[GRAPHIC OMITTED]
CREDIT AGREEMENT
$20,000,000
between
CHEMICAL ▇▇▇▇▇▇ CORPORATION
and
CORESTATES BANK, N.A.
dated
June 16, 1997
Table of Contents
1. Certain Definitions......................................................1
1.1. Definitions...................................................1
1.2. Accounting Terms..............................................9
2. The Credit..............................................................10
2.1. Credit Facilities.
(a) The Loans.................................................10
(b) Letters of Credit
2.2. The Note.....................................................11
2.3. Funding Procedures...........................................11
(a) Requests for Advance......................................11
(b) Irrevocability............................................12
(c) Availability of Funds.....................................12
(d) Funding of Net Amount.....................................12
2.4. Interest.....................................................12
(a) Base Rate.................................................12
(b) LIBO Rate.................................................12
(c) Renewals and Conversions of Loans.........................12
(d) Automatic Reinstatement...................................13
2.5. Fees.
(a) Administrative Fee........................................13
(b) Unused Commitment Fee.....................................13
2.6. Reduction or Termination of Commitment.......................13
(a) Voluntary.................................................13
(b) Loan Commitment Termination...............................13
2.7. Voluntary Prepayments........................................13
(a) Base Rate Loans...........................................13
(b) LIBO Rate Loans...........................................13
2.8. Payments.....................................................14
(a) Base Rate Loans...........................................14
(b) LIBO Rate Loans...........................................14
(c) Form of Payments, Application of Payments,
Payment Administration, Etc...............................14
(d) Net Payments..............................................14
(e) Prepayment of LIBO Rate Loans.............................15
(f) Demand Deposit Account....................................15
2.9. Changes in Circumstances; Yield Protection...................15
2.10. Illegality...................................................17
2.11. Repayment of Notes under Indenture...........................17
3. Representations and Warranties..........................................17
3.1. Organization, Standing.......................................17
3.2. Corporate Authority, Validity, Etc...........................17
3.3. Litigation...................................................18
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3.4. ERISA........................................................18
3.5. Financial Statements.........................................18
3.6. Not in Default, Judgments, Etc...............................19
3.7. Taxes........................................................19
3.8. Permits, Licenses, Etc.......................................19
3.9. No Materially Adverse Contracts, Etc.........................19
3.10. Compliance with Laws, Etc....................................19
(a) Compliance Generally......................................19
(b) Hazardous Wastes, Substances and Petroleum Products.......19
3.11. Solvency.....................................................20
3.12. Subsidiaries, Etc............................................20
3.13. Title to Properties, Leases..................................20
3.14. Public Utility Holding Company; Investment Company...........20
3.15. Margin Stock.................................................20
3.16. Use of Proceeds..............................................20
3.17. Disclosure Generally.........................................20
4. Conditions Precedent....................................................21
4.1. All Loans....................................................21
(a) Documents.................................................21
(b) Compliance Certificate....................................21
(c) Borrowing Base Certificate................................21
(d) Covenants; Representations................................21
(e) Defaults..................................................21
(f) Material Adverse Change...................................21
(g) Administrative Fee........................................21
4.2. Conditions to First Loan.....................................21
(a) Articles, Bylaws..........................................21
(b) Evidence of Authorization.................................21
(c) Legal Opinions............................................21
(d) Incumbency................................................22
(e) Note......................................................22
(f) Security Agreement........................................22
(g) Documents.................................................22
(h) Consents..................................................22
(i) Other Agreements..........................................22
(j) Repayment of Loans under CLTL Credit Agreement............22
(k) Repayment of Other Debt...................................22
(l) Collateralization of Letters of Credit....................22
(m) Sale of Senior Notes......................................22
(n) Fees, Expenses............................................22
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5. Affirmative Covenants...................................................23
5.1. Financial Statements and Reports.............................23
(a) Annual Statements.........................................23
(b) Quarterly Statements......................................23
(c) Compliance Certificate....................................24
(d) ERISA.....................................................24
(e) Material Changes..........................................24
(f) Other Information.........................................24
(g) Borrowing Base Certificate................................24
5.2. Corporate Existence..........................................24
5.3. ERISA........................................................24
5.4. Compliance with Regulations..................................24
5.5. Conduct of Business; Permits and Approvals,
Compliance with Laws.........................................24
5.6. Maintenance of Insurance.....................................25
5.7. Payment of Debt; Payment of Taxes, Etc.......................25
5.8. Notice of Events.............................................25
5.9. Inspection Rights............................................26
5.10. Generally Accepted Accounting Principles.....................26
5.11. Compliance with Material Contracts...........................26
5.12. Use of Proceeds..............................................26
5.13. Further Assurances...........................................26
5.14. Restrictive Covenants in Other Agreements....................26
5.15. Equipment....................................................27
6. Negative Covenants......................................................27
6.1. Consolidation and Merger.....................................27
6.2. Liens........................................................27
6.3. Guarantees...................................................27
6.4. Margin Stock.................................................27
6.5. Acquisitions and Investments.................................27
6.6. Transfer of Assets; Nature of Business.......................27
6.7. Restricted Payments..........................................28
6.8. Accounting Change............................................28
6.9. Transactions with Affiliates.................................28
6.10. Restriction on Amendment of This Agreement...................28
6.11. Indebtedness.................................................28
7. Financial Covenants.....................................................29
7.1. Minimum Tangible Net Worth...................................29
7.2. Fixed Charge Coverage........................................29
7.3. Borrowing Base...............................................29
8. Default.................................................................29
8.1. Events of Default............................................29
(a) Payments..................................................29
(b) Covenants.................................................29
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(c) Representations, Warranties...............................29
(d) Bankruptcy................................................30
(e) Senior Notes..............................................30
(f) Certain Other Defaults....................................30
(g) Judgments.................................................30
(h) Attachments...............................................30
(i) ERISA.....................................................30
(j) Change in Control.........................................31
(k) Security Interests........................................31
(l) Material Adverse Change...................................31
9. Collateral..............................................................31
9.1. Collateral...................................................31
10. Miscellaneous..........................................................32
10.1. Waiver.......................................................32
10.2. Amendments...................................................32
10.3. Governing Law................................................32
10.4. Participations and Assignments...............................32
10.5. Captions.....................................................32
10.6. Notices......................................................32
10.7. Expenses; Indemnification....................................33
10.8. Survival of Warranties and Certain Agreements................33
10.9. Severability.................................................33
10.10. No Fiduciary Relationship....................................33
10.11. CONSENT TO JURISDICTION AND SERVICE OF PROCESS...............33
10.12. WAIVER OF JURY TRIAL.........................................33
10.13. Counterparts; Effectiveness..................................34
10.14. Use of Defined Terms.........................................34
10.15. Offsets......................................................34
10.16. Entire Agreement.............................................34
10.18. Consolidated Basis...........................................34
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EXHIBIT A NOTE
SCHEDULE 1 DISCLOSURE ITEMS
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Credit Agreement
This Credit Agreement, dated June 16, 1997 (this "Agreement"), is
entered into by and between CHEMICAL ▇▇▇▇▇▇ CORPORATION, a Pennsylvania
corporation ("CLC") and CORESTATES BANK, N.A., a national banking association
("CoreStates", "CoreStates Bank" or the "Bank").
Preliminary Statement
WHEREAS, CLC proposes to issue $100,000,000 of 10 3/8% Senior Notes due
2005 (the "Senior Notes"), pursuant to the terms of an Indenture, dated on or
about June 16, 1997, by and between CLC and First Union National Bank, as
Trustee thereunder (the "Indenture").
WHEREAS, as a condition to the purchase of the Notes under the
Indenture, CLC is required to have a $20,000,000 revolving credit facility in
effect.
WHEREAS, CLC has requested and CoreStates has agreed to establish such
credit facility, under the terms and conditions hereinafter set forth.
WHEREAS, CLC owns all of the issued and outstanding capital stock of
Chemical ▇▇▇▇▇▇ Tank Lines, Inc., a Delaware corporation ("CLTL").
WHEREAS, CLTL currently is party to a Credit Agreement, dated July 31,
1995, as amended (the "CLTL Credit Agreement"), with the Bank pursuant to which
CLTL may borrow up to $12,500,000.
WHEREAS, CLC will cause CLTL to repay all obligations under the CLTL
Credit Agreement, deposit cash collateral with the Bank in the amount of letters
of credit outstanding pursuant to ss.1.1(b) of the CLTL Credit Agreement and the
CLTL Credit Agreement shall be terminated as of June 16, 1997.
NOW, THEREFORE, in consideration of the premises and promises
hereinafter set forth and intending to be legally bound hereby, the parties
hereto agree as follows:
1. Certain Definitions
1.1. Definitions.
"Additional Amount" shall have the meaning set forth in ss.2.8.(e).
"Adjusted Appraised Value" shall mean the aggregate of the Appraised
Values of each item of Revenue Equipment listed on Schedule A to the
Security Agreement as such schedule shall exist at the time of the
determination multiplied by a percentage which shall be (i) 100% for
the first calendar quarter (or portion thereof) that the item of
Revenue Equipment is included in the Collateral and (ii) for each
calendar quarter thereafter, a percentage which is 100% minus 2% times
the number of calendar quarters the item of Revenue Equipment has been
included in the Collateral. For example, an item of Revenue Equipment
added to Collateral on June 16, 1997
Credit Agreement, June 16, 1997 - 1 - Chemical ▇▇▇▇▇▇ Corporation
would be included at 100% until June 30, 1997, and the percentage would
change to 98% on July 1, 1997, 96% on October 1, 1997, 94% on January
1, 1998, and so on.
"Administrative Fee" shall have the meaning set forth in ss.2.5.(a)
"Affiliate" shall mean any Person: (1) which directly or indirectly
controls, or is controlled by, or is under common control with CLC; (2)
which directly or indirectly beneficially owns or holds ten percent
(10%) or more of any class of voting stock of CLC; or (3) ten percent
(10%) or more of whose voting stock of which is directly or indirectly
beneficially owned or held by CLC. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through
the ownership of voting securities, by contract, or otherwise.
"Agreement" shall mean this Credit Agreement, as amended, supplemented,
modified, replaced, substituted for or restated from time to time and
all exhibits and schedules attached hereto.
"Appraised Value" shall mean that value determined annually on or about
July 1 of each year by an independent appraiser of recognized standing
who shall be selected by CLC with the consent of the Bank (which
consent shall not be unreasonably withheld) as the aggregate of the
fair market values of each item of Revenue Equipment listed on Schedule
A to the Security Agreement as such schedule shall exist at the time of
the annual appraisal. Appraised value shall be adjusted at the time any
item of Revenue Equipment is withdrawn or added to Schedule A to the
Security Agreement during the course of each year with the fair market
value of deletions and additions to be the value of each item of
Revenue Equipment as such is listed on the most recent annual
appraisal. In the event an item of Revenue Equipment to be added to
Schedule A to the Security Agreement is not listed on the most recent
annual appraisal, the fair market value of such addition shall be
determined in good faith by CLC at the time of the addition on a basis
consistent with that employed by the appraiser in connection with the
most recent annual appraisal, provided, however, if the Bank shall
object to the value placed on any such addition the proposed addition
shall have no value for this purpose until (1) a valuation is agreed
upon by the Bank and CLC, or (2) a valuation is completed for such item
at the time of the next annual appraisal.
"Base Rate" shall mean, for any day, the higher of the Federal Funds
Rate plus 1/2 of 1% or the prime commercial lending rate of CoreStates
Bank, N.A., as announced from time to time at its head office,
calculated on the basis of 30 day months and a year of 360 days.
"Borrowing Base" shall mean an amount equal to 80% of the aggregate
Adjusted Appraised Value of all Revenue Equipment.
"Borrowing Base Certificate" shall mean a certificate setting forth
detailed information with respect to the Borrowing Base which shall be
in the form and substance requested by the Bank, as such may be
modified from time to time, and shall be signed by the chief financial
officer, treasurer or controller of CLC.
"Business Day" shall mean any day other than a Saturday, Sunday, or
other day on which commercial banks in Philadelphia are authorized or
required to close under the laws of the Commonwealth of Pennsylvania.
Credit Agreement, June 16, 1997 - 2 - Chemical ▇▇▇▇▇▇ Corporation
"Capitalized Lease" shall mean all lease obligations of any Person for
any property (whether real, personal or mixed) which have been or
should be capitalized on the books of the lessee in accordance with
General Accepted Accounting Principles.
"Capitalized Lease Obligations" with respect to any Person, shall mean
the aggregate amount which, in accordance with GAAP, is required to be
reported as a liability on the balance sheet of such Person at such
time in respect of such Person's interest as lessee under a Capital
Lease.
"Cash Flow Available for Fixed Charges" shall mean with respect to CLC,
for any period, without duplication, the amounts for such period, taken
as a single accounting period, of (i) net income, (ii) non-cash
charges, (iii) interest expense, and (iv) to the extent reducing net
income, income tax expenses, as such items are shown in the
consolidated financial statements of CLC.
"CLTL" shall have the meaning set forth in the Preliminary Statement.
"CLTL Credit Agreement" shall have the meaning set forth in the
Preliminary Statement.
"CLTL Letter of Credit" shall have the meaning set forth in ss.2.1(b).
"Code" shall mean the Internal Revenue Code of 1986, as amended from
time to time, and all rules and regulations with respect thereto in
effect from time to time.
"Collateral" shall have the meaning set forth in ss.9.1.
"Compliance Certificate" shall have the meaning set forth in ss.4.1(b).
"Credit Termination Date" shall have the meaning set forth in ss.2.2.
"Debt" shall mean, as of any date of determination with respect to CLC,
without duplication, (i) all items which in accordance with Generally
Accepted Accounting Principles would be included in determining total
liabilities as shown on the liability side of a balance sheet of CLC as
of the date on which Debt is to be determined, (ii) all indebtedness of
others with respect to which CLC has become liable by way of a
guarantee or endorsement (other than for collection or deposit in the
ordinary course of business), (iii) all contingent liabilities of CLC,
and (iv) lease obligations that, in conformity with GAAP, have been
capitalized on CLC's balance sheet.
"Default Rate" on any Loan shall mean the higher of 2% per annum above
the Base Rate or 2% per annum above the rate of interest otherwise in
effect for such Loan.
"Dollars" shall mean the lawful currency of the United States of
America.
"Environmental Control Statutes" shall mean each and every applicable
federal, state, county or municipal environmental statute, ordinance,
rule, regulation, order, directive or requirement, together with all
successor statutes, ordinances, rules, regulations, orders, directives
or requirements, of any Governmental Authority, including without
limitation laws in any way related to Hazardous Substances.
Credit Agreement, June 16, 1997 - 3 - Chemical ▇▇▇▇▇▇ Corporation
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as it may be amended from time to time.
"ERISA Affiliate" shall mean any corporation which is a member of the
same controlled group of corporations as CLC within the meaning of
ss.414(b) of the Code, or any trade or business which is under common
control with CLC within the meaning of ss.414(c) of the Code.
"Event of Default" shall have the meaning set forth in ss.8.1.
"Federal Funds Rate" shall mean, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/100 of 1%) equal to
the weighted average of the rates on overnight Federal funds
transactions with members of the Federal Reserve System arranged by
Federal funds brokers on such day, as published by the Federal Reserve
Bank of New York on the Business Day next succeeding such day, provided
that if the day for which such rate is to be determined is not a
Business Day, the Federal Funds Rate for such day shall be such rate on
such transactions on the next preceding Business Day as so published on
the next succeeding Business Day.
"Fiscal Quarter" shall mean a fiscal quarter of CLC, which shall be any
quarterly period ending on March 31, June 30, September 30 or December
31 of any year.
"Fiscal Year" shall mean a fiscal year of CLC, which shall end on the
last day of December.
"Fixed Charges" shall mean with respect to CLC, for any period, without
duplication, the amounts for such period of (i) interest expense, (ii)
the aggregate amount of cash dividends paid during such accounting
period in respect of preferred stock, (iii) 25% of the aggregate
outstanding balance of the Loans and Letters of Credit, and (iv) all
other debt obligations due within the next 365 days. Fixed Charges
shall be determined for CLC and its Subsidiaries on a consolidated
basis.
"Generally Accepted Accounting Principles" or "GAAP" shall mean
generally accepted accounting principles as in effect from time to time
in the United States, consistently applied.
"Governmental Authority" shall mean the federal, state, county or
municipal government, or any department, agency, bureau or other
similar type body obtaining authority therefrom or created pursuant to
any laws, including without limitation Environmental Control Statutes.
"Hazardous Substances" shall mean without limitation, any regulated
substance, toxic substance, hazardous substance, hazardous waste,
pollution, pollutant or contaminant, as defined or referred to in the
Resource Conservation and Recovery Act, as amended, 15 U.S.C., ss.2601
et seq.; the Comprehensive Environmental Response, Compensation and
Liability Act, 33 U.S.C. ss.1251 et seq.; the federal underground
storage tank law, Subtitle I of the Resource Conservation and Recovery
Act, as amended, P.L. 98-616, 42 U.S.C. ss.6901 et seq.; together with
any amendments thereto, regulations promulgated thereunder and all
substitutions thereof, as well as words of similar purport or meaning
referred to in any other federal, state, county or municipal
environmental statute, ordinance, rule or regulation.
"Indebtedness for Borrowed Money" shall mean (i) all indebtedness,
liabilities, and obligations, now existing or hereafter arising, for
money borrowed by CLC or any Subsidiary, whether or not
Credit Agreement, June 16, 1997 - 4 - Chemical ▇▇▇▇▇▇ Corporation
evidenced by any note, indenture, or agreement (including, without
limitation, the Note and any indebtedness for money borrowed from an
Affiliate) and (ii) all indebtedness of others for money borrowed
(including indebtedness of an Affiliate) with respect to which CLC or
any Subsidiary has become liable by way of a guarantee or indemnity.
"Indenture" shall have the meaning set forth in the Preliminary
Statement.
"Interest Period" shall mean with respect to any LIBO Rate Loan, each
period commencing on the date any such Loan is made, or, with respect
to a Loan being renewed, the last day of the next preceding Interest
Period with respect to a Loan, and ending on the numerically
corresponding day (or, if there is no numerically corresponding day, on
the last day of the calendar month) in the first, third or sixth
calendar month thereafter as selected under the procedures specified in
ss.2.3, if the Bank is then offering LIBO Rate Loans for such period;
provided that each LIBO Rate Loan Interest Period which would otherwise
end on a day which is not a Business Day (or, for purposes of Loans to
be repaid on a London Business Day, such day is not a London Business
Day) shall end on the next succeeding Business Day (or London Business
Day, as appropriate) unless such next succeeding Business Day (or
London Business Day, as appropriate) falls in the next succeeding
calendar month, in which case the Interest Period shall end on the next
preceding Business Day (or London Business Day, as appropriate). In the
case of any Interest Period in excess of three months, CLC shall pay
interest on the ninetieth (90th) day of the Interest Period and on the
last day of the Interest Period.
"Investment" in any Person shall mean (a) the acquisition (whether for
cash, property, services or securities or otherwise) of capital stock,
bonds, notes, debentures, partnership or other ownership interests or
other securities of such Person; (b) any deposit with, or advance, loan
or other extension of credit to, such Person (other than any such
deposit, advance, loan or extension of credit having a term not
exceeding 90 days in the case of unaffiliated Persons and 120 days in
the case of Affiliates representing the purchase price of inventory or
supplies purchased in the ordinary course of business) or guarantee or
assumption of, or other contingent obligation with respect to,
Indebtedness for Borrowed Money or other liability of such Person; and
(c) (without duplication of the amounts included in (a) and (b)) any
amount that may, pursuant to the terms of such investment, be required
to be paid, deposited, advanced, lent or extended to or guaranteed or
assumed on behalf of such Person.
"Letters of Credit" shall have the meaning set forth in ss.2.1(b).
"LIBO Rate" shall mean, for the applicable Interest Period, (i) the
rate, rounded upwards to the next one-sixteenth of one percent,
determined by the Bank three London Business Days prior to the date of
the corresponding LIBO Rate Loan, at which the Bank is offered deposits
in dollars at approximately 11:00 A.M., London time by leading banks in
the interbank eurodollar or eurocurrency market for delivery on the
date of such Loan in an amount and for a period comparable to the
amount and Interest Period of such Loan and in like funds, divided by
(ii) a number equal to one (1.0) minus the LIBO Rate Reserve
Percentage. The LIBO Rate shall be adjusted automatically with respect
to any LIBO Rate Loan outstanding on the effective date of any change
in the LIBO Rate Reserve Percentage, as of such effective date. LIBO
Rate shall be calculated on the basis of the number of days elapsed in
a year of 360 days.
Credit Agreement, June 16, 1997 - 5 - Chemical ▇▇▇▇▇▇ Corporation
"LIBO Rate Loans" shall mean Loans accruing interest based on the LIBO
Rate.
"LIBO Rate Reserve Percentage" shall mean, for any LIBO Rate Loan for
any Interest Period therefor, the daily average of the stated maximum
rate (expressed as a decimal) at which reserves (including any
marginal, supplemental, or emergency reserves) are required to be
maintained during such Interest Period under Regulation D by the Bank
against "Eurocurrency liabilities" (as such term is used in Regulation
D) but without benefit of credit proration, exemptions, or offsets that
might otherwise be available to the Bank from time to time under
Regulation D. Without limiting the effect of the foregoing, the LIBO
Rate Reserve Percentage shall reflect any other reserves required to be
maintained by the Bank against (1) any category of liabilities which
includes deposits by reference to which the rate for LIBO Rate Loans is
to be determined; or (2) any category of extension of credit or other
assets which include LIBO Rate Loans.
"Lien" shall mean any lien, mortgage, security interest, chattel
mortgage, pledge or other encumbrance (statutory or otherwise) of any
kind securing satisfaction of an Obligation, including any agreement to
give any of the foregoing, any conditional sales or other title
retention agreement, any lease in the nature thereof, and the filing of
or the agreement to give any financing statement under the Uniform
Commercial Code of any jurisdiction or similar evidence of any
encumbrance, whether within or outside the United States.
"Loan" or "Loans" shall mean the meanings set forth in ss.2.1.
"Loan Commitment" shall have the meaning set forth in ss.2.1.
"Loan Documents" shall mean this Agreement, the Note, the Security
Agreement and all other documents directly related or incidental to
said documents, the Loans or the Collateral.
"London Business Day" shall mean any Business Day on which banks in
London, England are open for business.
"Material Adverse Change" shall mean any event or condition which, in
the good faith determination of the Bank, could result in a material
adverse change in the financial condition, assets, operations or
prospects of CLC or any Subsidiary, or which gives reasonable grounds
to conclude that CLC may not or will not be able to perform or observe
(in the normal course) its obligations under the Loan Documents to
which it is a party, including but not limited to the Note.
"Material Adverse Effect" shall mean any event or condition which, in
the good faith determination of the Bank, could have a material adverse
effect on (i) the financial condition, assets, operations or prospects
of CLC or any Subsidiary, (ii) the ability of CLC to perform its
obligations under the Loan Documents to which it is a party, including
but not limited to the Note, or (iii) the legality, validity or
enforceability of this Agreement or the Note or the rights and remedies
of the holder(s) of the Loans.
"Multiemployer Plan" shall mean a multiemployer plan as defined in
ERISA ss.4001(a)(3), which covers employees of CLC or any ERISA
Affiliate.
"Note" shall have the meaning set forth in ss.2.2.
Credit Agreement, June 16, 1997 - 6 - Chemical ▇▇▇▇▇▇ Corporation
"Obligations" shall mean all now existing or hereafter arising debts,
obligations, covenants, and duties of payment or performance of every
kind, matured or unmatured, direct or contingent, owing, arising, due,
or payable to the Bank by or from CLC arising out of this Agreement or
any other Loan Document, including, without limitation, all obligations
to repay principal of and interest on the Loans, and to pay interest,
fees, costs, charges, expenses, professional fees, and all sums
chargeable to CLC or for which CLC is liable as indemnitor under the
Loan Documents, whether or not evidenced by any note or other
instrument.
"PBGC" shall mean the Pension Benefit Guaranty Corporation and any
successor thereto.
"Pension Plan" shall mean, at any time, any Plan (including a
Multiemployer Plan), the funding requirements of which (under ERISA
ss.302 or Code ss.412) are, or at any time within the six years
immediately preceding the time in question, were in whole or in part,
the responsibility of CLC or any ERISA Affiliate.
"Permitted Liens" shall mean (a) any Liens for current taxes,
assessments and other governmental charges not yet due and payable or
being contested in good faith by CLC by appropriate proceedings and for
which adequate reserves have been established by CLC as reflected in
CLC's financial statements; (b) any mechanic's, materialman's,
carrier's, warehousemen's or similar Liens for sums not yet due or
being contested in good faith by CLC by appropriate proceedings and for
which adequate reserves have been established by CLC as reflected in
CLC's financial statements; (c) easements, rights-of-way, restrictions
and other similar encumbrances on the real property or fixtures of CLC
incurred in the ordinary course of business which individually or in
the aggregate are not substantial in amount and which do not in any
case materially detract from the value or marketability of the property
subject thereto or interfere with the ordinary conduct of the business
of CLC; (d) Liens (other than Liens imposed on any property of CLC
pursuant to ERISA or ss.412 of the Code) incurred or deposits made in
the ordinary course of business, including Liens in connection with
workers' compensation, unemployment insurance and other types of social
security and Liens to secure performance of tenders, statutory
obligations, surety and appeal bonds (in the case of appeal bonds such
Liens shall not secure any reimbursement or indemnity obligation in an
amount greater than $250,000), bids, leases that are not Capitalized
Leases, performance bonds (in the case of performance bonds such Liens
shall not secure any reimbursement or indemnity obligation in an amount
greater than $10,000,000 in the aggregate), sales contracts and other
similar obligations, in each case, not incurred in connection with the
obtaining of credit or the payment of a deferred purchase price, and
which do not, in the aggregate, result in a Material Adverse Effect;
(e) Liens, if any, existing on the date hereof and listed in Schedule 1
hereto; (f) Liens on specific assets, if any, whether existing on the
date hereof or hereafter created, with respect to Indebtedness for
Borrowed Money of a type similar to that contemplated herein provided
that no such Lien shall be a Lien on any of the Collateral; (g) Liens
related to any capital lease obligations and/or purchase money security
interests limited to assets so purchased, the aggregate unpaid balance
of which shall not exceed $10,000,000 at any time.
"Person" shall mean any individual, corporation, partnership, joint
venture, association, company, business trust or entity, or other
entity of whatever nature.
"Plan" shall mean an employee benefit plan as defined in ss.3(3) of
ERISA, other than a Multiemployer Plan, whether formal or informal and
whether legally binding or not.
Credit Agreement, June 16, 1997 - 7 - Chemical ▇▇▇▇▇▇ Corporation
"Potential Default" shall mean an event, condition or circumstance that
with the giving of notice or lapse of time or both would become an
Event of Default.
"Prohibited Transaction" shall mean a transaction that is prohibited
under Code ss.4975 or ERISA ss.406 and not exempt under Code ss.4975 or
ERISA ss.408.
"Regulation" shall mean any statute, law, ordinance, regulation, order
or rule of any United States or foreign, federal, state, local or other
government or governmental body, including, without limitation, those
covering or related to banking, financial transactions, securities,
public utilities, environmental control, energy, safety, health,
transportation, bribery, record keeping, zoning, antidiscrimination,
antitrust, wages and hours, employee benefits, and price and wage
control matters.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as it may be amended from time to time.
"Regulatory Change" shall mean any change after the date of this
Agreement in any Regulation (including Regulation D) or the adoption or
making after such date of any interpretations, directives or requests
of or under any Regulation (whether or not having the force of law) by
any court or governmental or monetary authority charged with the
interpretation or administration thereof applying to a class of banks
but excluding any foreign office of the Bank.
"Release" shall mean without limitation, the presence, leaking,
leaching, pouring, emptying, discharging, spilling, using, generating,
manufacturing, refining, transporting, treating, or storing of
Hazardous Substances at, into, onto, from or about the property or the
threat thereof, regardless of whether the result of an intentional or
unintentional action or omission, and which is in violation of any
applicable law, including Environmental Control Statutes.
"Reportable Event" shall mean, with respect to a Pension Plan: (a) any
of the events set forth in ERISA Sections 4043(b) (other than a
reportable event as to which the provision of 30 days' notice to the
PBGC is waived under applicable regulations) or 4063(a) or the
regulations thereunder, (b) an event requiring CLC or any ERISA
Affiliate to provide security to a Pension Plan under Code
ss.401(a)(29) and (c) any failure by CLC or any ERISA Affiliate to make
payments required by Code ss.412(m).
"Revenue Equipment" shall mean all CLC's trucks, tractors, trailers and
similar equipment owned by CLC and used by it or a Subsidiary in the
normal course of its business and described in Schedule A to the
Security Agreement to be executed and delivered by CLC in favor of the
Bank on or before the date of the first advance as provided in
ss.4.2(f) hereof, as such Schedule A shall have been or be amended or
supplemented from time to time.
"Security Agreement" shall mean a security agreement in form and
substance acceptable to the Bank, which shall be executed and delivered
to the Bank on or before the first advance as set forth in ss.4.2(f)
hereof.
"Senior Notes" shall have the meaning set forth in the Preliminary
Statement.
Credit Agreement, June 16, 1997 - 8 - Chemical ▇▇▇▇▇▇ Corporation
"Solvent" shall mean, with respect to any Person, that the aggregate
present fair saleable value of such Person's assets is in excess of the
total amount of its probable liabilities on its existing debts as they
become absolute and matured, such Person has not incurred debts beyond
its foreseeable ability to pay such debts as they mature, and such
Person has capital adequate to conduct the business it is presently
engaged in or is about to engage in.
"Subsidiary" shall mean a 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 are at the
time owned, or the management of which is otherwise controlled,
directly or indirectly through one or more intermediaries or both, by
CLC.
"Tangible Assets" shall mean total assets, excluding patents,
copyrights, capitalized research and development costs, goodwill,
operating rights and other intangible assets on a consolidated basis.
"Tangible Net Worth" shall mean Tangible Assets less total liabilities
shown on the balance sheet.
"Taxes" shall have the meaning set forth in ss.2.8.(d).
"Termination Event" shall mean, with respect to a Pension Plan: (a) a
Reportable Event, (b) the termination of a Pension Plan, or the filing
of a notice of intent to terminate a Pension Plan, or the treatment of
a Pension Plan amendment as a termination under ERISA ss.4041(c), (c)
the institution of proceedings to terminate a Pension Plan under ERISA
ss.4042 or (d) the appointment of a trustee to administer any Pension
Plan under ERISA ss.4042.
"Unfunded Pension Liabilities" shall mean, with respect to any Pension
Plan at any time, the amount, if any, determined by taking the
accumulated benefit obligation, as disclosed in accordance with
Statement of Accounting Standards No. 87, and deducting the fair market
value of Pension Plan assets.
"Unrecognized Retiree Welfare Liability" shall mean, with respect to
any Plan that provides post-retirement benefits other than pension
benefits, the amount of the accumulated post-retirement benefit
obligation, as determined in accordance with Statement of Financial
Accounting Standards No. 106, as of the most recent valuation date.
Prior to the date such statement is applicable to any CLC, such amount
of the obligation shall be based on an estimate made in good faith.
1.2. Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with Generally Accepted Accounting
Principles consistent with those applied in the preparation of the financial
statements referred to in ss.3.5, and all financial data submitted pursuant to
this Agreement shall be prepared in accordance with such principles.
Credit Agreement, June 16, 1997 - 9 - Chemical ▇▇▇▇▇▇ Corporation
2. The Credit
2.1. Credit Facilities.
(a) The Loans. Subject to the terms and conditions herein set forth,
CoreStates Bank agrees to make loans (herein called individually a "Loan" and
collectively, the "Loans") to CLC upon receipt of loan requests therefor. Each
Loan made shall be in a minimum principal amount of two hundred and fifty
thousand dollars ($250,000). All Loans together and the aggregate amount of all
Letters of Credit outstanding shall not exceed an aggregate principal amount
outstanding at any time of TWENTY MILLION DOLLARS ($20,000,000). from the date
hereof through the Credit Termination Date (such amount, as the same may be
reduced pursuant to ss.2.6 or ss.2.11 hereof being hereinafter called the "Loan
Commit ment"). The maturity date of the Note, as provided in ss.2.2 below, shall
be June 15, 2000, if not sooner accelerated; provided, however, no later than
April 15, 1998 and April 15, 1999, respectively, CLC may request that CoreStates
extend the maturity date for one additional year. If CoreStates, in its sole
discretion, is willing to extend the maturity date as requested, it will so
advise CLC in writing not later than June 15, 1998 and June 15, 1999,
respectively, that the maturity date is extended. All Loans shall be made to CLC
at the main office of the Bank, Broad and ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Notwithstanding the foregoing, CLC shall not be entitled to any Loan
if, after giving effect to such Loan, the aggregate unpaid amount of the Loan,
when added to the aggregate amount of Letters of Credit outstanding as provided
below, would exceed the Loan Commitment. Further, CLC shall not be entitled to
any Loan if, after giving effect to such Loan, the unpaid amount of the Loan
when added to the aggregate amount of Letters of Credit outstanding would exceed
CLC's current Borrowing Base, as stated in the most recent Borrowing Base
Certificate furnished to the Bank as provided herein. Within the limits of the
Loan Commitment and the Borrowing Base, CLC may borrow, prepay and reborrow.
(b) Letters of Credit. The Bank, under the terms and subject to the
conditions of this Agreement, agrees to provide standby letters of credit at the
request and for the account of CLC (including for the use by a Subsidiary), from
time to time prior to the Credit Termination Date, as requested by CLC, provided
that:
(i) the aggregate amount of Letters of Credit outstanding at
any one time shall not exceed $8,500,000, at any time hereafter, or such lesser
amount, if any, as will, when added to the amount of the Loans then outstanding,
aggregate $20,000,000 (or such lesser amount as CLC is entitled to borrow
hereunder at such time by reason of the limitation of the Borrowing Base or
otherwise);
(ii) no Letter of Credit shall be issued after the Credit
Termination Date and no Letter of Credit shall be for a term longer than one
year; and
(iii) no Letter of Credit shall be issued for general
business purposes.
As used in this Agreement, "Letter of Credit" shall mean only those
standby letters of credit issued pursuant to a completed application on the form
of letter of credit application required by the Bank at the time of the request
for each Letter of Credit.
Letters of Credit (as defined in the CLTL Credit Agreement) issued for
the account of CLTL under the CLTL Credit Agreement (which are guaranteed by
CLC) ("CLTL Letters of Credit") shall be deemed
Credit Agreement, June 16, 1997 - 10 - Chemical ▇▇▇▇▇▇ Corporation
Letters of Credit for purposes of this Agreement for so long as they shall
continue in effect. Simultaneously with the execution and delivery of this
Agreement, CLC shall deposit cash collateral with the Bank in the amount of CLTL
Letters of Credit outstanding. At such time as the excess of the Borrowing Base
over the aggregate of the outstanding Loans and Letters of Credit issued
pursuant to this agreement is equal to or greater than the amount of the CLTL
Letters of Credit outstanding, the Bank shall return said cash collateral to, or
at the direction of, CLC and the CLTL Letters of Credit shall thereafter be
deemed to be issued pursuant to this Agreement.
CLC shall request a Letter of Credit by delivering a completed
letter of credit application to the Bank not less than one Business Day prior to
the date specified by CLC as the date the Letter of Credit is to be issued.
Letters of Credit shall not bear interest until drawn upon but shall
each be subject to an annual charge, payable quarterly in arrears from the date
of issuance, equal to one and eight-tenths percent (1.8%) of the amount of the
Letter of Credit.
Within the foregoing limit, CLC may request issuance of Letters of
Credit, pay them upon a drawing thereunder and request new issuances. Any
obligation of CLC to pay money in connection with any Letter of Credit shall be
secured as if made as a Loan hereunder. In the event CLC shall terminate the
Loan Commitment as provided in ss.2.6 and shall pay the outstanding principal
amount of the Loans in full and with interest or the Credit Termination Date
shall occur at a time when one or more Letters of Credit remain outstanding,
then CLC shall furnish to the Bank within three Business Days such amount of
cash, to be held as cash collateral and invested in certificates of deposit of
the Bank, as will pay the maximum amount which may be drawn by beneficiaries of
Letters of Credit outstanding at the date of such termination or Credit
Termination Date, as applicable.
2.2. The Note. The Loans made by the Bank shall be evidenced by a
single promissory note of CLC (such promissory note as it may be amended,
extended, modified, restated, replaced, substituted for or renewed, the "Note")
in principal face amount equal to TWENTY MILLION DOLLARS ($20,000,000) payable
to the order of the Bank and otherwise in the form attached hereto as Exhibit A.
The Note shall be dated June 16, 1997, shall bear interest at the rate per annum
and be payable as to principal and interest in accordance with the terms hereof.
The Note shall mature on the earliest to occur of (i) the date the maturity of
the Note is accelerated as provided in ss.8.1 hereof, or (ii) June 15, 2000,
subject to any extensions which may be made as provided for in ss.2.1(a) hereof
(this date to be deemed the "Credit Termination Date"). Upon maturity, the Loan
evidenced by the Note shall be due and payable. The Bank shall maintain records
of all Loans evidenced by the Note and of all payments thereon, which records
shall be conclusive absent manifest error.
2.3. Funding Procedures.
(a) Requests for Advance. Each request for a Loan or the conversion
or renewal of an interest rate with respect to a Loan shall be made not later
than 11:00 a.m. on a Business Day by delivery to the Bank of a written request
signed by CLC or in the alternative a telephone request followed promptly by
written confirmation of the request, specifying the date and amount of the Loan
to be made, converted or renewed, selecting the interest rate option applicable
thereto, and in the case of a LIBO Rate Loan, specifying the Interest Period
applicable to such Loan. Each request shall be received not less than one
Business Day prior to the date of the proposed borrowing, conversion or renewal
in the case of Base Rate Loans and three
Credit Agreement, June 16, 1997 - 11 - Chemical ▇▇▇▇▇▇ Corporation
London Business Days prior to the date of the proposed borrowing, conversion or
renewal in the case of LIBO Rate Loans. No request shall be effective until
actually received in writing by the Bank.
(b) Irrevocability. Upon receipt of a request for a Loan by the
Bank, the request shall not be revocable by CLC.
(c) Availability of Funds. Unless the Bank knows that any applicable
condition specified herein has not been satisfied, it will make funds
immediately available to CLC on the date of each Loan by a credit to the account
of CLC at the Bank's address set forth opposite its name on the signature page
hereof or to such other destination and in such other form as CLC may request,
in writing.
(d) Funding of Net Amount. If the Bank makes a Loan on a day on
which all or any part of an outstanding Loan from the Bank is to be repaid, the
Bank shall apply the proceeds of its new Loan to make such repayment and only an
amount equal to the difference (if any) between the amount being borrowed and
the amount being repaid shall be made available by the Bank to CLC as provided
in clause (c).
2.4. Interest. The following interest rates may be applicable to
any Loan or Loans, as requested by CLC from time to time.
(a) Base Rate. Each Base Rate Loan shall bear interest on the
principal amount thereof from the date made until such Loan is paid in full or
converted, at a rate per annum equal to the Base Rate plus one half of one
percent (1/2%).
(b) LIBO Rate. Each LIBO Rate Loan shall bear interest on the
principal amount thereof from the date made until such Loan is paid in full,
renewed, or converted, at a rate per annum equal to the LIBO Rate plus 180 basis
points. After receipt of a request for a LIBO Rate Loan, the Bank shall proceed
to determine the LIBO Rate to be applicable thereto. The Bank shall give prompt
notice by telephone or facsimile to CLC of the LIBO Rate thus determined in
respect of each LIBO Rate Loan or any change therein. Not more than ten (10)
LIBO Rate Loans shall be in existence at any one time in any combination of LIBO
Rates applicable to the Loans.
(c) Renewals and Conversions of Loans. On the last day of each
Interest Period, the LIBO Rate Loan then maturing shall automatically be renewed
for a new Interest Period of like duration, unless CLC shall have given the Bank
notice of a permitted conversion or renewal for an Interest Period of different
duration as provided in ss.2.3 hereof, or an Event of Default, or Potential
Default exists or would thereby occur. If no Event of Default or Potential
Default exists or would thereby occur, CLC shall have the right to convert Base
Rate Loans into LIBO Rate Loans, to convert LIBO Rate Loans into Base Rate
Loans, and to renew LIBO Rate Loans for Interest Periods of different duration,
from time to time, provided that it shall give the Bank notice of each permitted
conversion or renewal as provided in ss.2.3 hereof, and LIBO Rate Loans may be
converted or renewed for different Interest Periods only as of the last day of
the applicable Interest Period for such Loans. The Bank shall use its best
efforts to notify CLC of the effectiveness of such conversion or renewal
(automatic or not automatic), and the new interest rate to which the converted
or renewed Loan is subject, as soon as practicable after the conversion or
renewal; provided, however, that any failure to give such notice shall not
affect CLC's obligations or the Bank's rights and remedies hereunder in any way
whatsoever. In the event a LIBO Rate Loan is not automatically renewed as
provided herein and CLC shall not have selected an alternative Interest Period
for any LIBO Rate Loan maturing as provided
Credit Agreement, June 16, 1997 - 12 - Chemical ▇▇▇▇▇▇ Corporation
herein, such Loan shall be automatically converted into a Base Rate Loan on the
last day of the Interest Period for such Loan.
(d) Automatic Reinstatement. The liability of CLC under this ss.2.4
shall continue to be effective or be automatically reinstated, as the case may
be, if at any time payment, in whole or in part, of any of the payments to the
Bank is rescinded or must otherwise be restored or returned upon the insolvency,
bankruptcy, dissolution, liquidation or reorganization of CLC or any other
Person, or upon or as a result of the appointment of a custodian, receiver,
trustee or other officer with similar powers with respect to CLC or any other
Person or any substantial part of its property, or otherwise, all as though such
payment had not been made.
2.5. Fees.
(a) Administrative Fee. CLC agrees to pay to the Bank a one-time
fee (the "Administrative Fee") in an amount equal to $100,000, which fee is
payable on the date hereof.
(b) Unused Commitment Fee. CLC agrees to pay the Bank as
compensation for its Loan Commitment, a fee ("Commitment Fee") computed at the
rate of three-eighths of one percent (3/8%) per annum on the average daily
amount of the unused portion of the Loan Commitment accrued from and after the
date hereof. The unused portion of the Loan Commitment shall mean the Loan
Commitment less the principal amount of the outstanding Loan and Letters of
Credit issued hereunder. The Commitment Fee shall be calculated and be payable
quarterly in arrears and on the Credit Termination Date. The Commitment Fee
shall be calculated on the basis of a 365-day year for the actual number of days
elapsed.
2.6. Reduction or Termination of Commitment.
(a) Voluntary. CLC may at any time, on not less than one Business
Day's written notice, terminate or permanently reduce the Loan Commitment,
provided that any reduction shall be in the amount of $250,000 or a multiple
thereof and that no such reduction shall cause the principal amount of Loans
outstanding to exceed the Loan Commitment as reduced.
(b) Loan Commitment Termination. In the event the Loan Commitment is
terminated, the Credit Termination Date shall accelerate to such date of
termination and CLC shall, simultaneously with such termination, repay the Base
Rate Loans and LIBO Rate Loans in accordance with ss.2.8.
2.7. Voluntary Prepayments.
(a) Base Rate Loans. On one Business Day's notice to the Bank, CLC
may, at its option, prepay any Base Rate Loan in whole at any time or in part
from time to time, provided that each partial prepayment shall be in the
principal amount of $250,000 or, if greater, then in multiples thereof and, if
less than $250,000 shall be outstanding, in principal amount equal to the amount
remaining outstanding.
(b) LIBO Rate Loans. On one Business Day's notice to the Bank, CLC
may, at its option prepay any LIBO Rate Loan provided that if it shall prepay a
LIBO Rate Loan prior to the last day of the applicable Interest Period, or shall
fail to borrow any LIBO Rate Loan on the date such Loan is to be made, it shall
pay to the Bank, in addition to the principal and interest then to be paid in
the case of a prepayment
Credit Agreement, June 16, 1997 - 13 - Chemical ▇▇▇▇▇▇ Corporation
on such date of prepayment, the Additional Amount (as defined in ss.2.8(e)
below) incurred or sustained by the Bank as a result of such prepayment or
failure to borrow.
2.8. Payments.
(a) Base Rate Loans. Accrued interest on all Base Rate Loans shall
be due and payable on the first Business Day of each calendar month and upon the
Credit Termination Date.
(b) LIBO Rate Loans. Accrued interest on LIBO Loans with Interest
Periods of one or three months shall be due and payable on the last day of such
Interest Period. Accrued interest on LIBO Loans with an Interest Period of six
months shall be due and payable on the ninetieth (90th) day of such Interest
Period and on the last day of such Interest Period.
(c) Form of Payments, Application of Payments, Payment
Administration, Etc. Provided that no Event of Default or Potential Default then
exists, all payments and prepayments shall be applied to the Loans in such order
and to such extent as shall be specified by CLC, by written notice to the Bank
at the time of such payment or prepayment. Except as otherwise provided herein,
all payments of principal, interest, fees, or other amounts payable by CLC
hereunder shall be remitted to the Bank at the address set forth opposite its
name on the signature page hereof or at such office or account as the Bank shall
specify to CLC, in immediately available funds not later than 2:00 p.m. on the
day when due. Whenever any payment is stated as due on a day which is not a
Business Day, the maturity of such payment shall, except as otherwise provided
in the definition of "Interest Period," be extended to the next succeeding
Business Day and interest shall continue to accrue during such extension. CLC
authorizes the Bank to deduct from any account of CLC maintained at the Bank or
over which the Bank has control any amount payable under this Agreement, the
Notes or any other Loan Document. The Bank's failure to deliver any ▇▇▇▇,
statement or invoice with respect to amounts due under this Section or under any
Loan Document shall not affect CLC's obligation to pay any installment of
principal, interest or any other amount under this Agreement when due and
payable.
(d) Net Payments. All payments made to the Bank by CLC hereunder,
under the Note or under any other Loan Document will be made without set off,
counterclaim or other defense. All such payments will be made free and clear of,
and without deduction or withholding for, any present or future taxes, levies,
imposts, duties, fees, assessments or other charges of whatever nature now or
hereafter imposed by any jurisdiction or any political subdivision or taxing
authority thereof or therein (but excluding, except as provided below, any tax
imposed on or measured by the gross or net income of the Bank (including all
interest, penalties or similar liabilities related thereto) pursuant to the laws
of the United States of America or any political subdivision thereof, or taxing
authority of the United States of America or any political subdivision thereof,
in which the principal office or applicable lending office of the Bank is
located), and all interest, penalties or similar liabilities with respect
thereto (collectively, together with any amounts payable pursuant to the next
sentence, "Taxes"). CLC shall also reimburse the Bank, upon the written request
of the Bank, for Taxes imposed on or measured by the gross or net income of the
Bank pursuant to the laws of the United States of America (or any State or
political subdivision thereof), or the jurisdiction (or any political
subdivision or taxing authority thereof) in which the principal office or
applicable lending office of the Bank is located as the Bank shall determine are
payable by the Bank due to the amount of Taxes paid to or on behalf of the Bank
pursuant to this or the preceding sentence. If any Taxes are so levied or
imposed, CLC agrees to pay the full amount of such Taxes, and such additional
amounts as may be necessary so that every payment of all amounts due hereunder,
under the Note or under any other Loan Document, after
Credit Agreement, June 16, 1997 - 14 - Chemical ▇▇▇▇▇▇ Corporation
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein or in the Note. CLC will furnish to the Bank upon
request certified copies of tax receipts evidencing such payment by CLC. CLC
will indemnify and hold harmless the Bank, and reimburse the Bank upon its
written request, for the amount of any Taxes so levied or imposed and paid or
withheld by the Bank.
(e) Prepayment of LIBO Rate Loans. If any principal of a LIBO Rate
Loan shall be repaid (whether upon prepayment, reduction of the Loan Commitment
after acceleration or for any other reason) or converted to a Base Rate Loan
prior to the last day of the Interest Period applicable to such LIBO Rate Loan
or if CLC fails for any reason to borrow a LIBO Rate Loan after giving
irrevocable notice pursuant to ss.2.3, CLC shall pay to the Bank, in addition to
the principal and interest then to be paid, such additional amounts as may be
necessary to compensate the Bank for all direct and indirect costs and losses
(including losses resulting from redeployment of prepaid or unborrowed funds at
rates lower than the cost of such funds to the Bank, and including lost profits
incurred or sustained by the Bank) as a result of such repayment or failure to
borrow (the "Additional Amount"). The Additional Amount (which the Bank shall
take reasonable measures to minimize) shall be specified in a written notice or
certificate delivered to CLC by the Bank. Such notice or certificate shall
contain a calculation in reasonable detail of the Additional Amount to be
compensated and shall be conclusive as to the facts and the amounts stated
therein, absent manifest error.
(f) Demand Deposit Account. CLC shall maintain at least one demand
deposit account with the Bank for purposes of this Agreement. CLC authorizes the
Bank (but the Bank shall not be obligated) to deposit into said account all
amounts to be advanced to CLC hereunder. Further, CLC authorizes the Bank (but
the Bank shall not be obligated) to deduct from said account, or any other
account maintained by CLC at the Bank, any amount payable hereunder on or after
the date upon which it is due and payable. Such authorization shall include but
not be limited to amounts payable with respect to principal, interest, fees and
expenses.
2.9. Changes in Circumstances; Yield Protection.
(a) If any Regulatory Change or compliance by the Bank with any request
made after the date of this Agreement by the Board of Governors of the Federal
Reserve System or by any Federal Reserve Bank or other central bank or fiscal,
monetary or similar authority (in each case whether or not having the force of
law) shall:
(i) impose, modify or make applicable any reserve, special
deposit, Federal Deposit Insurance Corporation premium or similar
requirement or imposition against assets held by, or deposits in or for
the account of, or loans made by, or any other acquisition of funds for
loans or advances by, the Bank;
(ii) impose on the Bank any other condition regarding the
Note;
(iii) subject the Bank to, or cause the withdrawal or
termination of any previously granted exemption with respect to, any
tax (including any withholding tax but not including any income tax not
currently causing the Bank to be subject to withholding) or any other
levy, impost, duty, charge, fee or deduction on or from any payments
due from CLC; or
Credit Agreement, June 16, 1997 - 15 - Chemical ▇▇▇▇▇▇ Corporation
(iv) change the basis of taxation of payments from CLC to the
Bank (other than by reason of a change in the method of taxation of the
Bank's net income);
and the result of any of the foregoing events is to increase the cost to the
Bank of making or maintaining any Loan or to reduce the amount of principal,
interest or fees to be received by the Bank hereunder in respect of any Loan,
the Bank will immediately so notify CLC. If the Bank determines in good faith
that the effects of the change resulting in such increased cost or reduced
amount cannot reasonably be avoided or the cost thereof mitigated, then upon
notice by the Bank to CLC, CLC shall pay to the Bank on each interest payment
date of the Loan, such additional amount as shall be necessary to compensate the
Bank for such increased cost or reduced amount.
(b) If the Bank shall determine that any Regulation regarding capital
adequacy or the adoption of any Regulation regarding capital adequacy, which
Regulation is applicable to banks (or their holding companies) generally and not
CoreStates Bank (or its holding company) specifically, or any change therein, or
any change in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation or
administration thereof, or compliance by the Bank (or its holding company) with
any such request or directive regarding capital adequacy (whether or not having
the force of law) of any such authority, central bank or comparable agency, has
the effect of reducing the rate of return on the Bank's capital as a consequence
of its obligations hereunder to a level below that which the Bank could have
achieved but for such adoption, change or compliance (taking into consideration
the Bank's policies with respect to capital adequacy) by an amount deemed by the
Bank to be material, CLC shall promptly pay to the Bank, upon the demand of the
Bank, such additional amount or amounts as will compensate the Bank for such
reduction.
(c) If the Bank shall determine (which determination shall be, in the
absence of fraud or manifest error, conclusive and binding upon all parties
hereto) that by reason of abnormal circumstances affecting the interbank
eurodollar or applicable eurocurrency market, adequate and reasonable means do
not exist for ascertaining the LIBO Rate to be applicable to the requested LIBO
Rate Loan or that eurodollar or eurocurrency funds in amounts sufficient to fund
all the LIBO Rate Loans are not obtainable on reasonable terms, the Bank shall
give notice of such inability or determination by telephone and thereupon the
obligations of the Bank to make, convert other Loans to, or renew such LIBO Rate
Loan shall be excused, subject, however, to the right of CLC at any time
thereafter to submit another request.
(d) Determination by the Bank for purposes of this Section 2.9 of the
effect of any Regulatory Change or other change or circumstance referred to
above on its costs of making or maintaining Loans or on amounts receivable by it
in respect of the Loans and of the additional amounts required to compensate the
Bank in respect of any additional costs, shall be made in good faith and shall
be evidenced by a certificate, signed by an officer of the Bank and delivered to
CLC, as to the fact and amount of the increased cost incurred by or the reduced
amount accruing to the Bank owing to such event or events. Such certificate
shall be prepared in reasonable detail and shall be conclusive as to the facts
and amounts stated therein, absent manifest error.
(e) The Bank will notify CLC of any event occurring after the date of
this Agreement that will entitle the Bank to compensation pursuant to this
Section as promptly as practicable after it obtains knowledge thereof and
determines to request such compensation. Said notice shall be in writing, shall
specify the applicable Section or Sections of this Agreement to which it relates
and shall set forth the amount
Credit Agreement, June 16, 1997 - 16 - Chemical ▇▇▇▇▇▇ Corporation
or amounts then payable pursuant to this Section. CLC shall pay the Bank the
amount shown as due on such notice within 30 days after its receipt of the same.
2.10. Illegality. Notwithstanding any other provision in this
Agreement, if the adoption of any applicable Regulation, or any change therein,
or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive (whether or not having the force of law) of any such
authority, central bank, or comparable agency shall make it unlawful or
impossible for the Bank to (1) maintain its Loan Commitment, then upon notice to
CLC by the Bank, the Loan Commitment shall terminate; or (2) maintain or fund
its LIBO Rate Loans, then upon notice to CLC of such event, CLC's outstanding
LIBO Rate Loans shall be converted into Base Rate Loans.
2.11. Repayment of Notes under Indenture. To the extent that the
holders of Senior Notes exercise their rights under the Indenture to cause CLC
to redeem any Senior Notes held by them pursuant to a "Change of Control" as
defined in the Indenture, CLC shall prepay to the Bank, on the date of such
redemption, and the amount of the Loan Commitment shall be reduced by, that
amount which is equal to the lesser of (a) the Loan Commitment or (b) the actual
amount of the Senior Notes redeemed.
3. Representations and Warranties
CLC represents and warrants to the Bank that:
3.1. Organization, Standing. It (i) is a corporation duly organized,
validly existing and in good standing under the laws of the jurisdiction of its
incorporation, (ii) has the corporate power and authority necessary to own its
assets, carry on its business and enter into and perform its obligations
hereunder and under each Loan Document, and (iii) is qualified to do business
and is in good standing in each jurisdiction where the nature of its business or
the ownership of its properties requires such qualification, except where the
failure to be so qualified would not have a Material Adverse Effect.
3.2. Corporate Authority, Validity, Etc. The making and performance of
the Loan Documents to which it is a party are within its power and authority and
have been duly authorized by all necessary corporate action. The making and
performance of the Loan Documents do not and under present law will not require
any consent or approval of any of CLC's shareholders or any other person, do not
and under present law will not violate any law, rule, regulation order, writ,
judgment, injunction, decree, determination or award, do not violate any
provision of its charter or by-laws, do not and will not result in any breach of
any material agreement, lease or instrument to which it is a party, by which it
is bound or to which any of its assets are or may be subject, and do not and
will not give rise to any Lien upon any of its assets. The number of shares and
classes of the capital stock of CLC and the ownership thereof are accurately set
forth on Schedule 1 attached hereto; all such shares are validly issued, fully
paid and non-assessable, and the issuance and sale thereof are in compliance
with all applicable federal and state securities and other applicable laws.
Further, CLC is not in default under any such agreement, lease or instrument
except to the extent such default reasonably could not have a Material Adverse
Effect. No authorizations, approvals or consents of, and no filings or
registrations with, any governmental or regulatory authority or agency are
necessary for the execution, delivery or performance by CLC of any Loan Document
or for the validity or
Credit Agreement, June 16, 1997 - 17 - Chemical ▇▇▇▇▇▇ Corporation
enforceability thereof. Each Loan Document, when executed and delivered, will be
the legal, valid and binding obligation of CLC enforceable against it in
accordance with its terms.
3.3. Litigation. Except as disclosed on Schedule 1, there are no
actions, suits or proceedings pending or, to CLC's knowledge, threatened against
or affecting CLC or any of its assets before any court, government agency, or
other tribunal which if adversely determined reasonably could have a Material
Adverse Effect upon the ability of CLC to perform under the Loan Documents. If
there is any disclosure on Schedule 1, the status (including the tribunal, the
nature of the claim and the amount in controversy) of each such litigation
matter as of the date of this Agreement is set forth in Schedule 1.
3.4. ERISA. (a) CLC and each ERISA Affiliate are in compliance in all
material respects with all applicable provisions of ERISA and the regulations
promulgated thereunder; and, except as disclosed on Schedule 1, since April 29,
1980, none of CLC or any ERISA Affiliate has withdrawn from participation in any
"multiemployer plan" (as defined in section 4001 of ERISA) to which it makes
contributions such that any withdrawal liability has been or may be assessed and
remains unpaid, and none of CLC or any ERISA Affiliate has received any notice
and is not aware that any multiemployer plan to which it contributes is
insolvent or in reorganization status within the meaning of ERISA. With respect
to multiemployer plans to which CLC or any ERISA Affiliate makes contributions
but does not participate in the administration of such plans, none of CLC or any
ERISA Affiliate has received any information from any such multiemployer plan
which would indicate that any of the foregoing representation would be incorrect
as applied to such multiemployer plan; (b) neither CLC nor any ERISA Affiliate
sponsors or maintains any Plan under which there is an accumulated funding
deficiency within the meaning of ss.412 of the Code, whether or not waived; (c)
the aggregate liability for accrued benefits and other ancillary benefits under
each Plan that is or will be sponsored or maintained by CLC or any ERISA
Affiliate (determined on the basis of the actuarial assumptions prescribed for
valuing benefits under terminating single-employer defined benefit plans under
Title IV of ERISA) does not exceed the aggregate fair market value of the assets
under each such defined benefit pension Plan; (d) the aggregate liability of CLC
and each ERISA Affiliate arising out of or relating to a failure of any Plan to
comply with the provisions of ERISA or the Code, will not have a Material
Adverse Effect; (e) there does not exist any unfunded liability (determined on
the basis of actuarial assumptions utilized by the actuary for the plan in
preparing the most recent Annual Report) of CLC or any ERISA Affiliate under any
plan, program or arrangement providing post-retirement life or health benefits;
and (f) none of the Plans which are "employee pension benefit plans" (as defined
by ERISA) or the trusts created thereunder have been terminated since September
2, 1974; nor has any such Plan incurred any material liability to the Pension
Benefit Guaranty Corporation established pursuant to ERISA, other than for
required insurance premiums which have been paid when due, or incurred any
material "accumulated funding deficiency," (as defined by ERISA) whether or not
waived; nor has there been any "reportable event" (as defined by ERISA), or
other event or condition, which represents a material risk of termination of any
such Plan by the Pension Benefit Guaranty Corporation.
3.5. Financial Statements. The consolidated financial statements of CLC
as of and for the Fiscal Years ending December 31, 1994, December 31, 1995 and
December 31, 1996 and for the interim three-month period ending March 31, 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, furnished to the Bank in connection herewith, present fairly, in all
material respects, the financial position, results of operations and operating
statistics of CLC as of the dates and for the periods referred to, in conformity
with Generally Accepted Accounting Principles. Except as set forth on Schedule 1
hereto, there are no material liabilities, fixed or contingent, which are not
reflected in such financial statements, other than
Credit Agreement, June 16, 1997 - 18 - Chemical ▇▇▇▇▇▇ Corporation
liabilities which are not required to be reflected in such balance sheets. There
has been no Material Adverse Change since March 31, 1997.
3.6. Not in Default, Judgments, Etc. No Event of Default or Potential
Default under any Loan Document has occurred and is continuing. CLC has
satisfied all judgments and is not in default with respect to any judgment,
writ, injunction, decree, rule, or regulation of any court, arbitrator, or
federal, state, municipal, or other governmental authority, commission, board,
bureau, agency, or instrumentality, domestic or foreign which could have a
Material Adverse Effect.
3.7. Taxes. CLC has filed all federal, state, local and foreign tax
returns and reports which it is required by law to file and as to which its
failure to file would have a Material Adverse Effect, and has paid all taxes,
including wage taxes, assessments, withholdings and other governmental charges
which are presently due and payable, other than those being contested in good
faith by appropriate proceedings, if any, and disclosed on Schedule 1. The tax
charges, accruals and reserves on the books of CLC are adequate to pay all such
taxes that have accrued but are not presently due and payable.
3.8. Permits, Licenses, Etc. CLC possesses all permits, licenses,
franchises, trademarks, trade names, copyrights and patents necessary to the
conduct of its business as presently conducted or as presently proposed to be
conducted, except where the failure to possess the same would not have a
Material Adverse Effect.
3.9. No Materially Adverse Contracts, Etc. CLC is not subject to any
charter, corporate or other legal restriction, or any judgment, decree, order,
rule or regulation which in the judgment of its directors or officers has or is
expected in the future to have a Material Adverse Effect upon CLC or any
Subsidiary. Neither CLC nor any Subsidiary is a party to any contract or
agreement which in the judgment of the directors or officers of CLC has or is
expected to have any Material Adverse Effect except as otherwise reflected in
adequate reserves.
3.10. Compliance with Laws, Etc.
(a) Compliance Generally. CLC is in compliance in all material respects
with all Regulations applicable to its business (including obtaining all
authorizations, consents, approvals, orders, licenses, exemptions from, and
making all filings or registrations or qualifications with, any court or
governmental department, public body or authority, commission, board, bureau,
agency, or instrumentality), the noncompliance with which reasonably could have
a Material Adverse Effect.
(b) Hazardous Wastes, Substances and Petroleum Products. Except as
disclosed on Schedule 1, (i) CLC has received all permits and filed all
notifications necessary to carry on its business; and is in compliance in all
respects with all Environmental Control Statutes; (ii) CLC has not given any
written or oral notice, nor has it failed to give required notice, to the
Environmental Protection Agency ("EPA") or any state or local agency with regard
to any actual or imminently threatened Release of Hazardous Substances on
properties owned, leased or operated by it or used in connection with the
conduct of its business and operations; (iii) CLC has not received notice that
it is potentially responsible for costs of clean-up or remediation of any actual
or imminently threatened Release of Hazardous Substances pursuant to any
Environmental Control Statute; (iv) to the best of CLC's knowledge and belief,
no real property owned or leased by it is in violation of any Environmental Laws
and no Hazardous Substances are present on said real property in violation of
applicable law; and (v) CLC has not been identified in any litigation,
administrative
Credit Agreement, June 16, 1997 - 19 - Chemical ▇▇▇▇▇▇ Corporation
proceedings or investigation as a potentially responsible party for any
liability under any Environmental Laws, where such liability could have a
Material Adverse Effect.
3.11. Solvency. CLC is, and after giving effect to the transactions
contemplated hereby, will be, Solvent.
3.12. Subsidiaries, Etc. CLC has no Subsidiaries, except as set forth
in Schedule 1 hereto. Set forth in Schedule 1 hereto is a complete and correct
list, as of the date of this Agreement, of all Investments held by CLC in any
joint venture or other Person.
3.13. Title to Properties, Leases. CLC has good and marketable title to
all assets and properties reflected as being owned by it in its financial
statements as well as to all assets and properties acquired since said date
(except property disposed of since said date in the ordinary course of
business). Except for the Liens set forth in Schedule 1 hereto and any other
Permitted Liens and except for Liens to be discharged with proceeds of the
Senior Notes on or about June 16, 1997, there are no Liens on any of such assets
or properties. It has the right to, and does, enjoy peaceful and undisturbed
possession under all material leases under which it is leasing property as a
lessee. All such leases are valid, subsisting and in full force and effect, and
none of such leases is in default, except where such default, either
individually or in the aggregate, could not have a Material Adverse Effect.
3.14. Public Utility Holding Company; Investment Company. CLC is not a
"public utility company" or a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", as such terms are defined in the Public Utility
Holding Company Act of 1935, as amended; or a "public utility" within the
meaning of the Federal Power Act, as amended. Further, CLC is not an "investment
company" or an "affiliated person" of an "investment company" or a company
"controlled" by an "investment company" as such terms are defined in the
Investment Company Act of 1940, as amended.
3.15. Margin Stock. CLC is not and will not be engaged principally or
as one of its important activities in the business of extending credit for the
purpose of purchasing or carrying or trading in any margin stocks or margin
securities (within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System as amended from time to time). CLC will not use or permit
any proceeds of the Loans to be used, either directly or indirectly, for the
purpose, whether immediate, incidental or ultimate, of buying or carrying margin
stocks or margin securities.
3.16. Use of Proceeds. CLC will use the proceeds of any Loan only for
general corporate purposes, including, but not limited to working capital,
letters of credit and the purchase of revenue producing equipment.
3.17. Disclosure Generally. The representations and statements made by
CLC or on its behalf in connection with this credit facility and the Loans,
including representations and statements in each of the Loan Documents, 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 CLC to the Bank in connection with this credit
facility, the Loans, or any Loan Document 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.
Credit Agreement, June 16, 1997 - 20 - Chemical ▇▇▇▇▇▇ Corporation
4. Conditions Precedent
4.1. All Loans. After this Agreement has become effective, the
obligation of the Bank to make any Loan (including but not limited to the first
Loan hereunder) is conditioned upon the following:
(a) Documents. CLC shall have delivered and the Bank shall have
received a request for a Loan in such form as the Bank may request from time to
time.
(b) Compliance Certificate. CoreStates shall have received a
certificate in the form and substance requested by the Bank, as such may be
modified from time to time ("Compliance Certificate").
(c) Borrowing Base Certificate. CLC shall have delivered and the Bank
shall have received a Borrowing Base Certificate dated the date of the Loan
requested under this Agreement.
(d) Covenants; Representations. CLC shall be in compliance with all
covenants, agreements and conditions in each Loan Document and each
representation and warranty contained in each Loan Document shall be true with
the same effect as if such representation or warranty had been made on the date
such Loan is made or issued.
(e) Defaults. Immediately prior to and after giving effect to such
transaction, no Event of Default or Potential Default shall exist.
(f) Material Adverse Change. Since March 31, 1997, there shall not have
been any Material Adverse Change with respect to CLC or any Subsidiary.
(g) Administrative Fee. CLC shall have paid the Administrative Fee to
the Bank as set forth in ss.2.5.
4.2. Conditions to First Loan. In addition to the conditions to all
Loans as provided in ss.4.1, the obligation of the Bank to make the first Loan
hereunder is conditioned upon the following:
(a) Articles, Bylaws. The Bank shall have received copies of the
Articles of Incorporation and Bylaws of CLC certified by its Secretary or
Assistant Secretary; together with a Certificate of Good Standing from any
jurisdiction where the nature of its business or the ownership of its properties
requires such qualification except where the failure to be so qualified would
not have a Material Adverse Effect.
(b) Evidence of Authorization. The Bank shall have received copies
certified by the Secretary or Assistant Secretary of CLC of all corporate or
other action taken by CLC to authorize its execution and delivery and
performance of the Loan Documents and to authorize the Loans, together with such
other related papers as the Bank shall reasonably require.
(c) Legal Opinions. The Bank shall have received a favorable written
opinion in form and substance satisfactory to the Bank from Pepper, ▇▇▇▇▇▇▇▇ &
▇▇▇▇▇▇ LLP, as counsel for CLC, which shall be addressed to the Bank and be
dated the date of the first Loan.
Credit Agreement, June 16, 1997 - 21 - Chemical ▇▇▇▇▇▇ Corporation
(d) Incumbency. The Bank shall have received a certificate signed by
the secretary or assistant secretary of CLC, together with the true signature of
the officer or officers authorized to execute and deliver the Loan Documents and
certificates thereunder, upon which the Bank shall be entitled to rely
conclusively until it shall have received a further certificate of the secretary
or assistant secretary of CLC amending the prior certificate and submitting the
signature of the officer or officers named in the new certificate as being
authorized to execute and deliver Loan Documents and certificates thereunder.
(e) Note. The Bank shall have received the Note duly executed,
completed and issued in accordance herewith.
(f) Security Agreement. The Bank shall have received the Security
Agreement duly executed, completed and issued in accordance herewith.
(g) Documents. The Bank shall have received all certificates,
instruments and other documents then required to be delivered pursuant to any
Loan Documents, in each instance in form and substance reasonably satisfactory
to it.
(h) Consents. CLC shall have provided to the Bank evidence satisfactory
to it that all governmental, shareholder and third party consents and approvals
necessary in connection with the transactions contemplated hereby have been
obtained and remain in effect.
(i) Other Agreements. CLC shall have executed and delivered each other
Loan Document required hereunder.
(j) Repayment of Loans under CLTL Credit Agreement. CLC shall have paid
in full all outstanding indebtedness and satisfied all of its obligations under
the CLTL Credit Agreement other than with respect to the CLTL Letters of Credit.
(k) Repayment of all other Debt. CLC shall have provided to the Bank
evidence satisfactory to it that all outstanding indebtedness of CLC and its
subsidiaries and affiliates, including, without limitation, that indebtedness to
Associates Commercial Corporation, has been paid in full, except as otherwise
provided in Schedule 4.2(k) attached hereto.
(l) Collateralization of Letters of Credit. CLC shall have fully
collateralized the $3,900,000 letters of credit outstanding under the CLTL
Credit Agreement.
(m) Sale of Senior Notes. CLC shall have consummated the sale of the
Senior Notes pursuant to the Indenture.
(n) Fees, Expenses. CLC shall simultaneously pay or shall have paid all
fees and expenses due hereunder or any other Loan Document.
Credit Agreement, June 16, 1997 - 22 - Chemical ▇▇▇▇▇▇ Corporation
5. Affirmative Covenants
CLC covenants and agrees that from and after the date hereof and so
long as the Loan Commitment is in effect or any Obligation remains unpaid or
outstanding, it will:
5.1. Financial Statements and Reports. Furnish to the Bank the
following financial information:
(a) Annual Statements. No later than ninety (90) days after the end of
each Fiscal Year, the consolidated and consolidating balance sheet (which
consolidating balance sheets may be unaudited and prepared by management of CLC)
of CLC as of the end of such year and the prior year in comparative form, and
related statements of operations, shareholders' equity, and cash flows for the
Fiscal Year and the prior Fiscal Year in comparative form. The financial
statements shall be in reasonable detail with appropriate notes and be prepared
in accordance with Generally Accepted Accounting Principles. The consolidated
annual financial statements shall be certified (without any qualification or
exception) by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & Co. or such other independent certified public
accountants of nationally recognized standing reasonably acceptable to the Bank.
Such financial statements shall be accompanied by a report of such independent
certified public accountants stating that, in the opinion of such accountants,
such financial statements present fairly, in all material respects, the
financial position, and the results of operations and the cash flows of CLC for
the period then ended in conformity with Generally Accepted Accounting
Principles, except for inconsistencies resulting from changes in accounting
principles and methods agreed to by such accountants and specified in such
report, and that, in the case of such financial statements, the examination by
such accountants of such financial statements has been made in accordance with
generally accepted auditing standards and accordingly included examining, on a
test basis, evidence supporting the amounts and disclosures in the financial
statements and assessing the accounting principles used and significant
estimates made, as well as evaluating the overall financial statement
presentation. Each financial statement provided under this subsection (a) shall
be accompanied by a certificate signed by such accountants either stating that
during the course of their examination nothing came to their attention which
would cause them to believe that any event has occurred and is continuing which
constitutes an Event of Default or Potential Default, or describing each such
event. In addition to the annual financial statements, CLC shall, promptly upon
receipt thereof, furnish to the Bank a copy of each other report submitted to
its board of directors by its independent accountants in connection with any
annual, interim or special audit made by them of the financial records of CLC.
(b) Quarterly Statements. No later than forty-five (45) calendar days
after the end of each Fiscal Quarter of each Fiscal Year, the consolidated and
consolidating balance sheet (which consolidating balance sheets may be unaudited
and prepared by management of CLC) and related statements of operations,
shareholders' equity and cash flows of CLC for such quarterly period and for the
period from the beginning of such fiscal year to the end of such Fiscal Quarter
and a corresponding financial statement for the same periods in the preceding
Fiscal Year certified by the chief financial officer of CLC as having been
prepared in accordance with Generally Accepted Accounting Principles (subject to
changes resulting from audits and year-end adjustments); provided, however, that
if the independent certified public accountants issue a review report on the
quarterly financial statements of CLC, the financial statements required by this
subsection (b) shall be accompanied by a certificate signed by such accountants
either stating that during the course of their examination nothing came to their
attention which would cause them to believe that any event has occurred and is
continuing which constitutes an Event of Default or Potential Default, or
describing each such event and the remedial steps being taken by CLC.
Credit Agreement, June 16, 1997 - 23 - Chemical ▇▇▇▇▇▇ Corporation
(c) Compliance Certificate. Within forty-five (45) calendar days after
the end of each of the first three Fiscal Quarters of each Fiscal Year and
within ninety (90) calendar days after the end of each Fiscal Year, a Compliance
Certificate signed by the chief financial officer of CLC.
(d) ERISA. All reports and forms filed with respect to all Plans,
except as filed in the normal course of business and that would not result in an
adverse action to be taken under ERISA, and details of related information of a
Reportable Event, promptly following each filing.
(e) Material Changes. Notification to the Bank of any litigation,
administrative proceeding, investigation, business development, or change in
financial condition which could reasonably have a Material Adverse Effect,
promptly following its discovery.
(f) Other Information. Promptly, upon request by the Bank from time to
time (which may be on a monthly or other basis), CLC shall provide such other
information and reports regarding its operations, business affairs, prospects
and financial condition as the Bank may reasonably request.
(g) Borrowing Base Certificate. In the event CLC shall not have
delivered a Borrowing Base Certificate to the Bank during a calendar month, it
will deliver to the Bank, no later than thirty (30) days after the end of such
calendar month as of the last day of the preceding calendar month, a Borrowing
Base Certifi cate signed by the chief executive or chief financial officer,
treasurer or controller of CLC, together with appropriate schedules reflecting
the Revenue Equipment included in the Borrowing Base.
5.2. Corporate Existence. Preserve its, and cause its Subsidiaries to
preserve their, corporate existence and all material franchises, licenses,
patents, copyrights, trademarks and trade names consistent with good business
practice; and maintain, keep, and preserve all of its properties (tangible and
intangible) necessary or useful in the conduct of its and their business in good
working order and condition, ordinary wear and tear expected.
5.3. ERISA. Comply in all material respects with the provisions of
ERISA to the extent applicable to any Plan maintained for the employees of CLC
or any ERISA Affiliate; do or cause to be done all such acts and things that are
required to maintain the qualified status of each Plan and tax exempt status of
each trust forming part of such Plan; not incur any material accumulated funding
deficiency (within the meaning of ERISA and the regulations promulgated
thereunder), or any material liability to the PBGC (as established by ERISA);
not permit any event to occur as described in ss.4042 of ERISA or which may
result in the imposition of a lien on its properties or assets; notify the Bank
in writing promptly after it has come to the attention of senior management of
CLC of the assertion or threat of any "reportable event" or other event
described in ss.4042 of ERISA (relating to the soundness of a Plan) or the
PBGC's ability to assert a material liability against it or impose a lien on
its, or any ERISA Affiliates' properties or assets; and refrain from engaging in
any Prohibited Transactions or actions causing possible liability under ss.5.02
of ERISA.
5.4. Compliance with Regulations. Comply, and cause its Subsidiaries to
comply, in all material respects with all Regulations applicable to its and
their business, the noncompliance with which reasonably could have a Material
Adverse Effect.
5.5. Conduct of Business; Permits and Approvals, Compliance with Laws.
Continue to engage, and cause its Subsidiaries to continue to engage, in an
efficient and economical manner in businesses substantially the same as
conducted by them on the date of this Agreement; maintain, and cause its
Credit Agreement, June 16, 1997 - 24 - Chemical ▇▇▇▇▇▇ Corporation
Subsidiaries to maintain, in full force and effect, its and their franchises,
and all licenses, patents, trademarks, trade names, contracts, permits,
approvals and other rights necessary to the profitable conduct of its business.
5.6. Maintenance of Insurance. Keep and maintain, and cause its
Subsidiaries to keep and maintain, all of its and their property and assets
fully covered by insurance with reputable and financially sound insurance
companies against such hazards and in such amounts as is customary in the
industry and reasonably satisfactory to the Bank (including up to $2,000,000 of
self-insurance), under policies requiring the insurer to furnish thirty (30)
days' prior notice to the Bank and opportunity to cure any non-payment of
premiums prior to termination of coverage; and furnish the Bank with
certificates of such insurance and cause the Bank to be named as an additional
insured and the loss payee thereof with respect to the Collateral, as its
interest may appear.
5.7. Payment of Debt; Payment of Taxes, Etc. Where the amount involved
exceeds 1,000,000 or where the non-payment or non-discharge would otherwise have
a Material Adverse Effect on CLC or any of its Subsidiaries, or any of their
assets: promptly pay and discharge, and cause its Subsidiaries to promptly pay
and discharge, (a) all of its and their Debt in accordance with the terms
thereof; (b) all taxes, assessments, and governmental charges or levies imposed
upon it or them or upon its or their income and profits, upon any of their
property, real, personal or mixed, or upon any part thereof, before the same
shall become in default; (c) all lawful claims for labor, materials and supplies
or otherwise, which, if unpaid, might become a lien or charge upon such property
or any part thereof; provided, however, that so long as CLC first notifies the
Bank of its intention to do so, CLC or its Subsidiaries shall not be required to
pay and discharge any such Debt, tax, assessment, charge, levy or claim so long
as the failure to so pay or discharge does not constitute or result in an Event
of Default or a Potential Default hereunder and so long as no foreclosure or
other similar proceedings shall have been commenced against such property or any
part thereof and so long as the validity thereof shall be contested in good
faith by appropriate proceedings diligently pursued and it shall have set aside
on its consolidated books adequate reserves with respect thereto.
5.8. Notice of Events. Promptly upon discovery of any of the following
events, CLC shall provide telephone notice to the Bank (confirmed within three
(3) calendar days by written notice), describing the event and all action CLC
proposes to take with respect thereto:
(a) an Event of Default or Potential Default under this Agreement or
any other Loan Document;
(b) any default or event of default under a contract or contracts and
the default or event of default involves payments by CLC in an aggregate amount
equal to or in excess of $1,000,000;
(c) a default or event of default under or as defined in any evidence
of or agreements for Indebtedness for Borrowed Money under which the CLC's or
its Subsidiaries' liability is equal to or in excess of $1,000,000, singularly
or in the aggregate, whether or not an event of default thereunder has been
declared by any party to such agreement or any event which, upon the lapse of
time or the giving of notice or both, would become an event of default under any
such agreement or instrument or would permit any party to any such instrument or
agreement to terminate or suspend any commitment to lend to CLC or its
Subsidiaries or to declare or to cause any such indebtedness to be accelerated
or payable before it would otherwise be due;
(d) the institution of, any material adverse determination in, or the
entry of any default judgment or order or stipulated judgment or order in, any
suit, action, arbitration, administrative proceeding, criminal
Credit Agreement, June 16, 1997 - 25 - Chemical ▇▇▇▇▇▇ Corporation
prosecution or governmental investigation against CLC or its Subsidiaries in
which the amount in controversy is in excess of $1,000,000, singularly or in the
aggregate; or
(e) any change in any Regulation, including, without limitation,
changes in tax laws and regulations, which would have a Material Adverse Effect
on CLC or any of its Subsidiaries.
5.9. Inspection Rights. During regular business hours and then as often
as requested of CLC by the Bank, permit the Bank, or any authorized officer,
employee, agent, or representative of the Bank to examine and make abstracts
from the records and books of account of CLC and its Subsidiaries, wherever
located, and to visit the properties of CLC and its Subsidiaries; and to discuss
the affairs, finances, and accounts of CLC and its Subsidiaries with CLC's
Chairman, President, any executive vice president, it chief financial officer,
treasurer, controller or independent accountants. If no Event of Default or
Potential Default shall be in existence, the Bank shall limit such examination
to four times each calendar year and CLC shall reimburse the Bank its expenses
in connection with each such examination promptly following the completion of
each such examination. If the inspection shall be made during the continuance of
a Potential Default or an Event of Default, CLC shall reimburse the Bank for the
Bank's expense of such inspection. At all times, it is understood and agreed by
CLC that all expenses in connection with any such inspection which may be
incurred by CLC, any officers and employees thereof and the attorneys and
independent certified public accountants therefor shall be expenses payable by
CLC and shall not be expenses of the Bank.
5.10. Generally Accepted Accounting Principles. Maintain books and
records at all times in accordance with Generally Accepted Accounting
Principles.
5.11. Compliance with Material Contracts. CLC and its Subsidiaries will
comply in all material respects with all obligations, terms, conditions and
covenants, as applicable, in all Debt of CLC or its Subsidiaries and all
instruments and agreements related thereto, and all other instruments and
agreements to which it is a party or by which it is bound or any of its
properties is affected and in respect of which the failure to comply reasonably
could have a Material Adverse Effect.
5.12. Use of Proceeds. CLC will use the proceeds of any Loan made
pursuant hereto only for general corporate purposes, including, but not limited
to working capital, letters of credit and the purchase of revenue producing
equipment.
5.13. Further Assurances. Do such further acts and things and execute
and deliver to the Bank such additional assignments, agreements, powers and
instruments, as the Bank may reasonably require or reasonably deem advisable to
carry into affect the purposes of this Agreement or to better assure and confirm
unto the Bank its rights, powers and remedies hereunder.
5.14. Restrictive Covenants in Other Agreements. In the event that CLC
shall enter into or otherwise become subject to or suffer to exist any agreement
pertaining to Debt which contains covenants or restrictions that are more
restrictive on it than the covenants and restrictions contained in this
Agreement, each and every such covenant and restriction shall be deemed
incorporated herein by reference as fully as if set forth herein. If and to the
extent that any such covenant or restriction shall be inconsistent with or
otherwise be in conflict with any covenant or restriction set forth herein
(other than by reason of its being more restrictive), this Agreement shall
govern.
Credit Agreement, June 16, 1997 - 26 - Chemical ▇▇▇▇▇▇ Corporation
5.15. Equipment. CLC will grant to the Bank and the Bank shall continue
to have a valid, perfected first lien on and security interest in all equipment
set forth in Schedule A to the Security Agreement, as provided in such agreement
and as amended from time to time.
6. Negative Covenants
CLC covenants and agrees that, without the prior written consent of the
Bank, from and after the date hereof and so long as the Loan Commitment is in
effect or any Obligation remains unpaid or outstanding, it will not and it will
not permit its Subsidiaries to:
6.1. Consolidation and Merger. (a) dissolve, (b) adopt or enter into
any plan or agreement of liquidation, or (c) merge or consolidate with or into
any corporation or acquire all or substantially all of the assets of any Person,
unless the surviving entity is CLC.
6.2. Liens. Create, assume or permit to exist any Lien on any of its
property or assets, whether now owned or hereafter acquired, or upon any income
or profits therefrom, except Permitted Liens.
6.3. Guarantees. Guarantee or otherwise in any way become or be
responsible for indebtedness or obligations (including working capital
maintenance, take-or-pay contracts) of any other Person, contingently or
otherwise, in any amounts that would exceed $1,000,000 in the aggregate.
6.4. Margin Stock. Use or permit any proceeds of the Loans to be used,
either directly or indirectly, for the purpose, whether immediate, incidental or
ultimate, of buying or carrying margin stock within the meaning of Regulation U
of The Board of Governors of the Federal Reserve System, as amended from time to
time.
6.5. Acquisitions and Investments. Except as provided in ss.6.1,
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 its present business; or create any Subsidiary,
except (a) it may acquire and hold stock, obligations or securities received in
settlement of debts (created in the ordinary course of business) owing to it,
and (b) it may make and own (i) Investments in certificates of deposit or time
deposits having maturities in each case not exceeding one year from the date of
issuance thereof and issued by a Bank, or any FDIC-insured commercial bank
incorporated in the United States or any state thereof having a combined capital
and surplus of not less than $150,000,000, (ii) Investments in marketable direct
obligations issued or unconditionally guaranteed by the United States of
America, any agency thereof, or backed by the full faith and credit of the
United States of America, in each case maturing within one year from the date of
issuance or acquisition thereof, (iii) Investments in commercial paper issued by
a corporation incorporated in the United States or any State thereof maturing no
more than one year from the date of issuance thereof and, at the time of
acquisition, having a rating of A-1 (or better) by Standard & Poor's Corporation
or P-1 (or better) by ▇▇▇▇▇'▇ Investors Service, Inc., and (iv) Investments in
money market mutual funds all of the assets of which are invested in cash or
investments described in the immediately preceding clauses (i), (ii) and (iii).
6.6. Transfer of Assets; Nature of Business. Sell, transfer, pledge,
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
discontinue or liquidate in any material respect any substantial part of its
operations or business.
Credit Agreement, June 16, 1997 - 27 - Chemical ▇▇▇▇▇▇ Corporation
6.7. Restricted Payments.
(a) Make or pay any redemptions, repurchases, dividends or
distributions of any kind with respect to its capital stock, except that as long
as no Event of Default or Potential Default shall be in existence (i) dividends
required pursuant to the terms of preferred stock of CLC as such shall exist on
the date hereof, (ii) loans to shareholders of CLC which are outstanding as of
the date hereof, (iii) loans to ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ made after the date hereof
provided the aggregate outstanding balance of such loans do not exceed $350,000
at any time, and (iv) purchases, redemptions or other acquisitions, cancellation
or retirement for value of capital stock, or options, warrants, equity
appreciation rights or other rights to purchase or acquire capital stock of CLC
or any Subsidiary, or similar securities held by officers or employees or former
officers or employees of the CLC or any Subsidiary (or their estates), upon
death, disability, retirement, or terminating of employment, not to exceed
$1,000,000 in any consecutive 12-month period.
(b) Make any repayment or advance any monies to any Subsidiary or
Affiliate in respect of intercompany obligations, except that as long as no
Event of Default or Potential Default shall be in existence repayments or
advances may be made to any Subsidiary or Affiliate in the ordinary course of
the business of CLC.
(c) Make any prepayments or redemptions with respect to (i) any
subordinated indebtedness of CLC or any Subsidiary, or (ii) the Senior Notes.
Notwithstanding the foregoing, prepayments or redemptions may be made with
respect to the Senior Notes as permitted by the terms and conditions of the
Indenture as in effect on the date hereof, provided, that no Event of Default or
Potential Default shall be in existence or shall be the result of such
prepayment or redemption.
6.8. Accounting Change. Make or permit any change in financial
accounting policies or financial reporting practices, except as required by
Generally Accepted Accounting Principles or regulations of the Securities and
Exchange Commission, if applicable.
6.9. Transactions with Affiliates. Enter into any transaction
(including, without limitation, the purchase, sale or exchange of property, the
rendering of any services or the payment of management fees) with any Affiliate,
except transactions in the ordinary course of, and pursuant to the reasonable
requirements of, its business, and in good faith and upon commercially
reasonable terms.
6.10. Restriction on Amendment of This Agreement. Enter into or
otherwise become subject to or suffer to exist any agreement which would require
it to obtain the consent of any other person as a condition to the ability of
CoreStates and CLC to amend or otherwise modify this Agreement.
6.11. Indebtedness. Create, enter into or allow to exist any
indebtedness of CLC or any of its Subsidiaries except (i) the Loans hereunder
and the Letters of Credit issued pursuant hereto, (ii) the Senior Notes, (iii)
capital lease obligations and/or purchase money security interests limited to
assets purchased, the aggregate unpaid balance of which shall not exceed
$10,000,000 at any time, and (iv) performance bonds which shall not exceed
$10,000,000 in the aggregate outstanding at any time.
Credit Agreement, June 16, 1997 - 28 - Chemical ▇▇▇▇▇▇ Corporation
7. Financial Covenants
CLC covenants and agrees that, without the prior written consent of the
Bank, from and after the date hereof and so long as the Loan Commitment is in
effect or any Obligation remains unpaid or outstanding:
7.1. Minimum Tangible Net Worth. Tangible Net Worth of CLC, on a
consolidated basis, will not at any time be less than the sum of (i)
$15,000,000, (ii) fifty percent (50%) of net income for each Fiscal Quarter
ending after March 31, 1997 without deduction for any net losses and (iii) 100%
of the amount of subordinated debt and equity issued after March 31, 1997,
provided however any additions to equity after March 31, 1997 which are made for
the sole purpose of enabling CLC to be in compliance with the terms and
conditions of this Agreement or any other Loan Document shall not increase the
minimum Tangible Net Worth requirement if at the time of such addition CLC shall
provide written notice of such purpose to the Bank specifying the amount
required therefor.
7.2. Fixed Charge Coverage. The ratio of Cash Flow Available for Fixed
Charges to Fixed Charges of CLC for the four (4) most recently ended consecutive
Fiscal Quarters shall not be less than 1.10:1.
7.3. Borrowing Base. The aggregate principal amount of Loans
outstanding shall not at any time exceed the Borrowing Base or the Loan
Commitment, whichever is less; provided, however, that this covenant shall not
be deemed breached if, at the time such aggregate amount exceeds said level,
within five Business Days after the earlier of the date CLC first has knowledge
of such excess or the date of the next Borrowing Base Certificate disclosing the
existence of such excess, a prepayment of Loans shall be made in an amount
sufficient to assure continued compliance with this covenant in the future.
8. Default
8.1. Events of Default. CLC shall be in default if any one or more of
the following events (each an "Event of Default") occurs:
(a) Payments. CLC fails to pay any principal of or interest on the Note
when due and payable (whether at maturity, by notice of intention to
prepay, or otherwise) or fails to pay when it is due and payable any
other amount payable under any Loan Document, and such failure shall
continue for a period of five days or more.
(b) Covenants. CLC fails to observe or perform (1) any term, condition
or covenant set forth in ss.5.2, ss.5.4, ss.5.6, ss.5.9, ss.5.10,
ss.5.15, ss.ss.6.1 through 6.11 or ss.ss.7.1 through 7.3 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, as and when required and such failure shall
continue for a period of 10 days or more.
(c) Representations, Warranties. Any representation or warranty made or
deemed to be made by CLC herein or in any Loan Document or in any
exhibit, schedule, report or certificate delivered pursuant hereto or
thereto shall prove to have been false, misleading or incorrect in any
material respect when made or deemed to have been made.
Credit Agreement, June 16, 1997 - 29 - Chemical ▇▇▇▇▇▇ Corporation
(d) Bankruptcy. CLC or any Subsidiary is dissolved or liquidated, makes
an assignment for the benefit of creditors, files a petition in
bankruptcy, is adjudicated insolvent or bankrupt, petitions or applies
to any tribunal for any receiver or trustee, commences any proceeding
relating to itself under any bankruptcy, reorganization, readjustment
of debt, dissolution or liquidation law or statute of any jurisdiction,
has commenced against it any such proceeding which remains undismissed
for a period of thirty (30) days, or indicates its consent to, approval
of or acquiescence in any such proceeding, or any receiver of or
trustee for CLC or any Subsidiary or any substantial part of the
property of CLC or any Subsidiary is appointed, or if any such
receivership or trusteeship to continues undischarged for a period of
thirty (30) days.
(e) Senior Notes. CLC shall fail to pay any amounts due in respect of
the Senior Notes and such failure shall continue beyond any applicable
cure period, or CLC shall suffer to exist any default or event of
default in the performance or observance, subject to any applicable
grace period, of any agreement, term, condition or covenant with
respect to any agreement or document relating to the Senior Notes if
the effect of such default is to permit, with the giving of notice or
passage of time or both, the holders thereof to cause or declare any
portion of any borrowings thereunder to become due and payable prior to
the date on which it would otherwise be due and payable or require
repurchase or redemption of all or any portion of the Senior Notes,
provided that during any applicable cure period the Bank's obligations
hereunder to make further Loans shall be suspended.
(f) Certain Other Defaults. CLC or any Subsidiary shall fail to pay
when due any Indebtedness for Borrowed Money other than the Senior
Notes, which singularly or in the aggregate exceeds $1,000,000, and
such failure shall continue beyond any applicable cure period, or CLC
or any Subsidiary shall suffer to exist any default or event of default
in the performance or observance, subject to any applicable grace
period, of any agreement, term, condition or covenant with respect to
any agreement or document relating to Indebtedness for Borrowed Money
if the effect of such default is to permit, with the giving of notice
or passage of time or both, the holders thereof, or any trustee or
agent for said holders, to terminate or suspend any commitment (which
is equal to or in excess of $1,000,000) to lend money or to cause or
declare any portion of any borrowings thereunder to become due and
payable prior to the date on which it would otherwise be due and
payable, provided that during any applicable cure period the Bank's
obligations hereunder to make further Loans shall be suspended.
(g) Judgments. Any judgments against CLC or any Subsidiary or against
their assets or property for amounts in excess of $1,000,000 in the
aggregate remain unpaid, unstayed on appeal, undischarged, unbonded and
undismissed for a period of sixty (60) days.
(h) Attachments. Any assets of CLC or any Subsidiary shall be subject
to attachments, levies, or garnishments for amounts in excess of
$1,000,000 in the aggregate which have not been dissolved or satisfied
within twenty (20) days after service of notice thereof to CLC or any
Subsidiary.
(i) ERISA. Any Reportable Event or any other fact or circumstance which
the Bank in good faith determines constitutes ground for the
termination of any employee benefit plan maintained for employees of
CLC or any ERISA Affiliate and covered by Title IV of ERISA or grounds
for the appointment by an appropriate United States District Court of a
trustee to administer any such plan, shall have occurred and be
continuing for five days, or any such plan shall be terminated within
the meaning of such Title IV, or a trustee shall be appointed by the
appropriate United States District
Credit Agreement, June 16, 1997 - 30 - Chemical ▇▇▇▇▇▇ Corporation
Court to administer such plan or the Pension Benefit Guaranty
Corporation shall institute proceedings to terminate any such plan or
to appoint a trustee to administer such plan, if upon the termination
of the plan or plans with respect to which any of the foregoing events
shall have occurred there is or would be, in the reasonable judgment of
the Bank, a material resultant liability of CLC or any ERISA Affiliate.
(j) Change in Control. ▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Mr.
▇▇▇▇ ▇▇▇▇▇▇▇▇ and the Estate of ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, the members of their
immediate families, and trusts they control for the benefit of the
members of their immediate families, shall own, in the aggregate,
beneficially and of record, less than thirty percent (30%) of the
outstanding common stock of CLC.
(k) Security Interests. Any security interest created pursuant to any
Loan Document shall cease to be in full force and effect, or shall
cease in any material respect to give the Bank, the Liens, rights,
powers and privileges purported to be created thereby (including,
without limitation, a perfected security interest in, and Lien on, all
of the Collateral), superior to and prior to the rights of all third
Persons, and subject to no other Liens (except as permitted by ss.6.2).
(l) Material Adverse Change. There occurs any Material Adverse Change
with respect to CLC, or CLC and its Subsidiaries taken as a whole.
THEN and in every such event other than those specified in clause (d) above, the
Bank may, in its sole discretion, terminate the Loan Commitment (the date of
such termination being a Credit Termination Date) and declare the Notes together
with accrued interest thereon and all other amounts payable under any Loan
Document to be, and the same shall thereupon become, due and payable without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by CLC. Upon the occurrence of any event specified in clause (d)
above, the Loan Commitment shall automatically terminate and the Notes together
with accrued interest thereon and all other amounts payable under any Loan
Document shall immediately be due and payable without presentment, demand,
protest or other notice of any kind, all of which are hereby waived by CLC. From
and after the date an Event of Default shall have occurred and for so long as
any Event of Default shall be continuing, the Loan shall bear interest at the
Default Rate. Upon the occurrence of an Event of Default, in addition to the
rights set forth above, the Bank shall have the immediate right to enforce or
realize on any collateral security granted to it in any manner or order it deems
expedient without regard to any equitable principles of marshalling or
otherwise. In addition to any rights granted hereunder or in any of the other
Loan Documents, the Bank shall have all the rights and remedies granted by
applicable law, all of which shall be cumulative in nature.
9. Collateral
9.1. Collateral. Except as otherwise specifically set forth herein or
in any other Loan Document, any Loans made and outstanding and their repayment
at all times shall be secured by a first priority, perfected, security interest
in the Collateral (which shall mean Revenue Equipment and is sometimes referred
to herein as the "Collateral").
Credit Agreement, June 16, 1997 - 31 - Chemical ▇▇▇▇▇▇ Corporation
10. Miscellaneous
10.1. Waiver. No failure or delay on the part of the Bank or any holder
of the Note in exercising any right, power or remedy under any Loan Document
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 under any Loan Document. The
remedies provided under the Loan Documents are cumulative and not exclusive of
any remedies provided by law.
10.2. Amendments. No amendment, modification, termination or waiver of
any Loan Document or any provision thereof nor any consent to any departure by
CLC therefrom shall be effective unless the same shall have been approved in
writing by the Bank, be in writing and be signed by the Bank and CLC and then
any such waiver or consent shall be effective only in the instance and for the
specific purpose for which given. No notice to or demand on the CLC shall
entitle CLC to any other or further notice or demand in similar or other
circumstances.
10.3. Governing Law. The Loan Documents and all rights and obligations
of the parties thereunder shall be governed by and be construed and enforced in
accordance with the laws of the Commonwealth of Pennsylvania without regard to
Pennsylvania or federal principles of conflict of laws.
10.4. Participations and Assignments. CLC hereby acknowledges and
agrees that CoreStates may at any time: (a) grant participations in all or any
portion of the Note or of its right, title and interest therein or in or to this
Agreement (collectively, "Participations") to any other lending office of
CoreStates or to any other bank, lending institution or other entity which has
the requisite sophistication to evaluate the merits and risks of investments in
Participations ("Participants"); provided, however, that: (i) all amounts
payable by CLC hereunder shall be determined as if CoreStates had not granted
such Participation; and (ii) any agreement pursuant to which CoreStates may
grant a Participation: (x) shall provide that CoreStates shall retain the sole
right and responsibility to enforce the obligations of CLC hereunder including,
without limitation, the right to approve any amendment, modification or waiver
of any provisions of this Agreement; and (y) such participation agreement may
provide that CoreStates will not agree to any modification, amendment or waiver
of this Agreement without the consent of the Participant if such modification,
amendment or waiver would reduce the principal of or rate of interest on any
Loan or postpone the date fixed for any payment of principal of or interest on
any Loan; and (b) CoreStates may assign any of its obligations under this
Agreement and the Loan Documents, provided it shall retain at least $10,000,000
of the Loan Commitment and shall serve as agent for all assignees.
10.5. Captions. Captions in the Loan Documents are included for
convenience of reference only and shall not constitute a part of any Loan
Document for any other purpose.
10.6. Notices. All notices, requests, demands, directions, declarations
and other communications between the Bank and the CLC provided for in any Loan
Document shall, except as otherwise expressly provided, be mailed by registered
or certified mail, return receipt requested, or telegraphed, or faxed, or
delivered in hand to the applicable party at its address indicated opposite its
name on the signature pages hereto. The foregoing shall be effective and deemed
received three days after being deposited in the mails, postage prepaid,
addressed as aforesaid and shall whenever sent by telegram, telegraph or fax or
delivered in hand be effective when received. Any party may change its address
by a communication in accordance herewith.
Credit Agreement, June 16, 1997 - 32 - Chemical ▇▇▇▇▇▇ Corporation
10.7. Expenses; Indemnification. CLC will from time to time reimburse
the Bank promptly following demand for all reasonable out-of-pocket expenses
(including the reasonable fees and expenses of legal counsel) in connection with
(i) the preparation of the Loan Documents, (ii) the making of any Loans, (iii)
the administration of the Loan Documents, and (iv) the enforcement of the Loan
Documents. In addition to the payment of the foregoing expenses, CLC hereby
agrees to indemnify, protect and hold the Bank and any holder of the Note and
the officers, directors, employees, agents, affiliates and attorneys of the Bank
and such holder (collectively, the "Indemnitees") harmless from and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses and disbursements of any kind or nature,
including reasonable fees and expenses of legal counsel, which may be imposed
on, incurred by, or asserted against such Indemnitee by CLC or other third
parties and arise out of or relate to this Agreement or the other Loan Documents
or any other matter whatsoever related to the transactions contemplated by or
referred to in this Agreement or the other Loan Documents; provided, however,
that CLC shall have no obligation to an Indemnitee hereunder to the extent that
the liability incurred by such Indemnitee has been determined by a court of
competent jurisdiction to be the result of gross negligence or willful
misconduct of such Indemnitee.
10.8. Survival of Warranties and Certain Agreements. All agreements,
representations and warranties made or deemed made herein shall survive the
execution and delivery of this Agreement, the making of the Loans hereunder and
the execution and delivery of the Note. Notwithstanding anything in this
Agreement or implied by law to the contrary, the agreements of CLC set forth in
ss.ss.2.8, 2.9, and 10.7 shall survive the payment of the Loans and the
termination of this Agreement. This Agreement shall remain in full force and
effect until the repayment in full of all amounts owed by CLC under the Note or
any other Loan Document.
10.9. Severability. The invalidity, illegality or unenforceability in
any jurisdiction of any provision in or obligation under this Agreement, the
Note or other Loan Documents shall not affect or impair the validity, legality
or enforceability of the remaining provisions or obligations under this
Agreement, the Note or other Loan Documents or of such provision or obligation
in any other jurisdiction.
10.10. No Fiduciary Relationship. No provision in this Agreement or in
any of the other Loan Documents and no course of dealing between the parties
shall be deemed to create any fiduciary duty by the Bank to CLC.
10.11. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. CLC AND
CORESTATES EACH HEREBY CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL
COURT LOCATED WITHIN THE EASTERN DISTRICT OF PENNSYLVANIA AND IRREVOCABLY AGREES
THAT, ANY ACTIONS OR PROCEEDINGS ARISING OUT OF OR RELATING TO THE NOTE, THIS
AGREEMENT OR THE OTHER LOAN DOCUMENTS MAY BE LITIGATED IN SUCH COURTS. EACH
PARTY TO THIS AGREEMENT ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS
PROPERTIES, GENERALLY AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE
AFORESAID COURTS AND WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY
AGREES TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS
AGREEMENT, ANY NOTE, OR SUCH OTHER LOAN DOCUMENT.
10.12. WAIVER OF JURY TRIAL. CLC AND CORESTATES EACH HEREBY WAIVES ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON
Credit Agreement, June 16, 1997 - 33 - Chemical ▇▇▇▇▇▇ Corporation
OR ARISING OUT OF THIS AGREEMENT, ANY OF THE LOAN DOCUMENTS, OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS AGREEMENT AND THE
LENDER/BORROWER RELATIONSHIP ESTABLISHED HEREBY. THE SCOPE OF THIS WAIVER IS
INTENDED TO BE ALL-ENCOMPASSING OF ANY AND ALL DISPUTES THAT MAY BE FILED IN ANY
COURT AND THAT RELATE TO THE SUBJECT MATTER OF THIS TRANSACTION, INCLUDING
WITHOUT LIMITATION, CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS, AND ALL
OTHER COMMON LAW AND STATUTORY CLAIMS. CLC AND CORESTATES EACH ACKNOWLEDGES THAT
THIS WAIVER IS A MATERIAL INDUCEMENT TO THE TRANSACTION, THAT EACH HAS ALREADY
RELIED ON THE WAIVER IN ENTERING INTO THIS AGREEMENT AND THAT EACH WILL CONTINUE
TO RELY ON THE WAIVER IN THEIR RELATED FUTURE DEALINGS. CLC AND CORESTATES EACH
FURTHER WARRANTS AND REPRESENTS THAT EACH HAS REVIEWED THIS WAIVER WITH ITS
LEGAL COUNSEL, AND THAT EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL
RIGHTS FOLLOWING CONSULTATION WITH LEGAL COUNSEL. THIS WAIVER IS IRREVOCABLE,
AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS,
MODIFICATIONS, REPLACEMENTS OR RESTATEMENTS TO THIS AGREEMENT, THE LOAN
DOCUMENTS, OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS. IN THE
EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL
BY THE COURT.
10.13. Counterparts; Effectiveness. This Agreement and any amendment
hereto or waiver hereof may be signed 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. This Agreement and any amendments
hereto or waivers hereof shall become effective when the Bank shall have
received signed counterparts or notice by fax of the signature page that the
counterpart has been signed and is being delivered to it or facsimile that such
counterparts have been signed by all the parties hereto or thereto.
10.14. Use of Defined Terms. All words used herein in the singular or
plural shall be deemed to have been used in the plural or singular where the
context or construction so requires. Any defined term used in the singular
preceded by "any" shall be taken to indicate any number of the members of the
relevant class.
10.15. Offsets. Nothing in this Agreement shall be deemed a waiver or
prohibition of the Bank's right of banker's lien or offset.
10.16. Entire Agreement. This Agreement, the Note issued hereunder and
the other Loan Documents constitute the entire understanding of the parties
hereto as of the date hereof with respect to the subject matter hereof and
thereof and supersede any prior agreements, written or oral, with respect hereto
or thereto.
10.17. CLTL Agreement. Simultaneously with the execution and delivery
of this Agreement, the commitment of CoreStates Bank to make loans or issue
letters of credit under the CLTL Credit Agreement are hereby terminated.
10.18. Consolidated Basis. Unless the context otherwise requires,
references to CLC in this Agreement shall mean CLC and its Subsidiaries and
financial information shall be provided on a consolidated basis.
Credit Agreement, June 16, 1997 - 34 - Chemical ▇▇▇▇▇▇ Corporation
IN WITNESS WHEREOF, the parties hereto have each caused this Agreement
to be duly executed by their duly authorized representatives as of the date
first above written.
CHEMICAL ▇▇▇▇▇▇ CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
Notices To:
▇▇. ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Senior Vice President and Chief Financial Officer
Chemical ▇▇▇▇▇▇ Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
FAX No. ▇▇▇-▇▇▇-▇▇▇▇
CORESTATES BANK, N.A.
By: /s/ ▇▇▇▇▇ D'▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ D'Antonio
Title: Vice President
Notices To:
Mr. David D'Antonio
Vice President
CoreStates Bank, N.A.
Transportation Leasing and Construction Industry Services
FC 1-8-11-24
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
FAX No. ▇▇▇-▇▇▇-▇▇▇▇
Chemical ▇▇▇▇▇▇ Tank Lines, Inc. hereby terminates the commitment of
CoreStates Bank, N.A. as permitted by Section 1.5 of the CLTL Credit Agreement
and consents to Section 10.17 of the foregoing agreement.
CHEMICAL ▇▇▇▇▇▇ TANK LINES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Senior Vice President
Credit Agreement, June 16, 1997 - 35 - Chemical ▇▇▇▇▇▇ Corporation
Reference Table of Definitions
definition page defined
Additional Amount.........................................................15
Adjusted Appraised Value...................................................1
Administrative Fee........................................................13
Affiliate..................................................................2
Agreement..................................................................2
Appraised Value............................................................2
Bank.......................................................................1
Base Rate..................................................................2
Borrowing Base.............................................................2
Borrowing Base Certificate.................................................2
Business Day...............................................................2
Capitalized Lease..........................................................3
Capitalized Lease Obligations..............................................3
Code.......................................................................3
Collateral................................................................31
Commitment Fee............................................................13
Compliance Certificate....................................................21
CoreStates.................................................................1
CoreStates Bank............................................................1
Credit Termination Date...................................................11
Debt.......................................................................3
Default Rate...............................................................3
Dollars....................................................................3
Environmental Control Statutes.............................................3
ERISA......................................................................4
ERISA Affiliate............................................................4
Event of Default..........................................................29
Federal Funds Rate.........................................................4
Fiscal Quarter.............................................................4
Fiscal Year................................................................4
GAAP.......................................................................4
Generally Accepted Accounting Principles...................................4
Governmental Authority.....................................................4
Hazardous Substances.......................................................4
Indebtedness for Borrowed Money............................................4
Indemnitees...............................................................33
Interest Period............................................................5
Investment.................................................................5
Letter of Credit..........................................................10
LIBO Rate..................................................................5
LIBO Rate Loans............................................................6
LIBO Rate Reserve Percentage...............................................6
Credit Agreement, June 16, 1997 - 36 - Chemical ▇▇▇▇▇▇ Corporation
Lien.......................................................................6
Loan......................................................................10
Loan Commitment...........................................................10
Loan Documents.............................................................6
Loans.....................................................................10
Material Adverse Change....................................................6
Material Adverse Effect....................................................6
MLC........................................................................1
Multiemployer Plan.........................................................6
Note......................................................................11
Obligations................................................................7
Participants..............................................................32
Participations............................................................32
PBGC.......................................................................7
Pension Plan...............................................................7
Permitted Liens............................................................7
Person.....................................................................7
Plan.......................................................................7
Potential Default..........................................................8
Prohibited Transaction.....................................................8
Regulation.................................................................8
Regulation D...............................................................8
Regulatory Change..........................................................8
Release....................................................................8
Reportable Event...........................................................8
Revenue Equipment..........................................................8
Security Agreement.........................................................8
Solvent....................................................................9
Subsidiary.................................................................9
Tangible Assets............................................................9
Tangible Net Worth.........................................................9
Taxes......................................................................9
Termination Event..........................................................9
Unfunded Pension Liabilities...............................................9
Unrecognized Retiree Welfare Liability.....................................9
Credit Agreement, June 16, 1997 - 37 - Chemical ▇▇▇▇▇▇ Corporation
EXHIBIT A
[GRAPHIC OMITTED]
Note
$20,000,000 Philadelphia, PA
______ __, 1997
For Value Received, CHEMICAL ▇▇▇▇▇▇ CORPORATION, a Pennsylvania corporation
("CLC"), hereby promises to pay to the order of CORESTATES BANK, N.A. (the
"Bank"), in lawful currency of the United States of America in immediately
available funds at the Bank's offices located at Broad and Chestnut Streets,
Philadelphia, Pennsylvania, on the earlier to occur of acceleration of the
maturity date as provided in the Credit Agreement described below or the Credit
Termination Date as therein defined, the principal sum of TWENTY MILLION DOLLARS
($20,000,000) or, if less, the then unpaid principal amount of all Loans made by
the Bank pursuant to the Credit Agreement (defined below).
CLC promises also to pay interest on the unpaid principal amount hereof in like
money at such office from the date hereof until paid in full at the rates and at
the times provided in the Credit Agreement.
This Note is the Note referred to in, is entitled to the benefits of and is
secured by security interests referred to in the Credit Agreement, dated as of
June 16, 1997 by and between CLC and the Bank (as such may be amended, modified,
supplemented, restated or replaced from time to time, the "Credit Agreement").
Capitalized terms used in this Note but not defined herein shall have the
meanings ascribed to such terms in the Credit Agreement. This Note is subject to
voluntary prepayment and mandatory repayment prior to demand, acceleration of
maturity or the Credit Termination Date, in whole or in part, as provided in the
Credit Agreement.
In case an Event of Default shall occur and be continuing, the maturity date of
the principal of and the accrued interest on this Note may be accelerated and be
declared to be due and payable in the manner and with the effect provided in the
Credit Agreement.
CLC hereby waives presentment, demand, protest or notice of any kind in
connection with this Note.
Notwithstanding the face amount of this Note, the undersigned's liability
hereunder shall be limited, at all times, to the actual aggregate outstanding
indebtedness to the Bank relating to the Bank's Loans, including all principal
and interest, together with all fees and expenses as provided in the Credit
Agreement, as established by the Bank's books and records which shall be
conclusive absent manifest error.
Note - 1 - DRAFT: June 13, 1997
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF
THE COMMONWEALTH OF PENNSYLVANIA WITHOUT REGARD TO PENNSYLVANIA OR FEDERAL
PRINCIPLES OR CONFLICT OF LAWS.
IN WITNESS WHEREOF, and intending to be legally bound hereby, CLC has
caused this Note to be executed by its duly authorized officer as of the date
and year first above written.
CHEMICAL ▇▇▇▇▇▇ CORPORATION
By
-----------------------------------
Name:
Title:
Note - 2 - DRAFT: June 13, 1997
SCHEDULE 1
1.1 "Permitted Liens"
Permitted Liens including Liens securing indebtedness which will be paid
off with the proceeds of the Senior Notes.
3.2 Corporate Authority, Validity, Etc.
PRINCIPAL STOCKHOLDERS
The following table sets forth the beneficial ownership of the Company's
Common Stock as of March 30, 1997 with respect to each of the Company's
directors, the named executive officers, all directors and executive officers as
a group and each person who owns more than 5% of the Company's Common Stock.
Number Percentage of
of Shares Outstanding
Beneficially Shares of
Name and Address of Beneficial Owner(1) Owned Common Stock
--------------------------------------- ------------ -------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ....................... 216,600(2) 37.3%
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ......................... 186,200(3) 32.0%
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ........................ 43,400 7.5%
G. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ........................ 13,600 2.3%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. ................... -- --
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ........................ 8,750 1.5%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇ ......................... 17,450 3.0%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ..................... 11,650 2.0%
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, ▇▇. ................. 1,000 .2%
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇. ................. -- --
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ ..................... 8,750 1.5%
▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇-▇▇▇▇▇▇ ................ 6,975 1.2%
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ....................... 30,200(4) 5.2%
Directors and executive officers as a
group (12 persons) .................... 518,445 89.2%
----------
(1) Unless otherwise specified, the address of each listed beneficial owner is
▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇, ▇▇ ▇▇▇▇▇.
(2) Includes 61,200 shares held in trust for the benefit of ▇▇. ▇▇▇▇▇▇▇▇'▇
children.
(3) Includes 35,800 shares owned by other family members and 105,200 shares
owned in trust for the benefit of ▇▇. ▇▇▇▇▇▇▇▇ and other family members.
(4) Issuable upon conversion of preferred stock.
3.3 Litigation
Environmental Matters
The Company's operations and properties are subject to a wide variety of
increasingly complex and stringent federal, state, local and foreign laws and
regulations, including those governing the use, storage, handling, transport,
generation, treatment, release, discharge and disposal of certain materials,
substances and wastes, the remediation of contaminated soil and groundwater, and
the health and safety of employees (collectively, "Environmental Laws"). As
such, the nature of the Company's operations exposes it to the risk of claims
with respect to such matters and there can be no assurance that material costs
or liabilities will not be incurred in connection with such claims.
The Company believes that it is in compliance in all material respects with
all applicable Environmental Laws. Changes in Environmental Laws have resulted
in claims against the Company which arise from unintentional contamination as a
consequence of past waste disposal and treatment practices. Company management
has instituted policies and procedures intended to achieve compliance with all
applicable Environmental Laws. Compliance with such Environmental Laws is one of
the principal cornerstones of its business strategy due to its critical
importance to both the customer and the Company's operations.
Environmental issues confronting the Company may be separated into two
separate and distinct categories. The first category is exposure to remedial and
investigatory costs associated with the Company's historic operations. The
second is exposure to costs associated with ongoing environmental compliance.
The Company's wholly-owned subsidiary, EnviroPower, Inc., is staffed with
environmental experts who manage the Company's environmental exposure relating
to historic operations and develop policies and procedures, including periodic
audits of the Company's terminals and tank cleaning facilities, in order to
minimize the existence of circumstances that could lead to future environmental
exposure. None of the current audits has identified any material potential
liability under Environmental Laws at or involving existing Company facilities,
except for the Bridgeport, New Jersey site and certain other sites discussed
below. EnviroPower manages and oversees the Company's involvement in two sites
located in Bridgeport, New Jersey and West Caln Township, Pennsylvania, which
have been designated as Superfund Sites by the U.S. Environmental Protection
Agency ("EPA"). EnviroPower is also the Company's principal interface with the
EPA and various state environmental agencies. The Company is currently solely
responsible for remediation of the following two sites:
Bridgeport, New Jersey. During 1991, the Company entered into a Consent
Decree with the EPA filed in the U.S. District Court for the District of New
Jersey, U.S. v. Chemical ▇▇▇▇▇▇ Tank Lines, Inc., Civil Action No. 91-2637 (JFG)
(D.N.J.), with respect to its site located in Bridgeport, New Jersey, requiring
the Company to remediate groundwater contamination. The Consent Decree allowed
the Company to undertake Remedial Design and Remedial Action ("RD/RA") related
to the groundwater operable unit of the cleanup. Costs associated with
performing the RD/RA were $1.2 million in 1996. No decision has been made as to
the extent of soil remediation to be required, if any.
In August 1994, the EPA issued a Record of Decision ("ROD") selecting a
remedy for the wetlands operable unit at the Bridgeport site. The Company has
submitted comments to the EPA that
dispute the merits of the EPA's remedy. In the last quarter of 1996, the EPA
issued demands to the Company for reimbursement of approximately $2.5 million
in alleged EPA past response costs at the site for the groundwater and
wetlands operable units, and the Company expects that additional demands may
be issued in the future. The Company is involved in settlement negotiations
related to the matter. The government has not made a claim against the Company
for natural resource damages.
The Company is in litigation with its insurers to recover its costs in
connection with the environmental cleanup at the Bridgeport site. On April 7,
1993, the U.S. District Court for the District of New Jersey entered a
judgment requiring the insurers to reimburse the Company for substantially all
past and future environmental cleanup costs at the Bridgeport site. The
insurers appealed the judgment to the U.S. Court of Appeals for the Third
Circuit, but before the appeal was decided the Company and its primary insurer
settled all of the Company's claims, including claims asserted or to be asserted
at other sites, for $11.5 million. This insurer dismissed its appeal, but the
excess carriers did not. On June 20, 1996, the U.S. Court of Appeals
affirmed the judgment against the excess insurance carriers, except for the
allocation of liability among applicable policies, and remanded the case for
an allocation of damage liability among the insurers and applicable policies
on a several basis. The allocation proceeding and the Company's petition for
recovery of its legal costs are presently pending before the U.S. District
Court. While the excess insurers are continuing to contest the extent of their
coverage and the allocation methods proposed by the Company, the Company expects
to receive insurance proceeds sufficient to recover substantially all of the
costs of remediating the Bridgeport site, including attorney fees and expenses.
West Caln Township, Pennsylvania. The EPA has alleged that the Company
disposed of hazardous materials at the ▇▇▇▇▇▇▇ ▇▇▇▇ Lagoons Superfund Site
located in West Caln Township, Pennsylvania. In 1991, the EPA issued ROD I,
requiring the installation of a public water supply for some residents near the
site. In November 1991, the EPA issued special notice letters to the Company
and another potentially responsible party ("PRP") soliciting implementation
of ▇▇▇ ▇. In March 1992, the EPA issued a uniliateral order to the Company and
the other party directing them to implement ▇▇▇ ▇. The Company declined to
comply based on its belief that it had sufficient cause not to comply.
In April 1993, the EPA issued ▇▇▇ ▇▇, selecting a remedy for the soil
remediation phase of this cleanup program. The EPA and the Company agreed that
the Company would be afforded the opportunity to implement its preferred remedy
for the soil remediation phase and to settle its differences with the EPA
regarding the public water supply issue. Pursuant to a Consent Decree lodged
with the U.S. District Court for the Eastern District of Pennsylvania on October
10, 1995, U.S. v. Chemical ▇▇▇▇▇▇ Tank Lines, Inc., Civil Action No. 95-CV-4264
(RJB) (E.D.P.A.), the Company paid the EPA $713,674 in June 1996, $713,674 in
October 1996, and approximately $300,000 in November 1995, and established a
$300,000 irrevocable standby letter of credit. These payments settled the EPA's
claim relating to past response costs and failure to install a public water
supply in accordance with ▇▇▇ ▇. The Consent Decree requires the Company to make
an additional payment to the EPA of $700,000 in October 1997, perform an
interim groundwater remedy at the site, and finance the soil remedy. The Consent
Decree does not cover the final groundwater remedy or other site remedies, or
claims, if any, for natural resource damages.
Other Environmental Matters. The Company has been named as a PRP under
CERLCA and similar state laws at approximately 35 former waste treatment
and/or disposal sites. In general, the Company is among several PRPs named
at these sites. Based on the information known at this time, the Company's
involvement at these sites generally arises from shipment of wastes by or
for the Company in the ordinary course of business over many years to sites,
now contaminated, that are owned and operated by third parties. Given the
nature of the Company's involvement and the expected participation of a number
of other PRP's at these sites, the Company does not believes its liability at
these third party sites will be material. There can be no assurance, however,
that costs associated with these sites, individually or in the aggregate, will
not be material. The Company is also incurring expenses resulting from the
remediation of certain Company-owned sites. In April 1997, the Company received
a request from the New York State Department of Environmental Conservation
to perform a
Remedial Investigation and Feasibility Study relating to certain former surface
impoundments previously closed by the Company at its Tonawanda, New York
Terminal. The Company has indicated its willingness to perform a mutually
acceptable Remedial Investigation and Feasibility Study. In 1994, the Company
entered into an Administrative Consent Order ("ACO") with the West Virginia
Division of Environmental Protection ("DEP") to undertake the investigation and
remediation of a former lagoon at its former facility in ▇▇▇▇▇▇ County, West
Virginia. In accordance with the ACO, the Company has submitted a workplan to
DEP to address potential sludge and soil contamination. The extent of
groundwater remediation to be required, if any, has not been determined.
The Company has also undertaken the removal of all underground storage
tanks at its owned and operated facilities. This project is being managed by
EnviroPower staff and will be completed by the end of 1998 at an estimated cost
of $2 million, of which 1.5 million has been expended to date.
Although the extent and timing of the litigation, settlement and possible
cleanup costs at the foregoing sites, other than certain phases of the
Bridgeport and West Caln Township sites, are not reasonably estimable at this
time, it is anticipated that the Company will continue to incur costs with
respect to such sites and there can be no assurance that such costs will not
have a material adverse effect on the Company's financial condition or results
of operations. The Company has recorded total charges to income $2.3 million and
$2.4 million in 1996 and 1995, respectively, with regard to the foregoing
environmental matters and expects to continue to incur costs for environmental
matters generally for the foreseeable future.
Legal Proceedings
The Company is a party to a lawsuit filed in 1987 against the Company and
approximately 25 other defendants in the Superior Court of New Jersey, Passaic
County (A.L.U. Textile Combining Corp. et al. v. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇., ▇▇ ▇▇.,
▇▇. ▇-▇▇▇▇▇-▇▇). The approximately 175 plaintiffs seek damages claimed to exceed
$100 million resulting from a fire set to a building by trespassing arsonists.
The plaintiffs allege that the Company was negligent by delivering a shipment of
naphthalene to an outdoor facility where it could be ignited by trespassers. The
Company has denied any liability and has asserted cross-claims against the other
defendants. Discovery in the lawsuit has not yet been concluded. The Company is
currently in negotiations concerning a settlement of the claim. If a settlement
cannot be successfully concluded, the Company intends to defend against the
lawsuit and believes that it has meritorious defenses. There can be no assurance
that any settlement will be successfully concluded or that the terms of any
settlement or other resolution of the lawsuit would not have a material adverse
effect on the Company's financial condition or results of operations.
In connection with a dispute between the Company and a multiemployer
pension plan covering certain of the Company's union employees, the plan's
trustees have threatened to terminate the Company's participation in the pension
plan with respect to some of its employees. If such termination were to occur,
the plan's trustees have indicated that the Company would be required to pay a
partial withdrawal liability in the amount of approximately $3.8 million over a
period of two years commencing in 1999. The Company is currently negotiating
with the turstees concerning a possible settlement of the dispute, which would
permit all of the Company's covered operations to continue to participate in the
pension plan in exchange for either increased future contributions or increased
covered employment. There can be no assurance that any settlement agreement will
be reached. The Company believes that the ultimate resolution of this matter
will not have a material adverse effect on the Company's financial condition or
results of operations.
In addition to the matters described above and under "Environmental
Matters," the Company is a party to routine litigation incidental to its
business, primarily involving claims for personal injury or property damages
incurred in the transportation of chemicals. Except as described above and under
"Environmental Matters," the Company is not a party to any litigation, and is
not aware of any threatened claims, that could materially adversely affect the
Company's financial condition or results of operations.
3.4 ERISA
In connection with a dispute between the Company and a multiemployer
pension plan covering certain of the Company's union employees (Central States),
the plan's trustees have threatened to terminate the Company's participation in
the pension plan with respect to some of its employees. If such termination were
to occur, the plan's trustees have indicated that the Company would be required
to pay a partial withdrawal liability in the amount of approximately $3.8
million over a period of two years commencing in 1999. The Company is currently
negotiating with the trustees concerning a possible settlement of the dispute,
which would permit all of the Company's covered operations to continue to
participate in the pension plan in exchange for either increased future
contributions or increased covered employment. There can be no assurance that
any settlement agreement will be reached. The Company believes that the ultimate
resolution of this matter will not have a material adverse effect on the
Company's financial condition or results of operations.
3.5 Financial Statements
None.
3.7 Taxes
None.
3.10(b) Hazardous Wastes, Substances and Petroleum Products
Environmental Matters
The Company's operations and properties are subject to a wide variety of
increasingly complex and stringent federal, state, local and foreign laws and
regulations, including those governing the use, storage, handling, transport,
generation, treatment, release, discharge and disposal of certain materials,
substances and wastes, the remediation of contaminated soil and groundwater, and
the health and safety of employees (collectively, "Environmental Laws"). As
such, the nature of the Company's operations exposes it to the risk of claims
with respect to such matters and there can be no assurance that material costs
or liabilities will not be incurred in connection with such claims.
The Company believes that it is in compliance in all material respects with
all applicable Environmental Laws. Changes in Environmental Laws have resulted
in claims against the Company which arise from unintentional contamination as a
consequence of past waste disposal and treatment practices. Company management
has instituted policies and procedures intended to achieve compliance with all
applicable Environmental Laws. Compliance with such Environmental Laws is one of
the principal cornerstones of its business strategy due to its critical
importance to both the customer and the Company's operations.
Environmental issues confronting the Company may be separated into two
separate and distinct categories. The first category is exposure to remedial and
investigatory costs associated with the Company's historic operations. The
second is exposure to costs associated with ongoing environmental compliance.
The Company's wholly-owned subsidiary, EnviroPower, Inc., is staffed with
environmental experts who manage the Company's environmental exposure relating
to historic operations and develop policies and procedures, including periodic
audits of the Company's terminals and tank cleaning facilities, in order to
minimize the existence of circumstances that could lead to future environmental
exposure. None of the current audits has identified any material potential
liability under Environmental Laws at or involving existing Company facilities,
except for the Bridgeport, New Jersey site and certain other sites discussed
below. EnviroPower manages and oversees the Company's involvement in two sites
located in Bridgeport, New Jersey and West Caln Township, Pennsylvania, which
have been designated as Superfund Sites by the U.S. Environmental Protection
Agency ("EPA"). EnviroPower is also the Company's principal interface with the
EPA and various state environmental agencies. The Company is currently solely
responsible for remediation of the following two sites:
Bridgeport, New Jersey. During 1991, the Company entered into a Consent
Decree with the EPA filed in the U.S. District Court for the District of New
Jersey, U.S. v. Chemical ▇▇▇▇▇▇ Tank Lines, Inc., Civil Action No. 91-2637 (JFG)
(D.N.J.), with respect to its site located in Bridgeport, New Jersey, requiring
the Company to remediate groundwater contamination. The Consent Decree allowed
the Company to undertake Remedial Design and Remedial Action ("RD/RA") related
to the groundwater operable unit of the cleanup. Costs associated with
performing the RD/RA were $1.2 million in 1996. No decision has been made as to
the extent of soil remediation to be required, if any.
In August 1994, the EPA issued a Record of Decision ("ROD") selecting a
remedy for the wetlands operable unit at the Bridgeport site. The Company has
submitted comments to the EPA that
dispute the merits of the EPA's remedy. In the last quarter of 1996, the EPA
issued demands to the Company for reimbursement of approximately $2.5 million
in alleged EPA past response costs at the site for the groundwater and
wetlands operable units, and the Company expects that additional demands may
be issued in the future. The Company is involved in settlement negotiations
related to the matter. The government has not made a claim against the Company
for natural resource damages.
The Company is in litigation with its insurers to recover its costs in
connection with the environmental cleanup at the Bridgeport site. On April 7,
1993, the U.S. District Court for the District of New Jersey entered a
judgment requiring the insurers to reimburse the Company for substantially all
past and future environmental cleanup costs at the Bridgeport site. The
insurers appealed the judgment to the U.S. Court of Appeals for the Third
Circuit, but before the appeal was decided the Company and its primary insurer
settled all of the Company's claims, including claims asserted or to be asserted
at other sites, for $11.5 million. This insurer dismissed its appeal, but the
excess carriers did not. On June 20, 1996, the U.S. Court of Appeals
affirmed the judgment against the excess insurance carriers, except for
allocation of liability among applicable policies, and remanded the case for
an allocation of damage liability among the insurers and applicable policies
on a several basis. The allocation proceeding and the Company's petition for
recovery of its legal costs are presently pending before the U.S. District
Court. While the excess insurers are continuing to contest the extent of their
coverage and the allocation methods proposed by the Company, the Company expects
to receive insurance proceeds sufficient to recover substantially all of the
costs of remediating the Bridgeport site, including attorney fees and expenses.
West Caln Township, Pennsylvania. The EPA has alleged that the Company
disposed of hazardous materials at the ▇▇▇▇▇▇▇ ▇▇▇▇ Lagoons Superfund Site
located in West Caln Township, Pennsylvania. In 1991, the EPA issued ROD I,
requiring the installation of a public water supply for some residents near the
site. In November 1991, the EPA issued special notice letters to the Company
and another potentially responsible party ("PRP") soliciting implementation
of ▇▇▇ ▇. In March 1992, the EPA issued a unilateral order to the Company and
the other party directing them to implement ▇▇▇ ▇. The Company declined to
comply based on its belief that it had sufficient cause not to comply.
In April 1993, the EPA issued ▇▇▇ ▇▇, selecting a remedy for the soil
remediation phase of this cleanup program. The EPA and the Company agreed that
the Company would be afforded the opportunity to implement its preferred remedy
for the soil remediation phase and to settle its differences with the EPA
regarding the public water supply issue. Pursuant to a Consent Decree lodged
with the U.S. District Court for the Eastern District of Pennsylvania on October
10, 1995, U.S. v. Chemical ▇▇▇▇▇▇ Tank Lines, Inc., Civil Action No. 95-CV-4264
(RJB) (E.D.P.A.), the Company paid the EPA $713,674 in June 1996, $713,674 in
October 1996, and approximately $300,000 in November 1995, and established a
$300,000 irrevocable standby letter of credit. These payments settled the EPA's
claim relating to past response costs and failure to install a public water
supply in accordance with ▇▇▇ ▇. The Consent Decree requires the Company to make
an additional payment to the EPA of $700,000 in October 1997, perform an
interim groundwater remedy at the site, and finance the soil remedy. The Consent
Decree does not cover the final groundwater remedy or other site remedies, or
claims, if any, for natural resource damages.
Other Environmental Matters. The Company has been named as a PRP under
CERLCA and similar state laws at approximately 35 former waste treatment
and/or disposal sites. In general, the Company is among several PRPs named
at these sites. Based on the information known at this time, the Company's
involvement at these sites generally arises from shipment of wastes by or
for the Company in the ordinary course of business over many years to sites,
now contaminated, that are owned and operated by third parties. Given the
nature of the Company's involvement and the expected participation of a number
of other PRP's at these sites, the Company does not believe its liability at
these third party sites will be material. There can be no assurance, however,
that costs associated with these sites, individually or in the aggregate, will
not be material. The Company is also incurring expenses resulting from the
remediation of certain Company-owned sites. In April 1997, the Company received
a request from the New York State Department of Environmental Conservation
to perform a
Remedial Investigation and Feasibility Study relating to certain former surface
impoundments previously closed by the Company at its Tonawanda, New York
Terminal. The Company has indicated its willingness to perform a mutually
acceptable Remedial Investigation and Feasibility Study. In 1994, the Company
entered into an Administrative Consent Order ("ACO") with the West Virginia
Division of Environmental Protection ("DEP") to undertake the investigation and
remediation of a former lagoon at its former facility in ▇▇▇▇▇▇ County, West
Virginia. In accordance with the ACO, the Company has submitted a workplan to
DEP to address potential sludge and soil contamination. The extent of
groundwater remediation to be required, if any, has not been determined.
The Company has also undertaken the removal of all underground storage
tanks at its owned and operated facilities. This project is being managed by
EnviroPower staff and will be completed by the end of 1998 at an estimated cost
of $2 million, of which $1.5 million has been expended to date.
Although the extent and timing of the litigation, settlement and possible
cleanup costs at the foregoing sites, other than certain phases of the
Bridgeport and West Caln Township sites, are not reasonably estimable at this
time, it is anticipated that the Company will continue to incur costs with
respect to such sites and there can be no assurance that such costs will not
have a material adverse effect on the Company's financial condition or results
of operations. The Company has recorded total charges to income of $2.3 million
and $2.4 million in 1996 and 1995, respectively, with regard to the foregoing
environmental matters and expects to continue to incur costs for environmental
matters generally for the foreseeable future.
3.12 SUBSIDIARIES, Etc.
Chemical ▇▇▇▇▇▇ Tank Lines, Inc.
Fleet Transport Company, Inc.
Chemical Properties, Inc.
Power Purchasing, Inc.
American Transinsurance Group, Inc.
Capacity Management Services, Inc.
Quala Systems, Inc.
▇▇▇▇▇▇▇▇▇ Way Funding Corp.
Enviropower, Inc.
Core Logistics Management, Inc.
▇▇▇▇▇▇ Air Services, Inc.
3.13 TITLE TO PROPERTIES, LEASES
Permitted Liens including Liens securing indebtedness which will be paid
off with the proceeds of the Senior Notes.
