is thirty
(30) days after the date of the Fourth Amendment, the Borrowers
shall deliver title insurance policies issued to First Union in
amounts and by the insurance companies acceptable to First Union
and the Banks insuring all mortgages by any Borrower in favor of
First Union as valid mortgage liens and shall cooperate with
First Union and the Banks and shall use their best efforts to
have removed from such title insurance policies any exceptions
which are unacceptable to First Union or the other Banks.
5.24 Landlord's Waivers. Upon request by First Union or the
Banks, use their best efforts to obtain landlord's waivers, in
form and substance acceptable to First Union, in favor of First
Union and executed by each landlord which is the owner of any
property on which any collateral is located.
5.28 Subsections (b) and (c) of Section 6.4 of the Credit Agreement are
amended and restated in their entirety as follows:
"(b) Investments by any Subsidiary, provided, however,
that the aggregate total of all Investments by all
Subsidiaries, after the date of this Fourth Amendment,
taken together shall not exceed $100,000;"
"(c) advances, loans or extensions of credit after the
date of this Fourth Amendment to non-Borrower or
restricted Subsidiaries of the Borrowers not in excess
of $100,000 in the aggregate at any time outstanding;"
5.29 Subsection 6.4(e) of the Credit Agreement is deleted in its
entirety.
5.30 Section 6.5 of the Credit Agreement is amended and restated as
follows:
6.5. Restricted Payments. Declare or make, and shall not
suffer or permit any Subsidiary to declare or make, any dividend
payment or other distribution of assets, properties, cash,
rights, obligations or securities on account of any shares of any
class of its capital stock, or purchase, redeem or otherwise
acquire for value any shares of its capital stock or any
warrants, rights or options to acquire such shares now or
hereafter outstanding.
5.31 Section 6.11 of the Credit Agreement is amended by adding the
following sentence thereto:
Notwithstanding the foregoing, during the period from
September 1, 2000 through the date on which all Obligations are
paid in full, the following limitations on Capital Expenditures
shall apply: (i) no Capital Expenditures shall be permitted for
the purchase of new or used revenue generating equipment; (ii)
Capital Expenditures for technology and software purchases shall
not exceed $750,000 in the aggregate; (iii) Capital Expenditures
for the purpose of maintaining the existing fleet of revenue
generating equipment and existing facilities shall not exceed
$750,000 in the aggregate; and (iv) Capital Expenditures for
leasehold improvements at the Borrowers' headquarters located in
Wilmington Delaware shall not exceed $150,000 in the aggregate.
5.32 Article 6 of the Credit Agreement is supplemented by adding the
following Sections 6.12 and 6.13 thereto:
6.12. Disposition of Collateral. Sell, lease, rent or
otherwise dispose of any equipment or any of the other Collateral
or any right or interest therein unless First Union consents to
such disposal (which consent shall not be unreasonably withheld)
and unless the net proceeds realized from such disposal are
applied to permanently reduce the amounts outstanding under the
Loans in accordance with Section 2.13 of the Credit Agreement.
Notwithstanding the foregoing, sales which are (i) in the
ordinary course of business (including the sale of tractors and
trailers); (ii) with respect to real estate, for a price which is
more than the greater of either the scheduled value or the
appraised value of such real estate; or (iii) for any property
(except real or personal property described by (i) and (ii)
hereof) with a value of less than $50,000 in an arms-length
transaction, shall be permitted without the consent of First
Union on the condition that the net proceeds realized from such
sale are applied to permanently reduce the amounts outstanding
under the Revolving Credit Loans in accordance with Section 2.13
of the Credit Agreement.
5.33 Section 7.1 of the Credit Agreement is deleted in its entirety.
5.34 Sections 7.2, 7.3 and 7.4 of the Credit Agreement are amended and
restated in their entirety as follows:
7.2. Fixed Charge Coverage Ratio. The Company, on a
consolidated basis, shall not incur a Fixed Charge Coverage Ratio
of less than:(a) 0.30 determined at the end of the calendar
months ending July 31, 2000, August 31, 2000 and September 30,
2000; (b) 0.50 determined at the end of the calendar month ending
October 31, 2000; (c) 0.60 determined at the end of the calendar
month ending November 30, 2000; and (d) 0.70 determined at the
end of the calendar months ending December 31, 2000 and
January 31, 2001.
7.3 Leverage Ratio. The Company, on a consolidated basis,
shall not incur a Leverage Ratio of greater than 3.25:1.0
measured at the end of each calendar month. For purposes of
calculating this covenant, the Consolidated Net Worth of the
Company shall include reserves taken by the Company and its
consolidated Subsidiaries for the following items (i) accounts
receivable; (ii) impairment of facilities; (iii) amortization of
software costs; and (iv) self insurance related to specific
events which occurred prior to the date of the Fourth Amendment;
(v) the goodwill associated with the acquisition of Arrow; (vi)
the difference, if any, between the book value and the ultimate
sale price of ML; and (vii) those related to specific litigation
previously disclosed to the Banks in writing.
7.4. Consolidated Net Worth. The Consolidated Net Worth
will be equal to or greater than $10,000,000 for the month ending
July 31, 2000 and as of the end of each calendar month
thereafter.
5.35 Article 7 of the Credit Agreement is supplemented to add the
following Sections 7.5 and 7.6 thereto:
7.5 EBITDA. The Company, on a consolidated basis, shall not
incur EBITDA of less than: (a) ($1,100,000) for the month ended
July 31, 2000; (b) $800,000 for the month ended August 31, 2000;
(c) ($250,000) for the month ended September 30, 2000; (d)
$800,000 for the month ended October 31, 2000; (e) $1,700,000 for
the two-month period ending November 30, 2000; (f) $2,700,000 for
the three-month period ending December 31, 2000; and (g)
$3,700,000 for the four-month period ending January 31, 2001.
7.6 Ratio of Eligible Accounts to Aggregate Loan Commitment.
The ratio of Eligible Accounts Receivable to Aggregate Loan
Commitment shall be equal to or greater than the following: (a)
0.36:1.0 as of July 31, 2000; (b) 0.31:1.0 as of August 31, 2000
and September 30, 2000; (c) 0.3350:1.0 as of October 31, 2000;
(d) 0.30:1.0 as of November 30, 2000; (e) 0.2850:1.0 as of
December 31, 2000; and (f) 0.2775:1.0 as of January 31, 2001.
5.36 Subsection 8.1(b) of the Credit Agreement is amended and restated
in its entirety as follows:
(b) Covenants. Borrowers fail to observe or perform (1) any
term, condition or covenant set forth in Sections 5.1, 5.2(b) or
5.2(d), Section 5.3 (with respect to corporate existence only),
Section 5.12 (with respect to access for inspection and
appraisals only), Section 5.18, Section 5.20, Section 5.22,
Section 5.23, Section 5.24, all sections of Articles 6 and 9, or
Section 8.1(a) of this Agreement, as and when required, or (2)
any term, condition or covenant contained in this Agreement or
any other Loan Document other than as set forth in (1) above and
other than as set forth in Article 7 of this Agreement, as and
when required and such failure shall continue for a period of
thirty-one (31) calendar days; or (3) with respect to any
Financial Covenant set forth in Article 7 of this Agreement under
which the Borrowers are out of compliance as of the end of a
particular calendar month, the Borrowers fail to demonstrate
within ten (10) days after the end of the next succeeding
calendar month that they are back in compliance with such
covenant as of the end of such next succeeding calendar month.
5.37 Subsection 8.1(f) of the Credit Agreement is supplemented by
adding the following sentence thereto:
A default or event of default shall occur in connection with any
Indebtedness or other obligation of any kind by any Borrower to
First Union or any of the Banks and First Union or any of the
Banks shall have accelerated such Indebtedness or other
obligation.
5.38 Section 9.1 of the Credit Agreement is amended by deleting the
parenthetical phrase "(as defined in the Security Agreement, hereinafter
referred to as the "Collateral")" from Section 9.1.
5.39 Section 9.2 is amended by deleting the word "immediately" in the
third line and inserting the words "reasonably promptly" in its place.
5.40 The name and address of First Union on the signature pages of the
Credit Agreement is amended and restated in its entirety as follows:
First Union National Bank
Capital Markets Special Situations
1339 Chestnut Street, 4th Floor
PA 4810
Philadelphia, PA 19107
Attention: Don D. Mishler, Senior Vice President
Facsimile Number: 215-973-8783
Section 6. Release. In consideration for the Agent's and Banks'
agreement to enter into this Agreement and for other valuable consideration,
the receipt and sufficiency of which is hereby acknowledged, the Borrowers,
on behalf of themselves and all persons or entities claiming by, through,
or under the Borrowers (collectively, the "Releasors") do hereby
unconditionally remise, release and forever discharge the Agent and each
Bank, their parents, subsidiaries, affiliated companies, past and present
stockholders, partners, officers, directors, employees, agents, attorneys,
divisions, successors and assigns (the "Releasees") from any and all manner
of actions, causes of action, suits, claims, counterclaims, crossclaims,
defenses and demands whatsoever, arising from any and all debts, demands,
proceedings, agreements, contracts, judgments, damages, accounts,
reckonings, executions, controversies, claims, liabilities, and facts
whatsoever which the Releasors have knowledge of or should have knowledge
of as of the date hereof, whether contingent or fixed, liquidated or
unliquidated, at law or at equity, if any, which the Releasors ever had, now
have, and/or hereafter may have against the Releasees, for or by reason of
any cause, matter or thing whatsoever arising from the beginning of the
world through the date hereof, including, but not limited to, all claims
relating to the lending relationships between the Releasors and the
Releasees.
Section 7. Representations and Warranties. To induce the Agent and
Banks to enter into this Agreement, each Borrower makes the following
representations and warranties to the Agent and Banks, each and all of which
shall survive the execution and delivery of this Agreement:
(a) All corporate actions by each Borrower and its officers,
directors and stockholders necessary for the due authorization, execution,
delivery and performance of this Agreement or any agreement executed,
delivered or performed by such Borrower have been taken.
(b) Each person executing the Agreement or any agreement executed
in connection herewith on behalf of each Borrower is an authorized officer
of such Borrower and is duly authorized by such Borrower to execute same.
(c) This Agreement and each document executed by the Borrowers
pursuant hereto, will be the legal, valid and binding obligation of each
Borrower, enforceable against each Borrower in accordance with their
respective terms, subject only to bankruptcy, insolvency, reorganization,
moratorium or other laws or equitable principles affecting creditors' rights
generally.
(d) Each Borrower is in compliance in all material respects with
all laws (including all applicable environmental laws), regulations, and
requirements applicable to its business and has not received, and has no
knowledge of, any order or notice of any governmental investigation or of
any violation or claim of violation of any law, regulation or other
governmental requirement which would have a Material Adverse Effect upon its
business operations or financial condition.
(e) The execution, delivery and performance of this Agreement and
each of the other documents executed in connection herewith does not and
will not (i) conflict with, violate or result in a material breach of any
provision of any applicable law, rule, regulation or order or (ii) conflict
or result in a breach of any provision of the Articles of Incorporation,
Charter or Bylaws of any Borrower. No authorization, consent or approval
or other action by, and no notice of or filing with, any governmental
authority or regulatory bodies are required to be obtained or made by any
Borrower for the due execution, delivery and performance of this Agreement.
(f) Except as set forth in Section 2 hereof, all other
representations and warranties made by the Borrowers in the Credit Agreement
and the Loan Documents are true and correct as of the date of this Agreement
as if such representations and warranties have been made on the date hereof.
(g) Except as provided in Section 2 hereof, the Borrowers are in
full compliance with all of the covenants and conditions of the Credit
Agreement and the Loan Documents, as amended hereby.
(h) The Agent, on behalf of the Banks holds properly perfected
security interests in all of the Collateral pursuant to the terms and
conditions of, among other things, the Loan Documents, which liens and
security interests secure the payment and performance by the Borrowers of
the Loans. Each Borrower reaffirms the granting of the aforesaid liens and
security interests to the Agent to secure all of the Loans. Each Borrower
also reaffirms all of the terms and conditions of the Security Agreement and
acknowledges that the terms of the Security Agreement and the other Loan
Documents continue to be valid and binding upon the Borrower subject only
to bankruptcy, insolvency, reorganization, moratorium or other laws or
equitable principles affecting creditors' rights generally.
(i) Except as provided in Section 2, no Potential Default or
Event of Default has occurred and is continuing under the Loan Documents.
(j) All real property owned by any Borrower is set forth on
Schedule 7(j) hereof.
(k) All leases of real property under which any Borrower is a
lessor are set forth on Schedule 7(k) hereof.
(l) Schedule 7(l) sets forth a complete list of all locations at
which any of the Borrowers maintain assets or conduct business. MI is the
only Borrower that maintains personal property assets (except for tractors
and trailers) at locations other than the Borrowers' chief executive office
location at One Rollins Plaza in Wilmington, Delaware.
Section 8. Conditions Precedent to Enforceability of Agreement. This
Agreement, including, without limitation, the waivers of the Existing
Defaults, shall be deemed effective only after the occurrence of the
following events:
(a) Each Borrower's execution and delivery to the Agent of this
Agreement in form and substance satisfactory to the Agent;
(b) Execution and delivery to the Agent by the appropriate
Borrower of an Amended and Restated Security Agreement in form and substance
acceptable to the Agent and the Banks together with any UCC financing
statements required by the Agent;
(c) Execution and delivery to the Agent by the Borrowers of and
allonge or allonges to promissory notes in form and substance acceptable to
the Agent and the Banks;
(d) Execution and delivery to the Agent by the appropriate
Borrower of mortgages creating liens on each of the real properties listed
on Schedule 8(d) attached hereto;
(e) Retention by the Borrowers of a financial consultant
acceptable to the Agent on terms and conditions which are acceptable to the
Agent;
(f) Receipt by the Agent of all original leases to which ML is
a party;
(g) Receipt by the Agent of original titles for any vehicle or
any other asset (other than trailers), ownership of which is evidenced by
a certificate of title, owned by any Borrower on which the Agent does not
have a lien, together with the fully executed documentation required for the
Agent to perfect a first priority lien on such assets;
(h) Receipt by the Agent of original titles for any vehicle,
trailer or other asset, ownership of which is evidenced by a certificate of
title, owned by any Borrower on which the Agent does have a lien;
(i) Delivery to the Agent of a calculation of the aggregate
amount of Retained Non-Operational Cash Flow and Excess Receivables Proceeds
as of the date hereof;
(j) Delivery to the Agent of all appraisals obtained by the
Borrowers within the two-year period immediately preceding the date hereof
with respect to any of the Borrowers' assets including, without limitation,
all real and personal property of any Borrower;
(k) Delivery to the Agent of the opinion of Borrowers' counsel,
dated as of the date hereof, in form previously obtained by the Agent;
(l) Each Borrower's delivery to the Agent of corporate
resolutions of its Board of Directors, certified by its corporate secretary,
authorizing the appropriate officer of such Borrower to execute on such
Borrower's behalf this Agreement and authorizing such Borrower to perform
all of such Borrower's obligations thereunder, together with the governing
documents and good standing certificates for each Borrower;
(m) Payment to the Agent at the closing of an amount sufficient
to cover all of the Agent's fees, costs and expenses to date, including,
without limitation, the Agent's reasonable fees, costs and expenses incurred
in connection with the preparation and negotiation of the this Agreement
(including the fees of the Agent's counsel, recording fees, search fees and
title insurance premiums), which fees, costs and expenses the Borrowers
authorizes the Agent to pay by setting off the Borrowers' account at the
Agent by such amount;
(n) Payment to the Agent of $100,000 of the Renegotiation and
Extension Fee; and
(o) Each Borrower's execution and delivery or causing the
execution and delivery to the Agent of such agreements and documents as the
Agent or the Banks, in their sole discretion, request.
Section 9. Miscellaneous.
9.1 Whether or not the transactions contemplated by this Agreement are
fully consummated, the Borrowers shall promptly pay (or reimburse, as the
Agent may elect) all reasonable fees, costs and expenses which the Agent and
the Banks have incurred or may hereafter incur in connection with the
negotiation, preparation, reproduction, interpretation, and enforcement of
this Agreement, the collection of all amounts due hereunder and thereunder,
and any amendment, modification, consent or waiver which may be hereafter
requested by any Borrower or otherwise required. As of October 9, 2000, the
amount of such fees and costs is $107,333.52. Such fees, costs and expenses
shall include, without limitation, the fees and disbursements of counsel to
the Agent or any of the Banks, appraisal and/or examination fees, searches
of public records, costs of filing and recording documents with public
offices, and similar costs and expenses reasonably incurred by the Agent or
any of the Banks. Each Borrower's reimbursement obligations under this
Section shall survive any termination of the Loan Documents or this
Agreement.
9.2 Except as expressly amended hereby, the Credit Agreement, the Loan
Documents, and all the other documents executed in connection therewith
remain in full force and effect and the Borrowers, the Agent and the Banks
hereby ratify and confirm their rights, duties and obligations under the
Credit Agreement, the Loan Documents, and all of the other documents
executed in connection therewith.
9.3 The Borrowers agree to take such further action to execute and
deliver to each other such additional agreements, instruments and documents
as may reasonably be required to carry out the purposes of this Agreement.
9.4 This Agreement shall be governed and construed in accordance with
the internal laws of the Commonwealth of Pennsylvania.
9.5 This Agreement contains the entire agreement between the parties
hereto with respect to the subject matter hereof and may not be modified or
changed in any way except in writing signed by all parties.
9.6 First Union and the Banks agree to cooperate with the Borrowers
and to deliver, on a reasonably timely basis, any necessary consents,
titles, deeds, mortgage releases, releases of financing statements or other
documents necessary or reasonably requested by Borrowers to facilitate or
consummate any sale or other disposition permitted by Section 6.12.
IN WITNESS WHEREOF, and agreeing to be legally bound hereby, the
undersigned have caused this Agreement to be executed by their duly
authorized officers on the date and year first written.
Attest: MATLACK (DE), INC.
By: By:
Title: Title:
Attest: MATLACK, INC., for itself and as
successor by merger to Specialized Dedicated
Fleets, Inc. and Brite-Sol Services, Inc.
By: By:
Title: Title:
Attest: MATLACK LEASING CORPORATION
By: By:
Title: Title:
Attest: MATLACK PROPERTIES, INC., formerly
known as Super Service, Inc.
By: By:
Title: Title:
Attest: MATLACK SYSTEMS, INC.
By: By:
Title: Title:
FIRST UNION NATIONAL BANK, for itself and as
Agent
By:
Title:
CHASE BANK OF TEXAS, N.A.
By:
Title:
SUNTRUST BANK
By:
Title:
BANKBOSTON, N.A.
By:
Title:
Schedule 1.1
EXISTING DEFAULTS
Schedule 1.1A
ROLLINS FAMILY INTERESTS
Schedule 2
OUTSTANDING PRINCIPAL UNDER LOANS
As of October 5, 2000, the principal amount outstanding under the
Revolving Credit Loan together with the face amount of outstanding
letters of credit is $59,700,000.
Schedule 5.1(c)
MONTHLY REPORT
Schedule 5.18
DEPOSIT ACCOUNTS AND CASH MANAGEMENT ACCOUNTS
Schedule 7(j)
REAL PROPERTY OF ANY BORROWER
Schedule 7(k)
REAL PROPERTY LEASES UNDER WHICH ANY BORROWER IS A LESSOR
Schedule 7(l)
ALL LOCATIONS OF BORROWERS' ASSETS AND BUSINESS
Schedule 8(d)
PROPERTIES MORTGAGED IN FAVOR OF AGENT
Amended and Restated Exhibit A
BANKS' COMMITMENTS AND PERCENTAGES
Bank Commitment Percentage
First Union National Bank $18,270,000 30.00%
Capital Markets Special Situations
1339 Chestnut Street, 4th Floor
PA 4810
Philadelphia, PA 19107
Fax No. (215) 973-8783
Chase Bank of Texas, N.A. $10,150,000 16.67%
700 Lavaca
2nd Floor
Austin, TX 78701
Fax No. (512) 479-2853
Fleet National Bank $16,240,000 26.67%
Transportation Division
100 Federal Street
Mail Code: 01-08-01
Boston, MA 02110-2016
Fax No. (617) 434-1955
SunTrust Bank $16,240,000 26.67%
201 Fourth Ave. North
12th Floor
Nashville, TN 37219
Fax No. (615) 748-5700