PS Group, Inc.
Form 10-Q September 30, 1995
Exhibit 10. (a)
September 22, 1995
PS GROUP, INC.
0000 Xx Xxxxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
Vice President Finance and
Chief Financial Officer
Gentlemen:
Bank of America National Trust and Savings Association ("Bank") is pleased to
amend and restate that certain Credit Agreement dated as of June 23, 1994
(the "Existing Agreement"), between PS Group, Inc., a Delaware corporation,
("Company") and Bank of America National Trust and Savings Association
(the "Bank") on the following terms and conditions:
I. Tranche A Letter of Credit Facility.
A. Subject to the terms and conditions set forth herein, Bank
agrees to continue outstanding the standby letters of credit set
forth on Exhibit A hereto issued under the Existing Agreement;
provided that such letters of credit shall be amended to reduce
in amount as shown on Exhibit A and to have an expiry date of
May 10, 2000 (the "Tranche A Letter of Credit Facility").
B. The Tranche A Letter of Credit Facility is not a revolving credit, and
once any letter of credit is reduced in amount that amount
shall not be reinstated, and once any letter of credit expires it
may not be renewed or continued. Bank shall be under no obligation to
renew or continue a letter of credit beyond its stated expiration
date.
II. Tranche B Letter of Credit Facility.
A. The Bank agrees to continue its letter of credit number 220857
in the amount of $1,000,000 issued in favor of Exxon Company, USA,
a division of Exxon Corporation and to issue new letters of
credit not to exceed $5,000,000, including the $1,000,000 Exxon
letter of credit, in face amount outstanding at any one time to
support fuel trading operations (the "Tranche B Letter of Credit
Facility").
B. The Tranche B Letter of Credit Facility is a revolving credit under
which letters of credit may be paid, extended, renewed or expire and
new letters of credit may be issued.
C. The Tranche B Letter of Credit Facility shall expire on September 30,
1996, and no Tranche B Letter of Credit shall have an expiry date
later than September 30, 1997.
III. Provisions Applicable to the Tranche A Letter of Credit Facility and the
Tranche B Letter of Credit Facility.
A. Company shall reimburse any drawings on the letters of credit
immediately upon demand.
B. Company agrees to pay to Bank a commission on each outstanding
Tranche A and Tranche B Letter of Credit in an amount equal to 1%
per annum on the daily average aggregate undrawn face amount
thereof, and on the Tranche B Letter of Credit Facility, a fee of
1/2 of 1% per annum on the unused availability. The commission
and the fee shall be payable quarterly in arrears on the last
day of each calendar quarter.
C. Bank's standard fee schedule shall apply to all letters of
credit including, without limitation, issuance, negotiation,
amendment and transfer fees.
D. Any amount not paid when due hereunder shall bear interest at a per
annum rate which is equal to the Reference Rate plus 2 percent.
The Reference Rate is the rate of interest publicly announced from
time to time by Bank in San Francisco, California, as its "reference
rate." It is a rate set by Bank based upon various factors
including Bank's costs and desired return, general economic
conditions and other factors, and is used as a reference point for
pricing some loans, which may be priced at, above, or below such
announced rate. Any change in the reference rate announced
by Bank shall take effect at the opening of business on the day
specified in the public announcement of such change.
E. All interest and commissions shall be calculated on the basis of
a 360-day year and actual days elapsed (which results in more
interest and commissions than if a 365-day year were used).
IV. Payments.
A. All payments to Bank shall be made at its Global Payment Operations,
0000 Xxxxxxx Xxxxxxxxx, Xxxxxxx, Xxxxxxxxxx 00000 in same day funds.
B. Company agrees to make all payments or reimbursements hereunder
free and clear of any deduction for any present or future taxes and
agrees to pay any present or future taxes or charges with respect
to such payments or reimbursements which may be imposed by any
government authority, except net income taxes of Bank imposed by any
jurisdiction.
C. Company shall reimburse or compensate Bank, upon demand by Bank,
for all costs incurred, losses suffered or payments made by Bank or
any corporation controlling Bank which are applied or allocated by
Bank to the transaction contemplated herein (all as determined by
Bank in its sole and absolute discretion) by reason of:
1. Any and all present or future reserve, deposit or similar
requirements against (or against any class of or change in or
in the amount of) assets or liabilities of, or commitments or
extensions of credit made hereunder by, Bank;
2. Any and all present or future capital or similar
requirements affecting Bank or any corporation controlling Bank
against (or against any class of or change in or in the amount
of) assets or liabilities or, or commitments or extensions of
credit by, Bank; and
3. Compliance by Bank with any direction, requirements or request
from any regulatory authority, whether or not having the force of
law.
V. Security and Support.
Company's obligations hereunder shall be secured by a cash collateral
account in an amount at all times equal to the total undrawn and drawn
and unreimbursed amount of letters of credit pursuant to the Security
Agreement (the "Security Agreement") in the form of Exhibit B hereto.
VI. Conditions for Effectiveness.
A. As a condition precedent to this Agreement becoming effective, Bank
must have received all of the following in form and substance
satisfactory to Bank:
1. Corporate resolutions with certificate of incumbency
evidencing the authority of the officer(s) executing this
agreement and the Security Agreement on behalf of Company.
2. A fee of $35,000; and
3. This Agreement and the Security Agreement duly executed and
delivered by Company, together with any account opening
documents and deposits in such account required in connection
herewith and therewith.
B. As a condition precedent to the issuance of Tranche B Letters of
Credit hereunder:
1. Each representation and warranty set forth in Section VII below
must be true and correct (and the request for the letter of
credit shall be deemed a further representation that they are
true and correct).
2. No Event of Default or event which would, with due notice or
lapse oftime or both, constitute an Event of Default shall have
occurred.
3. The wording and beneficiary of the letter of credit
shall be satisfactory to Bank.
4. Bank shall have received a duly executed and completed standby
letter of credit application on Bank's standard form.
VII. Representations and Warranties. Company represents and warrants to Bank
that:
A. Company and its Subsidiaries are corporations duly organized and
existing under the laws of their respective jurisdiction of
incorporation and are duly organized to do business and are
in good standing under the laws of all jurisdictions in which they
are doing business except where the failure to so qualify would
not result in a material adverse effect upon (i) the business,
operations, properties, assets, business prospects or condition
(financial or otherwise) of Company and its Subsidiaries, taken as
a whole, or (ii) the ability of Company to perform, or of Bank to
enforce, the obligations of Company hereunder (a "Material Adverse
Effect");
B. All corporate action on the part of Company necessary for
the authorization, execution, delivery and performance hereof has
been duly taken;
C. This agreement creates legally valid and binding obligations of
Company, enforceable against Company in accordance with its terms,
except as enforcement may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws or equitable principles
relating to or limiting creditors' rights generally;
D. All required waivers, consents, permissions or licenses
from any governmental regulatory body to which Company is
subject which are necessary in connection with this agreement and
the borrowings hereunder have been obtained prior to the date
hereof;
E. Company's audited consolidated financial statements dated December 31,
1994 and unaudited consolidated financial statements dated June 30,
1995 fairly present the financial position and results of
operations of Company and its consolidated subsidiaries as of the
respective dates thereof. Since June 30, 1995 there has not been
any Material Adverse Effect; and
F. The execution, delivery and performance by Company of this agreement
do not and will not (a) violate any provision of law, the
certificate of incorporation or bylaws of Company or any order,
judgment or decree of any court or other agency of government
binding on Company, or (b) conflict with, result in a breach of
or constitute (with due notice or lapse of time or both) a default
under any agreement or instrument to which Company is a party or by
which any of its properties or assets is bound.
VIII. Affirmative Covenants.
So long as credit is available hereunder and until full and final
payment of all of Company's obligations hereunder and any other
instruments or agreements required hereunder, Company shall:
A. Promptly give written notice to Bank of any Event of Default or event
which constitutes (with due notice or lapse of time or both) an Event
of Default;
B. Deliver to Bank, in form and substance satisfactory to Bank:
1. Within 120 days after the end of each fiscal year, Company's
audited consolidated financial statements and unaudited
consolidating financial statements for such year together with an
opinion related to the audited financial statements of an
independent certified accountant containing only such
limitations and qualifications as shall be satisfactory to
Bank;
2. Within 60 days after the end of its first three (3) fiscal
quarters, Company's consolidating financial statements for such
quarter; and
3. Within 10 days after the end of each month, a certificate
signed by the chief financial officer, controller, treasurer
or an assistant treasurer of Company stating that Company has
been, and continues to be, in compliance with Paragraph VIII.C
during such month;
C. Maintain at all times an aggregate minimum of not less than Three
Million Dollars in cash and cash equivalents on hand, unpledged
and free and clear of all liens and encumbrances (including the
lien of Bank under the Security Agreement) whether voluntary or
involuntary; and
D. Maintain at all times a balance in the cash collateral account of not
less than the total undrawn and drawn and unreimbursed letters of
credit by depositing cash or Invested Assets when required to make up
any deficiency.
IX. Default. If any of the following events ("Events of Default") shall occur:
A. Any reimbursement of any drawing under any letter of credit is not
made when due; or any other payment required to be made hereunder is
not made within three (3) days thereof when due; or
B. Any representation or warranty to Bank in any document related to
this financing proves to be in any respect false or misleading in
any material respect at the time made and shall not have been cured
within fifteen (15) days of the Company having become aware thereof;
or
C. Company fails to comply with any other term or provision of this
agreement and such failure shall continue for more than thirty
(30) days after written notice from Bank to Company of the existence
and character of such Event of Default; or
D. Any provision of this agreement or the Security Agreement shall for
any reason cease to be valid and binding on or enforceable against
Company or Company shall so state in writing or bring an action
to limit its obligations or liabilities thereunder; or the Security
Agreement shall for any reason cease to create a valid security
interest in the collateral purported to be covered thereby or such
security interest shall for any reason cease to be a perfected and
first priority security interest; or
E. Any bankruptcy, receivership, reorganization, liquidation,
arrangement, insolvency or dissolution proceeding is commenced in
any court by or against Company or any of its Subsidiaries
under the laws of any jurisdiction;
THEN, at the option of Bank, all sums outstanding hereunder or under
any instrument executed in connection herewith shall immediately be due and
payable, together with all commissions and interest thereon, and the
Bank may exercise the remedies available to it under law, in equity
and under the Security Agreement, all without notice of default,
presentment or demand for payment, protest or notice of nonpayment or
dishonor, or other notices or demands of any kind or character, all of
which are hereby expressly waived.
X. Miscellaneous.
A. The obligation of Company to reimburse Bank for payments made by Bank
under the letters of credit shall be absolute, unconditional and
irrevocable, and shall be performed strictly in accordance with the
terms of this agreement under all circumstances.
B. This agreement shall bind and inure to the benefit of the parties and
their respective successors and assigns; provided, however, Company
shall not assign this agreement or any other instrument or
agreement required hereunder or any rights, duties or
obligations of Company herein and thereunder.
E. Bank may at any time upon written consent by Company, which consent
shall not be unreasonably withheld by Company, sell, assign, grant
participation in, or otherwise transfer (a "Transfer") all or part of
the obligations of Company or any part of them under this agreement,
provided such Transfer shall result in no cost to Company not
otherwise contemplated by this Agreement, and Company agrees
each such disposition shall give rise to their direct
obligation to any buyer, participant or assignee of Bank.
Bank may disclose to any such prospective buyer information
in Bank's possession concerning Company, this agreement.
F. No delay or omission by Bank to exercise any right under this
agreement or under any document related hereto shall impair such
right, nor shall it be construed as a waiver thereof. No waiver of
any breach or default shall be deemed a waiver of any subsequent
breach or default. Any waiver, consent or approval under this
agreement must be in writing to be effective.
G. Company agrees to pay all costs, expenses and attorneys' fees
(including the allocated costs of in-house counsel) incurred in
the preparation, negotiation and administration of this
agreement and the documents delivered in connection herewith
and incurred in the enforcement and collection (including without
limitation during any bankruptcy or receivership proceeding)
of any indebtedness incurred or outstanding hereunder.
H. This agreement, and all other instruments or agreements attached
hereto, required hereunder, or referred to herein, integrate all
the terms and conditions mentioned herein or incidental hereto,
supersede all oral negotiations and prior existing with respect to
the transactions authorized herein, and are intended by the parties
as the final expression of their agreement with respect to the terms
and conditions set forth herein and in any such other instruments or
agreements. Notwithstanding any provision of any application relating
to any letter of credit to the contrary, it is understood that in the
event of any conflict between the terms of any such application and
the terms of this agreement, the terms of this agreement shall
control with respect to events of default, representations and
warranties, and covenants, except that such application may
provide for further warranties relating specifically to the
transaction or affairs underlying such letter of credit.
I. All notices, consents and other communications provided for or
permitted hereunder, shall be given in writing and delivered or
sent by hand, by telex, cable or facsimile transmission to each party
at its address set forth below, or to such other addresses as
either party may hereafter designate in writing:
To Borrower
PS GROUP, INC.
0000 Xx Xxxxx Xxxxxxx Xxxxx, Xxxxx 0000
Xxx Xxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxxx X. Xxxxx
Vice President Finance and
Chief Financial Officer
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
To Bank
Bank of America National Trust
and Savings Association
000 Xxxxx Xxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Attention: Xxxxxxx Xxxxxxx
Vice President
Credit Products #5618
Telephone: (000) 000-0000
Facsimile: (000) 000-0000
I. This agreement shall be governed by and construed under the laws
of the State of California.
J. This agreement amends and restates in its entirety the Existing
Agreement. To the extent not amended, restated and set forth herein,
all terms of the Existing Agreement shall be of no further force and
effect from and after the date of this Agreement.
This commitment shall expire unless accepted in writing by Company on or
before October 15, 1995. If and when this agreement is accepted it shall
constitute the final agreement between the parties hereto. Please indicate
your acceptance of the foregoing by signing and returning a copy of this letter
to my attention on or before such date.
Sincerely yours,
BANK OF AMERICA NATIONAL
TRUST AND SAVINGS ASSOCIATION
By: /s/ Xxxxxxx Xxxxxxx
-------------------
Xxxxxxx Xxxxxxx
Vice President
AGREED TO AND ACCEPTED:
PS GROUP, INC.
Date: October 3, 1995
By: /s/ X.X. Xxxxx
--------------
Title: Vice President - Finance
EXHIBIT A
LETTERS OF CREDIT
Standby Letter Expiry or Reduction
of Credit No. Face Amount Date
LASB 205060 $ 2,542,095.72 05/11/95 - 11/10/95
2,249,642.23 11/11/95 - 05/10/96
1,957,188.74 05/11/96 - 11/10/96
1,687,231.67 11/11/96 - 05/10/97
1,462,267.45 05/11/97 - 11/10/97
1,147,317.54 11/11/97 - 05/10/98
899,856.89 05/11/98 - 11/10/98
674,892.67 11/11/98 - 05/10/99
472,424.87 05/11/99 - 11/10/99
292,453.49 11/11/99 - 05/10/00
LASB 205062 $ 2,686,222.56 05/11/95 - 11/10/95
2,377,188.10 11/11/95 - 05/10/96
2,068,153.65 05/11/96 - 11/10/96
1,782,891.08 11/11/96 - 05/10/97
1,545,172.27 05/11/97 - 11/10/97
1,212,365.93 11/11/97 - 05/10/98
950,875.24 05/11/98 - 11/10/98
713,156.43 11/11/98 - 05/10/99
499,209.50 05/11/99 - 11/10/99
309,034.45 11/11/99 - 05/10/00
Both letters of credit shall expire on May 10, 2000.
EXHIBIT B
SECURITY AGREEMENT
1. As security for the payment (in such manner and order as of the
holder may elect) of any drawings under the Tranche A and Tranche B Letters of
Credit (as defined in the Agreement referred to below) and any extensions or
renewals of the same and all other obligations of the undersigned pursuant
to the amended and restated letter loan Agreement dated as of even date
herewith between PS Group, Inc. ("Company") and Bank of America National
Trust and Savings Association ("Bank") (as amended, restated, extended or
otherwise modified from time to time, the "Agreement"), Company hereby assigns
and grants a security interest in all money and property from time to time
delivered to and deposited with Bank in the bank account identified on
Schedule 1 attached hereto, together with all proceeds thereof,
interest, earnings, money, rights to subscribe, new securities or other
property to which Debtor is or may hereafter become entitled to receive on
account of such property (the "collateral").
2. Provided no Default or Event of Default has occurred and is
continuing, Company may instruct Bank to invest the collateral in debt
securities of the following types (the funds at any time and from time to time
so invested and all proceeds thereof being herein called "Invested Assets"):
(a) direct obligations of, or obligations the principal and
interest of which are guaranteed by, the United States of America;
(b) deposit accounts (which may be represented by certificates of
deposits) in Bank and bankers acceptances drawn on and accepted by Bank;
(c) Pacific Horizon Government Service Funds; and
(d) other debt securities approved by Bank in writing;
provided, however, that (i) in all cases the maturity of any such Invested
Assets described in clauses (a) and (b) above shall not exceed six months;
(ii) so long as no Default or Event of Default has occurred and is continuing,
Bank shall remit any interest received on the Invested Assets to Company; (iii)
so long as no Default or Event of Default has occurred and is continuing,
Bank shall remit to Company the excess of total Invested Assets over the
total undrawn and drawn and unreimbursed amount of all letters of credit;
(iv) Bank shall be satisfied, in its sole discretion, that the perfection
and continuity of security interest granted hereunder in such Invested Assets
shall not be adversely affected by such investment; and (v) if USAir Group,
Inc. and/or any subsidiary thereof including USAir, Inc. should be the
subject of a voluntary or involuntary bankruptcy, receivership, reorganization,
liquidation, arrangement, insolvency or dissolution proceeding in any court,
then the collateral shall be invested only in deposit accounts in Bank.
3. Company, upon any Event of Default, authorizes Bank to
cause to collect upon the collateral by transferring to the name of Bank
or that of its nominee any investment securities, cash or any other assets
now or hereafter deposited with it as collateral and further authorizes Bank
at its option, without demand, advertisement or notice to liquidate all or
any portion of the above collateral or any substitute or addition thereto,
including evidences of debt, at 10/27/95 public or private sale, at the best
price offered and pursue any other remedy of a secured creditor under the
California Uniform Commercial Code.
4. Company waives, to the full extent permissible by law, the
pleading of the statute of limitations as a defense to any demand hereunder, and
hereby consents, without notice, to renewals and extensions of time, to the
release, surrender of substitutions of collateral, and to the acceptance of
any type of further security; and diligence, presentment, protest, demand and
notice of every kind are hereby waived. Company also specifically agrees
that it shall not be necessary for said holder to proceed against anyone
liable for the payment of said obligations, or against any other security
therefor, prior to or as a condition of realizing upon any security held
hereunder.
5. Terms not defined herein have the meanings assigned to them
in the Agreement.
6. Company agrees to pay all costs, expenses and attorneys'
fees (including the allocated costs of in-house counsel) incurred in the
preparation, negotiation and administration of this agreement and the
documents delivered in connection herewith. Company hereunder agrees to pay
any costs and attorneys' fees (including the allocated cost of in-house
counsel) incurred in the enforcement and collection (including without
limitation during any bankruptcy or receivership proceeding) of any
indebtedness incurred or outstanding hereunder.
7. No delay or omission by Bank to exercise any right under
this agreement or under any document related hereto shall impair such right,
nor shall it be construed as a waiver thereof. No waiver of any breach or
default shall be deemed a waiver of any subsequent breach or default.
Any waiver, consent or approval under this agreement must be in writing to
be effective.
8. This agreement shall be governed by and construed under the
laws of the State of California.
9. This Agreement amends and restates the Security Agreement dated
as of June 23, 1994 between Company and Bank of America National Trust
and Savings Association, as agent, and continues in existence the
security interest in the Collateral provided for therein.
IN WITNESS WHEREOF, the parties hereto have entered into this
Security Agreement as of October 3, 1995.
PS GROUP, INC.
By: /s/ X.X. Xxxxx
---------------
Title: Vice Predident - Finance
BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION
By: /s/ Xxxxxxx Xxxxxxx
--------------------
Xxxxxxx Xxxxxxx
Vice President
