Exhibit 10.4(a) First Amended and Restated Revolving Credit Loan Agreement.
FIRST Amended and Restated REVOLVING CREDIT LOAN AGREEMENT
Dated as of July 28, 2004
between
CENTRAL FREIGHT LINES, INC.,
a Texas corporation,
as Borrower
and
SUNTRUST BANK
as Lender
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ARTICLE I DEFINITIONS; CONSTRUCTION..................................................................1
Section 1.1 Definitions.......................................................................1
Section 1.2 Accounting Terms and Determination...............................................17
Section 1.3 Terms Generally..................................................................17
ARTICLE II AMOUNT AND TERMS OF THE COMMITMENT........................................................17
Section 2.1 Revolving Loans and Revolving Credit Note........................................17
Section 2.2 Procedure for Revolving Loans....................................................18
Section 2.3 Intentionally Omitted............................................................18
Section 2.4 Interest Elections...............................................................18
Section 2.5 Optional Reduction and Termination of Commitment.................................19
Section 2.6 Repayment of Loans...............................................................20
Section 2.7 Optional Prepayments.............................................................20
Section 2.8 Interest on Loans................................................................20
Section 2.9 Fees.............................................................................21
Section 2.10 Computation of Interest and Fees.................................................21
Section 2.11 Inability to Determine Interest Rates............................................22
Section 2.12 Illegality.......................................................................22
Section 2.13 Increased Costs..................................................................22
Section 2.14 Funding Indemnity................................................................24
Section 2.15 Payments Generally...............................................................24
Section 2.16 Intentionally Omitted............................................................24
Section 2.17 Letters of Credit................................................................24
ARTICLE III CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT.......................................27
Section 3.1 Conditions To Effectiveness......................................................27
Section 3.2 Each Credit Event................................................................28
ARTICLE IV REPRESENTATIONS AND WARRANTIES............................................................29
Section 4.1 Existence; Power.................................................................29
Section 4.2 Organizational Power; Authorization..............................................29
Section 4.3 Governmental Approvals; No Conflicts.............................................29
Section 4.4 Financial Statements.............................................................30
Section 4.5 Litigation and Environmental Matters.............................................30
Section 4.6 Compliance with Laws and Agreements..............................................30
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Section 4.7 Investment Company Act, Etc......................................................30
Section 4.8 Taxes............................................................................31
Section 4.9 Margin Regulations...............................................................31
Section 4.10 ERISA............................................................................31
Section 4.11 Ownership of Property............................................................31
Section 4.12 Disclosure.......................................................................31
Section 4.13 Labor Relations..................................................................32
Section 4.14 Subsidiaries.....................................................................32
ARTICLE V AFFIRMATIVE COVENANTS.....................................................................32
Section 5.1 Financial Statements and Other Information.......................................32
Section 5.2 Notices of Material Events.......................................................33
Section 5.3 Existence; Conduct of Business...................................................34
Section 5.4 Compliance with Laws, Etc........................................................34
Section 5.5 Payment of Obligations...........................................................34
Section 5.6 Books and Records................................................................34
Section 5.7 Visitation, Inspection, Etc......................................................35
Section 5.8 Maintenance of Properties; Insurance.............................................35
Section 5.9 Use of Proceeds and Letters of Credit............................................35
Section 5.10 Additional Subsidiaries..........................................................35
ARTICLE VI FINANCIAL COVENANTS.......................................................................35
Section 6.1 Lease Adjusted Leverage Ratio....................................................36
Section 6.2 Interest Coverage Ratio..........................................................36
Section 6.3 Minimum EBITDA...................................................................36
Section 6.4 Consolidated Tangible Net Worth..................................................36
ARTICLE VII NEGATIVE COVENANTS........................................................................36
Section 7.1 Indebtedness.....................................................................36
Section 7.2 Negative Pledge..................................................................37
Section 7.3 Fundamental Changes..............................................................38
Section 7.4 Investments, Loans, Etc..........................................................39
Section 7.5 Restricted Payments..............................................................40
Section 7.6 Sale of Assets...................................................................40
Section 7.7 Transactions with Affiliates.....................................................41
Section 7.8 Sale and Leaseback Transactions..................................................41
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Section 7.9 Hedging Agreements...............................................................41
Section 7.10 Amendment to Material Documents..................................................41
Section 7.11 Accounting Changes...............................................................42
ARTICLE VIII EVENTS OF DEFAULT.........................................................................42
Section 8.1 Events of Default................................................................42
ARTICLE IX MISCELLANEOUS.............................................................................45
Section 9.1 Notices..........................................................................45
Section 9.2 Waiver; Amendments...............................................................46
Section 9.3 Expenses; Indemnification........................................................46
Section 9.4 Successors and Assigns...........................................................48
Section 9.5 Governing Law; Jurisdiction; Consent to Service of Process.......................49
Section 9.6 WAIVER OF JURY TRIAL.............................................................50
Section 9.7 Right of Setoff..................................................................50
Section 9.8 Counterparts; Integration........................................................50
Section 9.9 Survival.........................................................................50
Section 9.10 Severability.....................................................................51
Section 9.11 Confidentiality..................................................................51
Section 9.12 Usury............................................................................51
Schedules
Schedule I - Applicable Margin and Applicable Percentage
Schedule 4.14 - Subsidiaries
Schedule 5.1 - Financial Covenants Compliance Certificate
Schedule 7.1 - Outstanding Indebtedness
Schedule 7.2 - Existing Liens
Schedule 7.4 - Existing Investments
Exhibits
Exhibit A - Revolving Credit Note
Exhibit B - Form of Subsidiary Guarantee Agreement
Exhibit 2.2 - Notice of Revolving Borrowing
Exhibit 2.4 - Form of Conversion/Continuation
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FIRST AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT
THIS FIRST AMENDED AND RESTATED REVOLVING CREDIT LOAN AGREEMENT (this
"Agreement") is made and entered into as of July 28, 2004, by and between
CENTRAL FREIGHT LINES, INC., a Texas corporation (the "Borrower") and SUNTRUST
BANK, a Georgia banking corporation (the "Lender").
RECITALS:
A.Borrower and Lender previously executed that certain Revolving Credit
Loan Agreement dated April 30, 2002 (as previously amended, the "Original Loan
Agreement").
B.The Borrower has requested that the Lender amend and restated the
Original Loan Agreement to establish a $30,000,000 revolving credit facility
(including a letter of credit facility) for the Borrower.
C.Subject to the terms and conditions of this Agreement, the Lender is
willing to establish the requested revolving credit facility (including a letter
of credit facility) for the Borrower.
NOW, THEREFORE, in consideration of the premises and the mutual covenants
herein contained, the Borrower and the Lender agree that the Original Loan
Agreement is amended and restated in its entirety as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.1 Definitions. In addition to the other terms defined herein, the
following terms used herein shall have the meanings herein specified (to be
equally applicable to both the singular and plural forms of the terms defined):
"Adjusted LIBO Rate" shall mean, with respect to each Interest Period for a
Eurodollar Loan, the rate per annum obtained by dividing (i) LIBOR for such
Interest Period by (ii) a percentage equal to 1.00 minus the Eurodollar Reserve
Percentage.
"Affiliate" shall mean, as to any Person, any other Person that directly,
or indirectly through one or more intermediaries, Controls, is Controlled by, or
is under common Control with, such Person.
"Applicable Margin" shall mean with respect to all Revolving Loans
outstanding on any date, a percentage per annum determined by reference to the
applicable Lease Adjusted Leverage Ratio in effect on such date as set forth on
Schedule I attached hereto; provided, that a change in the Applicable Margin
resulting from a change in the Lease Adjusted Leverage Ratio shall be effective
on the third day after which the Borrower is required to deliver the financial
statements required by Section 5.1(a) or (b) and the compliance certificate
required by Section 5.1 (c); provided further, that if at any time the Borrower
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shall have failed to deliver such financial statements and such certificate, the
Applicable Margin shall be at Level V until such time as such financial
statements and certificate are delivered, at which time the Applicable Margin
shall be determined as provided above. Notwithstanding the foregoing, the
Applicable Margin from the Closing Date until the first financial statement and
compliance certificate are required to be delivered shall be at Level I.
"Applicable Percentage" shall mean, with respect to the commitment fee or
the letter of credit fee, as the case may be, as of any date, the percentage per
annum determined by reference to the applicable Lease Adjusted Leverage Ratio in
effect on such date as set forth on Schedule I attached hereto; provided, that a
change in the Applicable Percentage resulting from a change in the Lease
Adjusted Leverage Ratio shall be effective on the third day after which the
Borrower is required to deliver the financial statements required by Section
5.1(a) or (b) and the compliance certificate required by Section 5.1 (c);
provided, further, that if at any time the Borrower shall have failed to deliver
such financial statements and such certificate, the Applicable Percentage shall
be at Level V until such time as such financial statements and certificate are
delivered, at which time the Applicable Percentage shall be determined as
provided above. Notwithstanding the foregoing, the Applicable Percentage for
both the commitment fee and the letter of credit fee from the Closing Date until
the first financial statement and compliance certificate are required to be
delivered shall be at Level I.
"Availability Period" shall mean the period from the Closing Date to the
Commitment Termination Date.
"Base Rate" shall mean the higher of (i) the per annum rate which the
Lender publicly announces from time to time to be its prime lending rate, as in
effect from time to time, or (ii) the Federal Funds Rate, as in effect from time
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to time, plus one-half of one percent (0.50%). The Lender's prime lending rate
is a reference rate and does not necessarily represent the lowest or best rate
charged to customers. The Lender may make commercial loans or other loans at
rates of interest at, above or below the Lender's prime lending rate. Each
change in the Lender's prime lending rate shall be effective from and including
the date such change is publicly announced as being effective.
"Base Rate Loan" shall mean a Revolving Loan designated by the Borrower as
a Loan accruing interest with reference to the Base Rate pursuant to Section 2.4
or otherwise converted to a Loan accruing interest at the Base Rate under the
terms of this Agreement.
"Borrower" shall have the meaning in the introductory paragraph hereof.
"Business Day" shall mean (i) any day other than a Saturday, Sunday or
other day on which commercial banks in Atlanta, Georgia or Nashville, Tennessee
are authorized or required by law to close and (ii) if such day relates to a
borrowing of, a payment or prepayment of principal or interest on, a conversion
of or into, or an Interest Period for, a Eurodollar Loan or a notice with
respect to any of the foregoing, any day on which dealings in Dollars are
carried on in the London interbank market.
"Capital Lease Obligations" of any Person shall mean all obligations of
such Person to pay rent or other amounts under any lease (or other arrangement
conveying the right to use) real or personal property, or a combination thereof,
which obligations are required to be classified and accounted for as capital
leases on a balance sheet of such Person under GAAP, and the amount of such
obligations shall be the capitalized amount thereof determined in accordance
with GAAP.
"Change in Control" shall mean the occurrence of one or more of the
following events: (a) any sale, lease, exchange or other transfer (in a single
transaction or a series of related transactions) of all or substantially all of
the assets of the Borrower or Holdings to any Person or "group" (within the
meaning of the Securities Exchange Act of 1934 and the rules of the Securities
and Exchange Commission thereunder in effect on the date hereof), (b) the
acquisition of ownership, directly or indirectly, beneficially or of record, by
any Unrelated Person or "group" (within the meaning of the Securities Exchange
Act of 1934 and the rules of the Securities and Exchange Commission thereunder
as in effect on the date hereof) of 30% or more of the outstanding shares of the
voting stock of Holdings; or (c) occupation of a majority of the seats (other
than vacant seats) on the board of directors of Holdings by Persons who were
neither (i) nominated by the current board of directors or (ii) appointed by
directors so nominated. For purposes of this definition, "Unrelated Person"
means any Person or "group" (within the meaning of the Securities Exchange Act
of 1934 and the rules of the Securities and Exchange Commission thereunder in
effect on the date hereof) other than: (1) ▇▇▇▇▇ ▇▇▇▇▇ and his spouse, lineal
descendents and spouses of his lineal descendents; (2) the estates of Persons
described in clause (1); (3) trusts established for the benefit of any Person or
Persons described in clause (1); (4) corporations, limited liability companies,
partnerships or similar entities 75% or more owned by any Person or Persons
described in clauses (1) through (3); (5) the Moyes Children's Trust; (6) the
Moyes Family Trust; and (7) ▇▇▇▇▇▇ ▇▇▇▇▇. For purposes of calculating the number
of outstanding shares of the voting stock of Holdings beneficially owned by any
"group" (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder in effect on the date
hereof), shares beneficially owned by Persons described in clauses (1) through
(7) of the preceding sentence shall be excluded from such calculation.
"Change in Law" shall mean (i) the adoption of any applicable law, rule or
regulation after the date of this Agreement, (ii) any change in any applicable
law, rule or regulation, or any change in the interpretation or application
thereof, by any Governmental Authority after the date of this Agreement, or
(iii) compliance by the Lender (or by the Lender's holding company, if
applicable) with any request, guideline or directive (whether or not having the
force of law) of any Governmental Authority made or issued after the date of
this Agreement.
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"Closing Date" shall mean July 28, 2004.
"Code" shall mean the Internal Revenue Code of 1986, as amended and in
effect from time to time.
"Contingent Obligation" means, as to any Person, any direct or indirect
liability of that Person with respect to any Indebtedness, lease, dividend,
guaranty, letter of credit or other obligation (each a "primary obligation") of
another Person (the "primary obligor"), whether or not contingent, (a) to
purchase, repurchase or otherwise acquire any such primary obligation or any
property constituting direct or indirect security therefor, or (b) to advance or
provide funds (i) for the payment or discharge of any such primary obligation,
or (ii) to maintain working capital or equity capital of the primary obligor in
respect of any such primary obligation or otherwise to maintain the net worth or
solvency or any balance sheet item, level of income or financial condition of
such primary obligor, or (c) to purchase property, securities or services
primarily for the purpose of assuring the owner of any such primary obligation
of the ability of the primary obligor thereof to make payment of such primary
obligation, or (d) otherwise to assure or hold harmless the owner of any such
primary obligation against loss or failure or inability to perform in respect
thereof. The amount of any Contingent Obligation shall be deemed to be an amount
equal to the stated or determinable amount of the primary obligation in respect
of which such Contingent Obligation is made or, if not stated or determinable,
the maximum reasonably anticipated liability in respect thereof.
"Commitment" shall mean the Revolving Commitment.
"Commitment Termination Date" shall mean the earliest of (i) April 30,
2006, (ii) the date on which the Revolving Commitment is terminated pursuant to
Section 2.5 or (iii) the date on which all amounts outstanding under this
Agreement have been declared or have automatically become due and payable by
acceleration following an Event of Default.
"Consolidated EBIT" shall mean, for Holdings and its Subsidiaries for any
period, an amount equal to the sum of (a) Consolidated Net Income for such
period plus (b) to the extent deducted in determining Consolidated Net Income
for such period, (i) Consolidated Interest Expense and (ii) income tax expense,
determined on a consolidated basis in accordance with GAAP, in each case for
such period.
"Consolidated EBITDA" shall mean, for Holdings and its Subsidiaries for any
period, an amount equal to the sum of (a) Consolidated Net Income for such
period plus (b) to the extent deducted in determining Consolidated Net Income
for such period, (i) Consolidated Interest Expense, (ii) income tax expense and
(iii) depreciation and amortization, determined on a consolidated basis in
accordance with GAAP in each case for such period.
"Consolidated EBITDAR" shall mean, for Holdings and its Subsidiaries for
any period, an amount equal to the sum of (a) Consolidated EBITDA and (b)
Consolidated Lease Expense.
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"Consolidated Interest Expense" shall mean, for Holdings and its
Subsidiaries for any period determined on a consolidated basis in accordance
with GAAP, the sum of total cash interest expense, including without limitation
the interest component of any payments in respect of Capital Lease Obligations
capitalized or expensed during such period (whether or not actually paid during
such period) and/or in respect of any Hedging Agreement.
"Consolidated Lease Expense" shall mean, for any period, the aggregate
amount of fixed and contingent rentals payable by Holdings and its Subsidiaries
with respect to leases of real and personal property (excluding Capital Lease
Obligations) determined on a consolidated basis in accordance with GAAP for such
period.
"Consolidated Net Income" shall mean, for any period, the net income (or
loss) of Holdings and its Subsidiaries for such period determined on a
consolidated basis in accordance with GAAP, but excluding therefrom (to the
extent otherwise included therein) (i) any extraordinary gains or losses, (ii)
any gains attributable to write-ups of assets and (iii) any equity interest of
Holdings or any Subsidiary of Holdings in the unremitted earnings of any Person
that is not a Subsidiary and (iv) any income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary or is merged into or consolidated with
Holdings or any Subsidiary on the date that such Person's assets are acquired by
Holdings or any Subsidiary.
"Consolidated Net Worth" shall mean, as of any date, (i) the total assets
of Holdings and its Subsidiaries that would be reflected on Holdings's
consolidated balance sheet as of such date prepared in accordance with GAAP,
after eliminating all amounts properly attributable to minority interests, if
any, in the stock and surplus of Subsidiaries, minus the sum of (i) the total
liabilities of Holdings and its Subsidiaries that would be reflected on
Holdings's consolidated balance sheet as of such date prepared in accordance
with GAAP and (ii) the amount of any write-up in the book value of any assets
resulting from a revaluation thereof or any write-up in excess of the cost of
such assets acquired reflected on the consolidated balance sheet of Holdings as
of such date prepared in accordance with GAAP.
"Consolidated Tangible Net Worth" shall mean, as of any date, (i) the total
assets of Holdings and its Subsidiaries that would be reflected on Holdings's
consolidated balance sheet as of such date prepared in accordance with GAAP,
after eliminating all amounts properly attributable to minority interests, if
any, in the stock and surplus of Subsidiaries, minus the sum of (i) the total
liabilities of Holdings and its Subsidiaries that would be reflected on
Holdings's consolidated balance sheet as of such date prepared in accordance
with GAAP, (ii) the amount of any write-up in the book value of any assets
resulting from a revaluation thereof or any write-up in excess of the cost of
such assets acquired reflected on the consolidated balance sheet of Holdings as
of such date prepared in accordance with GAAP and (iii) the net book amount of
all assets of Holdings and its Subsidiaries that would be classified as
intangible assets on a consolidated balance sheet of Holdings as of such date
prepared in accordance with GAAP.
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"Consolidated Total Debt" shall mean, as of any date of determination, all
Indebtedness of Holdings and its Subsidiaries that would be reflected on a
consolidated balance sheet of Holdings prepared in accordance with GAAP as of
such date.
"Control" shall mean the power, directly or indirectly, either to (i) vote
30% or more of securities having ordinary voting power for the election of
directors (or persons performing similar functions) of a Person or (ii) direct
or cause the direction of the management and policies of a Person, whether
through the ability to exercise voting power, by contract or otherwise. The
terms "Controlling", "Controlled by", and "under common Control with" have
meanings correlative thereto.
"Default" shall mean any condition or event that, with the giving of notice
or the lapse of time or both, would constitute an Event of Default.
"Default Interest" shall have the meaning set forth in Section 2.8(b).
"Dollar(s)" and the sign "$" shall mean lawful money of the United States
of America.
"Environmental Laws" shall mean all laws, rules, regulations, codes,
ordinances, orders, decrees, judgments, injunctions, notices or binding
agreements issued, promulgated or entered into by or with any Governmental
Authority, relating in any way to the environment, preservation or reclamation
of natural resources, the management, Release or threatened Release of any
Hazardous Material or to health and safety matters.
"Environmental Liability" shall mean any liability, contingent or otherwise
(including any liability for damages, costs of environmental investigation and
remediation, costs of administrative oversight, fines, natural resource damages,
penalties or indemnities), of the Borrower or any Subsidiary directly or
indirectly resulting from or based upon (a) any actual or alleged violation of
any Environmental Law, (b) the generation, use, handling, transportation,
storage, treatment or disposal of any Hazardous Materials, (c) any actual or
alleged exposure to any Hazardous Materials, (d) the Release or threatened
Release of any Hazardous Materials or (e) any contract, agreement or other
consensual arrangement pursuant to which liability is assumed or imposed with
respect to any of the foregoing.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor statute.
"ERISA Affiliate" shall mean any trade or business (whether or not
incorporated), which, together with the Borrower, is treated as a single
employer under Section 414(b) or (c) of the Code or, solely for the purposes of
Section 302 of ERISA and Section 412 of the Code, is treated as a single
employer under Section 414 of the Code.
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"ERISA Event" shall mean (a) any "reportable event", as defined in Section
4043 of ERISA or the regulations issued thereunder with respect to a Plan (other
than an event for which the 30-day notice period is waived); (b) the existence
with respect to any Plan of an "accumulated funding deficiency" (as defined in
Section 412 of the Code or Section 302 of ERISA), whether or not waived; (c) the
filing pursuant to Section 412(d) of the Code or Section 303(d) of ERISA of an
application for a waiver of the minimum funding standard with respect to any
Plan; (d) the incurrence by the Borrower or any of its ERISA Affiliates of any
liability under Title IV of ERISA with respect to the termination of any Plan;
(e) the receipt by the Borrower or any ERISA Affiliate from the PBGC or a plan
administrator appointed by the PBGC of any notice relating to an intention to
terminate any Plan or Plans or to appoint a trustee to administer any Plan; (f)
the incurrence by the Borrower or any of its ERISA Affiliates of any liability
with respect to the withdrawal or partial withdrawal from any Plan or
Multiemployer Plan; or (g) the receipt by the Borrower or any ERISA Affiliate of
any notice, or the receipt by any Multiemployer Plan from the Borrower or any
ERISA Affiliate of any notice, concerning the imposition of Withdrawal Liability
or a determination that a Multiemployer Plan is, or is expected to be, insolvent
or in reorganization, within the meaning of Title IV of ERISA.
"Eurodollar Loan" shall mean a Revolving Loan designated by the Borrower as
a Loan accruing interest with reference to the Adjusted LIBO Rate pursuant to
Section 2.4.
"Eurodollar Reserve Percentage" shall mean the aggregate of the maximum
reserve percentages (including, without limitation, any emergency, supplemental,
special or other marginal reserves) expressed as a decimal (rounded upwards to
the next 1/100th of 1%) in effect on any day to which the Lender is subject with
respect to the Adjusted LIBO Rate pursuant to regulations issued by the Board of
Governors of the Federal Reserve System (or any Governmental Authority
succeeding to any of its principal functions) with respect to eurocurrency
funding (currently referred to as "eurocurrency liabilities" under Regulation
D). Eurodollar Loans shall be deemed to constitute eurocurrency funding and to
be subject to such reserve requirements without benefit of or credit for
proration, exemptions or offsets that may be available from time to time to the
Lender under Regulation D. The Eurodollar Reserve Percentage shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"Event of Default" shall have the meaning provided in Article VIII.
"Federal Funds Rate" shall mean, for any day, the rate per annum (rounded
upwards, if necessary, to the next 1/100th of 1%) equal to the weighted average
of the rates on overnight Federal funds transactions with member banks of the
Federal Reserve System arranged by Federal funds brokers, as published by the
Federal Reserve Bank of New York on the next succeeding Business Day or if such
rate is not so published for any Business Day, the Federal Funds Rate for such
day shall be the average rounded upwards, if necessary, to the next 1/100th of
1% of the quotations for such day on such transactions received by the Lender
from three Federal funds brokers of recognized standing selected by the Lender.
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"GAAP" shall mean generally accepted accounting principles in the United
States applied on a consistent basis and subject to the terms of Section 1.2.
"Governmental Authority" shall mean the government of the United States of
America, any other nation or any political subdivision thereof, whether state or
local, and any agency, authority, instrumentality, regulatory body, court,
central bank or other entity exercising executive, legislative, judicial,
taxing, regulatory or administrative powers or functions of or pertaining to
government.
"Guarantee" of or by any Person (the "guarantor") shall mean any
obligation, contingent or otherwise, of the guarantor guaranteeing or having the
economic effect of guaranteeing any Indebtedness or other obligation of any
other Person (the "primary obligor") in any manner, whether directly or
indirectly and including any obligation, direct or indirect, of the guarantor
(a) to purchase or pay (or advance or supply funds for the purchase or payment
of) such Indebtedness or other obligation or to purchase (or to advance or
supply funds for the purchase of) any security for the payment thereof, (b) to
purchase or lease property, securities or services for the purpose of assuring
the owner of such Indebtedness or other obligation of the payment thereof, (c)
to maintain working capital, equity capital or any other financial statement
condition or liquidity of the primary obligor so as to enable the primary
obligor to pay such Indebtedness or other obligation or (d) as an account party
in respect of any letter of credit or letter of guaranty issued in support of
such Indebtedness or obligation; provided, that the term "Guarantee" shall not
include endorsements for collection or deposits in the ordinary course of
business. The amount of any Guarantee shall be deemed to be an amount equal to
the stated or determinable amount of the primary obligation in respect of which
Guarantee is made or, if not so stated or determinable, the maximum reasonably
anticipated liability in respect thereof (assuming such Person is required to
perform thereunder) as determined by such Person in good faith. The term
"Guarantee" used as a verb has a corresponding meaning.
"Hazardous Materials" means all explosive or radioactive substances or
wastes and all hazardous or toxic substances, wastes or other pollutants,
including petroleum or petroleum distillates, asbestos or asbestos containing
materials, polychlorinated biphenyls, radon gas, infectious or medical wastes
and all other substances or wastes of any nature regulated pursuant to any
Environmental Law.
"Hedging Agreements" shall mean interest rate swap, cap or collar
agreements, interest rate future or option contracts, currency swap agreements,
currency future or option contracts, commodity agreements and other similar
agreements or arrangements designed to protect against fluctuations in interest
rates, currency values or commodity values entered into by Borrower and Lender
(or an affiliate thereof) with respect to all or a portion of the Obligations.
"Holdings" shall mean Central Freight Lines, Inc., a Nevada corporation and
its permitted successors or assigns.
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"Holdings Guarantee Agreement" shall mean that certain Guarantee Agreement
dated as of the date of this Agreement executed by Holdings and Lender, and any
amendments thereto or restatements thereof.
"Indebtedness" of any Person shall mean, without duplication (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person in respect of the deferred purchase price of
property or services (other than trade payables incurred in the ordinary course
of business; provided, that for purposes of Section 8.1(f), trade payables
overdue by more than 120 days shall be included in this definition except to the
extent that any of such trade payables are being disputed in good faith and by
appropriate measures), (iv) all obligations of such Person under any conditional
sale or other title retention agreement(s) relating to property acquired by such
Person, (v) all Capital Lease Obligations of such Person, (vi) all obligations,
contingent or otherwise, of such Person in respect of letters of credit,
acceptances or similar extensions of credit, (vii) all Guarantees of such Person
of the type of Indebtedness described in clauses (i) through (vi) above, (viii)
all Indebtedness of a third party secured by any Lien on property owned by such
Person, whether or not such Indebtedness has been assumed by such Person, (ix)
all obligations of such Person, contingent or otherwise, to purchase, redeem,
retire or otherwise acquire for value any common stock of such Person, and (x)
Off-Balance Sheet Liabilities. The Indebtedness of any Person shall include the
Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer, except to the extent that the terms of such
Indebtedness provide that such Person is not liable therefor.
"Indemnified Taxes" shall mean Taxes other than Excluded Taxes.
"Interest Coverage Ratio" shall mean for any period of four consecutive
Fiscal Periods of Holdings, the ratio of (i) Consolidated EBIT for such period
to (ii) Consolidated Interest Expense for such period.
"Interest Period" shall mean, with respect to any Eurodollar Loan, a period
of one, three or six months, as the Borrower may request; provided, that:
(i) the initial Interest Period for any such Loan shall commence
on the date of such Loan (including the date of any conversion from a
Base Rate Loan) and each Interest Period occurring thereafter in
respect of such Loan shall commence on the day on which the next
preceding Interest Period expires;
(ii) if any Interest Period would otherwise end on a day other
than a Business Day, such Interest Period shall be extended to the
next succeeding Business Day, unless such Business Day falls in
another calendar month, in which case such Interest Period would end
on the next preceding Business Day;
13
(iii)any Interest Period which begins on the last Business Day of
a calendar month or on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period shall end on the last Business Day of such calendar month; and
(iv) no Interest Period may extend beyond the Commitment
Termination Date.
"LC Commitment" shall mean that portion of the Revolving Commitment that
may be used by the Borrower for the issuance of Letters of Credit in an
aggregate face amount not to exceed Thirty Million Dollars ($30,000,000).
"LC Disbursement" shall mean a payment made by the Lender pursuant to a
Letter of Credit.
"LC Documents" shall mean the Letters of Credit and all applications,
agreements and instruments relating to the Letters of Credit.
"LC Exposure" shall mean, at any time, the sum of (i) the aggregate undrawn
amount of all outstanding Letters of Credit at such time, plus (ii) the
aggregate amount of all LC Disbursements that have not been reimbursed by or on
behalf of the Borrower at such time.
"Lease Adjusted Funded Debt" shall mean the sum of (i) Consolidated Total
Debt, (ii) the present value of all future Consolidated Lease Expense
(calculated utilizing a discount rate equal to 10%), minus all cash (which is
not subject to any Lien or other claim by a third-party) held by Holdings or
Borrower in excess of $5,000,000.
"Lease Adjusted Leverage Ratio" shall mean for any period of four
consecutive Fiscal Periods of Holdings, the ratio of (i) Lease Adjusted Funded
Debt for such period to Consolidated EBITDAR for such period.
"Letter of Credit" shall mean any letter of credit issued pursuant to
Section 2.17 by the Lender for the account of the Borrower pursuant to the LC
Commitment.
"LIBOR" shall mean, for any applicable Interest Period with respect to any
Eurodollar Loan, the rate per annum for deposits in Dollars for a period equal
to such Interest Period appearing on the display designated as Page 3750 on the
Dow ▇▇▇▇▇ Markets Service (or such other page on that service or such other
service designated by the British Banker's Association for the display of such
Association's Interest Settlement Rates for Dollar deposits) as of 11:00 a.m.
(London, England time) on the day that is two Business Days prior to the first
day of the Interest Period or if such Page 3750 is unavailable for any reason at
such time, the rate which appears on the Reuters Screen ISDA Page as of such
date and such time; provided, that if the Lender determines that the relevant
14
foregoing sources are unavailable for the relevant Interest Period, LIBOR shall
mean the rate of interest determined by the Lender to be the average (rounded
upward, if necessary, to the nearest 1/100th of 1%) of the rates per annum at
which deposits in Dollars are offered to the Lender two (2) Business Days
preceding the first day of such Interest Period by leading banks in the London
interbank market as of 10:00 a. m. for delivery on the first day of such
Interest Period, for the number of days comprised therein and in an amount
comparable to the amount of the Eurodollar Loan of the Lender.
"Lien" shall mean any mortgage, pledge, security interest, lien (statutory
or otherwise), charge, encumbrance, hypothecation, assignment, deposit
arrangement, or other arrangement having the practical effect of the foregoing
or any preference, priority or other security agreement or preferential
arrangement of any kind or nature whatsoever (including any conditional sale or
other title retention agreement and any capital lease having the same economic
effect as any of the foregoing).
"Loan Documents" shall mean, collectively, this Agreement, the Note, the
Holdings Guarantee Agreement, the Security Agreement, the LC Documents and any
and all other instruments, agreements, documents and writings executed in
connection with any of the foregoing.
"Loan Parties" shall mean the Borrower, Holdings and any Subsidiary Loan
Parties.
"Loans" shall mean all Revolving Loans in the aggregate or any of them, as
the context shall require.
"Material Adverse Effect" shall mean, with respect to any event, act,
condition or occurrence of whatever nature (including any adverse determination
in any litigation, arbitration, or governmental investigation or proceeding),
whether singly or in conjunction with any other event or events, act or acts,
condition or conditions, occurrence or occurrences whether or not related, a
material adverse change in, or a material adverse effect on, (i) the business,
results of operations, financial condition, assets, liabilities or prospects of
Holdings and its Subsidiaries taken as a whole, (ii) the ability of the Loan
Parties to perform any of their respective obligations under the Loan Documents,
(iii) the rights and remedies of the Lender under any of the Loan Documents or
(iv) the legality, validity or enforceability of any of the Loan Documents.
"Material Indebtedness" shall mean Indebtedness (other than the Loans and
Letters of Credit), of any one or more of Holdings and the Subsidiaries in an
aggregate principal amount exceeding $1,000,000. For purposes of determining
Material Indebtedness, the "principal amount" of the obligations of Holdings or
any Subsidiary in respect to any Hedging Agreement (which are unrelated to the
Obligations) at any time shall be the maximum aggregate amount (giving effect to
any netting agreements) that Holdings or such Subsidiary would be required to
pay if such Hedging Agreement were terminated at such time.
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"Material Subsidiary" shall mean at any time any direct or indirect
Subsidiary of Holdings having: (a) assets in an amount equal to at least 5% of
the total assets of Holdings and its Subsidiaries determined on a consolidated
basis as of the last day of the most recent Fiscal Period of Holdings at such
time; or (b) revenues or net income in an amount equal to at least 5% of the
total revenues or net income of Holdings and its Subsidiaries on a consolidated
basis for the 12-month period ending on the last day of the most recent Fiscal
Period of Holdings at such time.
"Multiemployer Plan" shall have the meaning set forth in Section 4001(a)(3)
of ERISA.
"Note" shall mean the Revolving Credit Note.
"Notice of Conversion/Continuation" shall mean the notice given by the
Borrower to the Lender in respect of the conversion or continuation of an
outstanding Loan as provided in Section 2.4(b) hereof.
"Notice of Revolving Borrowing" shall have the meaning as set forth in
Section 2.2.
"Obligations" shall mean all amounts owing by the Borrower to the Lender
pursuant to or in connection with this Agreement or any other Loan Document,
including without limitation, all principal, interest (including any interest
accruing after the filing of any petition in bankruptcy or the commencement of
any insolvency, reorganization or like proceeding relating to the Borrower,
whether or not a claim for post-filing or post-petition interest is allowed in
such proceeding), all reimbursement obligations, fees, expenses, indemnification
and reimbursement payments, costs and expenses (including all fees and expenses
of counsel to the Lender incurred pursuant to this Agreement or any other Loan
Document), whether direct or indirect, absolute or contingent, liquidated or
unliquidated, now existing or hereafter arising hereunder or thereunder,
together with all renewals, extensions, modifications or refinancings thereof.
"Off-Balance Sheet Liabilities" of any Person shall mean (i) any repurchase
obligation or liability of such Person with respect to accounts or notes
receivable sold by such Person, (ii) any liability of such Person under any sale
and leaseback transactions which do not create a liability on the balance sheet
of such Person, (iii) any liability of such Person under any so-called
"synthetic" lease transaction or (iv) any obligation arising with respect to any
other transaction which is the functional equivalent of or takes the place of
borrowing but which does not constitute a liability on the balance sheet of such
Person. Notwithstanding the foregoing, Off-Balance Sheet Liabilities shall not
include operating leases entered into in the ordinary course of business.
"Participant" shall have the meaning set forth in Section 9.4(c).
"Payment Office" shall mean the office of the Lender located at Atlanta,
Georgia, or such other location as to which the Lender shall have given written
notice to the Borrower.
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"PBGC" shall mean the Pension Benefit Guaranty Corporation referred to and
defined in ERISA, and any successor entity performing similar functions.
"Permitted Encumbrances" shall mean
(i) Liens imposed by law for taxes not yet due or which are being
contested in good faith by appropriate proceedings and with respect to
which adequate reserves are being maintained in accordance with GAAP;
(ii) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen and other Liens imposed by law
created in the ordinary course of business for amounts not yet due or
which are being contested in good faith by appropriate proceedings and
with respect to which adequate reserves are being maintained in
accordance with GAAP;
(iii) pledges and deposits made in the ordinary course of
business in compliance with workers' compensation, unemployment
insurance and other social security laws or regulations;
(iv) deposits to secure the performance of bids, trade contracts,
leases, statutory obligations, surety and appeal bonds, performance
bonds and other obligations of a like nature, in each case in the
ordinary course of business;
(v) judgment and attachment liens not giving rise to an Event of
Default or Liens created by or existing from any litigation or legal
proceeding that are currently being contested in good faith by
appropriate proceedings and with respect to which adequate reserves
are being maintained in accordance with GAAP; and
(vi) easements, zoning restrictions, rights-of-way and similar
encumbrances on real property imposed by law or arising in the
ordinary course of business that do not secure any monetary
obligations and do not materially detract from the value of the
affected property or materially interfere with the ordinary conduct of
business of the Borrower and its Subsidiaries taken as a whole;
provided, that the term "Permitted Encumbrances" shall not include any Lien
securing the Indebtedness.
"Permitted Investments" shall mean:
(i) direct obligations of, or obligations the principal of and
interest on which are unconditionally guaranteed by, the United States
(or by any agency thereof to the extent such obligations are backed by
the full faith and credit of the United States), in each case maturing
within one year from the date of acquisition thereof;
17
(ii) commercial paper having the highest rating, at the time of
acquisition thereof, of S&P or ▇▇▇▇▇'▇ and in either case maturing
within six months from the date of acquisition thereof;
(iii) certificates of deposit, bankers' acceptances and time
deposits maturing within 180 days of the date of acquisition thereof
issued or guaranteed by or placed with, and money market deposit
accounts issued or offered by, any domestic office of any commercial
bank organized under the laws of the United States or any state
thereof which has a combined capital and surplus and undivided profits
of not less than $500,000,000;
(iv) fully collateralized repurchase agreements with a term of
not more than 30 days for securities described in clause (i) above and
entered into with a financial institution satisfying the criteria
described in clause (iii) above; and
(v) mutual funds investing solely in any one or more of the
Permitted Investments described in clauses (i) through (iv) above.
"Person" shall mean any individual, partnership, firm, corporation,
association, joint venture, limited liability company, trust or other entity, or
any Governmental Authority.
"Plan" means any employee pension benefit plan (other than a Multiemployer
Plan) subject to the provisions of Title IV of ERISA or Section 412 of the Code
or Section 302 of ERISA, and in respect of which the Borrower or any ERISA
Affiliate is (or, if such plan were terminated, would under Section 4069 of
ERISA be deemed to be) an "employer" as defined in Section 3(5) of ERISA.
"Receivables" shall mean accounts receivable (including, without
limitation, all rights to payment created or arising from the sales of goods,
leases of goods or the rendition of services, no matter how evidenced and
whether or not earned by performance) or any "accounts" as such term is defined
under the applicable Uniform Commercial Code.
"Regulation D" shall mean Regulation D of the Board of Governors of the
Federal Reserve System, as the same may be in effect from time to time, and any
successor regulations.
"Related Parties" shall mean, with respect to any specified Person, such
Person's Affiliates and the respective directors, officers, employees, agents
and advisors of such Person and such Person's Affiliates.
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"Release" means any release, spill, emission, leaking, dumping, injection,
pouring, deposit, disposal, discharge, dispersal, leaching or migration into the
environment (including ambient air, surface water, groundwater, land surface or
subsurface strata) or within any building, structure, facility or fixture.
"Responsible Officer" shall mean any of the president, the chief executive
officer, the chief operating officer, the chief financial officer, the treasurer
or a vice president of the Borrower or such other representative of the Borrower
as may be designated in writing by any one of the foregoing with the consent of
the Lender; and, with respect to the financial covenants only, the chief
financial officer or the treasurer of the Borrower.
"Restricted Payment" shall have the meaning as set forth in Section 7.5.
"Revolving Commitment" shall mean the obligation of the Lender to make
Revolving Loans to the Borrower in an aggregate principal amount not exceeding
$30,000,000.
"Revolving Commitment Sublimit" shall mean that portion of the Revolving
Commitment that may be used as advances constituting Revolving Loans, which are
not LC Disbursements and which shall not exceed Ten Million Dollars
($10,000,000).
"Revolving Credit Note" shall mean a promissory note of the Borrower
payable to the order of the Lender in the principal amount of the Revolving
Commitment, in substantially the form of Exhibit A.
"Revolving Loan" shall mean a loan made by the Lender to the Borrower under
its Revolving Commitment, which may either be a Base Rate Loan or a Eurodollar
Loan.
"Rolling Stock" shall mean all tractors, trailers, and forklifts owned by
Borrower and its Subsidiaries.
"Securitization Transaction" shall mean any transfer by the Borrower or any
Subsidiary of Receivables or interests therein and all collateral securing such
Receivables, all contracts and contract rights and all guarantees or other
obligations in respect of such Receivables, all other assets that are
customarily transferred or in respect of which security interests are
customarily granted in connection with asset securitization transactions
involving such Receivables and all proceeds of any of the foregoing (i) to a
trust, partnership, corporation or other entity (other than the Borrower or a
Subsidiary other than a SPE Subsidiary), which transfer is funded in whole or in
part, directly or indirectly, by the incurrence or issuance by the transferee or
any successor transferee of indebtedness or other securities that are to receive
payments from, or that represent interests in, the cash flow derived from such
Receivables or interests in Receivables, or (ii) directly to one or more
investors or other purchasers (other than the Borrower or any Subsidiary). The
"amount" or "principal amount" of any Securitization Transaction shall be deemed
at any time to be (x) in the case of a transaction described in clause (i) of
the preceding sentence, the aggregate principal or stated amount of the
19
Indebtedness or other securities referred to in such clause or, if there shall
be no such principal or stated amount, the uncollected amount of the Receivables
transferred pursuant to such Securitization Transaction net of any such
Receivables that have been written off as uncollectible, and (y) in the case of
a transaction described in clause (ii) of the preceding sentence, the aggregate
outstanding principal amount of the Indebtedness secured by Liens on the subject
Receivables.
"Security Agreement" shall mean that certain First Amended and Restated
Security Agreement executed by Borrower in favor of Lender, of even date
herewith, as it may be amended or restated from time to time.
"SPE Subsidiary" shall mean any Subsidiary formed solely for the purpose
of, and that engaged only in, one or more Securitization Transactions.
"Subsidiary" shall mean, with respect to any Person (the "parent"), any
corporation, partnership, joint venture, limited liability company, association
or other entity the accounts of which would be consolidated with those of the
parent in the parent's consolidated financial statements if such financial
statements were prepared in accordance with GAAP as of such date, as well as any
other corporation, partnership, joint venture, limited liability company,
association or other entity (i) of which securities or other ownership interests
representing more than 50% of the equity or more than 50% of the ordinary voting
power, or in the case of a partnership, more than 50% of the general partnership
interests are, as of such date, owned, Controlled or held, or (ii) that is, as
of such date, otherwise Controlled, by the parent or one or more subsidiaries of
the parent or by the parent and one or more subsidiaries of the parent. Unless
otherwise indicated, all references to "Subsidiary" hereunder shall mean a
Subsidiary of the Borrower.
"Subsidiary Guarantee Agreement" shall mean the Subsidiary Guarantee
Agreement, substantially in the form of Exhibit B, made by any Subsidiary Loan
Parties in favor of the Lender.
"Subsidiary Loan Party" shall mean any Material Subsidiary other than
Borrower or any SPE Subsidiary whose organizational documents prohibit such
entity from guaranteeing the Obligations.
"Taxes" shall mean any and all present or future taxes, levies, imposts,
duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"Type", when used in reference to a Loan, refers to whether the rate of
interest on such Loan is determined by reference to the Adjusted LIBO Rate or
the Base Rate.
"Unencumbered Asset Coverage Ratio" shall mean the ratio of assets
constituting Holdings's consolidated cash, Permitted Investments, Rolling Stock
and real property which are not subject to a Lien (except any Lien securing the
Obligations) to unsecured Consolidated Total Debt. In calculating this ratio,
Rolling Stock and real property shall be determined at their net book value.
20
"Withdrawal Liability" shall mean liability to a Multiemployer Plan as a
result of a complete or partial withdrawal from such Multiemployer Plan, as such
terms are defined in Part I of Subtitle E of Title IV of ERISA.
Section 1.2 Accounting Terms and Determination. Unless otherwise defined or
specified herein, all accounting terms used herein shall be interpreted, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared, in accordance with GAAP as
in effect from time to time, applied on a basis consistent (except for such
changes approved by the Borrower's independent public accountants) with the most
recent audited consolidated financial statement of Holdings delivered pursuant
to Section 5.1(a).
Section 1.3 Terms Generally. The definitions of terms herein shall apply
equally to the singular and plural forms of the terms defined. Whenever the
context may require, any pronoun shall include the corresponding masculine,
feminine and neuter forms. The words "include", "includes" and "including" shall
be deemed to be followed by the phase "without limitation". The word "will"
shall be construed to have the same meaning and effect as the word "shall". In
the computation of periods of time from a specified date to a later specified
date, the word "from" means "from and including" and the word "to" means "to but
excluding". Unless the context requires otherwise (i) any definition of or
reference to any agreement, instrument or other document herein shall be
construed as referring to such agreement, instrument or other document as it was
originally executed or as it may from time to time be amended, supplemented or
otherwise modified (subject to any restrictions on such amendments, supplements
or modifications set forth herein), (ii) any reference herein to any Person
shall be construed to include such Person's successors and permitted assigns,
(iii) the words "hereof", "herein" and "hereunder" and words of similar import
shall be construed to refer to this Agreement as a whole and not to any
particular provision hereof, (iv) all references to Articles, Sections, Exhibits
and Schedules shall be construed to refer to Articles, Sections, Exhibits and
Schedules to this Agreement and (v) all references to a specific time shall be
construed to refer to the time in the city and state of the Lender's principal
office, unless otherwise indicated.
ARTICLE II
AMOUNT AND TERMS OF THE COMMITMENT
Section 2.1 Revolving Loans and Revolving Credit Note.
(a) Subject to the terms and conditions set forth herein, the Lender
agrees to make Revolving Loans to the Borrower, from time to time during
the Availability Period, in an aggregate principal amount outstanding at
21
any time that will not exceed the Revolving Commitments Sublimit and will
not result in the sum of the principal amount of Revolving Loans then
outstanding plus the outstanding LC Exposure to exceed the Revolving
Commitment. During the Availability Period, the Borrower shall be entitled
to borrow, prepay and reborrow Revolving Loans in accordance with the terms
and conditions of this Agreement; provided, that the Borrower may not
borrow or reborrow should there exist a Default or an Event of Default.
(b) The Borrower's obligation to pay the principal of, and interest
on, the Revolving Loans shall be evidenced by the records of the Bank and
by the Revolving Credit Note. The entries made in such records and/or on
the schedule annexed to the Revolving Credit Note shall be prima facie
evidence of the existence and amounts of the obligations of the Borrower
therein recorded; provided, that the failure or delay of the Lender in
maintaining or making entries into any such record or on such schedule or
any error therein shall not in any manner affect the obligation of the
Borrower to repay the Revolving Loans (both principal and unpaid accrued
interest) in accordance with the terms of this Agreement.
(c) The Borrower and Lender agree and acknowledge that all Advances
(as defined in the Original Loan Agreement) and all Letters of Credit (as
defined in the Original Loan Agreement) which are outstanding under the
Original Loan Agreement shall, as of the Closing Date, be deemed Loans
(with the same unexpired Interest Period under the Original Loan Agreement)
and/or Letters of Credit, advanced or issued as applicable, under this Loan
Agreement.
Section 2.2 Procedure for Revolving Loans. The Borrower shall give the
Lender written notice (or telephonic notice promptly confirmed in writing) of
each Revolving Loan substantially in the form of Exhibit 2.2 (a "Notice of
Revolving Borrowing") (x) prior to 10:00 a.m. on the same Business Day of the
making of each Base Rate Loan requested and (y) prior to 11:00 a.m. two (2)
Business Days prior to the requested date of each Eurodollar Loan. Each Notice
of Revolving Borrowing shall be irrevocable and shall specify: (i) the principal
amount of the Revolving Loan, (ii) the proposed date of such Revolving Loan
(which shall be a Business Day), (iii) the Type of such Revolving Loan and
(iv)in the case of a Eurodollar Loan, the duration of the initial Interest
Period applicable thereto (subject to the provisions of the definition of
Interest Period). The aggregate principal amount of each Eurodollar Loan shall
be not less than $1,000,000 or a larger multiple of $250,000, and the principal
amount of each Base Rate Loan shall not be less than $100,000 or a larger
multiple of $50,000, or in such lesser amounts equal to the amount of the unused
Revolving Commitment. At no time shall the total number of Eurodollar Loans
outstanding at any time exceed five. Upon the satisfaction of the applicable
conditions set forth in Article III hereof, the Lender will make the proceeds of
each Revolving Loan available to the Borrower at the Payment Office on the date
specified in the applicable Notice of Revolving Borrowing by crediting an
account maintained by the Borrower with the Lender or at the Borrower's option,
by effecting a wire transfer of such amount to an account designated by the
Borrower to the Lender.
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Section 2.3 Intentionally Omitted.
Section 2.4 Interest Elections.
(a) Each Revolving Loan initially shall be of the Type specified in
the applicable Notice of Revolving Borrowing, and in the case of a
Eurodollar Loan, shall have an initial Interest Period as specified in such
Notice of Revolving Borrowing. Thereafter, the Borrower may elect to
convert any Loan into a different Type or to continue any Loan, and in the
case of a Eurodollar Loan, may elect Interest Periods therefor, all as
provided in this Section.
(b) To make an election pursuant to this Section, the Borrower shall
give the Lender prior written notice (or telephonic notice promptly
confirmed in writing) of each Loan (a "Notice of Conversion/Continuation")
that is to be converted or continued, as the case may be, (x) prior to
10:00 a.m. on the same Business Day as the date of a conversion into a Base
Rate Loan and (y) prior to 11:00 a.m. two (2) Business Days prior to a
continuation of or conversion into a Eurodollar Loan. Each such Notice of
Conversion/Continuation shall be irrevocable and shall specify (i) the Loan
to which such Notice of Conversion/Continuation applies; (ii) the effective
date of the election made pursuant to such Notice of
Conversion/Continuation, which shall be a Business Day, (iii) whether the
resulting Loan is to be a Base Rate Loan or a Eurodollar Loan; and (iv) if
the resulting Loan is to be a Eurodollar Loan, the Interest Period
applicable thereto after giving effect to such election, which shall be a
period contemplated by the definition of "Interest Period". If any such
Notice of Conversion/Continuation requests a Eurodollar Loan but does not
specify an Interest Period, the Borrower shall be deemed to have selected
an Interest Period of one month. The principal amount of any resulting Loan
shall satisfy the minimum borrowing amount for Eurodollar Loans and Base
Rate Loans set forth in Section 2.2.
(c) If, on the expiration of any Interest Period in respect of any
Eurodollar Loan, the Borrower shall have failed to deliver a Notice of
Conversion/Continuation, then, unless such Loan is repaid as provided
herein, the Borrower shall be deemed to have elected to convert such Loan
to a Base Rate Loan. No Loan may be converted into, or continued as, a
Eurodollar Loan if a Default or an Event of Default exists, unless the
Lender shall have otherwise consented in writing. No conversion of any
Eurodollar Loan shall be permitted except on the last day of the Interest
Period in respect thereof.
23
Section 2.5 Optional Reduction and Termination of Commitment.
(a) Unless previously terminated in accordance with the terms hereof,
the Revolving Commitment shall terminate on the Commitment Termination
Date.
(b) Upon at least two (2) Business Days' prior written notice (or
telephonic notice promptly confirmed in writing) to the Lender (which
notice shall be irrevocable), the Borrower may reduce the Revolving
Commitment in part or terminate the Revolving Commitment in whole;
provided, that (i) any partial reduction pursuant to this Section 2.5 shall
be in an amount of at least $500,000 and any larger multiple of $100,000,
and (ii) no such reduction shall be permitted which would reduce the
Revolving Commitment (after giving effect thereto and any concurrent
prepayments made under Section 2.7) to an amount less than the outstanding
Revolving Loans plus the outstanding LC Exposure.
Section 2.6 Repayment of Loans. The outstanding principal amount of all
Revolving Loans shall be due and payable (together with accrued and unpaid
interest thereon) on the Commitment Termination Date.
Section 2.7 Optional Prepayments. The Borrower shall have the right at any
time and from time to time to prepay any Loan, in whole or in part, without
premium or penalty, by giving irrevocable written notice (or telephonic notice
promptly confirmed in writing) to the Lender no later than (i) in the case of
prepayment of any Eurodollar Loan, 11:00 a.m. not less than two (2) Business
Days prior to any such prepayment and (ii) in the case of any prepayment of any
Base Rate Loan, not less than one (1) Business Day prior to the date of such
prepayment. Each such notice shall be irrevocable and shall specify the proposed
date of such prepayment and the principal amount of each Loan or portion thereof
to be prepaid. Such amount shall be due and payable on the date designated in
such notice, together with accrued interest to such date on the amount so
prepaid in accordance with Section 2.8(a); provided, that if a Eurodollar Loan
is prepaid on a date other than the last day of an Interest Period applicable
thereto, the Borrower shall also pay all amounts required pursuant to Section
2.14. Each partial prepayment of any Loan shall be in an amount that would be
permitted in the case of an advance of a Revolving Loan of the same Type
pursuant to Section 2.2.
Section 2.8 Interest on Loans.
(a) The Borrower shall pay interest: (i) on each Base Rate Loan at the
Base Rate less the Applicable Margin in effect from time to time; and (ii)
on each Eurodollar Loan at the Adjusted LIBO Rate for the applicable
Interest Period in effect for such Loan plus the Applicable Margin in
effect from time to time.
(b) While an Event of Default exists, at the option of the Lender, the
Borrower shall pay interest ("Default Interest") with respect to all
Eurodollar Loans at the rate otherwise applicable under Section 2.8(a) for
24
the then-current Interest Period plus an additional 2% per annum until the
last day of such Interest Period, and thereafter, and with respect to all
Base Rate Loans and all other Obligations hereunder (other than Loans), at
an all-in rate in effect for Base Rate Loans (without an Applicable
Margin), plus an additional 2% per annum.
(c) Interest on the principal amount of all Loans shall accrue from
and including the date such Loans are made to (but excluding) the date of
any repayment thereof. Interest on all outstanding Base Rate Loans shall be
payable quarterly in arrears on the last day of each March, June, September
and December, commencing on June 30, 2004, and on the Commitment
Termination Date. Interest on all outstanding Eurodollar Loans shall be
payable on the last day of each Interest Period applicable thereto, and, in
the case of any Eurodollar Loans having an Interest Period in excess of
three months, on each day which occurs every three months after the initial
date of such Interest Period, and on the Commitment Termination Date or the
Maturity Date, as the case may be. Interest on any Loan which is converted
into a Loan of another Type or which is repaid or prepaid shall be payable
on the date of such conversion or on the date of any such repayment or
prepayment (on the amount repaid or prepaid) thereof. All Default Interest
shall be payable on demand.
(d) The Lender shall determine each interest rate applicable to the
Loans hereunder and shall promptly notify the Borrower of such rate in
writing (or by telephone, promptly confirmed in writing). Any such
determination shall be conclusive and binding for all purposes, absent
manifest error.
Section 2.9 Fees.
(a) Commitment Fee. The Borrower agrees to pay to the Lender a
commitment fee, which shall accrue at the Applicable Percentage (determined
daily in accordance with Schedule I) on the daily amount of the daily
average unused Revolving Commitment during the Availability Period. The
face amount of any outstanding Letter of Credit issued hereunder shall be
deemed utilization of the Revolving Commitment. As of the Closing Date, the
Applicable Percentage shall be determined at Level V.
(b) Letter of Credit Fees. The Borrower agrees to pay to the Lender a
letter of credit fee which shall accrue at twenty-five (.25%) basis points
multiplied by the average daily amount of the Lender's LC Exposure
(excluding any portion thereof attributable to unreimbursed LC
Disbursements) attributable to such Letter of Credit during the period from
and including the date of issuance of such Letter of Credit to but
excluding the date on which such Letter expires or is drawn in full, as
well as the Lender's standard fees with respect to issuance, amendment,
renewal or extension of any Letter of Credit or processing of drawings
thereunder.
25
(c) Closing Fee. The Borrower shall pay to the Lender a closing fee in
an amount equal to $75,000. The closing fee shall be due and payable on the
Closing Date.
(d) Payments. Accrued fees under this Section (other than the closing
fee referenced in paragraph (c)) shall be payable quarterly in arrears on
the last day of each March, June, September and December, commencing on
June 30, 2004 and on the Commitment Termination Date.
Section 2.10 Computation of Interest and Fees. All computations of interest
and fees hereunder shall be made on the basis of a year of 360 days for the
actual number of days (including the first day but excluding the last day)
occurring in the period for which such interest or fees are payable (to the
extent computed on the basis of days elapsed). Each determination by the Lender
of an interest amount or fee hereunder shall be made in good faith and, except
for manifest error, shall be final, conclusive and binding for all purposes.
Section 2.11 Inability to Determine Interest Rates. If prior to the
commencement of any Interest Period for any Eurodollar Loan, the Lender shall
have determined (which determination shall be conclusive and binding upon the
Borrower) that (i) by reason of circumstances affecting the relevant interbank
market, adequate means do not exist for ascertaining LIBOR for such Interest
Period, or (ii) the Adjusted LIBO Rate does not adequately and fairly reflect
the cost to the Lender of making, funding or maintaining its Eurodollar Loans
for such Interest Period, the Lender shall give written notice (or telephonic
notice, promptly confirmed in writing) to the Borrower as soon as practicable
thereafter. Until the Lender notifies the Borrower that the circumstances giving
rise to such notice no longer exist, (i) the obligation of the Lender to make
Eurodollar Loans or to continue or convert outstanding Loans as or into
Eurodollar Loans shall be suspended and (ii) all such affected Loans shall be
converted into Base Rate Loans on the last day of the then current Interest
Period applicable thereto unless the Borrower prepays such Loans in accordance
with this Agreement. Unless the Borrower notifies the Lender at least one
Business Day before the date of any Eurodollar Loan for which a Notice of
Revolving Borrowing has previously been given that it elects not to borrow on
such date, then such Eurodollar Loan shall be made as a Base Rate Loan.
Section 2.12 Illegality. If any Change in Law shall make it unlawful or
impossible for the Lender to make, maintain or fund any Eurodollar Loan, the
Lender shall promptly give notice thereof to the Borrower, whereupon until the
Lender notifies the Borrower that the circumstances giving rise to such
suspension no longer exist, the obligation of the Lender to make Eurodollar
Revolving Loans, or to continue or convert outstanding Loans as or into
Eurodollar Loans, shall be suspended. In the case of the making of a Eurodollar
Loan, such Lender's Revolving Loan shall be made as a Base Rate Loan as part of
the same Revolving Loan for the same Interest Period and if the affected
Eurodollar Loan is then outstanding, such Loan shall be converted to a Base Rate
Loan either (i) on the last day of the then current Interest Period applicable
to such Eurodollar Loan if such Lender may lawfully continue to maintain such
Loan to such date or (ii) immediately if such Lender shall determine that it may
not lawfully continue to maintain such Eurodollar Loan to such date.
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Notwithstanding the foregoing, the Lender shall, prior to giving such notice to
the Lender, designate a different lending office if such designation would avoid
the need for giving such notice and if such designation would not otherwise be
disadvantageous to the Lender in the good faith exercise of its discretion.
Section 2.13 Increased Costs.
(a) If any Change in Law shall:
(i) impose, modify or deem applicable any reserve, special
deposit or similar requirement that is not otherwise included in the
determination of the Adjusted LIBO Rate hereunder against assets of,
deposits with or for the account of, or credit extended by, the Lender
(except any such reserve requirement reflected in the Adjusted LIBO
Rate); or
(ii) impose on the Lender or the eurodollar interbank market any
other condition affecting this Agreement or any Eurodollar Loans made
by the Lender; and the result of the foregoing is to increase the cost
to the Lender of making, converting into, continuing or maintaining a
Eurodollar Loan or to increase the cost to the Lender of issuing any
Letter of Credit or to reduce the amount received or receivable by the
Lender hereunder (whether of principal, interest or any other amount),
then the Borrower shall promptly pay, upon written notice from and
demand by the Lender, within five (5) Business Days after the date of
such notice and demand, additional amount or amounts sufficient to
compensate the Lender for such additional costs incurred or reduction
suffered.
(b) If the Lender shall have reasonably determined that on or after
the date of this Agreement any Change in Law regarding capital requirements
has or would have the effect of reducing the rate of return on the Lender's
capital (or on the capital of the Lender's parent corporation) as a
consequence of its obligations hereunder or under or in respect of any
Letter of Credit to a level below that which the Lender or the Lender's
parent corporation could have achieved but for such Change in Law (taking
into consideration the Lender's policies or the policies of the Lender's
parent corporation with respect to capital adequacy) then, from time to
time, within five (5) Business Days after receipt by the Borrower of
written demand by the Lender, the Borrower shall pay to the Lender such
additional amounts as will compensate the Lender or the Lender's parent
corporation for any such reduction suffered.
(c) A certificate of the Lender setting forth the amount or amounts
necessary to compensate the Lender or its parent corporation, as the case
may be, specified in paragraph (a) or (b) of this Section shall be
delivered to the Borrower and shall be conclusive, absent manifest error.
The Borrower shall pay the Lender such amount or amounts within 10 days
after receipt thereof.
27
(d) Failure or delay on the part of the Lender to demand compensation
pursuant to this Section shall not constitute a waiver of the Lender's
right to demand such compensation; provided, that the Borrower shall not be
required to compensate the Lender under this Section for any increased
costs or reductions incurred more than six (6) months prior to the date
that the Lender notifies the Borrower of such increased costs or reductions
and of the Lender's intention to claim compensation therefor; provided
further, that if the Change in Law giving rise to such increased costs or
reductions is retroactive, then such six-month period shall be extended to
include the period of such retroactive effect.
Section 2.14 Funding Indemnity. In the event of (a) the payment of any
principal of a Eurodollar Loan other than on the last day of the Interest Period
applicable thereto (including as a result of an Event of Default), (b) the
conversion or continuation of a Eurodollar Loan other than on the last day of
the Interest Period applicable thereto, or (c) the failure by the Borrower to
borrow, prepay, convert or continue any Eurodollar Loan on the date specified in
any applicable notice (regardless of whether such notice is withdrawn or
revoked), then, in any such event, the Borrower shall compensate the Lender,
within five (5) Business Days after written demand from the Lender, for any
loss, cost or expense attributable to such event. Such loss, cost or expense
shall be deemed to include an amount determined by the Lender to be the excess,
if any, of (A) the amount of interest that would have accrued on the principal
amount of such Eurodollar Loan if such event had not occurred at the Adjusted
LIBO Rate applicable to such Eurodollar Loan for the period from the date of
such event to the last day of the then current Interest Period therefor (or in
the case of a failure to borrow, convert or continue, for the period that would
have been the Interest Period for such Eurodollar Loan) over (B) the amount of
interest that would accrue on the principal amount of such Eurodollar Loan for
the same period if the Adjusted LIBO Rate were set on the date such Eurodollar
Loan was prepaid or converted or the date on which the Borrower failed to
borrow, convert or continue such Eurodollar Loan. A certificate as to any
additional amount payable under this Section submitted to the Borrower by the
Lender shall be conclusive, absent manifest error.
Section 2.15 Payments Generally.
The Borrower shall make each payment required to be made by it hereunder
(whether of principal, interest, fees or reimbursement of LC Disbursements, or
of amounts payable under Section 2.13 or 2.14, or otherwise) prior to 2:00 p.m.
(Central time), on the date when due, in immediately available funds, without
set-off or counterclaim. Any amounts received after such time on any date may,
in the discretion of the Lender, be deemed to have been received on the next
succeeding Business Day for purposes of calculating interest thereon. All such
payments shall be made to the Lender at its Payment Office. If any payment
hereunder shall be due on a day that is not a Business Day, the date for payment
shall be extended to the next succeeding Business Day, and, in the case of any
payment accruing interest, interest thereon shall be made payable for the period
of such extension. All payments hereunder shall be made in Dollars.
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Section 2.16 Intentionally Omitted.
Section 2.17 Letters of Credit.
(a) During the Availability Period, the Lender agrees to issue, at the
request of the Borrower, Letters of Credit for the account of the Borrower
on the terms and conditions hereinafter set forth; provided, that (i) each
Letter of Credit shall expire on the earlier of (A) the date one year after
the date of issuance of such Letter of Credit (or in the case of any
renewal or extension thereof, one year after such renewal or extension) and
(B) the date that is one (1) day prior to the Commitment Termination Date;
(ii) each Letter of Credit shall be in a stated amount of at least
$100,000; and (iii) the Borrower may not request any Letter of Credit, if,
after giving effect to such issuance (A) the LC Exposure would exceed the
LC Commitment or exceed the Cash Collateral, as defined in the Security
Agreement or (B) the LC Exposure, plus the outstanding Revolving Loans
would exceed the Revolving Commitment.
(b) To request the issuance of a Letter of Credit (or any amendment,
renewal or extension of an outstanding Letter of Credit), the Borrower
shall give the Lender irrevocable written notice at least three (3)
Business Days prior to the requested date of such issuance specifying the
date (which shall be a Business Day) such Letter of Credit is to be issued
(or amended, extended or renewed, as the case may be), the expiration date
of such Letter of Credit, the amount of such Letter of Credit , the name
and address of the beneficiary thereof and such other information as shall
be necessary to prepare, amend, renew or extend such Letter of Credit. In
addition to the satisfaction of the conditions in Article III, the issuance
of such Letter of Credit (or any amendment which increases the amount of
such Letter of Credit) will be subject to the further conditions that such
Letter of Credit shall be in such form and contain such terms as the Lender
shall approve and that the Borrower shall have executed and delivered any
additional applications, agreements and instruments relating to such Letter
of Credit as the Lender shall reasonably require; provided, that in the
event of any conflict between such applications, agreements or instruments
and this Agreement, the terms of this Agreement shall control.
(c) The Lender shall examine all documents purporting to represent a
demand for payment under a Letter of Credit promptly following its receipt
thereof. The Lender shall notify the Borrower of such demand for payment
and whether the Lender has made or will make a LC Disbursement thereunder;
provided, that any failure to give or delay in giving such notice shall not
relieve the Borrower of its obligation to reimburse the Lender with respect
to such LC Disbursement. The Borrower shall be irrevocably and
unconditionally obligated to reimburse the Lender for any LC Disbursements
paid by the Lender in respect of such drawing, without presentment, demand
or other formalities of any kind.
(d) If any Event of Default shall occur and be continuing, on the
Business Day that the Borrower receives notice from the Lender demanding
the deposit of cash collateral pursuant to this paragraph, the Borrower
shall deposit in an account with the Lender, in the name of the Lender and
for the benefit of the Lender, an amount in cash equal to the LC Exposure
as of such date plus any accrued and unpaid interest thereon; provided,
that the obligation to deposit such cash collateral shall become effective
immediately, and such deposit shall become immediately due and payable,
without demand or notice of any kind, upon the occurrence of any Event of
Default with respect to the Borrower described in clause (g) or (h) of
Section 8.1. Such deposit shall be held by the Lender as collateral for the
payment and performance of the obligations of the Borrower under this
Agreement. The Lender shall have exclusive dominion and control, including
the exclusive right of withdrawal, over such account. Other than any
interest earned on the investment of such deposits, which investments shall
be made at the option and sole discretion of the Lender and at the
Borrower's risk and expense, such deposits shall not bear interest.
Interest and profits, if any, on such investments shall accumulate in such
account. Moneys in such account shall applied by the Lender to reimburse
itself for LC Disbursements for which it had not been reimbursed and to the
extent so applied, shall be held for the satisfaction of the reimbursement
obligations of the Borrower for the LC Exposure at such time or, if the
maturity of the Loans has been accelerated, be applied to satisfy other
obligations of the Borrower under this Agreement. If the Borrower is
required to provide an amount of cash collateral hereunder as a result of
the occurrence of an Event of Default, such amount (to the extent not so
applied as aforesaid) shall be returned to the Borrower with three Business
Days after all Events of Default have been cured or waived.
29
(e) The Borrower's obligation to reimburse LC Disbursements hereunder
shall be absolute, unconditional and irrevocable and shall be performed
strictly in accordance with the terms of this Agreement under all
circumstances whatsoever and irrespective of any of the following
circumstances:
(i) Any lack of validity or enforceability of any Letter of
Credit or this Agreement;
(ii) The existence of any claim, set-off, defense or other right
which the Borrower or any Subsidiary or Affiliate of the Borrower may
have at any time against a beneficiary or any transferee of any Letter
of Credit (or any Persons or entities for whom any such beneficiary or
transferee may be acting), the Lender or any other Person, whether in
connection with this Agreement or the Letter of Credit or any document
related hereto or thereto or any unrelated transaction;
(iii) Any draft or other document presented under a Letter of
Credit proving to be forged, fraudulent or invalid in any respect or
any statement therein being untrue or inaccurate in any respect;
(iv) Payment by the Lender under a Letter of Credit against
presentation of a draft or other document to the Lender that does not
comply with the terms of such Letter of Credit;
(v) Any other event or circumstance whatsoever, whether or not
similar to any of the foregoing, that might, but for the provisions of
this Section, constitute a legal or equitable discharge of, or provide
a right of setoff against, the Borrower's obligations hereunder; or
(vi) The existence of a Default or an Event of Default.
Neither the Lender nor any Related Party of the Lender shall have any liability
or responsibility by reason of or in connection with the issuance or transfer of
any Letter of Credit or any payment or failure to make any payment thereunder
(irrespective of any of the circumstances referred to above), or any error,
omission, interruption, loss or delay in transmission or delivery of any draft,
notice or other communication under or relating to any Letter of Credit
(including any document required to make a drawing thereunder), any error in
interpretation of technical terms or any consequence arising from causes beyond
the control of the Lender; provided, that the foregoing shall not be construed
to excuse the Lender from liability to the Borrower to the extent of any direct
damages (as opposed to consequential damages, claims in respect of which are
hereby waived by the Borrower to the extent permitted by applicable law)
suffered by the Borrower that are caused by the Lender's failure to exercise
care when determining whether drafts or other documents presented under a Letter
of Credit comply with the terms thereof. The parties hereto expressly agree,
that in the absence of gross negligence or willful misconduct on the part of the
Lender (as finally determined by a court of competent jurisdiction), the Lender
shall be deemed to have exercised care in each such determination. In
furtherance of the foregoing and without limiting the generality thereof, the
parties agree that, with respect to documents presented that appear on their
face to be in substantial compliance with the terms of a Letter of Credit, the
Lender may, in its sole discretion, either accept and make payment upon such
documents without responsibility for further investigation, regardless of any
notice or information to the contrary, or refuse to accept and make payment upon
such documents if such documents are not in strict compliance with the terms of
such Letter of Credit.
(f) Each Letter of Credit, other than a standby letter of credit,
shall be subject to the Uniform Customs and Practices for Documentary
Credits (1993 Revision), International Chamber of Commerce Publication No.
500, as the same may be amended from time to time, and, to the extent not
inconsistent therewith, the governing law of this Agreement set forth in
Section 9.5. Any standby letters of credit issued hereunder shall be
governed by the rules of the "International Standby Practices 1998" (ISP98)
(or such later revision as may be published by the Institute of
International Banking Law & Practice on any date any Letter of Credit may
be issued) and to the extent not inconsistent therewith, the governing law
of this Agreement set forth in Section 9.5.
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ARTICLE III
CONDITIONS PRECEDENT TO LOANS AND LETTERS OF CREDIT
Section 3.1 Conditions To Effectiveness. The obligations of the Lender to
make an initial Revolving Loan and to issue an initial Letter of Credit
hereunder is subject to the receipt by the Lender of the following documents in
form and substance reasonably satisfactory to the Lender:
(a) this Agreement duly executed and delivered by the Borrower;
(b) a duly executed Note;
(c) a duly executed Holdings Guarantee Agreement;
(d) a duly executed Security Agreement;
(e) certificates of the Secretary or Assistant Secretary of the
Borrower and Holdings, attaching and certifying copies of its bylaws and of
the resolutions of their respective boards of directors, authorizing the
execution, delivery and performance of the Loan Documents to which it is a
party and certifying the name, title and true signature of each officer of
the Borrower or Holdings, as applicable, executing the Loan Documents to
which it is a party;
(f) certified copies of the articles of incorporation or other charter
documents of the Borrower and Holdings, together with certificates of good
standing or existence, as may be available from the Secretary of State of
the jurisdiction of incorporation of the Borrower and Holdings;
(g) a certificate, dated the Closing Date and signed by a Responsible
Officer, confirming compliance with the conditions set forth in paragraphs
(a) and (b) of Section 3.2;
(h) a duly executed Notice of Revolving Borrowing, if applicable.
Section 3.2 Each Credit Event. The obligation of the Lender to make any
Loan or to issue, amend, renew or extend any Letter of Credit is subject to the
satisfaction of the following conditions:
31
(a) at the time of and immediately after giving effect to such Loan or
the issuance, amendment, renewal or extension of such Letter of Credit, as
applicable, no Default or Event of Default shall exist; and
(b) the value of the Collateral as described in the Security Agreement
(excluding the Cash Collateral) equals or exceeds 200% of aggregate amount
of Revolving Loans and the LC Exposure does not at any time exceed the Cash
Collateral as described and defined in the Security Agreement.
(c) all representations and warranties of each Loan Party set forth in
the Loan Documents shall be true and correct in all material respects on
and as of the date of such Loan or the date of issuance, amendment,
extension or renewal of such Letter of Credit, in each case before and
after giving effect thereto; and
(d) since the date of the most recent financial statements of the
Borrower described in Section 5.1(a), there shall have been no change which
has had or could reasonably be expected to have a Material Adverse Effect.
The making of each Loan and each issuance, amendment, extension or renewal of
any Letter of Credit shall be deemed to constitute a representation and warranty
by the Borrower on the date thereof as to the matters specified in paragraphs
(a), (b) and (c) of this Section 3.2.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants to the Lender as follows:
Section 4.1 Existence; Power. The Borrower, Holdings and each of its
Subsidiaries (i) is duly organized, validly existing and in good standing as a
corporation under the laws of the jurisdiction of its organization, (ii) has all
requisite power and authority to carry on its business as now conducted, and
(iii) is duly qualified to do business, and is in good standing, in each
jurisdiction where such qualification is required, except where a failure to be
so qualified could not reasonably be expected to result in a Material Adverse
Effect.
Section 4.2 Organizational Power; Authorization. The execution, delivery
and performance by each Loan Party of the Loan Documents to which it is a party
are within such Loan Party's organizational powers and have been duly authorized
by all necessary organizational action. This Agreement has been duly executed
and delivered by the Borrower, and constitutes, and each other Loan Document to
which any Loan Party is a party, when executed and delivered by such Loan Party,
will constitute, valid and binding obligations of the Borrower or such Loan
Party (as the case may be), enforceable against it in accordance with their
respective terms, except as may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium, or similar laws affecting the enforcement of
creditors' rights generally and by general principles of equity.
32
Section 4.3 Governmental Approvals; No Conflicts. The execution, delivery
and performance by the Borrower of this Agreement, and by each Loan Party of the
other Loan Documents to which it is a party (a) do not require any consent or
approval of, registration or filing with, or any action by, any Governmental
Authority, except those as have been obtained or made and are in full force and
effect or where the failure to do so, individually or in the aggregate, could
not reasonably be expected to have a Material Adverse Effect, (b) will not
violate any applicable law or regulation or the charter, by-laws or other
organizational documents of the Borrower or any of its Subsidiaries or any order
of any Governmental Authority, (c) will not violate or result in a default under
any indenture, material agreement or other material instrument binding on the
Borrower or any of its Subsidiaries or any of its assets or give rise to a right
thereunder to require any payment to be made by the Borrower or any of its
Subsidiaries and (d) will not result in the creation or imposition of any Lien
on any asset of the Borrower or any of its Subsidiaries, except Liens (if any)
created under the Loan Documents. Section 4.4 Financial Statements. The Borrower
has furnished to the Lender (i) the audited consolidated balance sheet of
Holdings and its Subsidiaries as of December 31, 2003 and the related
consolidated statements of income, shareholders' equity and cash flows for the
fiscal year then ended prepared by KPMG and (ii) the unaudited consolidated
balance sheet of Holdings and its Subsidiaries as of April 3, 2004, and the
related unaudited consolidated statements of income and cash flows for the
fiscal quarter and year-to-date period then ending, certified by a Responsible
Officer. Such financial statements fairly present the consolidated financial
condition of Holdings and its Subsidiaries as of such dates and the consolidated
results of operations for such periods in conformity with GAAP consistently
applied, subject to year end audit adjustments and the absence of footnotes in
the case of the statements referred to in clause (ii). Since December 31, 2003,
there have been no changes with respect to Holdings and its Subsidiaries which
have had or could reasonably be expected to have, singly or in the aggregate, a
Material Adverse Effect.
Section 4.5 Litigation and Environmental Matters.
(a) No litigation, investigation or proceeding of or before any
arbitrators or Governmental Authorities is pending against or, to the
knowledge of the Borrower, threatened against or affecting Holdings or any
of its Subsidiaries (i) as to which there is a reasonable possibility of an
adverse determination that could reasonably be expected to have, either
individually or in the aggregate, a Material Adverse Effect or (ii) which
in any manner draws into question the validity or enforceability of this
Agreement or any other Loan Document.
(b) Neither Holdings nor any of its Subsidiaries (i) has failed to
comply with any Environmental Law or to obtain, maintain or comply with any
33
permit, license or other approval required under any Environmental Law,
(ii) has become subject to any Environmental Liability, (iii) has received
notice of any claim with respect to any Environmental Liability or (iv)
knows of any basis for any Environmental Liability.
Section 4.6 Compliance with Laws and Agreements. Holdings and each
Subsidiary is in compliance with (a) all applicable laws, rules, regulations and
orders of any Governmental Authority, and (b) all indentures, agreements or
other instruments binding upon it or its properties, except where
non-compliance, either singly or in the aggregate, could not reasonably be
expected to result in a Material Adverse Effect.
Section 4.7 Investment Company Act, Etc. Neither Holdings nor any of its
Subsidiaries is (a) an "investment company", as defined in, or subject to
regulation under, the Investment Company Act of 1940, as amended, (b) a "holding
company" as defined in, or subject to regulation under, the Public Utility
Holding Company Act of 1935, as amended or (c) otherwise subject to any other
regulatory scheme limiting its ability to incur debt.
Section 4.8 Taxes. Holdings and its Subsidiaries have timely filed or
caused to be filed all Federal income tax returns and all other material tax
returns that are required to be filed by them, and have paid all taxes shown to
be due and payable on such returns or on any assessments made against it or its
property and all other taxes, fees or other charges imposed on it or any of its
property by any Governmental Authority, except (i) to the extent the failure to
do so would not have a Material Adverse Effect or (ii) where the same are
currently being contested in good faith by appropriate proceedings and for which
Holdings or such Subsidiary, as the case may be, has set aside on its books
adequate reserves.
Section 4.9 Margin Regulations. None of the proceeds of any of the Loans or
Letters of Credit will be used for "purchasing" or "carrying" any "margin stock"
with the respective meanings of each of such terms under Regulation U as now and
from time to time hereafter in effect or for any purpose that violates the
provisions of the applicable Margin Regulations.
Section 4.10 ERISA. No ERISA Event has occurred or is reasonably expected
to occur that, when taken together with all other such ERISA Events for which
liability is reasonably expected to occur, could reasonably be expected to
result in a Material Adverse Effect. The present value of all accumulated
benefit obligations under each Plan (based on the assumptions used for purposes
of Statement of Financial Standards No. 87) did not, as of the date of the most
recent financial statements reflecting such amounts, exceed by more than
$100,000 the fair market value of the assets of such Plan, and the present value
of all accumulated benefit obligations of all underfunded Plans (based on the
assumptions used for purposes of Statement of Financial Standards No. 87) did
not, as of the date of the most recent financial statements reflecting such
amounts, exceed by more than $100,000 the fair market value of the assets of all
such underfunded Plans.
34
Section 4.11 Ownership of Property.
(a) Each of Holdings and its Subsidiaries has good title to, or valid
leasehold interests in, all of its real and personal property material to
the operation of its business.
(b) Each of Holdings and its Subsidiaries owns, or is licensed, or
otherwise has the right, to use, all patents, trademarks, service marks,
trade names, copyrights and other intellectual property material to its
business, and the use thereof by Holdings and its Subsidiaries does not
infringe on the rights of any other Person, except for any such
infringements that, individually or in the aggregate, would not have a
Material Adverse Effect.
Section 4.12 Disclosure. The Borrower has disclosed to the Lender all
agreements, instruments, and corporate or other restrictions to which Holdings
or any of its Subsidiaries is subject, and all other matters known to any of
them, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect. None of the reports (including without
limitation all reports that Holdings is required to file with the Securities and
Exchange Commission), financial statements, certificates or other information
furnished by or on behalf of the Borrower to the Lender in connection with the
negotiation of this Agreement or any other Loan Document or delivered hereunder
or thereunder (as modified or supplemented by any other information so
furnished) contains any material misstatement of fact or omits to state any
material fact necessary to make the statements therein, taken as a whole, in
light of the circumstances under which they were made, not misleading.
Section 4.13 Labor Relations. There are no strikes, lockouts or other
material labor disputes or grievances against Holdings or any of its
Subsidiaries, or, to the Borrower's knowledge, threatened against or affecting
Holdings or any of its Subsidiaries, and no significant unfair labor practice,
charges or grievances are pending against Holdings or any of its Subsidiaries,
or to the Borrower's knowledge, threatened against any of them before any
Governmental Authority. All payments due from Holdings or any of its
Subsidiaries pursuant to the provisions of any collective bargaining agreement
have been paid or accrued as a liability on the books of Holdings or any such
Subsidiary, except where the failure to do so could not reasonably be expected
to have a Material Adverse Effect.
Section 4.14 Subsidiaries. Schedule 4.14 sets forth the name of, the
ownership interest of Holdings in, the jurisdiction of incorporation of, and the
type of, each Subsidiary and identifies each Subsidiary that is a Subsidiary
Loan Party, in each case as of the Closing Date.
35
ARTICLE V
AFFIRMATIVE COVENANTS
The Borrower covenants and agrees that so long as the Lender has a
Revolving Commitment hereunder or the principal of and interest on any Loan or
any fee or any LC Disbursement remains unpaid or any Letter of Credit remains
outstanding:
Section 5.1 Financial Statements and Other Information. The Borrower will
deliver to the Lender:
(a) as soon as available and in any event within 90 days after the end
of each fiscal year of Holdings, a copy of the annual audited report for
such fiscal year for Holdings and its Subsidiaries, containing a
consolidated balance sheet of Holdings and its Subsidiaries as of the end
of such fiscal year and the related consolidated statements of income,
stockholders' equity and cash flows (together with all footnotes thereto)
of Holdings and its Subsidiaries for such fiscal year, setting forth in
each case in comparative form the figures for the previous fiscal year, all
in reasonable detail and reported on by independent public accountants of
nationally recognized standing (without a "going concern" or like
qualification, exception or explanation and without any qualification or
exception as to scope of such audit) to the effect that such financial
statements present fairly in all material respects the financial condition
and the results of operations of Holdings and its Subsidiaries for such
fiscal year on a consolidated basis in accordance with GAAP and that the
examination by such accountants in connection with such consolidated
financial statements has been made in accordance with generally accepted
auditing standards;
(b) as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Periods of each fiscal year of Holdings,
an unaudited consolidated balance sheet of Holdings and its Subsidiaries as
of the end of such fiscal quarter and the related unaudited consolidated
statements of income and cash flows of Holdings and its Subsidiaries for
such fiscal quarter and the then elapsed portion of such fiscal year,
setting forth in each case in comparative form the figures for the
corresponding quarter and the corresponding portion of Holdings's previous
fiscal year, all certified by the chief financial officer or treasurer of
Holdings as presenting fairly in all material respects the financial
condition and results of operations of Holdings and its Subsidiaries on a
consolidated basis in accordance with GAAP, subject to normal year-end
audit adjustments and the absence of footnotes;
(c) concurrently with the delivery of the financial statements
referred to in clauses (a) and (b) above, a certificate of a Responsible
Officer, (i) certifying as to whether there exists a Default or Event of
Default on the date of such certificate, and if a Default or an Event of
Default then exists, specifying the details thereof and the action which
the Borrower has taken or proposes to take with respect thereto and (ii)
setting forth in reasonable detail calculations demonstrating compliance
with the financial covenants under Article VI in substantially the form as
set forth in Schedule 5.1; and
36
(d) promptly following any request therefor, such other information
regarding the results of operations, business affairs and financial
condition of Holdings or any Subsidiary as the Lender may reasonably
request.
Section 5.2 Notices of Material Events. The Borrower will furnish to the
Lender prompt written notice of the following:
(a) the occurrence of any Default or Event of Default;
(b) the filing or commencement of any action, suit or proceeding by or
before any arbitrator or Governmental Authority against or, to the
knowledge of the Borrower, affecting Holdings or any Subsidiary which, if
adversely determined, could reasonably be expected to result in a Material
Adverse Effect;
(c) the occurrence of any event or any other development by which
Holdings or any of its Subsidiaries (i) fails to comply with any
Environmental Law or to obtain, maintain or comply with any permit, license
or other approval required under any Environmental Law, (ii) becomes
subject to any Environmental Liability, (iii) receives notice of any claim
with respect to any Environmental Liability, or (iv) becomes aware of any
basis for any Environmental Liability and in each of the preceding clauses,
which individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect;
(d) the occurrence of any ERISA Event that alone, or together with any
other ERISA Events that have occurred, could reasonably be expected to
result in liability of Holdings and its Subsidiaries in an aggregate amount
exceeding $100,000; and
(e) any other development that results in, or could reasonably be
expected to result in, a Material Adverse Effect.
Each notice delivered under this Section shall be accompanied by a written
statement of a Responsible Officer setting forth the details of the event or
development requiring such notice and any action taken or proposed to be taken
with respect thereto.
Section 5.3 Existence; Conduct of Business. The Borrower will, and will
cause each of its Subsidiaries to, do or cause to be done all things necessary
to preserve, renew and maintain in full force and effect its legal existence and
its respective rights, licenses, permits, privileges, franchises, patents,
copyrights, trademarks and trade names material to the conduct of its business
and will continue to engage in the same business as presently conducted or such
other businesses that are reasonably related thereto; provided, that nothing in
this Section shall prohibit any merger, consolidation, liquidation or
dissolution permitted under Section 7.3.
37
Section 5.4 Compliance with Laws, Etc. The Borrower will, and will cause
each of its Subsidiaries to, comply with all laws, rules, regulations and
requirements of any Governmental Authority applicable to its properties, except
where the failure to do so, either individually or in the aggregate, could not
reasonably be expected to result in a Material Adverse Effect.
Section 5.5 Payment of Obligations. The Borrower will, and will cause each
of its Subsidiaries to, pay and discharge at or before maturity, all of its
obligations and liabilities (including without limitation all tax liabilities
and claims that could result in a statutory Lien) before the same shall become
delinquent or in default, except where (a) the validity or amount thereof is
being contested in good faith by appropriate proceedings, (b) the Borrower or
such Subsidiary has set aside on its books adequate reserves with respect
thereto in accordance with GAAP and (c) the failure to make payment pending such
contest could not reasonably be expected to result in a Material Adverse Effect.
Section 5.6 Books and Records. The Borrower will, and will cause each of
its Subsidiaries to, keep proper books of record and account in which full, true
and correct entries shall be made of all dealings and transactions in relation
to its business and activities to the extent necessary to prepare the
consolidated financial statements of Borrower in conformity with GAAP.
Section 5.7 Visitation, Inspection, Etc. The Borrower will, and will cause
each of its Subsidiaries to, permit any representative of the Lender to visit
and inspect its properties, to examine its books and records and to make copies
and take extracts therefrom, and to discuss its affairs, finances and accounts
with any of its officers and with its independent certified public accountants,
all at such reasonable times and as often as the Lender may reasonably request
after reasonable prior notice to the Borrower; provided however, that the Lender
and its representatives shall be bound by the provisions of Section 9.11 with
respect to any information obtained pursuant to this Section.
Section 5.8 Maintenance of Properties; Insurance. The Borrower will, and
will cause each of its Subsidiaries to, (a) keep and maintain all property
material to the conduct of its business in good working order and condition,
ordinary wear and tear except where the failure to do so, either individually or
it the aggregate, could not reasonably be expected to result in a Material
Adverse Effect and (b) maintain with financially sound and reputable insurance
companies, insurance with respect to its properties and business, and the
properties and business of its Subsidiaries, against loss or damage of the kinds
customarily insured against by companies in the same or similar businesses
operating in the same or similar locations.
Section 5.9 Use of Proceeds and Letters of Credit. The Borrower will use
the proceeds of all Loans to finance working capital needs, capital expenditures
38
and for other general corporate purposes of the Borrower and its Subsidiaries.
No part of the proceeds of any Loan will be used, whether directly or
indirectly, for any purpose that would violate any rule or regulation of the
Board of Governors of the Federal Reserve System, including Regulations T, U or
X. All Letters of Credit will be used for general corporate purposes.
Section 5.10 Additional Subsidiaries. If any additional Subsidiary is
acquired or formed after the Closing Date which is a Material Subsidiary, or if
an existing Subsidiary shall become a Material Subsidiary, the Borrower will,
within ten (10) business days after such occurrence, notify the Lender thereof
and will cause such Material Subsidiary to become a Subsidiary Loan Party by
executing agreements in the form of Exhibit B in form and substance satisfactory
to the Lender and will cause such Subsidiary Loan Party to deliver
simultaneously therewith similar documents applicable to such Subsidiary Loan
Party as required under Section 3.1, all as reasonably requested by the Lender.
ARTICLE VI
FINANCIAL COVENANTS
The Borrower covenants and agrees that so long as the Lender has its
Revolving Commitment hereunder or the principal of or interest on or any Loan
remains unpaid or any fee or any LC Disbursement remains unpaid or any Letter of
Credit remains outstanding:
Section 6.1 Lease Adjusted Leverage Ratio. Holdings will have, as of the
end of each fiscal quarter, commencing with fiscal quarter 3 of 2004, a Lease
Adjusted Leverage Ratio of not greater than 5.0 to 1.0. Commencing with the
earlier of fiscal quarter 3 of 2005 or the date Borrower makes a Restricted
Payment under Section 7.5(iii) in excess of $1,000,000, the Lease Adjusted
Leverage Ratio shall not exceed 2.75 to 1.0. Such ratio shall be calculated on a
trailing four quarters basis.
Section 6.2 Interest Coverage Ratio. Holdings will have, as of the end of
each fiscal quarter, commencing with fiscal quarter 3 of 2005, an Interest
Coverage Ratio of not less than 1.25 to 1.0. The Interest Coverage Ratio shall
be calculated on a trailing four quarters basis.
Section 6.3 Minimum EBITDA. Holdings will maintain its Consolidated EBITDA
as of the last day of the periods set forth below (calculated on a trailing four
quarters basis) of not less than the amounts set forth below:
The last day of fiscal quarter 3 of 2004 $13,800,000;
The last day of fiscal quarter 4 of 2004 $11,600,000;
The last day of fiscal quarter 1 of 2005 $14,600,000;
39
The last day of fiscal quarter 2 of 2005 $23,100,000; and
The last day of each fiscal quarter thereafter $25,000,000.
Section 6.4 Consolidated Tangible Net Worth. Holdings will not permit its
Consolidated Tangible Net Worth at any time to be less than $90,000,000 as at
date of last financial statements for fiscal quarter 2 of 2004, plus 100% of the
net proceeds of any equity offering thereafter, plus 50% of Consolidated Net
Income on a cumulative basis for all fiscal quarters of Holdings, commencing
with the fiscal quarter 3 of 2004; provided, that if Consolidated Net Income is
negative in any fiscal quarter, then the amount added for such fiscal quarter
shall be zero and such negative Consolidated Net Income shall not reduce the
amount of Consolidated Net Income added from any previous fiscal quarter.
ARTICLE VII
NEGATIVE COVENANTS
The Borrower covenants and agrees that so long as the Lender has its
Revolving Commitment hereunder or the principal of or interest on any Loan
remains unpaid or any fee or any LC Disbursement remains unpaid or any Letter of
Credit remains outstanding:
Section 7.1 Indebtedness. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Indebtedness,
except:
(a) Indebtedness created pursuant to the Loan Documents;
(b) Indebtedness existing on the date hereof and set forth on Schedule
7.1 and extensions, renewals and replacements of any such Indebtedness that
do not increase the outstanding principal amount thereof (immediately prior
to giving effect to such extension, renewal or replacement) or shorten the
maturity or the weighted average life thereof;
(c) Indebtedness of the Borrower or any Subsidiary incurred to finance
the acquisition, construction or improvement of any fixed or capital
assets, including Capital Lease Obligations and any Indebtedness assumed in
connection with the acquisition of any such assets of secured by a Lien on
any such assets prior to the acquisition thereof; provided, that such
Indebtedness is incurred prior to or within 90 days after such acquisition
or the completion of such construction or improvements or extensions,
renewals, and replacements of any such Indebtedness that do not increase
the outstanding principal amount thereof (immediately prior to giving
effect to such extension, renewal or replacement) or shorten the maturity
or the weighted average life thereof; provided further, that the aggregate
principal amount of such Indebtedness incurred does not exceed $30,000,000
40
in any consecutive twelve (12) month period and $50,000,000 at any time
outstanding;
(d) Indebtedness of the Borrower owing to any Subsidiary and of any
Subsidiary owing to the Borrower or any other Subsidiary; provided, that
any such Indebtedness that is owed to a Subsidiary that is not a Subsidiary
Loan Party shall be subject to Section 7.4;
(e) Guarantees by the Borrower of Indebtedness of any Subsidiary and
by any Subsidiary of Indebtedness of the Borrower or any other Subsidiary;
provided, that Guarantees by any Loan Party of Indebtedness of any
Subsidiary that is not a Subsidiary Loan Party shall be subject to Section
7.4;
(f) Indebtedness in respect of obligations under Hedging Agreements
permitted by Section 7.9; and
(g) other unsecured Indebtedness in an aggregate principal amount not
to exceed $2,000,000 at any time outstanding.
Section 7.2 Negative Pledge. The Borrower will not, and will not permit any
of its Subsidiaries to, create, incur, assume or suffer to exist any Lien on any
of its assets or property now owned or hereafter acquired or, except:
(a) Liens, if any, created in favor of the Lender pursuant to the Loan
Documents;
(b) Permitted Encumbrances;
(c) any Liens on any property or asset of the Borrower or any
Subsidiary existing on the Closing Date set forth on Schedule 7.2;
provided, that such Lien shall not apply to any other property or asset of
the Borrower or any Subsidiary;
(d) purchase money Liens upon or in any fixed or capital assets to
secure the purchase price or the cost of construction or improvement of
such fixed or capital assets or to secure Indebtedness incurred solely for
the purpose of financing the acquisition, construction or improvement of
such fixed or capital assets (including Liens securing any Capital Lease
Obligations); provided, that (i) such Lien secures Indebtedness permitted
by Section 7.1(c), (ii) such Lien attaches to such asset concurrently or
within 90 days after the acquisition, improvement or completion of the
construction thereof; (iii) such Lien does not extend to any other asset;
and (iv) the Indebtedness secured thereby does not exceed the cost of
acquiring, constructing or improving such fixed or capital assets;
41
(e) any Lien (i) existing on any asset of any Person at the time such
Person becomes a Subsidiary of the Borrower, (ii) existing on any asset of
any Person at the time such Person is merged with or into the Borrower or
any Subsidiary of the Borrower or (iii) existing on any asset prior to the
acquisition thereof by the Borrower or any Subsidiary of the Borrower;
provided, that any such Lien was not created in the contemplation of any of
the foregoing and any such Lien secures only those obligations which it
secures on the date that such Person becomes a Subsidiary or the date of
such merger or the date of such acquisition;
(f) Liens arising in connection with Capital Lease Obligations
permitted under this Agreement;
(g) Liens on Receivables and proceeds thereof arising in connection
with the transfer thereof pursuant to a Securitization Transaction; and
(h) extensions, renewals, or replacements of any Lien referred to in
paragraphs (a) through (e) of this Section; provided, that the principal
amount of the Indebtedness secured thereby is not increased and that any
such extension, renewal or replacement is limited to the assets originally
encumbered thereby.
Section 7.3 Fundamental Changes.
(a) The Borrower will not, and will not permit any Subsidiary to,
merge into or consolidate into any other Person, or permit any other Person
to merge into or consolidate with it, or sell, lease, transfer or otherwise
dispose of (in a single transaction or a series of transactions) all or
substantially all of its assets (in each case, whether now owned or
hereafter acquired) or all or substantially all of the stock of any of its
Subsidiaries (in each case, whether now owned or hereafter acquired) or
liquidate or dissolve; provided, that if at the time thereof and
immediately after giving effect thereto, no Default or Event of Default
shall have occurred and be continuing: (i) the Borrower or any Subsidiary
may merge with a Person if the Borrower (or such Subsidiary if the Borrower
is not a party to such merger) is the surviving Person, (ii) any Subsidiary
may merge into another Subsidiary; provided, that if any party to such
merger is a Subsidiary Loan Party, the Subsidiary Loan Party shall be the
surviving Person, (iii) any Subsidiary may sell, transfer, lease or
otherwise dispose of all or substantially all of its assets to the Borrower
or to a Subsidiary Loan Party and (iv) any Subsidiary (other than a
Subsidiary Loan Party) may liquidate or dissolve if the Borrower determines
in good faith that such liquidation or dissolution is in the best interests
of the Borrower and is not materially disadvantageous to the Lenders;
provided, that any such merger involving a Person that is not a
wholly-owned Subsidiary immediately prior to such merger shall not be
permitted unless also permitted by Section 7.4.
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(b) The Borrower will not, and will not permit any of its Subsidiaries
to, engage to any material extent in any business other than businesses of
the type conducted by the Borrower and its Subsidiaries on the date hereof
and businesses reasonably related thereto.
Section 7.4 Investments, Loans, Etc. The Borrower will not, and will not
permit any of its Subsidiaries to, purchase, hold or acquire (including pursuant
to any merger with any Person that was not a wholly-owned Subsidiary prior to
such merger), any common stock, evidence of indebtedness or other securities
(including any option, warrant, or other right to acquire any of the foregoing)
of, make or permit to exist any loans or advances to, Guarantee any obligations
of, or make or permit to exist any investment or any other interest in, any
other Person (all of the foregoing being collectively called "Investments"), or
purchase or otherwise acquire (in one transaction or a series of transactions)
any assets of any other Person that constitute a business unit, except:
(a) Investments (other than Permitted Investments) existing on the
date hereof and set forth on Schedule 7.4 (including Investments in
Subsidiaries);
(b) Permitted Investments;
(c) Guarantees constituting Indebtedness permitted by Section 7.1;
(d) Investments made by the Borrower in or to any Subsidiary and by
any Subsidiary to the Borrower or in or to another Subsidiary; provided,
that the aggregate amount of Investments by Loan Parties in or to, and
Guarantees by Loan Parties of Indebtedness of any Subsidiary that is not a
Subsidiary Loan Party (including all such Investments and Guarantees
existing on the Closing Date) shall not exceed $250,000 at any time
outstanding;
(e) loans or advances to employees, officers or directors of the
Borrower or any Subsidiary in the ordinary course of business for travel,
relocation and related expenses;
(f) Hedging Agreements permitted by Section 7.9; and
(g) Other Investments which in the aggregate do not exceed $250,000 in
any fiscal year of the Borrower.
Section 7.5 Restricted Payments. The Borrower will not, and will not permit
its Subsidiaries to, declare or make, or agree to pay or make, directly or
indirectly, any dividend on any class of its stock, or make any payment on
account of, or set apart assets for a sinking or other analogous fund for, the
purchase, redemption, retirement, defeasance or other acquisition of, any shares
43
of common stock or Indebtedness subordinated to the Obligations of the Borrower
or any options, warrants, or other rights to purchase such common stock or such
Indebtedness, whether now or hereafter outstanding (each, a "Restricted
Payment"), except for (i) dividends payable by the Borrower solely in shares of
any class of its common stock, (ii) Restricted Payments made by any Subsidiary
to the Borrower or to another Subsidiary Loan Party and (iii) so long as no
Default or Event of Default shall exist, the redemption or repurchase of up to
$1,000,000 of common stock of Borrower. Notwithstanding the foregoing provisions
of this Section, in the event the Lease Adjusted Leverage Ratio set forth in
Section 6.1 is equal to or less than 2.75 to 1.0, the $1,000,000 amount in
subsection (iii) shall be increased to $10,000,000.
Section 7.6 Sale of Assets. The Borrower will not, and will not permit any
of its Subsidiaries to, convey, sell, lease, assign, transfer or otherwise
dispose of, any of its assets, business or property, whether now owned or
hereafter acquired, or, in the case of any Subsidiary, issue or sell any shares
of such Subsidiary's common stock to any Person other than the Borrower or a
Subsidiary Loan Party except:
(a) the sale or other disposition for fair market value of obsolete or
worn out property or other property not necessary for operations disposed
of in the ordinary course of business;
(b) sales and dispositions of trucks, tractors and trailers in the
ordinary course of business, so long as the proceeds from such sale or
disposition, net of commissions and other reasonable and customary
transaction costs, fees and expenses property attributable to such
transaction and payable in connection therewith to non-Affiliates, are
applied either (i) to prepay the Loans (with a corresponding permanent
reduction in the Revolving Commitment if an Event of Default has occurred
and is continuing at the time of such prepayment) or (ii) to the purchase
or lease of replacement trucks, tractors and trailers for use in the
ordinary course of business of Borrower and its Subsidiaries;
(c) the sale of inventory and Permitted Investments in the ordinary
course of business;
(d) a sale of assets in connection with sale and leaseback
transactions permitted under Section 7.8; and
(e) the sale or other disposition of such assets in an aggregate
amount not to exceed $10,000,000 in any fiscal year of the Borrower.
Section 7.7 Transactions with Affiliates. The Borrower will not, and will
not permit any of its Subsidiaries to, sell, lease or otherwise transfer any
property or assets to, or purchase, lease or otherwise acquire any property or
assets from, or otherwise engage in any other transactions with, any of its
Affiliates, except (a) in the ordinary course of business at prices and on terms
and conditions not less favorable to the Borrower or such Subsidiary than could
44
be obtained on an arm's-length basis from unrelated third parties, (b)
transactions between or among the Borrower and its wholly-owned Subsidiaries not
involving any other Affiliates, (c) any Restricted Payment permitted by Section
7.5 and (d) those transactions previously disclosed in the Borrower's Annual
Report on Form 10-K and Proxy Statement on Schedule 14A filed with the
Securities and Exchange Commission on March 30, 2004 and April 23, 2004
respectively.
Section 7.8 Sale and Leaseback Transactions. Except as set forth in this
Section, the Borrower will not, and will not permit any of the Subsidiaries to,
enter into any arrangement, directly or indirectly, whereby it shall sell or
transfer any property, real or personal, used or useful in its business, whether
now owned or hereinafter acquired, and thereafter rent or lease such property or
other property that it intends to use for substantially the same purpose or
purposes as the property sold or transferred. Notwithstanding the foregoing
provisions of this Section, Borrower may enter into sale and leaseback
transactions as long as the aggregate outstanding principal amount of such sales
from and after the date of this Agreement does not exceed $10,000,000 during the
term hereof.
Section 7.9 Hedging Agreements. The Borrower will not, and will not permit
any of the Subsidiaries to, enter into any Hedging Agreement, other than Hedging
Agreements entered into in the ordinary course of business to hedge or mitigate
risks to which the Borrower or any Subsidiary is exposed in the conduct of its
business or the management of its liabilities. Solely for the avoidance of
doubt, the Borrower acknowledges that a Hedging Agreement entered into for
speculative purposes or of a speculative nature (which shall be deemed to
include any Hedging Agreement under which the Borrower or any of the
Subsidiaries is or may become obliged to make any payment (i) in connection with
the purchase by any third party of any common stock or any Indebtedness or (ii)
as a result of changes in the market value of any common stock or any
Indebtedness) is not a Hedging Agreement entered into in the ordinary course of
business to hedge or mitigate risks.
Section 7.10 Amendment to Material Documents. The Borrower will not, and
will not permit any Subsidiary to, amend, modify or waive any of its rights in a
manner materially adverse to the Lender under its certificate of incorporation,
bylaws or other organizational documents .
Section 7.11 Accounting Changes. The Borrower will not permit any
significant change in accounting treatment or reporting practices, except as
required by GAAP, or change the fiscal year of the Borrower or of any
Subsidiary, except to change the fiscal year of a Subsidiary to conform its
fiscal year to that of the Borrower.
45
ARTICLE VIII
EVENTS OF DEFAULT
Section 8.1 Events of Default. If any of the following events (each an
"Event of Default") shall occur:
(a) the Borrower shall fail to pay any principal of any Loan or of any
reimbursement obligation in respect of any LC Disbursement when and as the
same shall become due and payable, whether at the due date thereof or at a
date fixed for prepayment or otherwise; or
(b) the Borrower shall fail to pay any interest on any Loan or any fee
or any other amount (other than an amount payable under clause (a) of this
Article) payable under this Agreement or any other Loan Document, when and
as the same shall become due and payable, and such failure shall continue
unremedied for a period of three (3) Business Days; or
(c) any representation or warranty made or deemed made by or on behalf
of the Borrower, Holdings or any Subsidiary in or in connection with this
Agreement or any other Loan Document (including the Schedules attached
thereto) and any amendments or modifications hereof or waivers hereunder,
or in any certificate, report, financial statement or other document
submitted to the Lender or the Lenders by any Loan Party or any
representative of any Loan Party pursuant to or in connection with this
Agreement or any other Loan Document shall prove to be incorrect in any
material respect when made or deemed made or submitted; or
(d) the Borrower shall fail to observe or perform any covenant or
agreement contained in Section 5.3 (with respect to the Borrower's
existence) or Articles VI or VII; or
(e) any Loan Party shall fail to observe or perform any covenant or
agreement contained in this Agreement (other than those referred to in
clauses (a), (b) and (d) above), and such failure shall remain unremedied
for 30 days after the earlier of (i) any officer of the Borrower becomes
aware of such failure, or (ii) notice thereof shall have been given to the
Borrower by the Lender or any Lender; or
(f) the Borrower, Holdings or any Material Subsidiary (whether as
primary obligor or as guarantor or other surety) shall fail to pay any
principal of or premium or interest on any Material Indebtedness that is
outstanding, when and as the same shall become due and payable (whether at
46
scheduled maturity, required prepayment, acceleration, demand or
otherwise), and such failure shall continue after the applicable grace
period, if any, specified in the agreement or instrument evidencing such
Indebtedness; or any other event shall occur or condition shall exist under
any agreement or instrument relating to such Indebtedness and shall
continue after the applicable grace period, if any, specified in such
agreement or instrument, if the effect of such event or condition is to
accelerate, or permit the acceleration of, the maturity of such
Indebtedness; or any such Indebtedness shall be declared to be due and
payable; or required to be prepaid or redeemed (other than by a regularly
scheduled required prepayment or redemption), purchased or defeased, or any
offer to prepay, redeem, purchase or defease such Indebtedness shall be
required to be made, in each case prior to the stated maturity thereof; or
(g) Holdings or any Subsidiary shall (i) commence a voluntary case or
other proceeding or file any petition seeking liquidation, reorganization
or other relief under any federal, state or foreign bankruptcy, insolvency
or other similar law now or hereafter in effect or seeking the appointment
of a custodian, trustee, receiver, liquidator or other similar official of
it or any substantial part of its property, (ii) consent to the institution
of , or fail to contest in a timely and appropriate manner, any proceeding
or petition described in clause (i) of this Section, (iii) apply for or
consent to the appointment of a custodian, trustee, receiver, liquidator or
other similar official for the Borrower or any such Subsidiary or for a
substantial part of its assets, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make
a general assignment for the benefit of creditors, or (vi) take any action
for the purpose of effecting any of the foregoing; or
(h) an involuntary proceeding shall be commenced or an involuntary
petition shall be filed seeking (i) liquidation, reorganization or other
relief in respect of the Borrower, Holdings or any Subsidiary or its debts,
or any substantial part of its assets, under any federal, state or foreign
bankruptcy, insolvency or other similar law now or hereafter in effect or
(ii) the appointment of a custodian, trustee, receiver, liquidator or other
similar official for the Borrower, Holdings or any Subsidiary or for a
substantial part of its assets, and in any such case, such proceeding or
petition shall remain undismissed for a period of 60 days or an order or
decree approving or ordering any of the foregoing shall be entered; or
(i) the Borrower, Holdings or any Material Subsidiary shall become
unable to pay, shall admit in writing its inability to pay, or shall fail
to pay, its debts as they become due; or
(j) an ERISA Event shall have occurred that, in the reasonable opinion
of the Lender, when taken together with other ERISA Events that have
occurred, could reasonably be expected to result in liability to the
Borrower, Holdings and the Subsidiaries in an aggregate amount exceeding
$1,000,000; or
47
(k) any judgment or order for the payment of money in excess of
$2,000,000 in the aggregate shall be rendered against the Borrower,
Holdings or any Material Subsidiary which is not covered by collectible
insurance, and either (i) enforcement proceedings shall have been commenced
by any creditor upon such judgment or order or (ii) there shall be a period
of 30 consecutive days during which a stay of enforcement of such judgment
or order, by reason of a pending appeal or otherwise, shall not be in
effect; or
(l) any non-monetary judgment or order shall be rendered against the
Borrower, Holdings or any Material Subsidiary that could reasonably be
expected to have a Material Adverse Effect, and there shall be a period of
30 consecutive days during which a stay of enforcement of such judgment or
order, by reason of a pending appeal or otherwise, shall not be in effect;
or
(m) a Change in Control shall occur or exist; or
(n) a default or failure by Holdings to comply with any provision of
the Holdings Guarantee Agreement; or
(o) any provision of any Subsidiary Guarantee Agreement shall for any
reason cease to be valid and binding on, or enforceable against, any
Subsidiary Loan Party, or any Subsidiary Loan Party shall so state in
writing, or any Subsidiary Loan Party shall seek to terminate its
Subsidiary Guarantee Agreement;
then, and in every such event (other than an event with respect to the Borrower
described in clause (g) or (h) of this Section) and at any time thereafter
during the continuance of such event, the Lender may, by notice to the Borrower,
take any or all of the following actions, at the same or different times: (i)
terminate its Revolving Commitment; (ii) declare the principal of and any
accrued interest on the Loans, and all other Obligations owing hereunder, to be,
whereupon the same shall become due and payable immediately, without
presentment, demand, protest or other notice of any kind, all of which are
hereby waived by the Borrower and (iii) exercise all remedies contained in any
other Loan Document; and that, if an Event of Default specified in either clause
(g) or (h) shall occur, the Revolving Commitment shall automatically terminate
and the principal of the Loans then outstanding, together with accrued interest
thereon, and all fees, and all other Obligations shall automatically become due
and payable, without presentment, demand, protest or other notice of any kind,
all of which are hereby waived by the Borrower.
48
ARTICLE IX
MISCELLANEOUS
Section 9.1 Notices.
(a) Except in the case of notices and other communications expressly
permitted to be given by telephone, all notices and other communications to
any party herein to be effective shall be in writing and shall be delivered
by hand or overnight courier service, mailed by certified or registered
mail or sent by telecopy, as follows:
To the Borrower: Central Freight Lines, Inc.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇, Chief Financial Officer
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
▇▇▇▇▇▇▇ Law Firm, P.C., L.L.O.
411 Building
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
To the Lender: SunTrust Bank
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇▇
Director
Corporate and Investment Banking
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
Any party hereto may change its address or telecopy number for notices and
other communications hereunder by notice to the other parties hereto. All such
notices and other communications shall, when transmitted by overnight delivery,
or faxed, be effective when delivered for overnight (next-day) delivery, or
transmitted in legible form by facsimile machine, respectively, or if mailed,
upon the third Business Day after the date deposited into the mails or if
delivered, upon delivery; provided, that notices delivered to the Lender shall
not be effective until actually received by the Lender at its address specified
in this Section.
(b) Any agreement of the Lender herein to receive certain notices by
telephone or facsimile is solely for the convenience and at the request of the
Borrower. The Lender shall be entitled to rely on the authority of any Person
purporting to be a Person authorized by the Borrower to give such notice and the
Lender shall not have any liability to the Borrower or other Person on account
of any action taken or not taken by the Lender in reliance upon such telephonic
or facsimile notice. The obligation of the Borrower to repay the Loans and all
other Obligations hereunder shall not be affected in any way or to any extent by
49
any failure of the Lender to receive written confirmation of any telephonic or
facsimile notice or the receipt by the Lender of a confirmation which is at
variance with the terms understood by the Lender to be contained in any such
telephonic or facsimile notice.
Section 9.2 Waiver; Amendments.
(a) No failure or delay by the Lender in exercising any right or power
hereunder or any other Loan Document, and no course of dealing between the
Borrower and the Lender, shall operate as a waiver thereof, nor shall any
single or partial exercise of any such right or power or any abandonment or
discontinuance of steps to enforce such right or power, preclude any other
or further exercise thereof or the exercise of any other right or power
hereunder or thereunder. The rights and remedies of the Lender hereunder
and under the other Loan Documents are cumulative and are not exclusive of
any rights or remedies provided by law. No waiver of any provision of this
Agreement or any other Loan Document or consent to any departure by the
Borrower therefrom shall in any event be effective unless the same shall be
permitted by paragraph (b) of this Section, and then such waiver or consent
shall be effective only in the specific instance and for the purpose for
which given. Without limiting the generality of the foregoing, the making
of a Loan or the issuance of a Letter of Credit shall not be construed as a
waiver of any Default or Event of Default, regardless of whether the Lender
may have had notice or knowledge of such Default or Event of Default at the
time.
(b) No amendment or waiver of any provision of this Agreement or the
other Loan Documents, nor consent to any departure by the Borrower
therefrom, shall in any event be effective unless the same shall be in
writing and signed by the Borrower and the Lender and then such waiver or
consent shall be effective only in the specific instance and for the
specific purpose for which given.
Section 9.3 Expenses; Indemnification.
(a) The Borrower shall pay all out-of-pocket costs and expenses
(including, without limitation, the reasonable fees, charges and
disbursements of outside counsel) incurred by the Lender in connection with
the enforcement or protection of its rights in connection with this
Agreement, including its rights under this Section, or in connection with
the Loans made or any Letters of Credit issued hereunder, including all
such out-of-pocket expenses incurred during any workout, restructuring or
negotiations in respect of such Loans or Letters of Credit.
(b) The Borrower shall indemnify the Lender and each Related Party of
the Lender (each, an "Indemnitee") against, and hold each of them harmless
from, any and all costs, losses, liabilities, claims, damages and related
expenses, including the fees, charges and disbursements of any counsel for
50
any Indemnitee, which may be incurred by or asserted against any Indemnitee
arising out of, in connection with or as a result of (i) the execution or
delivery of any this Agreement or any other agreement or instrument
contemplated hereby, the performance by the parties hereto of their
respective obligations hereunder or the consummation of any of the
transactions contemplated hereby, (ii) any Loan or Letter of Credit or any
actual or proposed use of the proceeds therefrom (including any refusal by
the Lender to honor a demand for payment under a Letter of Credit if the
documents presented in connection with such demand do not strictly comply
with the terms of such Letter of Credit), (iii) any actual or alleged
presence or release of Hazardous Materials on or from any property owned by
the Borrower or any Subsidiary or any Environmental Liability related in
any way to the Borrower or any Subsidiary or (iv) any actual or prospective
claim, litigation, investigation or proceeding relating to any of the
foregoing, whether based on contract, tort, or any other theory and
regardless of whether any Indemnitee is a party thereto; provided, that the
Borrower shall not be obligated to indemnify any Indemnitee for any of the
foregoing arising out of such Indemnitee's gross negligence or willful
misconduct as determined by a court of competent jurisdiction in a final
and nonappealable judgment.
(c) The Borrower shall pay, and hold the Lender harmless from and
against, any and all present and future stamp, documentary, and other
similar taxes with respect to this Agreement and any other Loan Documents,
any collateral described therein, or any payments due thereunder, and save
the Lender harmless from and against any and all liabilities with respect
to or resulting from any delay or omission to pay such taxes.
(d) To the extent permitted by applicable law, the Borrower shall not
assert, and hereby waives, any claim against any Indemnitee, on any theory
of liability, for indirect, consequential or punitive damages (as opposed
to actual or direct damages) arising out of, in connection with or as a
result of, this Agreement or any agreement or instrument contemplated
hereby, the transactions contemplated therein, any Loan or the Letter of
Credit or the use of proceeds thereof.
(e) All amounts due under this Section shall be payable promptly after
written demand therefor.
Section 9.4 Successors and Assigns.
(a) The provisions of this Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective successors and
assigns, except that the Borrower may not assign or transfer any of its
rights hereunder without the prior written consent of the Lender (and any
attempted assignment or transfer by the Borrower without such consent shall
be null and void).
(b) The Lender may at any time assign to one or more assignees all or
a portion of its rights and obligations under this Agreement and the other
51
Loan Documents (including all or a portion of its Revolving Commitment and
the Loans and LC Exposure at the time owing to it); provided, that the
Borrower must give its prior written consent (which consent shall not be
unreasonably withheld or delayed) to any assignment, except an assignment
to an Affiliate of the Lender or during the occurrence and continuation of
a Default or an Event of Default. Upon the execution and delivery of an
assignment agreement by the Lender and such assignee and payment by such
assignee of an amount equal to the purchase price agreed between the Lender
and such assignee, such assignee shall become a party to this Agreement and
the other Loan Documents and shall have the rights and obligations of a
Lender under this Agreement, and the Lender shall be released from its
obligations hereunder to a corresponding extent. Upon the consummation of
any such assignment hereunder, the Lender, the assignee and the Borrower
shall make appropriate arrangements to have new Notes issued to reflect
such assignment.
(c) The Lender may at any time, without the consent of the Borrower,
sell participations to one or more banks or other entities (a
"Participant") in all or a portion of the Lender's rights and obligations
under this Agreement; provided, that (i) the Lender's obligations under
this Agreement shall remain unchanged, (ii) the Lender shall remain solely
responsible to the other parties hereto for the performance of its
obligations hereunder, and (iii) the Borrower shall continue to deal solely
and directly with the Lender in connection with the Lender's rights and
obligations under this Agreement and the other Loan Documents. Any
agreement between the Lender and the Participant with respect to such
participation shall provide that the Lender shall retain the sole right and
responsibility to enforce this Agreement and the other Loan Documents and
the right to approve any amendment, modification or waiver of this
Agreement and the other Loan Documents; provided, that such participation
agreement may provide that such Lender will not, without the consent of the
Participant, agree to any amendment, modification or waiver of this
Agreement described in the first proviso of Section 9.2(b) that affects the
Participant. The Borrower agrees that each Participant shall be entitled to
the benefits of Sections 2.13 and 2.14 to the same extent as if it were a
Lender hereunder and had acquired its interest by assignment pursuant to
paragraph (b); provided, that no Participant shall be entitled to receive
any greater payment under Section 2.13 than the Lender would have been
entitled to receive with respect to the participation sold to such
Participant unless the sale of such participation is made with the
Borrower's prior written consent.
(d) The Lender may at any time pledge or assign a security interest in
all or any portion of its rights under this Agreement and the Notes to
secure its obligations to a Federal Reserve Bank without complying with
this Section; provided, that no such pledge or assignment shall release the
Lender from any of its obligations hereunder or substitute any such pledgee
or assignee for such Lender as a party hereto.
52
Section 9.5 Governing Law; Jurisdiction; Consent to Service of Process.
(a) This Agreement and the other Loan Documents shall be construed in
accordance with and be governed by the law (without giving effect to the
conflict of law principles thereof) of the State of Tennessee.
(b) The Borrower hereby irrevocably and unconditionally submits, for
itself and its property, to the non-exclusive jurisdiction of the United
States District Court of the Middle District of Tennessee and of any
Chancery court located in Davidson County, Tennessee and any appellate
court from any thereof, in any action or proceeding arising out of or
relating to this Agreement or any other Loan Document or the transactions
contemplated hereby or thereby, or for recognition or enforcement of any
judgment, and each of the parties hereto hereby irrevocably and
unconditionally agrees that all claims in respect of any such action or
proceeding may be heard and determined in such Tennessee state court or, to
the extent permitted by applicable law, such Federal court. Each of the
parties hereto agrees that a final judgment in any such action or
proceeding shall be conclusive and may be enforced in other jurisdictions
by suit on the judgment or in any other manner provided by law. Nothing in
this Agreement or any other Loan Document shall affect any right that the
Lender may otherwise have to bring any action or proceeding relating to
this Agreement or any other Loan Document against the Borrower or its
properties in the courts of any jurisdiction.
(c) The Borrower irrevocably and unconditionally waives any objection
which it may now or hereafter have to the laying of venue of any such suit,
action or proceeding described in paragraph (b) of this Section and brought
in any court referred to in paragraph (b) of this Section. Each of the
parties hereto irrevocably waives, to the fullest extent permitted by
applicable law, the defense of an inconvenient forum to the maintenance of
such action or proceeding in any such court.
(d) Each party to this Agreement irrevocably consents to the service
of process in the manner provided for notices in Section 9.1. Nothing in
this Agreement or in any other Loan Document will affect the right of any
party hereto to serve process in any other manner permitted by law.
Section 9.6 WAIVER OF JURY TRIAL. EACH PARTY HERETO IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL
BY JURY IN ANY LEGAL PROCEEDING DIRECTLY OR INDIRECTLY ARISING OUT OF THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR
THEREBY (WHETHER BASED ON CONTRACT, TORT OR ANY OTHER THEORY). EACH PARTY HERETO
(A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER PARTY HAS
53
REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT, IN THE
EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER, AND (B) ACKNOWLEDGES
THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER INTO THIS
AGREEMENT AND THE OTHER LOAN DOCUMENTS BY, AMONG OTHER THINGS, THE MUTUAL
WAIVERS AND CERTIFICATIONS IN THIS SECTION.
Section 9.7 Right of Setoff. In addition to any rights now or hereafter
granted under applicable law and not by way of limitation of any such rights,
the Lender shall have the right, at any time or from time to time upon the
occurrence and during the continuance of an Event of Default, without prior
notice to the Borrower, any such notice being expressly waived by the Borrower
to the extent permitted by applicable law, to set off and apply against all
deposits (general or special, time or demand, provisional or final) of the
Borrower at any time held or other obligations at any time owing by the Lender
to or for the credit or the account of the Borrower against any and all
Obligations held by the Lender, irrespective of whether the Lender shall have
made demand hereunder and although such Obligations may be unmatured. The Lender
agrees promptly to notify the Borrower after any such set-off and any
application made by the Lender; provided, that the failure to give such notice
shall not affect the validity of such set-off and application.
Section 9.8 Counterparts; Integration. This Agreement may be executed by
one or more of the parties to this Agreement on any number of separate
counterparts (including by telecopy), and all of said counterparts taken
together shall be deemed to constitute one and the same instrument. This
Agreement, the other Loan Documents, and any separate letter agreement(s)
relating to any fees payable to the Lender constitute the entire agreement among
the parties hereto and thereto regarding the subject matters hereof and thereof
and supersede all prior agreements and understandings, oral or written,
regarding such subject matters.
Section 9.9 Survival. All covenants, agreements, representations and
warranties made by the Borrower herein and in the certificates or other
instruments delivered in connection with or pursuant to this Agreement shall be
considered to have been relied upon by the other parties hereto and shall
survive the execution and delivery of this Agreement and the making of any Loans
and issuance of any Letters of Credit, regardless of any investigation made by
any such other party or on its behalf and notwithstanding that the Lender may
have had notice or knowledge of any Default or incorrect representation or
warranty at the time any credit is extended hereunder, and shall continue in
full force and effect as long as the principal of or any accrued interest on any
Loan or any fee or any other amount payable under this Agreement is outstanding
and unpaid or any Letter of Credit is outstanding and so long as the Revolving
Commitment has not expired or terminated. The provisions of Sections 2.13 and
9.3 shall survive and remain in full force and effect regardless of the
consummation of the transactions contemplated hereby, the repayment of the
Loans, the expiration or termination of the Letters of Credit and the
Commitments or the termination of this Agreement or any provision hereof. All
representations and warranties made herein, in the certificates, reports,
notices, and other documents delivered pursuant to this Agreement shall survive
the execution and delivery of this Agreement and the other Loan Documents, and
the making of the Loans.
54
Section 9.10 Severability. Any provision of this Agreement or any other
Loan Document held to be illegal, invalid or unenforceable in any jurisdiction,
shall, as to such jurisdiction, be ineffective to the extent of such illegality,
invalidity or unenforceability without affecting the legality, validity or
enforceability of the remaining provisions hereof or thereof; and the
illegality, invalidity or unenforceability of a particular provision in a
particular jurisdiction shall not invalidate or render unenforceable such
provision in any other jurisdiction.
Section 9.11 Confidentiality. The Lender agrees to take normal and
reasonable precautions to maintain the confidentiality of any information
designated in writing as confidential and provided to it by the Borrower or any
Subsidiary, except that such information may be disclosed (i) to any Related
Party of the Lender, including without limitation accountants, legal counsel and
other advisors, (ii) to the extent required by applicable laws or regulations or
by any subpoena or similar legal process, (iii) to the extent requested by any
regulatory agency or authority, (iv) to the extent that such information becomes
publicly available other than as a result of a breach of this Section, or which
becomes available to the Lender or any Related Party of the Lender on a
nonconfidential basis from a source other than the Borrower, (v) in connection
with the exercise of any remedy hereunder or any suit, action or proceeding
relating to this Agreement or the enforcement of rights hereunder, and (ix)
subject to provisions substantially similar to this Section, to any actual or
prospective assignee or Participant, or (vi) with the consent of the Borrower.
Any Person required to maintain the confidentiality of any information as
provided for in this Section shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such information as such Person would accord its
own confidential information. Lender shall give Borrower prior written notice of
disclosures made under subsections (ii) through (vi) hereof.
Section 9.12 Usury. The parties to this Agreement intend to conform
strictly to applicable usury laws as presently in effect. Accordingly, if the
transactions contemplated hereby would be usurious under applicable law then, in
that event, notwithstanding anything to the contrary in the Loan Documents,
Borrower and Lender agree as follows: (i) the aggregate of all consideration
that constitutes interest under the Loan Documents or otherwise in connection
with the Obligations, shall under no circumstance exceed the maximum lawful rate
of interest permitted by applicable law, and any excess shall be credited on the
Obligations by the holder thereof (or, if the Obligations shall have been paid
in full, refunded to Borrower); and (ii) if the maturity of the Obligations is
accelerated by reason of an election of the holder resulting from any Event of
Default or otherwise, or in the event of any required or permitted prepayment,
then such consideration that constitutes interest may never include more than
the maximum amount of interest permitted by applicable law, and excess interest,
if any, for which this Agreement provides, or otherwise, shall be canceled
automatically as of the date of such acceleration or prepayment and, if
55
previously paid, shall be credited on the Obligations (or, if the Obligations
shall have been paid in full, refunded to Borrower).
(remainder of page left intentionally blank)
56
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their respective authorized officers as of the day and year
first above written.
BORROWER:
CENTRAL FREIGHT LINES, INC., a
Texas corporation
By:_______________________________________
Title:____________________________________
SUNTRUST BANK
By:_______________________________________
Title:____________________________________
57
Schedule I
APPLICABLE MARGIN AND APPLICABLE PERCENTAGE
PRICING GRID
---------------- ------------------------- ------------------------- -------------------------- -------------------------
Lease Adjusted Leverage Applicable Margin for Applicable Margin for Applicable Percentage
Pricing Ratio Eurodollar Loans Base Rate for Commitment Fee
Level Loans
---------------- ------------------------- ------------------------- -------------------------- -------------------------
I Less than or equal to
1.00x 1.00% -0.50% 0.15%
---------------- ------------------------- ------------------------- -------------------------- -------------------------
II Less than or equal to
1.50x but greater than 1.125% -0.25% 0.20%
1.00x
---------------- ------------------------- ------------------------- -------------------------- -------------------------
III Less than or equal to
2.00x but greater than 1.25% 0.00% 0.20%
1.50x
---------------- ------------------------- ------------------------- -------------------------- -------------------------
IV Less than or equal to
2.50x but greater than 1.50% 0.00% 0.25%
2.00x
---------------- ------------------------- ------------------------- -------------------------- -------------------------
V Greater than 2.50x
1.75% 0.00% 0.25%
---------------- ------------------------- ------------------------- -------------------------- -------------------------
58