EXHIBIT 10.40
SECOND AMENDMENT TO INVESTMENT AND PARTICIPATION AGREEMENT
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THIS SECOND AMENDMENT TO INVESTMENT AND PARTICIPATION AGREEMENT (this
"Second Amendment") is dated as of March 30, 2000, among U.S. XPRESS
ENTERPRISES, INC., a Nevada corporation (the "Company") and WACHOVIA CAPITAL
INVESTMENTS, INC. (formerly known as Wachovia Capital Markets, Inc.), as Lessor
(the "Lessor");
W I T N E S S E T H:
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WHEREAS, the Company and the Lessor executed and delivered that certain
Investment and Participation Agreement, dated as of the March 20, 1998, as
amended by that certain First Amendment to Investment and Participation
Agreement dated as of November 12, 1999 (as amended, the "Investment
Agreement");
WHEREAS, the Company has requested and the Lessor has agreed to certain
amendments to the Investment Agreement, subject to the terms and conditions
hereof;
NOW, THEREFORE, for and in consideration of the above premises and other
good and valuable consideration, the receipt and sufficiency of which hereby is
acknowledged by the parties hereto, the Company and the Lessor hereby covenant
and agree as follows:
1. Definitions. Unless otherwise specifically defined herein, each term
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used herein which is defined in Schedule 1.02 to the Investment Agreement shall
have the meaning assigned to such term in Schedule 1.02 to the Investment
Agreement. Each reference to "hereof", "hereunder", "herein" and "hereby" and
each other similar reference and each reference to "this Agreement" and each
other similar reference contained in the Investment Agreement shall from and
after the date hereof refer to the Investment Agreement as amended hereby.
2. Amendments.
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(a) Schedule 1.02(b) to the Investment Agreement is amended and
restated in its entirety as set forth on Schedule 1.02(b) attached to this
Second Amendment.
(b) Section 8.24 of the Investment Agreement is hereby amended and
restated in its entirety as follows:
Section 8.24. Restricted Payments. Beginning on January 1, 2000 and
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thereafter, the Company shall not declare or make any Restricted Payments,
provided that, so long as after giving effect thereto no Default shall be
in existence or be created thereby, the Company may:
(a) during the period beginning on January 1, 2000 and ending on
December 31, 2000, inclusive ("Fiscal Year 2000"), purchase, redeem or
retire up to Ten Million and No/100 Dollars ($10,000,000) of the Company's
Class A Capital Stock at a weighted average price per share not to exceed
Thirteen and No/100 Dollars ($13.00) (the "Repurchase");
(b) during Fiscal Year 2000, make Restricted Payments in
addition to any made pursuant to the Repurchase so long as the aggregate of
all such Restricted Payments made during Fiscal Year 2000 do not exceed the
greater of (i) five percent (5%) of cumulative Consolidated Net Income
earned during Fiscal Year 2000, or (ii) twenty-five percent (25%) of
cumulative Consolidated Net Income earned during Fiscal Year 2000 less
the amount of aggregate Restricted Payments made during Fiscal Year 2000
(including those made pursuant to the Repurchase); and
(c) during the period beginning on January 1, 2001 and ending on
the Lease Termination Date, make Restricted Payments so long as the
Restricted Payments made during any Fiscal Year do not exceed the sum of
(x) twenty-five percent (25%) of cumulative Consolidated Net Income for
that Fiscal Year, plus (y) solely with respect to Fiscal Year 2001,
Restricted Payments permitted but not paid during Fiscal Year 2000 under
Section 8.24(b).
(c) Section 8.26 of the Investment Agreement is hereby amended and
restated in its entirety as follows:
Section 8.26 Investments. Neither the Company nor any of its
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Subsidiaries shall make Investments in any Person except as permitted by
Section 8.25 and except Investments in (i) direct obligations of the United
States Government maturing within one year, (ii) certificates of deposit
issued by a commercial bank whose credit is satisfactory to the Agent,
(iii) commercial paper rated A1 or the equivalent thereof by S&P or P1 or
the equivalent thereof by ▇▇▇▇▇'▇ and in either case maturing within 6
months after the date of acquisition, (iv) tender bonds the payment of the
principal of and interest on which is fully supported by a letter of credit
issued by a United States bank whose long-term certificates of deposit are
rated at least AA or the equivalent thereof by S&P and Aa or the equivalent
thereof by ▇▇▇▇▇'▇, (v) acquisitions of the stock of a Person permitted by
Section 8.34, or (vi) ▇▇▇▇▇▇▇▇▇▇.▇▇▇, consisting of cash and certain
intangible assets (collectively, the "Transplace Investment"), so long as
(a) the cash portion of the Transplace Investment does not exceed Five
Million Dollars ($5,000,000), in the aggregate, and (b) the ownership
interest of Borrower in ▇▇▇▇▇▇▇▇▇▇.▇▇▇ and the other terms of the
Transplace Investment are substantially as described by the Borrower to the
Administrative Agent and to the Banks in written correspondence provided by
the Borrower, and in conferences held with the Borrower, prior to March 30,
2000; provided, however, immediately after giving effect to the making of
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any Investment, no Default shall have occurred and be continuing.
(d) Section 8.30 of the Investment Agreement is hereby amended and
restated in its entirety as follows:
Section 8.30. Ratio of Consolidated Total Adjusted Debt to
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Consolidated EBILTDA. The ratio of Consolidated Total Adjusted Debt to
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Consolidated EBILTDA will not at any time exceed (i) 3.25 to 1.00 during
the Fiscal Quarters ending on March 31, 2000 and June 30, 2000, and (ii)
thereafter, 3.00 to 1.00.
(e) Section 8.31 of the Investment Agreement is hereby amended and
restated in its entirety as follows:
Section 8.31. Ratio of Consolidated EBILT to Consolidated Fixed
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Charges. The ratio of (a) Consolidated EBILT to (b) Consolidated Fixed
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Charges will at all times exceed the following amounts during the
corresponding periods set forth below:
Period Amount
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Fiscal Quarters ending 03/31/00 through 06/30/00 1.10 to 1.00
Fiscal Quarter ending 09/30/00 1.15 to 1.00
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Fiscal Quarter ending 12/31/00 1.20 to 1.00
Each Fiscal Quarter ending thereafter 1.25 to 1.00
(f) Section 8.34(i) of the Investment Agreement is hereby amended and
restated in its entirety as follows:
(i) during the calendar year 1998, the Company may acquire all
of the outstanding capital stock of Victory Express, Inc. and PST Vans,
Inc., provided that the acquisition of the capital stock of PST Vans, Inc.
is on the terms and conditions set forth in that certain Agreement and Plan
of Merger dated as July 7, 1998, by and among PST Vans, Inc., U.S. Xpress
Enterprises, Inc., and PST Acquisition Corp., and further provided that for
any Fiscal Year thereafter the aggregate total consideration for all such
acquisitions shall not exceed $75,000,000;"
3. Conditions Precedent. This Second Amendment and the obligations of
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the Lenders evidenced hereunder shall not be effective until the execution and
delivery of this Second Amendment by each of the parties hereto and until the
Lessor shall have received a Reaffirmation of Guaranty from each Subsidiary in
substantially the form of Exhibit A-1 hereto.
4. Restatement of Representations and Warranties. The Company hereby
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restates and renews each and every representation and warranty heretofore made
by it in the Investment Agreement and the other Operative Documents as fully as
if made on the date hereof and with specific reference to this Second Amendment
and all other documents executed and/or delivered in connection herewith.
5. Effect of Amendment. Except as set forth expressly hereinabove, all
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terms of the Investment Agreement and the other Operative Documents shall be and
remain in full force and effect, and shall constitute the legal, valid, binding
and enforceable obligations of the Company. The amendments contained herein
shall be deemed to have prospective application only, unless otherwise
specifically stated herein. The execution, delivery and performance of this
Second Amendment shall not, except as expressly provided herein, constitute a
waiver of any provision of, or operate as a waiver of any right, power or remedy
of the Lessor or any Lease Participant under the Investment Agreement or any of
the other Operative Documents.
6. Ratification. The Company hereby restates, ratifies and reaffirms
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each and every term, covenant and condition set forth in the Investment
Agreement and the other Operative Documents effective as of the date hereof.
7. Counterparts. This Second Amendment may be executed in any number of
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counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed to be an original and all
of which counterparts, taken together, shall constitute but one and the same
instrument.
8. Section References. Section titles and references used in this
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Second Amendment shall be without substantive meaning or content of any kind
whatsoever and are not a part of the agreements among the parties hereto
evidenced hereby.
9. No Default. To induce the Lessor and the Lease Participants to enter
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into this Second Amendment and to continue to make advances pursuant to the
Investment Agreement, the Company hereby acknowledges and agrees that, as of the
date hereof, and after giving effect to the terms hereof, there exists (i) no
Default or Event of Default and (ii) no right of offset, defense, counterclaim,
claim or objection in favor of the Company arising out of or with respect to any
of the Rent or other obligations of the Company owed to the Lessor under the
Investment Agreement, the Lease or the other Operative Documents.
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10. Further Assurances. The Company agrees to take such further actions
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as the Lessor shall reasonably request in connection herewith to evidence the
amendments herein contained to the Company.
11. Governing Law. This Second Amendment shall be governed by and
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construed and interpreted in accordance with, the laws of the State of New York.
12. Conditions Precedent. This Second Amendment shall become effective
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only upon execution and delivery (i) of this Second Amendment by each of the
parties hereto, and (ii) of the Consent and Reaffirmation of Guarantors and
Second Amendment to Guaranty at the end hereof by each of the Guarantors and the
Lessor.
[Signatures begin on following page]
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IN WITNESS WHEREOF, each of the Company and the Lessor have caused this
Second Amendment to be duly executed, under seal, by its duly authorized officer
as of the day and year first above written.
U.S. XPRESS ENTERPRISES, INC., (SEAL)
as Company
By: /s/
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Name:
Title:
WACHOVIA CAPITAL INVESTMENTS, INC. (SEAL)
By: /s/
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Name:
Title:
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CONSENT AND REAFFIRMATION OF GUARANTORS
AND SECOND AMENDMENT TO SUBSIDIARY GUARANTY
Each of the undersigned Subsidiary Guarantors (i) acknowledges receipt of
the foregoing Second Amendment to Investment Agreement (the "Second Amendment"),
(ii) consents to the execution and delivery of the Second Amendment by the
parties thereto and (iii) reaffirms all of its obligations and covenants under
the Subsidiary Guaranty dated as of March 20, 1998 executed by it, and agrees
that none of such obligations and covenants shall be affected by the execution
and delivery of the Second Amendment.
This Consent and Reaffirmation and Second Amendment to Subsidiary
Guaranty may be executed in any number of counterparts and by different parties
hereto in separate counterparts, each of which when so executed and delivered
shall be deemed to be an original and all of which counterparts, taken together,
shall constitute but one and the same instrument.
U.S. XPRESS, INC.
CSI/CROWN, INC.
JTI, INC.
XPRESS AIR, INC.
U.S. XPRESS LEASING, INC.
By: /s/
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Name:
Title:
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SCHEDULE 1.02(b)
Pricing Schedule
Each of the terms "Applicable Margin" (for Yield accruing based on the
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Adjusted LIBO Rate) and "Commitment Fee Rate" means, for any day, the rate per
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annum set forth below:
(i) for the period commencing on March 30, 2000, to and including the
next Performance Pricing Determination Date, the Applicable Margin shall
equal 1.75%, and the Commitment Fee Rate shall equal 0.375%; and
(ii) from and after such next Performance Pricing Determination Date,
the rate per annum set forth in the table below, in the row opposite such
term and in the column of the table corresponding to the Pricing Level that
applies on such day:
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Pricing ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇ II III IV V
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Commitment Fee 0.20% 0.25% 0.30% 0.375% 0.50%
Rate
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Applicable Margin 0.75% 1.00% 1.375% 1.75% 2.25%
for Adjusted LIBO
Rate basis
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For purposes of this Pricing Schedule, the following terms have the
following meanings:
"Adjusted Total Debt/EBILTDA Ratio" means the ratio of Consolidated
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Total Adjusted Debt to Consolidated EBILTDA.
"Level I Pricing" applies if the Adjusted Total Debt/EBILTDA Ratio at
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the most recent Performance Pricing Determination Date was less than or equal
1.50 to 1.00.
"Level II Pricing" applies if the Adjusted Total Debt/EBILTDA Ratio at
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the most recent Performance Pricing Determination Date was greater than 1.50 to
1.00 and less than or equal to 2.00 to 1.00.
"Level III Pricing" applies if the Adjusted Total Debt/EBILTDA Ratio
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at the most recent Performance Pricing Determination Date was greater than 2.00
to 1.00 and less than or equal to 2.50 to 1.00.
"Level IV Pricing" applies if the Adjusted Total Debt/EBILTDA Ratio at
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the most recent Performance Pricing Determination Date was greater than 2.50 to
1.00 and less than or equal to 3.00 to 1.00.
"Level V Pricing" applies if the Adjusted Total Debt/EBILTDA Ratio at
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the most recent Performance Pricing Determination Date was greater than 3.00 to
1.00.
"Performance Pricing Determination Date" means each date that occurs
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45 days after the end of the first 3 Fiscal Quarters, and 90 days after the end
of the last Fiscal Quarter, of the Company.
In determining the Applicable Margin and Commitment Fee Rate, the Lessor
shall refer to the Company's most recent financial statements delivered to the
Funding Parties pursuant to Section 8.01(i) of the Investment Agreement
(together with the Compliance Certificate delivered in connection therewith, the
"Audited Statements") and Section 8.01(ii) of the Investment Agreement (together
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with the Compliance
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Certificate delivered in connection therewith, the "Unaudited Statements");
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provided, that, should any relevant Audited Statements or Unaudited Statements
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be delivered on a date later than a Performance Pricing Determination Date, any
necessary changes in the Applicable Margin and Commitment Fee Rate shall not be
effective, except to the extent hereinafter provided to the contrary, until the
next succeeding Performance Pricing Determination Date; provided, further, that,
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if the Audited Statements reflect an Adjusted Total Debt/EBILTDA Ratio or
Consolidated EBILT different from the Adjusted Total Debt/EBILTDA Ratio or
Consolidated EBILT determined by the Unaudited Statements for the third Fiscal
Quarter, then (i) if the Audited Statements reveal that Yield and Commitment
Fees should have been at a higher rate for the period from the last Performance
Pricing Determination Date to the next Performance Pricing Determination Date,
then the Company (as Acquisition/Construction Agent for the Lessor, or as Lessee
under the Lease) shall immediately pay to the Lessor such amounts as are
necessary to cause the Lessor to have received the appropriate return (and the
Lessor shall pay to the A Percentage Lease Participants and the B Percentage
Lease Participants their A Percentage Share and B Percentage Share,
respectively, thereof, and (ii) if the Audited Statements reveal that Yield and
Commitment Fees should have been at a lower rate for the period from the last
Performance Pricing Determination Date to the next Performance Pricing
Determination Date, then, so long as no Default shall be in existence, the
Company shall be entitled to a credit against future payments for such amounts
as are necessary to cause the Lessor to have received the appropriate return.
All determinations hereunder shall be made by the Lessor unless the Majority
Funding Parties shall object to any such determination.
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