Exhibit 10.7
LOAN AND SECURITY AGREEMENT
Dated as of November 27, 1996
Among
BANKAMERICA BUSINESS CREDIT, INC.
as the Agent and a Lender
and
NATIONSBANK OF TEXAS, N.A.
as a Lender, the L/C Issuer and a Co-Syndication Agent
and
CAISSE NATIONALE DE CREDIT AGRICOLE
as a Lender and as a Co-Agent
and
THE OTHER FINANCIAL INSTITUTIONS NAMED HEREIN
as Lenders
and
CONSOLIDATED FREIGHTWAYS CORPORATION OF DELAWARE
as the Borrower
TABLE OF CONTENTS
Page
ARTICLE 1 INTERPRETATION OF THIS AGREEMENT 1
1.1 Definitions 1
1.2 Accounting Terms 26
1.3 Other Terms 26
1.4 Other Interpretive Provisions 26
ARTICLE 2 LOANS AND LETTERS OF CREDIT 27
2.1 Credit Facility 27
2.2 Revolving Loans 28
2.3 Letters of Credit 34
2.4 Automated Clearing House Transfers and
Overdrafts 40
2.5 Purpose 41
ARTICLE 3 INTEREST AND FEES 41
3.1 Interest 41
3.2 Conversion and Continuation Elections 42
3.3 Maximum Interest Rate 43
3.4 Closing Fee 44
3.5 Unused Line Fee 44
3.6 Letter of Credit Fee 44
3.7 Other Fees 45
ARTICLE 4 PAYMENTS AND PREPAYMENTS 45
4.1 Revolving Loans 45
4.2 Termination of Facility 45
4.3 Payments by the Borrower 46
4.4 Payments as Revolving Loans 47
4.5 Apportionment, Application and Reversal of
Payments 47
4.6 Indemnity for Returned Payments 48
4.7 Agent's and Lenders' Books and Records; Monthly
Statements 48
ARTICLE 5 TAXES, YIELD PROTECTION AND ILLEGALITY 49
5.1 Taxes 49
5.2 Illegality 50
5.3 Increased Costs and Reduction of Return 50
5.4 Replacement of Lender in Event of Adverse
Condition 51
5.5 Funding Losses 51
5.6 Inability to Determine Rates 52
5.7 Certificates of Lenders 52
5.8 Survival 52
ARTICLE 6 COLLATERAL 52
6.1 Grant of Security Interest 52
6.2 Perfection and Protection of Security Interests 53
6.3 Location of Collateral 55
6.4 Title to, Liens on, and Sale and Use of
Collateral 55
6.5 Appraisals 55
6.6 Access and Examination; Confidentiality 56
6.7 Collateral Reporting 57
6.8 Accounts 58
6.9 Collection of Accounts; Payments 59
6.10 Equipment 60
6.11 Assigned Contracts 61
6.12 Documents, Instruments, and Chattel Paper 62
6.13 Right to Cure 62
6.14 Power of Attorney 62
6.15 The Agent's and Lenders' Rights, Duties and
Liabilities 63
ARTICLE 7 BOOKS AND RECORDS; FINANCIAL INFORMATION;
NOTICES 63
7.1 Books and Records 63
7.2 Financial Information 63
7.3 Notices to the Lenders 66
ARTICLE 8 GENERAL WARRANTIES AND REPRESENTATIONS 69
8.1 Authorization, Validity, and Enforceability of
this Agreement and the Loan Documents 69
8.2 Validity and Priority of Security Interest 69
8.3 Organization and Qualification 69
8.4 Corporate Name; Prior Transactions 70
8.5 Subsidiaries and Affiliates 70
8.6 Financial Statements and Projections 70
8.7 Capitalization 71
8.8 Solvency 71
8.9 Debt 71
8.10 Restricted Payments 71
8.11 Title to Property 71
8.12 Real Estate; Leases 71
8.13 Proprietary Rights 71
8.14 Trade Names and Terms of Sale 72
8.15 Litigation 72
8.16 Restrictive Agreements 72
8.17 Labor Disputes 72
8.18 Environmental Laws 72
8.19 No Violation of Law 73
8.20 No Default 74
8.21 ERISA Compliance 74
8.22 Taxes 75
8.23 Regulated Entities 75
8.24 Use of Proceeds; Margin Regulations 75
8.25 Copyrights, Patents, Trademarks and Licenses,
etc. 75
8.26 No Material Adverse Change 75
8.27 Full Disclosure 75
8.28 Material Agreements 76
8.29 Bank Accounts 76
8.30 Eligible Revenue Equipment 76
8.31 Excluded Revenue Equipment 76
8.32 Former Parent Liens 76
ARTICLE 9 AFFIRMATIVE AND NEGATIVE COVENANTS 76
9.1 Taxes and Other Obligations 76
9.2 Corporate Existence and Good Standing 77
9.3 Compliance with Law and Agreements; Maintenance
of Licenses 77
9.4 Maintenance of Property 77
9.5 Insurance 77
9.6 Environmental Laws 78
9.7 Compliance with ERISA 78
9.8 Mergers, Consolidations or Sales 79
9.9 Restricted Payments; Capital Change; Restricted
Investments 79
9.10 Transactions Affecting Collateral or
Obligations 79
9.11 Guaranties 79
9.12 Debt 80
9.13 Prepayment 80
9.14 Transactions with Affiliates 80
9.15 Investment Banking and Finder's Fees 80
9.16 Business Conducted 81
9.17 Liens 81
9.18 Sale and Leaseback Transactions 81
9.19 New Subsidiaries 81
9.20 Fiscal Year 81
9.21 Capital Expenditures 81
9.22 Adjusted Net Earnings 82
9.23 Adjusted Tangible Net Worth 82
9.24 Fixed Charge Coverage Ratio 83
9.25 Use of Proceeds 83
9.26 Restrictions on Canadian Freightways 83
9.27 Further Assurances 84
9.28 Cooperation 84
ARTICLE 10 CONDITIONS OF CLOSING AND LENDING 84
10.1 Conditions Precedent to Making of Loans on the
Closing Date 84
10.2 Conditions Precedent to the Initial Funding
Date 87
10.3 Conditions Precedent to Each Loan 88
ARTICLE 11 DEFAULT; REMEDIES 89
11.1 Events of Default 89
11.2 Remedies 91
ARTICLE 12 TERM AND TERMINATION 93
12.1 Term and Termination 93
12.2 Termination if Conditions Not Satisfied 93
ARTICLE 13 AMENDMENTS; WAIVER; PARTICIPATIONS;
ASSIGNMENTS; SUCCESSORS 93
13.1 No Waivers Cumulative Remedies 93
13.2 Amendments and Waivers 93
13.3 Assignments; Participations 94
ARTICLE 14 THE AGENT 96
14.1 Appointment and Authorization 96
14.2 Delegation of Duties 97
14.3 Liability of Agent 97
14.4 Reliance by Agent 98
14.5 Notice of Default 98
14.6 Credit Decision 98
14.7 Indemnification 99
14.8 Agent in Individual Capacity 99
14.9 Successor Agent 100
14.10 Withholding Tax 100
14.11 Collateral Matters 101
14.12 Restrictions on Actions by Lenders; Sharing
of Payments 103
14.13 Agency for Perfection 103
14.14 Payments by Agent to Lenders 103
14.15 Concerning the Collateral and the Related
Loan Documents 104
14.16 Field Audit and Examination Reports; Disclaimer
by Lenders 104
14.17 Co-Agents 105
ARTICLE 15 MISCELLANEOUS 105
15.1 Cumulative Remedies; No Prior Recourse to
Collateral 105
15.2 Severability 105
15.3 Governing Law; Choice of Forum; Service of
Process; Jury Trial Waiver 105
15.4 WAIVER OF JURY TRIAL 107
15.5 Survival of Representations and Warranties 108
15.6 Other Security and Guaranties 108
15.7 Fees and Expenses 108
15.8 Notices 109
15.9 Waiver of Notices 109
15.10 Binding Effect 110
15.11 Indemnity of the Agent and the Lenders by
the Borrower 110
15.12 Final Agreement 110
15.13 Counterparts 111
15.14 Captions 111
15.15 Right of Setoff 111
EXHIBITS
A Form of Borrowing Base Certificate
B Form of Notice of Borrowing
C Form of Notice of
Conversion/Continuation
D Form of Assignment and Acceptance
E Form of Landlord's Waiver
F Financial Statements
SCHEDULES
8.3 Jurisdictions
8.5 Subsidiaries and Affiliates
8.9 Debt
8.12 Locations of Collateral, Real Estate,
Leases and Subleases
8.13 Proprietary Rights
8.14 Trade Names
8.15 Litigation
8.17 Labor Disputes
8.18 Environmental Disclosures
8.21 ERISA Disclosures
8.28 Material Agreements
8.29 Bank Accounts
8.30 Included Revenue Equipment
8.31 Excluded Revenue Equipment
8.32 Former Parent Liens
LOAN AND SECURITY AGREEMENT
Loan and Security Agreement, dated as of November 27,
1996, among the financial institutions listed on the signature
pages hereof as lenders (such financial institutions, together
with their respective successors and assigns, are referred to
hereinafter each individually as a "Lender" and collectively as
the "Lenders"), BankAmerica Business Credit, Inc., a Delaware
corporation, as agent for the Lenders (in its capacity as agent,
the "Agent"), NationsBank of Texas, N.A., as the L/C Issuer (as
hereafter defined) and as co-syndication agent for the Lenders,
Caisse Nationale De Credit Agricole, as co-agent for the Lenders,
Consolidated Freightways Corporation of Delaware, a Delaware
corporation, with offices at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (the "Borrower"), Consolidated Freightways
Corporation (the "Parent") and ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation
("▇▇▇▇▇▇"), affiliates of the Borrower and, together with the
Borrower, sometimes called Loan Parties (as hereafter defined)
hereunder.
W I T N E S S E T H
WHEREAS, the Borrower has requested the Lenders to make
available to the Borrower a revolving line of credit for loans
and letters of credit in an amount not to exceed $225,000,000,
which extensions of credit the Borrower will use for its working
capital needs and general business purposes;
WHEREAS, the Lenders have agreed to make available to
the Borrower a revolving credit facility upon the terms and
conditions set forth in this Agreement;
WHEREAS, the L/C Issuer has agreed to issue the letters
of credit provided for under such revolving credit facility; and
WHEREAS, the Parent and ▇▇▇▇▇▇ are parties to this
Agreement and certain other agreements relating to such revolving
credit facility in order to make certain representations and
warranties, and incur certain obligations in favor of the
Lenders, the Agent and the L/C Issuer;
NOW, THEREFORE, in consideration of the mutual
conditions and agreements set forth in this Agreement, and for
good and valuable consideration, the receipt of which is hereby
acknowledged, the Lenders, the L/C Issuer, the Agent, the
Borrower, the Parent and ▇▇▇▇▇▇ hereby agree as follows.
ARTICLE 1
INTERPRETATION OF THIS AGREEMENT
1.1 Definitions. As used herein:
"Account Advance Rate" means eighty-five percent (85%),
provided, however, that if the average Accounts Dilution Rate
(determined by dividing the total of the amounts described in
clause (i) of the definition of Accounts Dilution Rate by the
total amounts described in clause (ii) of the definition of
Accounts Dilution Rate, in each case, for a twelve month period),
tested monthly, exceeds seven percent (7%) but is not more than
ten percent (10%) on a rolling twelve month basis, the Account
Advance Rate shall be eighty percent (80%), and provided,
further, that if the average Accounts Dilution Rate, tested
monthly, exceeds ten percent (10%) on a rolling twelve month
basis, the Account Advance Rate shall be further reduced by two
percent (2%) for each percentage point that the average Accounts
Dilution Rate exceeds ten percent (10%).
"Accounts" means all of the Borrower's now owned or
hereafter acquired or arising accounts, and any other rights to
payment for the sale or lease of goods or rendition of services,
whether or not they have been earned by performance.
"Account Debtor" means each Person obligated in any way
on or in connection with an Account.
"Accounts Dilution Rate" means the percent obtained by
dividing (i) the sum of all adjustments made to the Accounts to
reflect (a) correcting adjustments which consist of short pays
due to a rate adjustment or other disputed amounts,
(b) uncollectable items being transferred to the bad debt
allowance account, (c) reclassifications to delinquent accounts
for further collection efforts, and (d) other non-cash credits,
allowances, discounts, write-offs or other offsets to the
Accounts which the Agent, in the exercise of its commercially
reasonable discretion, deems appropriate to reduce the value of
Accounts by, by (ii) the gross amount of all Accounts created by
the Borrower.
"ACH Settlement Risk Reserve" means any and all
reserves which the Agent from time to time establishes, in its
reasonable commercial discretion, with respect to ACH
Transactions.
"ACH Transactions" means all debts, liabilities, and
obligations now or hereafter owing from the Borrower to Bank of
America arising from or related to the automatic clearing house
transfer of funds by Bank of America for the account of the
Borrower pursuant to agreement or overdrafts.
"Adjusted Net Earnings" means, with respect to any
fiscal period of the Borrower, the Adjusted Net Earnings from
Operations for such fiscal period plus the sum of the following
to the extent deducted in computing Adjusted Net Earnings from
Operations: (a) interest expense, (b) accrued income taxes,
(c) depreciation and amortization expense, and (d) miscellaneous
expenses (including Letter of Credit Fees) less miscellaneous
income for such period.
"Adjusted Net Earnings from Operations" means, with
respect to any fiscal period of the Borrower, the Parent's, the
Borrower's and their Subsidiaries' consolidated net income after
provision for income taxes for such fiscal period, as determined
in accordance with GAAP and reported on the Financial Statements
for such period, excluding any and all of the following included
in such net income: (a) gain or loss arising from the sale of
any capital assets (excluding Revenue Equipment); (b) gain
arising from any write-up in the book value of any asset;
(c) earnings of any corporation, substantially all the assets of
which have been acquired by the Parent or the Borrower or their
Subsidiaries in any manner, to the extent realized by such other
corporation prior to the date of acquisition; (d) earnings of any
business entity in which the Parent or the Borrower or any of
their Subsidiaries has an ownership interest (other than the
Subsidiaries) unless (and only to the extent) such earnings shall
actually have been received by the Parent or the Borrower or
their Subsidiaries in the form of cash distributions;
(e) earnings of any Person into which the Parent or the Borrower
or their Subsidiaries shall have been merged, or which has been a
party with the Parent or the Borrower or their Subsidiaries to
any consolidation or other form of reorganization, prior to the
date of such transaction; (f) gain arising from the acquisition
of debt or equity securities of the Parent or the Borrower or
their Subsidiaries or from cancellation or forgiveness of Debt;
and (g) gain arising from extraordinary items, as determined in
accordance with GAAP, or gain from any other non-recurring
transaction.
"Adjusted Tangible Assets" means all of the Parent's,
the Borrower's and their Subsidiaries' assets on a consolidated
basis except: (a) deferred assets, other than deferred tax
assets, prepaid insurance, and prepaid taxes; (b) patents,
copyrights, trademarks, trade names, franchises, goodwill, and
other similar intangibles; (c) unamortized debt discount and
expense; and (d) fixed assets to the extent of any write-up in
the book value thereof resulting from a revaluation effective
after the Closing Date.
"Adjusted Tangible Net Worth" means, at any date:
(a) the book value (after deducting related depreciation,
obsolescence, amortization, valuation, and other proper reserves
as determined in accordance with GAAP) at which the Adjusted
Tangible Assets would be shown on a consolidated balance sheet of
the Parent, the Borrower and their Subsidiaries at such date
prepared in accordance with GAAP; less (b) the amount at which
the Parent's, the Borrower's and their Subsidiaries' liabilities
would be shown on such balance sheet, including as liabilities
all reserves for contingencies and other potential liabilities
which would be shown on such balance sheet.
"Affiliate" means, as to any Person, any other Person
which, directly or indirectly, is in control of, is controlled
by, or is under common control with, such Person or which owns,
directly or indirectly, five percent (5%) or more of the
outstanding equity interest of such Person (except that with
respect to the Parent or the Former Parent, twenty percent (20%)
or more of the outstanding equity interest of the Parent or of
the Former Parent, as the case may be). A Person shall be deemed
to control another Person if the controlling Person possesses,
directly or indirectly, the power to direct or cause the
direction of the management and policies of the other Person,
whether through the ownership of voting securities, by contract,
or otherwise.
"Agent" means BankAmerica Business Credit, Inc., solely
in its capacity as agent for the L/C Issuer and the Lenders, and
shall include any successor agent.
"Agent Advances" has the meaning specified in
Section 2.2(i).
"Agent's Liens" means collectively the Liens in the
Collateral granted to the Agent, for the ratable benefit of the
Lenders, the L/C Issuer, BABC, and the Agent pursuant to this
Agreement, the other Loan Documents or any other agreement or
instrument.
"Agent-Related Persons" means the Agent and any
successor agent, together with their respective Affiliates, and
the officers, directors, employees, agents and attorneys-in-fact
of such Persons and Affiliates.
"Aggregate Revolver Outstandings" means, at any time:
the sum of (a) the unpaid balance of Revolving Loans, (b) the
aggregate amount of Pending Revolving Loans, (c) one hundred
percent (100%) of the aggregate undrawn face amount of all
outstanding Letters of Credit (less any Designated Cash
Collateral therefor), and (d) the aggregate amount of any unpaid
reimbursement obligations in respect of Letters of Credit.
"Agreement" means this Loan and Security Agreement.
"Anniversary Date" means each anniversary of the
Initial Funding Date.
"Applicable Margin" means
(i) with respect to Base Rate Revolving Loans and
all other Obligations (other than LIBOR Revolving Loans), one-
half percent (0.5%); and
(ii) with respect to LIBOR Revolving Loans, one
and one-half percent (1.5%).
"Appraised Value of Revenue Equipment" means the
orderly liquidation value of the Eligible Revenue Equipment, as
set forth in the most recent appraisal conducted by an appraiser
satisfactory to the Agent pursuant to Section 6.5.
"Assigned Contracts" means, collectively, all of the
Borrower's rights and remedies under, and all moneys and claims
for money due or to become due to the Borrower under those
contracts set forth in Part A of Schedule 8.28, and any other
material contracts, and any and all amendments, supplements,
extensions, and renewals thereof including, without limitation,
all rights and claims of the Borrower now or hereafter existing:
(i) under any insurance, indemnities, warranties, and guarantees
provided for or arising out of or in connection with any of the
foregoing agreements; (ii) for any damages arising out of or for
breach or default under or in connection with any of the
foregoing contracts; (iii) to all other amounts from time to time
paid or payable under or in connection with any of the foregoing
agreements; or (iv) to exercise or enforce any and all covenants,
remedies, powers and privileges thereunder.
"Assignee" has the meaning specified in
Section 13.3(a).
"Assignment and Acceptance" has the meaning specified
in Section 13.3(a).
"Attorney Costs" means and includes all reasonable
fees, expenses and disbursements of any law firm or other
external counsel engaged by the Agent, the allocated cost of
reasonable internal legal services of the Agent and all
reasonable expenses and disbursements of internal counsel of the
Agent.
"Availability" means at any time the lesser of:
(a) the Total Facility or
(b) the sum of:
(i) the Net Amount of Eligible Accounts multiplied
by the Account Advance Rate; plus
(ii) the lesser of:
a) the Maximum Revolver Equipment Advance or
b) the Eligible Revenue Equipment Value
multiplied by the Revenue Equipment Advance Rate;
Less, in the case of each of (a) and (b) above, the sum
of (without duplication of amounts which have become ineligible):
(A) the Aggregate Revolver Outstandings;
(B) following the occurrence and during the
continuance of any Event of Default, reserves for accrued
interest on the Obligations;
(C) the Environmental Compliance Reserve;
(D) ACH Settlement Risk Reserve; and
(E) all other reserves which the Agent deems
necessary or desirable in the exercise of its reasonable credit
judgment to maintain with respect to the Borrower's account,
including, without limitation, reserves for any amounts which the
Agent or any Lender may be obligated to pay in the future for the
account of the Borrower.
"BABC" means BankAmerica Business Credit, Inc.
"BABC Loan" and "BABC Loans" have the meanings
specified in Section 2.2(h).
"Bank of America" means Bank of America National Trust
and Savings Association, a national banking association, or any
successor entity thereto.
"Bankruptcy Code" means Title 11 of the United States
Code (11 U.S.C. 101 et seq.).
"Base Rate" means, for any day, the rate of interest in
effect for such day as publicly announced from time to time by
Bank of America in San Francisco, California, as its "reference
rate" (the "reference rate" being a rate set by Bank of America
based upon various factors including Bank of America's costs and
desired return, general economic conditions and other factors,
and is used as a reference point for pricing some loans, which
may be priced at, above, or below such announced rate). Any
change in the reference rate announced by Bank of America shall
take effect at the opening of business on the day specified in
the public announcement of such change. Each Interest Rate based
upon the Base Rate shall be adjusted simultaneously with any
change in the Base Rate.
"Base Rate Revolving Loan" means a Revolving Loan
during any period in which it bears interest based on the Base
Rate.
"Blocked Account Agreement" means the Blocked Account
Agreement among the Borrower, the Agent and United States
National Bank of Oregon.
"Borrowing" means a borrowing hereunder consisting of
Revolving Loans made on the same day by the Lenders to the
Borrower (or by BABC in the case of a Borrowing funded by BABC
Loans) or by the Agent in the case of a Borrowing consisting of
an Agent Advance.
"Borrowing Base Certificate" means the certificate by
a Responsible Officer of the Borrower, substantially in the form
of Exhibit A (or another form acceptable to the Agent) which
(a) is required to be delivered on a weekly basis pursuant to
Section 6.7 (it being understood and agreed that information
included therein with respect to the Accounts will be updated
weekly, and that other information included therein with respect
to Accounts of the type described in Accounts Dilution Rate and
with respect to Included Revenue Equipment will be updated as of
the end of each month), (b) sets forth the calculation of the
Availability, including a calculation of each component thereof,
and is dated, as of the close of business on the last Business
Day of the week covered by the certificate, and (c) is to be
delivered prior to the end of the third Business Day of the
following week; all in such detail as shall be reasonably
satisfactory to the Agent. All calculations of Availability in
connection with the preparation of any Borrowing Base Certificate
shall originally be made by the Borrower and certified to the
Agent; provided, that the Agent shall have the right to review
and adjust, in the exercise of its reasonable credit judgment,
any such calculation (1) to reflect its reasonable estimate of
declines in value of any of the Collateral described therein, and
(2) to the extent that such calculation is not in accordance with
this Agreement.
"Business Day" means (a) any day that is not a
Saturday, Sunday, or a day on which banks in San Francisco,
California, are required or permitted to be closed, and (b) with
respect to all notices, determinations, fundings and payments in
connection with the LIBOR Rate or LIBOR Revolving Loans, any day
that is a Business Day pursuant to clause (a) above and that is
also a day on which trading in Dollars is carried on by and
between banks in the London interbank market.
"Canadian Freightways" means Canadian Freightways
Limited, a corporation organized under the laws of the Province
of Alberta, Canada, and a wholly-owned subsidiary of the
Borrower.
"Capital Adequacy Regulation" means any guideline,
request or directive of any central bank or other Governmental
Authority, or any other law, rule or regulation, whether or not
having the force of law, in each case, regarding capital adequacy
of any bank or of any corporation controlling a bank.
"Capital Expenditures" means all payments due (whether
or not paid) in respect of the cost of any fixed asset or
improvement, or replacement, substitution, or addition thereto,
which has a useful life of more than one year, including, without
limitation, those costs arising in connection with the direct or
indirect acquisition of such asset by way of increased product or
service charges or offset items or in connection with a Capital
Lease or a Synthetic Lease.
"Capital Lease" means any lease of Property by the
Borrower which, in accordance with GAAP, is or should be
capitalized on the Borrower's balance sheet or for which the
amount of the asset and liability thereunder, as if so
capitalized, should be disclosed in a footnote to such balance
sheet.
"Change in Control" means (a) the acquisition by any
"person" or "group" (as such terms are used in Section 13(d)
and 14(d)(2) of the Exchange Act (other than a Person who is not
an Unrelated Person) of beneficial ownership (within the meaning
of Rule 13d-3 of the Securities and Exchange Commission under the
Exchange Act) of 25% or more of the outstanding shares of voting
stock of the Parent; or (b) during any period of 12 consecutive
calendar months, commencing on the date of the Agreement, the
ceasing of those individuals (the "Continuing Directors") who
(i) were directors of the Parent on the first day of each such
period or (ii) subsequently became directors of the Parent and
whose initial election or initial nomination for election
subsequent to that date was approved by a majority of the
Continuing Directors then on the board of directors of the Parent
to constitute a majority of the board of directors of the Parent.
"Closing Date" means the date of this Agreement.
"Closing Fee" has the meaning specified in Section 3.4.
"Code" means the Internal Revenue Code of 1986, as
amended from time to time, and any successor statute, and
regulations promulgated thereunder.
"Collateral" has the meaning specified in Section 6.1.
"Commitment" means, at any time with respect to a
Lender, the principal amount set forth beside such Lender's name
under the heading "Commitment" on the signature pages of this
Agreement or on the signature page of the Assignment and
Acceptance pursuant to which such Lender became a Lender
hereunder in accordance with the provisions of Section 13.3, as
such Commitment may be adjusted from time to time in accordance
with the provisions of Section 13.3 or Section 2.1(b) and
"Commitments" means, collectively, the aggregate amount of the
commitments of all of the Lenders.
"Contaminant" means any waste, pollutant, hazardous
substance, toxic substance, hazardous waste, special waste,
petroleum or petroleum-derived substance or waste, asbestos in
any form or condition, polychlorinated biphenyls ("PCBs"), or any
constituent of any such substance or waste.
"Debt" means, without duplication, all liabilities,
obligations and indebtedness of a Person to any other Person, of
any kind or nature, now or hereafter owing, arising, due or
payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed or
otherwise, and including, without in any way limiting the
generality of the foregoing: (i) the Borrower's liabilities and
obligations to trade creditors; (ii) all Obligations; (iii) all
obligations and liabilities of any Person secured by any Lien on
the Property of such Person, even though such Person shall not
have assumed or become liable for the payment thereof; provided,
however, that all such obligations and liabilities which are
limited in recourse to such Property shall be included in Debt
only to the extent of the book value of such Property as would be
shown on a balance sheet of such Person prepared in accordance
with GAAP; (iv) all obligations or liabilities created or arising
under any Capital Lease, Synthetic Lease or conditional sale or
other title retention agreement with respect to Property used or
acquired by a Person, even if the rights and remedies of the
lessor, seller or lender thereunder are limited to repossession
of such Property; provided, however, that all such obligations
and liabilities which are limited in recourse to such Property
shall be included in Debt only to the extent of the book value of
such Property as would be shown on a balance sheet of the Person
prepared in accordance with GAAP; (v) all accrued pension fund
and other employee benefit plan obligations and liabilities;
(vi) all obligations and liabilities under any Guaranty; and
(vii) deferred tax liability.
"Debt For Borrowed Money" means Debt for borrowed money
or as evidenced by notes, bonds, debentures or similar evidences
of any such Debt of such Person, the deferred and unpaid purchase
price of any Property or business (other than trade accounts
payable incurred in the ordinary course of business and
constituting current liabilities) and all obligations under
Capital Leases or Synthetic Leases.
"Default" means any event or circumstance which, with
the giving of notice, the lapse of time, or both, would (if not
cured or otherwise remedied during such time) constitute an Event
of Default.
"Defaulting Lender" has the meaning specified in
Section 2.2(g)(ii).
"Default Rate" means a fluctuating per annum interest
rate at all times equal to the sum of (a) the otherwise
applicable Interest Rate (without any adjustment provided for in
clauses (B) or (C) of the proviso to Section 3.1(a)), plus
(b) two percent (2.0%). Each Default Rate shall be adjusted
simultaneously with any change in the applicable Interest Rate.
In addition, with respect to Letters of Credit, the Default Rate
shall mean an increase in the Letter of Credit Fee by two (2)
percentage points (without any adjustment to such Fee provided
for in clauses (a) or (b) of the proviso to Section 3.6).
"Designated Cash Collateral" means any cash collateral
pledged by the Borrower and designated as cash collateral for
outstanding Letters of Credit pursuant to Section 2.3(j).
"Distribution" has the meaning set forth in the
Form 10.
"DOL" means the United States Department of Labor or
any successor department or agency.
"Dollar" and "$" means dollars in the lawful currency
of the United States.
"Eligible Accounts" means all Accounts of the Borrower,
unless the Agent in the exercise of its reasonable commercial
discretion determines that an Account shall not be considered
eligible due to the risk of uncollectability or delay in timely
collection. Without limiting the discretion of the Agent to
establish other criteria of ineligibility, Eligible Accounts
shall not, unless the Agent in its sole discretion elects,
include any Account (without duplication):
(a) with respect to which more than 90 days have
elapsed since the date of the original invoice therefor;
(b) with respect to which any of the
representations, warranties, covenants, and agreements contained
in Section 6.8(a) are not or have ceased to be complete and
correct or have been breached;
(c) with respect to which, in whole or in part, a
check, promissory note, draft, trade acceptance or other
instrument for the payment of money has been received, presented
for payment and returned uncollected for any reason;
(d) as to which any one or more of the following
events has occurred with respect to the Account Debtor on such
Account: death or judicial declaration of incompetency of an
Account Debtor who is an individual; the filing by or against the
Account Debtor of a request or petition for liquidation,
reorganization, arrangement, adjustment of debts, adjudication as
a bankrupt, winding-up, or other relief under the bankruptcy,
insolvency, or similar laws of the United States, any state or
territory thereof, or any foreign jurisdiction, now or hereafter
in effect; the making of any general assignment by the Account
Debtor for the benefit of creditors; the appointment of a
receiver or trustee for the Account Debtor or for any of the
assets of the Account Debtor, including, without limitation, the
appointment of or taking possession by a "custodian," as defined
in the Bankruptcy Code; the institution by or against the Account
Debtor of any other type of insolvency proceeding (under the
bankruptcy laws of the United States or otherwise) or of any
formal or informal proceeding for the dissolution or liquidation
of, settlement of claims against, or winding up of affairs of,
the Account Debtor; the sale, assignment, or transfer of all or
any material part of the assets of the Account Debtor; the
nonpayment generally by the Account Debtor of its debts as they
become due; or the cessation of the business of the Account
Debtor as a going concern;
(e) if fifty percent (50%) or more of the
aggregate Dollar amount of outstanding Accounts owed at such time
by the Account Debtor thereon is classified as ineligible under
the other criteria set forth in subparagraphs (a) or (r) hereof;
(f) owed by an Account Debtor which: (i) does not
maintain an office in the United States or Canada to which the
Account is billed; or (ii) is the government of any foreign
country or sovereign state, or of any state, province,
municipality, or other political subdivision thereof, or of any
department, agency, public corporation, or other instrumentality
thereof; except to the extent that such Account is secured or
payable by a letter of credit satisfactory to the Agent in its
sole discretion;
(g) owed by an Account Debtor which is an
Affiliate or employee of the Borrower;
(h) except as provided in (j) below, as to which
either the perfection, enforceability, or validity of the Agent's
Lien in such Account, or the Agent's right or ability to obtain
direct payment to the Agent of the proceeds of such Account, is
governed by any federal, state, or local statutory requirements
other than those of the UCC;
(i) which is owed by an Account Debtor to which
the Borrower is indebted in any way (including any indebtedness
arising from damage to the Account Debtor's goods during
shipment) or which is subject to any right of setoff or
recoupment by the Account Debtor, unless (i) the Account Debtor
has entered into an agreement acceptable to the Agent to waive
setoff rights or if the Account Debtor thereon has disputed
liability or made any claim with respect to any other Account due
from such Account Debtor; but in each such case only to the
extent of such indebtedness, setoff, recoupment, dispute, or
claim; provided, however, notwithstanding the foregoing, an
Account shall not be considered ineligible if it is subject to a
right of setoff which right arises in the ordinary course of
business from a transaction not related to the Account ("Eligible
Setoff Account"); provided, further, however that an Eligible
Setoff Account shall nevertheless be ineligible to the extent
described above if (i) such an Account is owed by an Account
Debtor which constitutes one of the fifteen largest Account
Debtors of the Borrower, and (ii) the Borrower's obligations to
such Account Debtor are greater than $50,000;
(j) which is owed by the government of the United
States of America or Canada, by any state, province,
municipality, or other political subdivision of the United States
of America or Canada, or by any department, agency, public
corporation, or other instrumentality of any such entities, to
the extent the Dollar amount of such Account, when added to the
aggregate Dollar amount of all other Eligible Accounts owed by
any of such entities, exceeds five percent (5%) of the aggregate
Dollar amount of all other Eligible Accounts;
(k) which is owed by any state, municipality, or
other political subdivision of the United States of America, or
any department, agency, public corporation, or other
instrumentality thereof and as to which the Agent determines that
the Agent's Lien therein is not or cannot be perfected;
(l) which is an Interline Account;
(m) which is evidenced by a promissory note or
other instrument or by chattel paper;
(n) with respect to which the Account Debtor is
located in any state requiring the filing of a Notice of Business
Activities Report or similar report in order to permit the
Borrower to seek judicial enforcement in such state of payment of
such Account, unless such Borrower has qualified to do business
in such state or has filed a Notice of Business Activities Report
or equivalent report for the then current year;
(o) which does not arise out of services being
rendered in the ordinary course of the Borrower's freight carrier
business;
(p) arises out of a contract or order which, by
its enforceable terms, forbids, restricts or makes void or
unenforceable the granting of an Agent's Lien by the Borrower
with respect to such Account;
(q) which is not subject to a first priority and
perfected Agent's Lien;
(r) which has been classified by the Borrower as
a "type 8 account" and represents a past due Account in dispute
or subject to collection;
(s) if the Agent believes in its reasonable
credit judgment that the prospect of collection of such Account
is impaired or that the Account may not be paid by reason of the
Account Debtor's financial inability to pay; or
(t) which is owed by an Account Debtor which the
Agent, in its reasonable credit judgment, otherwise deems to be
uncreditworthy.
If any Account at any time ceases to be an Eligible
Account by reason of any of the foregoing exclusions or any
failure to meet any other eligibility criteria established by the
Agent in the exercise of its reasonable discretion then such
Account shall promptly be excluded from the calculation of
Eligible Accounts. With respect to Accounts described in clauses
(a) and (e) above, the Agent's discretion to include such
Accounts as Eligible Accounts shall not exceed $10,000,000 of
such Accounts outstanding at any time unless otherwise authorized
by the Majority Lenders.
"Eligible Revenue Equipment" means Revenue Equipment
upon which there exists a perfected, first priority Agent's Lien.
"Eligible Revenue Equipment Value" means the orderly
liquidation value of Eligible Revenue Equipment, based on the
most recent appraisal conducted by an appraiser satisfactory to
the Agent pursuant to Section 6.5, but adjusted for subsequent
purchases, sales and other disposals according to the monthly
reports received by the Agent pursuant to Section 6.7.
"Environmental Claims" means all claims, however
asserted, by any Governmental Authority or other Person alleging
potential liability or responsibility for violation of any
Environmental Law, or for release or injury to the environment.
"Environmental Compliance Reserve" means any reserves
which the Agent, after the Closing Date, establishes in its
reasonable commercial discretion from time to time for amounts
that are reasonably likely to be expended by the Borrower in
order for the Borrower and its operations and property to comply
with any notice from a Governmental Authority asserting material
non-compliance with Environmental Laws; provided, however, that
for the purposes of calculating Availability, any Environmental
Compliance Reserve amounts may be used to make Revolving Loans
solely for the purpose of making the environmental expenditures
described above.
"Environmental Laws" means all federal, state or local
laws, statutes, common law duties, rules, regulations, ordinances
and codes, together with all administrative orders, directed
duties, requests, licenses, authorizations and permits of, and
agreements with, any Governmental Authority, in each case
relating to environmental, health, safety and land use matters.
"Environmental Lien" means a Lien in favor of any
Governmental Authority for (1) any liability under any
Environmental Laws, or (2) damages arising from, or costs
incurred by such Governmental Authority in response to, a Release
or threatened Release of a Contaminant into the environment.
"Equipment" means all of the Borrower's now owned and
hereafter acquired machinery, equipment, furniture, furnishings,
fixtures, and other tangible personal property (except
Inventory), including Revenue Equipment and other motor vehicles
with respect to which a certificate of title has been issued,
aircraft, dies, tools, jigs, and office equipment, as well as all
of such types of property leased by the Borrower and all of the
Borrower's rights and interests with respect thereto under such
leases (including, without limitation, options to purchase);
together with all present and future additions and accessions
thereto, replacements therefor, component and auxiliary parts and
supplies used or to be used in connection therewith, and all
substitutes for any of the foregoing, and all manuals, drawings,
instructions, warranties and rights with respect thereto;
wherever any of the foregoing is located.
"ERISA" means the Employee Retirement Income Security
Act of 1974, and regulations promulgated thereunder.
"ERISA Affiliate" means any trade or business (whether
or not incorporated) under common control with the Borrower
within the meaning of Section 414(b) or (c) of the Code (and
Sections 414(m) and (o) of the Code for purposes of provisions
relating to Section 412 of the Code, determined after the
distribution of the common stock of the Borrower to the
shareholders of the Former Parent).
"ERISA Event" means (a) a Reportable Event with respect
to a Pension Plan; (b) a withdrawal by the Borrower or any ERISA
Affiliate from a Pension Plan subject to Section 4063 of ERISA
during a plan year in which it was a substantial employer (as
defined in Section 4001(a)(2) of ERISA) or a cessation of
operations which is treated as such a withdrawal under Section
4062(e) of ERISA; (c) a complete or partial withdrawal by the
Borrower or any ERISA Affiliate from a Multi-employer Plan or
notification that a Multi-employer Plan is in reorganization;
(d) the filing of a notice of intent to terminate, the treatment
of a Plan amendment as a termination under Section 4041 or 4041A
of ERISA, or the commencement of proceedings by the PBGC to
terminate a Pension Plan or Multi-employer Plan; (e) an event or
condition which might reasonably be expected to constitute
grounds under Section 4042 of ERISA for the termination of, or
the appointment of a trustee to administer, any Pension Plan or
Multi-employer Plan; or (f) the imposition of any liability under
Title IV of ERISA, other than PBGC premiums due but not
delinquent under Section 4007 of ERISA, upon the Borrower or any
ERISA Affiliate.
"Event of Default" has the meaning specified in
Section 11.1.
"Exchange Act" means the Securities Exchange Act of
1934, and regulations promulgated thereunder.
"Excluded Property" means Real Estate (and any fixtures
and intangible property (such as permits, maintenance contracts,
blueprints and designs) which are in each case directly and
specifically related to the particular parcel of Real Estate if
covered by a mortgage of such Real Estate), the Excluded Revenue
Equipment and stock of Subsidiaries of the Borrower existing as
of the Closing Date other than the 65% of the stock of Canadian
Freightways Limited pledged to the Agent for the benefit of the
Lenders pursuant to the Stock Pledge Agreement.
"Excluded Revenue Equipment" means the Revenue
Equipment listed on Schedule 8.31.
"FDIC" means the Federal Deposit Insurance Corporation,
and any Governmental Authority succeeding to any of its principal
functions.
"Federal Funds Rate" means, for any day, the rate set
forth in the weekly statistical release designated as H.15(519),
or any successor publication, published by the Federal Reserve
Bank of New York (including any such successor, "H.15(519)") on
the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so
published on any such preceding Business Day, the rate for such
day will be the arithmetic mean as determined by the Agent of the
rates for the last transaction in overnight Federal funds
arranged prior to 9:00 a.m. (New York City time) on that day by
each of three leading brokers of Federal funds transactions in
New York City selected by the Agent.
"Federal Reserve Board" means the Board of Governors of
the Federal Reserve System or any successor thereto.
"Fee Letter" means the letter dated November 5, 1996
from BABC to the Former Parent reflecting certain fees owed to
BABC in connection with this Agreement and the transactions
contemplated hereby, and accepted by the Former Parent and the
Borrower on that date.
"Financial Statements" means, according to the context
in which it is used, the financial statements referred to in
Section 8.6 or any other financial statements required to be
given to the Lenders pursuant to this Agreement.
"Fiscal Year" means the Borrower's fiscal year for
financial accounting purposes. The current Fiscal Year of the
Borrower will end on December 31, 1996.
"Fixed Charge Coverage Ratio" means, for any period,
the ratio of (a) Adjusted Net Earnings for such period, to
(b) the sum of the following: (i) total principal and interest
payments made or required to be made (without duplication) during
such period by the Parent, the Borrower and their Subsidiaries on
Debt for Borrowed Money plus any Letter of Credit Fees during
such period, (ii) Capital Expenditures net of asset sales and
(iii) accrued income taxes during such period.
"Form 10" means the Registration Statement on Form 10
(including the information Statement on Form 14C included therein
at the time of its effectiveness) filed by Borrower with the
Securities and Exchange Commission ("SEC") and declared effective
by the SEC on November 7, 1996.
"Former Parent" means Consolidated Freightways, Inc.
which may in the future be renamed CNF Transportation, Inc.
"Former Parent Obligations" has the meaning set forth
in Section 8.32.
"Funding Date" means the date on which a Borrowing
occurs.
"GAAP" means generally accepted accounting principles
set forth from time to time in the opinions and pronouncements of
the Accounting Principles Board and the American Institute of
Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board (or agencies with
similar functions of comparable stature and authority within the
U.S. accounting profession), which are applicable to the
circumstances as of the Closing Date.
"General Intangibles" means all of the Borrower's now
owned or hereafter arising, created or acquired general
intangibles, choses in action and causes of action and all other
intangible personal property of the Borrower of every kind and
nature (other than Accounts), including, without limitation, all
contract rights, Proprietary Rights, corporate or other business
records, inventions, designs, blueprints, plans, specifications,
patents, patent applications, trademarks, service marks, trade
names, trade secrets, goodwill, copyrights, computer software,
customer lists, registrations, licenses, franchises, tax refund
claims, any funds which may become due to the Borrower in
connection with the termination of any Plan or other employee
benefit plan or any rights thereto and any other amounts payable
to the Borrower from any Plan or other employee benefit plan,
rights and claims against carriers and shippers, rights to
indemnification, business interruption insurance and proceeds
thereof, property, casualty or any similar type of insurance and
any proceeds thereof, proceeds of insurance covering the lives of
key employees on which the Borrower is beneficiary, and any
letter of credit, guarantee, claim, security interest or other
security held by or granted to the Borrower.
"Governmental Authority" means any nation or
government, any state or other political subdivision thereof, any
central bank (or similar monetary or regulatory authority)
thereof, any entity exercising executive, legislative, judicial,
regulatory or administrative functions of or pertaining to
government, and any corporation or other entity owned or
controlled, through stock or capital ownership or otherwise, by
any of the foregoing.
"Guaranty" means, with respect to any Person, all
obligations of such Person which in any manner directly or
indirectly guarantee or assure, or in effect guarantee or assure,
the payment or performance of any indebtedness, dividend or other
obligations of any other Person (the "guaranteed obligations"),
or assure or in effect assure the holder of the guaranteed
obligations against loss in respect thereof, including, without
limitation, any such obligations incurred through an agreement,
contingent or otherwise: (a) to purchase the guaranteed
obligations or any property constituting security therefor;
(b) to advance or supply funds for the purchase or payment of the
guaranteed obligations or to maintain a working capital or other
balance sheet condition; or (c) to lease property or to purchase
any debt or equity securities or other property or services, but
excluding the endorsement for collection of checks received in
the ordinary course of business.
"Included Revenue Equipment" means all Revenue
Equipment other than Excluded Revenue Equipment.
"Initial Funding Date" means the date on which the
first Revolving Loan is made pursuant to this Agreement or the
first Letter of Credit is issued pursuant to this Agreement,
which date shall be substantially contemporaneous with the
consummation of the Distribution.
"Intercompany Accounts" means all assets and
liabilities, however arising, which are due to the Borrower from,
which are due from the Borrower to, or which otherwise arise from
any transaction by the Borrower with, any Affiliate.
"Intercreditor Agreement" means that certain
Intercreditor Agreement of even date herewith among the Former
Parent, certain of its Affiliates and the Agent.
"Interest Period" means, as to any LIBOR Revolving
Loan, the period commencing on the Funding Date of such Revolving
Loan or on the Conversion/ Continuation Date on which the
Revolving Loan is converted into or continued as a LIBOR
Revolving Loan, and ending on the date one, two, three or six
months thereafter as selected by the Borrower in its Notice of
Borrowing or Notice of Conversion/ Continuation; provided that:
(i) if any Interest Period would otherwise end on
a day that is not a Business Day, that Interest Period shall be
extended to the following Business Day unless the result of such
extension would be to carry such Interest Period into another
calendar month, in which event such Interest Period shall end on
the preceding Business Day;
(ii) any Interest Period pertaining to a LIBOR
Revolving Loan that 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 the
calendar month at the end of such Interest Period; and
(iii) no Interest Period shall extend beyond
the Stated Termination Date.
"Interest Rate" means each or any of the interest
rates, including the Default Rate, set forth in Section 3.1.
"Interline Accounts" means Accounts that are due from
other freight carriers.
"Inventory" means all of the Borrower's now owned and
hereafter acquired inventory, goods, merchandise, and other
tangible personal property, wherever located, to be furnished
under any contract of service or held for sale or lease, all
returned goods, raw materials, other materials and supplies of
any kind, nature or description which are or might be consumed in
the Borrower's business or used in connection with the packing,
shipping, advertising, selling or finishing of such goods,
merchandise and such other personal property, and all documents
of title or other documents representing them.
"IRS" means the Internal Revenue Service and any
Governmental Authority succeeding to any of its principal
functions under the Code.
"Landlord's Waiver" means an agreement substantially in
the form of Exhibit E hereto (with such changes thereto as may be
approved from time to time by the Agent) executed by a landlord
of any premises leased by the Borrower.
"Latest Projections" means: (a) on the Closing Date
and thereafter until the Agent receives new projections pursuant
to Section 7.2(f), the projections of the Borrower's financial
condition, results of operations, and cash flow, dated
September 9, 1996; and (b) thereafter, the projections most
recently received by the Agent pursuant to Section 7.2(f).
"L/C Issuer" means NationsBank of Texas, N.A. or any
Replacement L/C Issuer pursuant to the provisions of
Section 2.3(k).
"▇▇▇▇▇▇" means ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation, a
wholly-owned Subsidiary of the Parent.
"▇▇▇▇▇▇ Guaranty" means that certain Guaranty of even
date herewith executed by ▇▇▇▇▇▇ in favor of the Agent, the L/C
Issuer and the Lenders.
"▇▇▇▇▇▇ Security Agreement" means that certain Security
Agreement of even date herewith executed by ▇▇▇▇▇▇ securing
Leland's obligations to the Agent, the L/C Issuer and the Lenders
under the ▇▇▇▇▇▇ Guaranty.
"Lender" and "Lenders" have the meanings specified in
the introductory paragraph hereof and shall include the Agent to
the extent of any Agent Advance outstanding and BABC to the
extent of any BABC Loan outstanding; provided that no such Agent
Advance or BABC Loan shall be taken into account in determining
any Lender's Pro Rata Share.
"Letter of Credit" has the meaning specified in
Section 2.3(a).
"Letter of Credit Fee" has the meaning specified in
Section 3.6.
"LIBOR Rate" means, for any Interest Period, with
respect to LIBOR Revolving Loans comprising part of the same
Borrowing, the rate of interest per annum (rounded upward to the
next 1/1000th of 1.0%) determined by the Agent as follows:
LIBOR Rate =
LIBOR
1.00 - Eurodollar Reserve Percentage
Where,
"Eurodollar Reserve
Percentage" means for any day for any
Interest Period the maximum reserve
percentage (expressed as a decimal,
rounded upward to the next 1/100th of
1%) in effect on such day (whether or
not applicable to any Lender) under
regulations issued from time to time by
the Federal Reserve Board for
determining the maximum reserve
requirement (including any emergency,
supplemental or other marginal reserve
requirement) with respect to
Eurocurrency funding (currently referred
to as "Eurocurrency liabilities"); and
"LIBOR" means the rate of
interest per annum (rounded upward to
the next 1/16th of 1%) notified to the
Agent by Bank of America as the rate of
interest at which dollar deposits in the
approximate amount of the Revolving Loan
to be made or continued as, or converted
into, a LIBOR Revolving Loan and having
a maturity comparable to such Interest
Period would be offered by Bank of
America's applicable lending office to
major banks in the London eurodollar
market at approximately 11:00 a.m.
(London time) two Business Days prior to
the commencement of such Interest
Period.
"LIBOR Revolving Loan" means a Revolving Loan during
any period in which it bears interest based on the LIBOR Rate.
"Lien" means: (a) any interest in property securing an
obligation owed to, or a claim by, a Person other than the owner
of the property, whether such interest is based on the common
law, statute, or contract, and including without limitation, a
security interest, charge, claim, or lien arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, agreement, security agreement,
conditional sale or trust receipt or a lease, consignment or
bailment for security purposes; and (b) to the extent not
included under clause (a), any reservation, exception,
encroachment, easement, right-of-way, covenant, condition,
restriction, lease or other title exception or encumbrance
affecting property.
"Loan Account" means the loan account of the Borrower,
which account shall be maintained by the Agent.
"Loan Documents" means this Agreement, the
Intercreditor Agreement, the Patent and Trademark Agreements, the
Parent Guaranty, the Parent Security Agreement, the Parent Pledge
Agreement, the Stock Pledge Agreement, the ▇▇▇▇▇▇ Guaranty, the
▇▇▇▇▇▇ Security Agreement, the Blocked Account Agreement, the
Post-Closing Letter and any other agreements, instruments, and
documents heretofore, now or hereafter evidencing, securing,
guaranteeing or otherwise relating to the Obligations, the
Collateral, or any other aspect of the transactions contemplated
by this Agreement.
"Loan Parties" means, collectively, the Borrower, the
Parent, ▇▇▇▇▇▇ and all new domestic Subsidiaries which are formed
pursuant to Section 9.19; and, individually, any of the foregoing
Persons.
"Majority Lenders" means at anytime Lenders whose Pro
Rata shares aggregate two-thirds (2/3) or more of the Commitments
or, if no Commitments shall then be in effect, Lenders who hold
two-thirds (2/3) or more of the aggregate principal amount of the
Revolving Loans then outstanding.
"Margin Stock" means "margin stock" as such term is
defined in Regulation G, T, U or X of the Federal Reserve Board.
"Material Adverse Effect" means (a) a material adverse
change in, or a material adverse effect upon, the operations,
business, properties, condition (financial or otherwise) or
prospects of the Borrower or the Collateral; (b) a material
impairment of the ability of the Borrower to perform under any
Loan Document and to avoid any Event of Default; or (c) a
material adverse effect upon the legality, validity, binding
effect or enforceability against the Borrower of any material
provision of any Loan Document; provided, however, that the mere
occurrence of a strike shall not in and of itself constitute a
Material Adverse Effect, but the consequences of a strike may
cause a Material Adverse Effect.
"Maximum Rate" has the meaning specified in Section 3.3
"Maximum Revolver Amount" means $100,000,000 as such
amount may be reduced pursuant to Section 2.1(b).
"Maximum Revolver Equipment Advance" means $75,000,000.
"Multi-employer Plan" means a "multi-employer plan" as
defined in Section 4001(a)(3) of ERISA which is or was at any
time during the current year or the immediately preceding
five (5) plan years contributed to by the Borrower or any ERISA
Affiliate.
"NationsBank" means NationsBank of Texas, N.A.
"Net Amount of Eligible Accounts" means, at any time,
the gross amount of Eligible Accounts less: (a) sales, excise or
similar taxes; (b) returns, discounts, claims, credits and
allowances of any nature at any time issued, owing, granted,
outstanding, available or claimed; (c) reserves, as determined by
the Agent in the exercise of its reasonable credit judgment,
relating to Canadian exchange rate translation adjustments;
(d) reserves, as determined by the Agent in the exercise of its
reasonable credit judgment, to reflect the prebilled nature of
the Accounts created by using the pick-up date as the invoice
date rather than the delivery date; and (e) reserves, as
determined by the Agent in the exercise of its reasonable credit
judgment, relating to volume discounts, rebates, customer
refunds, short-pays, unapplied cash, barter credits and any other
adjustments regarding Accounts, as reflected on the Borrower's
general ledger system.
"Notice of Borrowing" has the meaning specified in
Section 2.2(b).
"Notice of Conversion/ Continuation" has the meaning
specified in Section 3.2(b).
"Obligations" means all present and future loans,
advances, liabilities, obligations, covenants, duties, and debts
owing by the Borrower to the Agent, the L/C Issuer and/or any
Lender, arising under or pursuant to this Agreement or any of the
other Loan Documents, whether or not evidenced by any note, or
other instrument or document, whether arising from an extension
of credit, opening of a letter of credit, acceptance, loan,
guaranty, indemnification or otherwise, whether direct or
indirect (including, without limitation, those acquired by
assignment from others, and any participation by the Agent, the
L/C Issuer and/or any Lender in the Borrower's debts owing to
others), absolute or contingent, due or to become due, primary or
secondary, as principal or guarantor, and including, without
limitation, all principal, interest, charges, expenses, fees,
attorneys' fees, filing fees and any other sums chargeable to the
Borrower hereunder or under any of the other Loan Documents.
"Obligations" includes, without limitation, (a) all debts,
liabilities, and obligations now or hereafter owing from the
Borrower to the Agent, the L/C Issuer and/or any Lender under or
in connection with the Letters of Credit and (b) all debts,
liabilities and obligations now or hereafter owing from the
Borrower to the Agent, the L/C Issuer and Lenders arising from or
related to ACH Transactions.
"Other Taxes" means any present or future stamp or
documentary taxes or any other excise or property taxes, charges
or similar levies which arise from any payment made hereunder or
from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or any other Loan Documents.
"Parent" shall mean Consolidated Freightways
Corporation, the sole shareholder of the Borrower.
"Parent Guaranty" means that certain Guaranty of even
date herewith executed by the Parent in favor of the Agent, the
L/C Issuer and the Lenders.
"Parent Pledge Agreement" means that certain Pledge
Agreement of even date herewith pledging all stock of the
Borrower and ▇▇▇▇▇▇ to the Agent for the benefit of the Lenders
to secure the obligations of the Parent under the Parent
Guaranty.
"Parent Security Agreement" means that certain Security
Agreement of even date herewith executed by the Parent securing
the Parent's obligations under the Parent Guaranty.
"Participant" means any Person who shall have been
granted the right by any Lender to participate in the financing
provided by such Lender under this Agreement, and who shall have
entered into a participation agreement in form and substance
satisfactory to such Lender.
"Patent and Trademark Agreements" means (i) the
Supplemental Security Agreement (Patents) and the Supplemental
Security Agreement (Trademarks), each dated as of the date
hereof, executed and delivered by the Borrower to the Agent to
evidence and perfect the Agent's Liens in the Borrower's present
and future patents, trademarks, and related licenses and rights
and (ii) the Supplemental Security Agreement (Patents) and the
Supplemental Security Agreement (Trademarks), each dated as of
the date hereof, executed and delivered by the Parent to the
Agent to evidence and perfect the liens granted to the Agent in
the Parent's present and future patents, trademarks, and related
licenses and rights.
"Payment Account" means each blocked bank account
established pursuant to Section 6.9, to which the funds of the
Borrower (including, without limitation, proceeds of Accounts and
other Collateral) are deposited or credited, and which is
maintained in the name of the Agent or the Borrower, as the Agent
may determine, on terms acceptable to the Agent.
"PBGC" means the Pension Benefit Guaranty Corporation
or any Governmental Authority succeeding to the functions
thereof.
"Pending Revolving Loans" means, at any time, the
aggregate principal amount of all Revolving Loans requested in
any outstanding Notice(s) of Borrowing received by the Agent
which have not yet been advanced.
"Pension Plan" means a pension plan (as defined in
Section 3(2) of ERISA) subject to Title IV of ERISA which the
Borrower sponsors, maintains, or to which it makes, is making, or
is obligated to make contributions, or in the case of a Multiple-
employer Plan has made contributions at any time during the
immediately preceding five (5) plan years.
"Permitted Liens" means:
(a) Liens for taxes not delinquent;
(b) statutory Liens for taxes in an amount not to
exceed $5,000,000 provided that the payment of such taxes which
are due and payable is being contested in good faith and by
appropriate proceedings diligently pursued and as to which
adequate financial reserves have been established on Borrower's
books and records and a stay of enforcement of any such Lien is
in effect;
(c) the Agent's Liens;
(d) deposits under worker's compensation,
unemployment insurance, social security and other similar laws,
or to secure the performance of bids, tenders or contracts (other
than for the repayment of borrowed money) or to secure indemnity,
performance or other similar bonds for the performance of bids,
tenders or contracts (other than for the repayment of borrowed
money) or to secure statutory obligations (other than liens
arising under ERISA or Environmental Liens) or surety or appeal
bonds, or to secure indemnity, performance or other similar bonds
in the ordinary course of business;
(e) Liens securing the claims or demands of
materialmen, mechanics, carriers, warehousemen, landlords and
other like Persons, provided that the payment thereof is not at
the time required by Section 9.1;
(f) reservations, exceptions, encroachments,
easements, rights of way, covenants running with the land, and
other similar title exceptions or encumbrances affecting any Real
Estate; provided that they do not in the aggregate materially
detract from the value of the Real Estate or materially interfere
with its use in the ordinary conduct of the Borrower's business;
(g) judgment and other similar Liens arising in
connection with court proceedings, provided that (A) the
existence of such Liens is being contested in good faith and by
proper proceedings diligently pursued, (B) reserves or other
appropriate provision, if any, as are required by GAAP have been
made therefor, (C) a stay of enforcement of any such Liens is in
effect, (D) the priority of any such Liens is subordinate to that
of the Agent's Liens, and (E) the existence of any judgment or
court proceedings upon which such Liens are based does not
otherwise constitute an Event of Default under this Agreement;
(h) Liens on Excluded Revenue Equipment;
(i) Liens on the Real Estate described in
Section 8.32 to the extent permitted pursuant to Section 8.32 and
Excluded Property;
(j) purchase money security interests of sellers
or financing entities in connection with Capital Expenditures
permitted under Section 9.21; and
(k) Liens in existence on the date of this
Agreement which are set forth in Schedule 8.12.
"Person" means any individual, sole proprietorship,
partnership, joint venture, trust, unincorporated organization,
association, corporation, Governmental Authority, or any other
entity.
"Plan" means an employee benefit plan (as defined in
Section 3(3) of ERISA) which the Borrower sponsors or maintains
or to which the Borrower makes, is making, or is obligated to
make contributions and includes any Pension Plan.
"Prior L/C Issuer" has the meaning specified in
Section 2.3(k).
"Pro Rata Share" means, with respect to a Lender, a
fraction (expressed as a percentage), the numerator of which is
the amount of such Lender's Commitment and the denominator of
which is the sum of the amounts of all of the Lenders'
Commitments.
"Property" means any interest in any kind of property
or asset, whether real, personal or mixed, or tangible or
intangible.
"Proprietary Rights" means, with respect to a Person,
all now owned and hereafter arising or acquired: licenses,
franchises, permits, patents, patent rights, copyrights, works
which are the subject matter of copyrights, trade secrets, other
proprietary information or materials, trademarks, service marks,
trade names, trade styles, patent, trademark and service ▇▇▇▇
applications, and other intellectual property or proprietary
rights and all licenses and rights related to any of the
foregoing, including, without limitation, those patents,
trademarks, service marks, trade names and copyrights set forth
on Schedule 8.13 hereto, and all other rights under any of the
foregoing, all extensions, renewals, reissues, divisions,
continuations, and continuations-in-part of any of the foregoing,
and all rights to ▇▇▇ for past, present and future infringement
of any of the foregoing, in each case whether owned, licensed to,
or otherwise held by such Person, whether now held or hereafter
arising or acquired.
"Real Estate" means all of the present and future
interests of any Person, as owner, lessee, or otherwise, in real
property, including, without limitation, any interest arising
from an option to purchase or lease any such real property.
"Reduction" has the meaning specified in
Section 2.1(b).
"Release" means a release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal,
leaching or migration of a Contaminant into the indoor or outdoor
environment or into or out of any Real Estate or other property
in violation of any Environmental Law, including the movement of
Contaminants through or in the air, soil, surface water,
groundwater or Real Estate or other property.
"Reportable Event" means, any of the events set forth
in Section 4043(b) of ERISA or the regulations thereunder, other
than any such event for which the 30-day notice requirement under
ERISA has been waived in regulations issued by the PBGC.
"Required Lenders" means at any time Lenders whose Pro
Rata Shares aggregate more than fifty percent (50%) of the
Commitments or, if no Commitments shall then be in effect,
Lenders who hold more than fifty percent (50%) of the aggregate
principal amount of the Revolving Loans then outstanding.
"Requirement of Law" means, as to any Person, any law
(statutory or common), treaty, rule or regulation or
determination of an arbitrator or of a Governmental Authority, in
each case applicable to or binding upon the Person or any of its
property or to which the Person or any of its property is
subject.
"Replacement L/C Issuer" has the meaning specified in
Section 2.3(k).
"Responsible Officer" means the chairman, the chief
executive officer, the president, the chief financial officer,
the treasurer and the controller of the Borrower, or any other
officer having substantially the same authority and
responsibility; or, with respect to compliance with financial
covenants and the preparation of the Borrowing Base Certificate,
the chief financial officer, treasurer, assistant treasurer,
controller, or director of financial accounting of the Borrower,
or any other officer having substantially the same authority and
responsibility.
"Restricted Investment" means any acquisition of
property by a Person in exchange for cash or other property,
whether in the form of an acquisition of stock, debt, or other
indebtedness or obligation, or the purchase or acquisition of any
other property, or a loan, advance, capital contribution, or
subscription, except acquisitions of the following: (a) goods
held for sale or lease or to be used by a Person in the ordinary
course of business; (b) current assets arising from the sale or
lease of goods or the rendition of services in the ordinary
course of business of a Person; and (c) other investments, so
long as any such investment is materially consistent with the
Borrower's investment policy guidelines as approved from time to
time by the Board of Directors of the Borrower (a copy of the
version of such guidelines as of the date of this Agreement
having been delivered to each Lender); provided, that any change
from the guidelines previously submitted to the Lenders shall be
submitted to the Agent for review and approval and shall not
materially adversely affect the Lenders.
"Restricted Payments" means, in respect of any
corporation: (a) the payment or making of any dividend or other
distribution of property in respect of capital stock (or any
options or warrants for such stock) of such corporation, other
than distributions in capital stock (or any options or warrants
for such stock) of the same class; or (b) the redemption or other
acquisition of any capital stock (or any options or warrants for
such stock) of such corporation.
"Revenue Equipment" means Equipment owned by the
Borrower covered by a certificate of title, which Equipment is
utilized in the ordinary course of the Borrower's business.
"Revenue Equipment Advance Rate" means seventy-five
percent (75%), provided, however, that the Revenue Equipment
Advance Rate shall be reduced to sixty-five percent (65%) on the
first Anniversary Date and to fifty-five percent (55%) on the
second Anniversary Date, and provided, further, that so long as
no Default or Event of Default exists, upon receipt by the Agent
of a new appraisal pursuant to Section 6.5 establishing a new
Appraised Value of the Revenue Equipment, the Revenue Equipment
Advance Rate shall be restored to seventy-five percent (75%),
with such Revenue Equipment Advance Rate thereafter being reduced
to sixty-five percent (65%) and fifty-five percent (55%),
respectively, on the first and second anniversary dates of the
updated Appraised Value of the Revenue Equipment.
"Revolving Loans" has the meaning specified in
Section 2.2.
"Solvent" means when used with respect to any Person
that (a) the fair value of all its assets is in excess of the
total amount of its debts (including contingent liabilities);
(b) it is able to pay its debts as they mature; (c) it does not
have unreasonably small capital for the business in which it is
engaged or for any business or transaction in which it is about
to engage; and (d) it is not "insolvent" as such term is defined
in Section 101(32) of the Bankruptcy Code.
"Stock Pledge Agreement" means that certain
Supplemental Security Agreement (Stock Pledge) executed by the
Borrower in favor of the Agent for the benefit of the Lenders,
confirming the pledge of 65% of the stock of Canadian
Freightways.
"Stated Termination Date" means January 2, 2000.
"Subsidiary" of a Person means any corporation,
association, partnership, joint venture or other business entity
of which more than fifty percent (50%) of the voting stock or
other equity interests (in the case of Persons other than
corporations), is owned or controlled directly or indirectly by
the Person, or one or more of the Subsidiaries of the Person, or
a combination thereof. Unless the context otherwise clearly
requires, references herein to a "Subsidiary" refer to a
Subsidiary of any of the Loan Parties.
"Supporting Letter of Credit" has the meaning set forth
in Section 2.3(j).
"Surviving Indemnities" means any Obligations in the
nature of an indemnity or hold harmless by the Borrower or any
other Loan Party in favor of the Agent, the L/C Issuer and/or any
Lender, arising under or pursuant to this Agreement or any of the
other Loan Documents, which by its terms survives the latest of
(the "Cut-off Date"):
(i) the termination of this Agreement,
(ii) cancellation of all Letters of Credit, and
(iii) the payment of all principal, interest,
prepayment penalties, fees and all other
Obligations (not in the nature of an
indemnity or hold harmless) due at the time
of such payment under this Agreement and the
Loan Documents;
provided that there shall be excluded from such indemnity or hold
harmless Obligations all amounts that are due and payable
thereunder upon the Cutoff Date.
"Synthetic Leases" means (i) generally, a lease (and
related documents) entered into in connection with the financing
of equipment which qualifies as an operating lease for accounting
purposes but which permits the lessee to be treated as the owner
of the equipment for tax purposes, and (ii) specifically, each of
the synthetic leases described in the following sentence. As of
the date of this Agreement, (x) Borrower is the lessee under a
synthetic lease entered into on or about December 22, 1995 with
ABN AMRO Bank N.V. as agent and (y) Borrower, together with
certain Subsidiaries of Former Parent, are lessees under a
synthetic lease entered into on or about September 30, 1994 with
BankAmerica Leasing & Capital Corp. as agent.
"Taxes" means any and all present or future taxes,
levies, imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, in the case of each
Lender, the L/C Issuer and the Agent, such taxes (including
income taxes or franchise taxes) as are imposed on or measured by
each Lender's net income by the jurisdiction (or any political
subdivision thereof) under the laws of which such Lender, the L/C
Issuer or the Agent, as the case may be, is organized or
maintains a lending office.
"Termination Date" means the earliest to occur of
(i) the Stated Termination Date, (ii) the date the Total Facility
is terminated either by the Borrower pursuant to Section 4.2 or
by the Majority Lenders pursuant to Section 11.2, and (iii) the
date this Agreement is otherwise terminated for any reason
whatsoever.
"Total Facility" has the meaning specified in
Section 2.1(a).
"Transition Agreements" mean those certain "Transition
Documents" as defined in the Form 10.
"Triggering Event" means the occurrence of any one of
the following events: (a) an Event of Default, (b) Availability
is $50,000,000 or less, (c) the average daily Dollar amount of
Revolving Loans outstanding for the immediately preceding thirty
(30) day period exceeds $15,000,000, or (d) the aggregate Dollar
amount of Revolving Loans outstanding on any date exceeds
$25,000,000.
"UCC" means the Uniform Commercial Code (or any
successor statute) of the State of California or of any other
state the laws of which are required by Section 9-103 thereof to
be applied in connection with the issue of perfection of security
interests.
"Unfunded Pension Liability" means the excess of a
Pension Plan's benefit liabilities under Section 4001(a)(16) of
ERISA, over the current value of that Plan's assets, determined
in accordance with the assumptions used for funding the Pension
Plan pursuant to Section 412 of the Code for the applicable plan
year except for a Multi-employer Plan it means the share of
unfunded vested benefits allocable to the Borrower and its ERISA
Affiliates.
"Unrelated Person" means any Person other than (a) a
Subsidiary of the Parent or (b) an employee stock ownership plan
or other employee benefit plan covering the employees of the
Parent or its Subsidiaries.
"Unused Letter of Credit Facility" means an amount
equal to $150,000,000 minus the sum of (a) the aggregate undrawn
amount of all outstanding Letters of Credit plus (b) the
aggregate unpaid reimbursement obligations with respect to all
Letters of Credit, as such amount may be adjusted pursuant to
Section 2.1(b).
"Unused Line Fee" has the meaning specified in
Section 3.5.
1.2 Accounting Terms. Any accounting term used in this
Agreement shall have, unless otherwise specifically provided
herein, the meaning customarily given in accordance with GAAP,
and all financial computations hereunder shall be computed,
unless otherwise specifically provided herein, in accordance with
GAAP as consistently applied and using the same method for
inventory valuation as used in the preparation of the Financial
Statements.
1.3 Other Terms. All other undefined terms contained in
this Agreement shall, unless the context indicates otherwise,
have the meanings provided for by the UCC to the extent the same
are used or defined therein. Wherever appropriate in the
context, terms used herein in the singular also include the
plural, and vice versa, and each masculine, feminine, or neuter
pronoun shall also include the other genders.
1.4 Other Interpretive Provisions.
(a) The words "hereof," "herein," "hereunder" and
similar words refer to this Agreement as a whole and not to any
particular provision of this Agreement; and Subsection, Section,
Schedule and Exhibit references are to this Agreement unless
otherwise specified.
(b) (i) The term "documents" includes any and all
instruments, documents, agreements, certificates, indentures,
notices and other writings, however evidenced.
(ii) The term "including" is not limiting and
means "including without limitation."
(iii) In the computation of periods of time
from a specified date to a later specified date, the word "from"
means "from and including," the words "to" and "until" each mean
"to but excluding" and the word "through" means "to and
including."
(c) Unless otherwise expressly provided herein, (i)
references to agreements (including this Agreement) and other
contractual instruments shall be deemed to include all subsequent
amendments and other modifications thereto, but only to the
extent such amendments and other modifications are not prohibited
by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all
statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or
regulation.
(d) The captions and headings of this Agreement are
for convenience of reference only and shall not affect the
interpretation of this Agreement.
(e) This Agreement and other Loan Documents may use
several different limitations, tests or measurements to regulate
the same or similar matters. All such limitations, tests and
measurements are cumulative and shall each be performed in
accordance with their terms.
(f) This Agreement and the other Loan Documents are
the result of negotiations among and have been reviewed by
counsel to the Agent, the L/C Issuer, the Lenders, each Loan
Party and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders, the
L/C Issuer or the Agent merely because of the Agent's, the L/C
Issuer's or Lenders' involvement in their preparation.
ARTICLE 2
LOANS AND LETTERS OF CREDIT
2.1 Credit Facility.
(a) Total Facility. Subject to all of the terms and
conditions of this Agreement, the Lenders severally agree to make
available a total credit facility of up to $225,000,000 (as such
amount may be reduced from time to time pursuant to
Section 2.1(b), the "Total Facility") for the Borrower's use from
time to time during the term of this Agreement. The Total
Facility shall be comprised of a revolving line of credit
consisting of revolving loans and letters of credit, as described
in Sections 2.2 and 2.3.
(b) Permanent Reductions. The Borrower shall have the
right, at any time from time to time, without premium or penalty,
to permanently reduce the Total Facility and the Commitments
(each a "Reduction"), and the Commitment of each Lender shall be
reduced by its Pro Rata Share of each Reduction, if all of the
following conditions are met as to each requested Reduction:
(i) The Borrower shall give the Agent at least
five (5) days' prior written notice of the requested
Reduction;
(ii) The aggregate amount of such Reduction and
all prior Reductions shall not exceed $25,000,000;
(iii) Each requested Reduction must be in an
amount not less than $5,000,000 or that is an integral
multiple of $5,000,000 in excess thereof;
(iv) The requested Reduction shall not cause the
Availability to be exceeded;
(v) The amount of each requested Reduction shall
be applied at the option of the Borrower (as designated to
the Agent in the written notice required under clause (i)
above) to reduce (A) the Maximum Revolver Amount, (B) the
Unused Letter of Credit Facility, or (C) any combination
thereof, provided, that, each Reduction in (A) or (B) shall:
(x) be in an amount of $5,000,000 or an integral multiple
thereof, (y) not cause the Maximum Revolver Amount, if so
reduced, to be less than the sum of the unpaid balance of
all Revolving Loans at such time and the aggregate amount of
Pending Loans at such time; and (z) not cause the Unused
Letter of Credit Facility, if so reduced, to be less than
the sum of the aggregate undrawn amount of all letters of
credit at such time and the aggregate amount of any unpaid
reimbursement obligations in respect of Letters of Credit at
such time.
2.2 Revolving Loans.
(a) Amounts. Subject to the satisfaction of the
conditions precedent set forth in Article 10, each Lender
severally agrees, upon the Borrower's request from time to time
on any Business Day during the period from the Initial Funding
Date to the Termination Date, to make revolving loans (the
"Revolving Loans") to the Borrower, in amounts not to exceed
(except for BABC with respect to BABC Loans or Agent Advances)
such Lender's Pro Rata Share of the lesser of (i) the Maximum
Revolver Amount and (ii) the Availability. All of the Lenders
acting in concert, however, in their discretion, may elect to
make Revolving Loans in excess of the Maximum Revolver Amount or
the Availability on one or more occasions, but if they do so,
neither the Agent nor the Lenders shall be deemed thereby to have
changed the limits of the Maximum Revolver Amount or the
Availability or to be obligated to exceed such limits on any
other occasion. If the Aggregate Revolver Outstandings exceeds
the Availability (with Availability for this purpose calculated
as if the Aggregate Revolver Outstandings were zero) or if the
Revolving Loans exceed the Maximum Revolver Amount, the Lenders
may refuse to make or otherwise restrict the making of Revolving
Loans as the Lenders determine until such excess has been
eliminated, subject to the Agent's authority, in its sole
discretion, to make Agent Advances pursuant to the terms of
Section 2.2(i).
(b) Procedure for Borrowing.
(1) Each Borrowing shall be made upon the
Borrower's irrevocable written notice delivered to the Agent in
the form of a Notice of Borrowing substantially in the form of
Exhibit B (each, a "Notice of Borrowing") (which must be received
by the Agent prior to 10:00 a.m. (Pacific time) (i) three
Business Days prior to the requested Funding Date, in the case of
LIBOR Revolving Loans and (ii) no later than 10:00 a.m. (Pacific
time) on the requested Funding Date, in the case of Base Rate
Revolving Loans, specifying:
(A) the amount of the Borrowing (which shall
be in an amount not less than $2,000,000 or that is in an
integral multiple of $1,000,000 in excess thereof in the
case of LIBOR Revolving Loans);
(B) the requested Funding Date, which shall
be a Business Day;
(C) whether the Revolving Loans requested
are to be Base Rate Revolving Loans or LIBOR Revolving
Loans; and
(D) the duration of the Interest Period if
the requested Revolving Loans are to be LIBOR Revolving
Loans. If the Notice of Borrowing fails to specify the
duration of the Interest Period for any Borrowing comprised
of LIBOR Revolving Loans, such Interest Period shall be one
month;
provided, however, that with respect to the Borrowing to be made
on the Initial Funding Date, such Borrowings will consist of Base
Rate Revolving Loans only.
(2) With respect to any request for Base Rate
Revolving Loans, in lieu of delivering the above-described Notice
of Borrowing the Borrower may give the Agent telephonic notice of
such request by the required time, with such telephonic notice to
be confirmed in writing within 24 hours of the giving of such
notice but the Agent shall be entitled to rely on the telephonic
notice in making such Revolving Loans.
(c) Reliance upon Authority. On or prior to the
Initial Funding Date and thereafter prior to any change with
respect to any of the information contained in the following
clauses (i) and (ii), the Borrower shall deliver to the Agent a
writing setting forth (i) the account of the Borrower to which
the Agent is authorized to transfer the proceeds of the Revolving
Loans requested pursuant to this Section 2.2, and (ii) the names
of the persons authorized to request Revolving Loans on behalf of
the Borrower, and shall provide the Agent with a specimen
signature of each such person. The Agent shall be entitled to
rely conclusively on such officer's authority to request
Revolving Loans on behalf of the Borrower, the proceeds of which
are to be transferred to any of the accounts specified by the
Borrower pursuant to the immediately preceding sentence, until
the Agent receives written notice to the contrary. The Agent
shall have no duty to verify the identity of any individual
representing him or herself as one of the officers authorized by
the Borrower to make such requests on its behalf.
(d) No Liability. The Agent shall not incur any
liability to the Borrower as a result of acting upon any notice
referred to in Sections 2.2(b) and (c), which notice the Agent
believes in good faith to have been given by an officer duly
authorized by the Borrower to request Revolving Loans on its
behalf or for otherwise acting in good faith under this
Section 2, and the crediting of Revolving Loans to the Borrower's
deposit account, or transmittal to such Person as the Borrower
shall direct, shall conclusively establish the obligation of the
Borrower to repay such Revolving Loans as provided herein.
Notwithstanding any provision in this Agreement to the contrary,
the aggregate amount of all BABC Loans at any time outstanding
shall not exceed $10,000,000.
(e) Notice Irrevocable. Any Notice of Borrowing (or
telephonic notice in lieu thereof) made pursuant to
Section 2.2(b) shall be irrevocable and the Borrower shall be
bound to borrow the funds requested therein in accordance
therewith.
(f) Agent's Election. Promptly after receipt of a
Notice of Borrowing (or telephonic notice in lieu thereof)
pursuant to Section 2.2(b), the Agent shall elect, in its
discretion, (i) to have the terms of Section 2.2(g) apply to such
requested Borrowing, or (ii) to request BABC to make a BABC Loan
pursuant to the terms of Section 2.2(h) in the amount of the
requested Borrowing; provided, however, that if BABC declines in
its sole discretion to make a BABC Loan pursuant to
Section 2.2(h), or if the requested borrowing is for a LIBOR
Revolving Loan, the Agent shall elect to have the terms of
Section 2.2(g) apply to such requested Borrowing.
(g) Making of Revolving Loans.
(i) In the event that the Agent shall elect to
have the terms of this Section 2.2(g) apply to a requested
Borrowing as described in Section 2.2(f), then promptly after
receipt of a Notice of Borrowing or telephonic notice pursuant to
Section 2.2(b), the Agent shall notify the Lenders by telecopy,
telephone or other similar form of transmission, of the requested
Borrowing. Each Lender shall make the amount of such Lender's
Pro Rata Share of the requested Borrowing available to the Agent
in same day funds, to such account of the Agent as the Agent may
designate, not later than 12:00 p.m., (Pacific time) on the
Funding Date applicable thereto. After the Agent's receipt of
the proceeds of such Revolving Loans, upon satisfaction of the
applicable conditions precedent set forth in Article 10, the
Agent shall use its best efforts to make the proceeds of such
Revolving Loans available to the Borrower on the applicable
Funding Date, no later than 2:00 p.m. (Pacific time), by
transferring same day funds equal to the proceeds of such
Revolving Loans received by the Agent to the account of the
Borrower, designated in writing by the Borrower and acceptable to
the Agent; provided, however, that the amount of Revolving Loans
so made on any date shall in no event result in (i) the Maximum
Revolver Amount or (ii) the Availability being exceeded on such
date.
(ii) Unless the Agent receives notice from a
Lender on or prior to the Initial Funding Date or, with respect
to any Borrowing after the Initial Funding Date, at least one
Business Day prior to the date of such Borrowing, that such
Lender will not make available as and when required hereunder to
the Agent for the account of the Borrower the amount of that
Lender's Pro Rata Share of the Borrowing, the Agent may assume
that each Lender has made such amount available to the Agent in
immediately available funds on the Funding Date and the Agent may
(but shall not be so required), in reliance upon such assumption,
make available to the Borrower on such date a corresponding
amount. If and to the extent any Lender shall not have made its
full amount available to the Agent in immediately available funds
and the Agent in such circumstances has made available to the
Borrower such amount, that Lender shall on the Business Day
following such Funding Date make such amount available to the
Agent, together with interest at the Federal Funds Rate for each
day during such period. A notice of the Agent submitted to any
Lender with respect to amounts owing under this subsection shall
be conclusive, absent manifest error. If such amount is so made
available, such payment to the Agent shall constitute such
Lender's Revolving Loan on the date of Borrowing for all purposes
of this Agreement. If such amount is not made available to the
Agent on the Business Day following the Funding Date, the Agent
will notify the Borrower of such failure to fund and, upon demand
by the Agent, the Borrower shall pay such amount to the Agent for
the Agent's account, together with interest thereon for each day
elapsed since the date of such Borrowing, at a rate per annum
equal to the Interest Rate applicable at the time to the
Revolving Loans comprising such Borrowing. The failure of any
Lender to make any Revolving Loan on any Funding Date (any such
Lender, prior to the cure of such failure, being hereinafter
referred to as a "Defaulting Lender") shall not relieve any other
Lender of any obligation hereunder to make a Revolving Loan on
such Funding Date, but no Lender shall be responsible for the
failure of any other Lender to make the Revolving Loan to be made
by such other Lender on any Funding Date.
(iii) The Agent shall not be obligated to
transfer to a Defaulting Lender any payments made by Borrower to
the Agent for the Defaulting Lender's benefit; nor shall a
Defaulting Lender be entitled to the sharing of any payments
hereunder. Amounts payable to a Defaulting Lender shall instead
be paid to or retained by the Agent. The Agent may hold and, in
its discretion, re-lend to Borrower the amount of all such
payments received or retained by it for the account of such
Defaulting Lender. Any amounts so re-lent to the Borrower shall
bear interest at the applicable Interest Rate and for all other
purposes of this Agreement shall be treated as if they were
Revolving Loans, provided, however, that for purposes of voting
or consenting to matters with respect to the Loan Documents and
determining Pro Rata Shares, such Defaulting Lender shall be
deemed not to be a "Lender" and such Lender's Commitment shall be
deemed to be zero (-0-). Until a Defaulting Lender cures its
failure to fund its Pro Rata Share of any Borrowing (A) such
Defaulting Lender shall not be entitled to any portion of the
Unused Line Fee, the Letter of Credit Fee or any early
termination fee under Section 4.2 and (B) the Unused Line Fee,
the Letter of Credit Fee and any such early termination fee shall
accrue in favor of the Lenders which have funded their respective
Pro Rata Shares of such requested Borrowing, shall be allocated
among such performing Lenders ratably based upon their relative
Commitments, and shall be calculated based upon the average
amount by which the aggregate Commitments of such performing
Lenders exceeds the sum of outstanding Revolving Loans and the
undrawn face amount of all outstanding Letters of Credit. This
section shall remain effective with respect to such Defaulting
Lender until such time as the Defaulting Lender shall no longer
be in default of any of its obligations under this Agreement.
The terms of this Section shall not be construed to increase or
otherwise affect the Commitment of any Lender, or relieve or
excuse the performance by Borrower of its duties and obligations
hereunder.
(h) Making of BABC Loans.
(i) In the event the Agent shall elect, with the
consent of BABC, to have the terms of this Section 2.2(h) apply
to a requested Borrowing as described in Section 2.2(f), BABC
shall make a Revolving Loan in the amount of such Borrowing (any
such Revolving Loan made solely by BABC pursuant to this
Section 2.2(h) being referred to as a "BABC Loan" and such
Revolving Loans being referred to collectively as "BABC Loans")
available to the Borrower on the Funding Date applicable thereto
by transferring same day funds to an account of the Borrower,
designated in writing by the Borrower and acceptable to the
Agent. Each BABC Loan is a Revolving Loan hereunder and shall be
subject to all the terms and conditions applicable to other
Revolving Loans except that all payments thereon shall be payable
to BABC solely for its own account (and for the account of the
holder of any participation interest with respect to such
Revolving Loan). The Agent shall not request BABC to make any
BABC Loan if (i) the Agent shall have received written notice
from any Lender, or otherwise has actual knowledge, that one or
more of the applicable conditions precedent set forth in
Article 10 will not be satisfied on the requested Funding Date
for the applicable Borrowing, or (ii) the requested Borrowing
would result in (A) the Maximum Revolver Amount or (B) the
Availability being exceeded on such Funding Date. BABC shall not
otherwise be required to determine whether the applicable
conditions precedent set forth in Article 10 have been satisfied
or the requested Borrowing would exceed the Availability of the
Borrower on the Funding Date applicable thereto prior to making,
in its sole discretion, any BABC Loan.
(ii) The BABC Loans shall be repayable on demand
and secured by the Collateral, shall constitute Revolving Loans
and Obligations hereunder, and shall bear interest at the rate
applicable to the Revolving Loans from time to time (including,
without limitation, the Interest Rate increase specified in
clause (A) of the proviso to Section 3.1(a) as to any BABC Loan
made under the circumstances described in such clause).
(i) Agent Advances.
(i) Subject to the limitations set forth in the
provisos contained in this Section 2.2(i), the Agent is hereby
authorized by the Borrower and the Lenders, from time to time in
the Agent's sole discretion, (1) after the occurrence of a
Default or an Event of Default, or (2) at any time that any of
the other applicable conditions precedent set forth in Article 10
have not been satisfied, to make Revolving Loans to the Borrower
on behalf of the Lenders which the Agent, in its reasonable
business judgment, deems necessary or desirable (A) to preserve
or protect the Collateral, or any portion thereof, (B) to enhance
the likelihood of, or maximize the amount of, repayment of the
Revolving Loans and other Obligations, or (C) to pay any other
amount chargeable to the Borrower pursuant to the terms of this
Agreement, including, without limitation, costs, fees and
expenses as described in Section 15.7 (any of the advances
described in this Section 2.2(i) being hereinafter referred to as
"Agent Advances"); provided, that the Required Lenders may at any
time revoke the Agent's authorization contained in this
Section 2.2(i) to make Agent Advances, any such revocation to be
in writing and to become effective prospectively upon the Agent's
receipt thereof; provided, further, that Agent Advances made in
excess of the Availability or the Maximum Revolver Amount shall
be made to preserve or protect the Collateral and shall not
exceed $5,000,000 in the aggregate outstanding at any time or
result in the Total Facility being exceeded.
(ii) The Agent Advances shall be repayable on
demand and secured by the Collateral, shall constitute Revolving
Loans and Obligations hereunder, and shall bear interest at the
rate applicable to the Revolving Loans from time to time. The
Agent shall notify each Lender in writing of each such Agent
Advance.
(j) Settlement. It is agreed that each Lender's
funded portion of the Revolving Loan is intended by the Lenders
to be equal at all times to such Lender's Pro Rata Share of the
outstanding Revolving Loans. Notwithstanding such agreement, the
Agent, BABC, and the other Lenders agree (which agreement shall
not be for the benefit of or enforceable by the Borrower) that in
order to facilitate the administration of this Agreement and the
other Loan Documents, settlement among them as to the Revolving
Loans, the BABC Loans and the Agent Advances shall take place on
a periodic basis in accordance with the following provisions:
(i) The Agent shall request settlement
("Settlement") with the Lenders on a weekly basis, or on a more
frequent basis if so determined by the Agent, (1) on behalf of
BABC, with respect to each outstanding BABC Loan, (2) for itself,
with respect to each Agent Advance, and (3) with respect to
collections received, in each case, by notifying the Lenders of
such requested Settlement by telecopy, telephone or other similar
form of transmission, of such requested Settlement, no later than
10:00 a.m. (Pacific time) on the date of such requested
Settlement (the "Settlement Date"). Each Lender (other than
BABC, in the case of BABC Loans) shall make the amount of such
Lender's Pro Rata Share of the outstanding principal amount of
the BABC Loans and Agent Advances with respect to which
Settlement is requested available to the Agent, for itself or for
the account of BABC, in same day funds, to such account of the
Agent as the Agent may designate, not later than 1:00 p.m.
(Pacific time), on the Settlement Date applicable thereto,
regardless of whether the applicable conditions precedent set
forth in Article 10 have then been satisfied. Such amounts made
available to the Agent shall be applied against the amounts of
the applicable BABC Loan or Agent Advance and, together with the
portion of such BABC Loan or Agent Advance representing BABC's
Pro Rata Share thereof, shall constitute Revolving Loans of such
Lenders. If any such amount is not made available to the Agent
by any Lender on the Settlement Date applicable thereto, the
Agent shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the Federal Funds
Rate for the first three (3) days from and after the Settlement
Date and thereafter at the Interest Rate then applicable to the
Revolving Loans.
(ii) Notwithstanding the foregoing, not more than
one (1) Business Day after demand is made by the Agent (whether
before or after the occurrence of a Default or an Event of
Default and regardless of whether the Agent has requested a
Settlement with respect to a BABC Loan or Agent Advance), each
other Lender shall irrevocably and unconditionally purchase and
receive from BABC or the Agent, as applicable, without recourse
or warranty, an undivided interest and participation in such BABC
Loan or Agent Advance to the extent of such Lender's Pro Rata
Share thereof by paying to the Agent, in same day funds, an
amount equal to such Lender's Pro Rata Share of such BABC Loan or
Agent Advance. If such amount is not in fact made available to
the Agent by any Lender, the Agent shall be entitled to recover
such amount on demand from such Lender together with interest
thereon at the Federal Funds Rate for the first three (3) days
from and after such demand and thereafter at the Interest Rate
then applicable to the Revolving Loans.
(iii) From and after the date, if any, on
which any Lender purchases an undivided interest and
participation in any BABC Loan or Agent Advance pursuant to
subsection (ii) above, the Agent shall promptly distribute to
such Lender at such address as such Lender may request in
writing, such Lender's Pro Rata Share of all payments of
principal and interest and all proceeds of Collateral received by
the Agent in respect of such BABC Loan or Agent Advance.
(iv) Between Settlement Dates, the Agent, to the
extent no Agent Advances or BABC Loans are outstanding, may pay
over to BABC any payments received by the Agent, which in
accordance with the terms of this Agreement would be applied to
the reduction of the Revolving Loans, for application to BABC's
Pro Rata Share of the Revolving Loans. If, as of any Settlement
Date, collections received since the then immediately preceding
Settlement Date have been applied to BABC's Pro Rata Share of the
Revolving Loans other than to BABC Loans or Agent Advances, as
provided for in the previous sentence, BABC shall pay to the
Agent for the accounts of the Lenders, to be applied to the
outstanding Revolving Loans of such Lenders, an amount such that
each Lender shall, upon receipt of such amount, have, as of such
Settlement Date, its Pro Rata Share of the Revolving Loans.
During the period between Settlement Dates, BABC with respect to
BABC Loans, the Agent with respect to Agent Advances, and each
Lender with respect to the Revolving Loans other than BABC Loans
and Agent Advances, shall be entitled to interest at the
applicable rate or rates payable under this Agreement on the
actual average daily amount of funds employed by BABC, the Agent
and the other Lenders.
(k) Notation. The Agent shall record on its books the
principal amount of the Revolving Loans owing to each Lender,
including the BABC Loans owing to BABC, and the Agent Advances
owing to the Agent, from time to time. In addition, each Lender
is authorized, at such Lender's option, to note the date and
amount of each payment or prepayment of principal of such
Lender's Revolving Loans in its books and records, including
computer records, such books and records constituting rebuttably
presumptive evidence, absent manifest error, of the accuracy of
the information contained therein.
(l) Lenders' Failure to Perform. All Revolving Loans
(other than BABC Loans and Agent Advances) shall be made by the
Lenders simultaneously and in accordance with their Pro Rata
Shares. It is understood that (a) no Lender shall be responsible
for any failure by any other Lender to perform its obligation to
make any Revolving Loans hereunder, nor shall any Commitment of
any Lender be increased or decreased as a result of any failure
by any other Lender to perform its obligation to make any
Revolving Loans hereunder, (b) no failure by any Lender to
perform its obligation to make any Revolving Loans hereunder
shall excuse any other Lender from its obligation to make any
Revolving Loans hereunder, and (c) the obligations of each Lender
hereunder shall be several, not joint and several.
2.3 Letters of Credit.
(a) Agreement to Issue. Subject to the terms and
conditions of this Agreement and such other documents as may be
required under Section 2.3(c)(1), and in reliance upon the
representations and warranties of the Borrower herein set forth,
the L/C Issuer agrees to issue one or more stand-by or
documentary letters of credit (each such letter of credit, a
"Letter of Credit" and such letters of credit, collectively, the
"Letters of Credit") in accordance with this Section 2.3 from
time to time during the term of this Agreement. Notwithstanding
anything in this Agreement to the contrary, only the L/C Issuer
has any obligation to issue Letters of Credit.
(b) Amounts; Outside Expiration Date. The L/C Issuer
shall not have any obligation to issue any Letter of Credit at
any time: (1) if the maximum undrawn amount of the requested
Letter of Credit is greater than the Unused Letter of Credit
Facility at such time; (2) if the maximum undrawn amount of the
requested Letter of Credit and all commissions, fees, and charges
due from the Borrower in connection with the opening thereof
exceed the Availability at such time; or (3) if the expiration
date of the requested Letter of Credit is later than five (5)
days prior to the Stated Termination Date or more than
twelve (12) months from the date of issuance.
(c) Other Conditions. The obligation of the L/C
Issuer to issue any Letter of Credit is subject to the following
conditions precedent having been satisfied in a manner
satisfactory to the Agent and the L/C Issuer:
(1) The satisfaction of the applicable conditions
precedent contained in Article 10;
(2) The Borrower shall have delivered to the L/C
Issuer, at such times and in such manner as the L/C Issuer may
prescribe, an application in form and substance satisfactory to
the L/C Issuer and the Agent for the issuance of the Letter of
Credit and such other documents as may be required pursuant to
the terms thereof (including reimbursement documentation) and the
form and terms of the proposed Letter of Credit and such other
documentation shall be satisfactory to the Agent and the L/C
Issuer; and
(3) As of the date of issuance, no order of any
court, arbitrator or Governmental Authority shall purport by its
terms to enjoin or restrain the L/C Issuer from issuing letters
of credit of the type and in the amount of the proposed Letter of
Credit, and no law, rule or regulation applicable to the L/C
Issuer and no request or directive (whether or not having the
force of law) from any Governmental Authority with jurisdiction
over the L/C Issuer shall prohibit, or request that the L/C
Issuer refrain from, the issuance of letters of credit generally
or the issuance of such Letters of Credit.
In the event of any conflict between the terms and provisions of
this Agreement and any other agreement relating to the issuance
of Letters of Credit, the terms and provisions of this Agreement
shall control.
(d) Issuance of Letters of Credit.
(1) Request for Issuance. The Borrower shall
give each of the Agent and the L/C Issuer two (2) Business Days'
prior written notice of the Borrower's request for the issuance
of a Letter of Credit. Such notice shall be irrevocable and
shall specify the original face amount of the Letter of Credit
requested, the effective date (which date shall be a Business
Day) of issuance of such requested Letter of Credit, whether such
Letter of Credit may be drawn in a single or in partial draws,
the date on which such requested Letter of Credit is to expire
(which date shall be a Business Day), the purpose for which such
Letter of Credit is to be issued, and the beneficiary of the
requested Letter of Credit. The Borrower shall attach to such
notice the proposed form of the Letter of Credit that the L/C
Issuer is requested to issue.
(2) Responsibilities of the Agent; Issuance. The
Agent shall determine (such determination being subject to
verification by the L/C Issuer) as of the Business Day
immediately preceding the requested effective date of issuance of
the Letter of Credit set forth in the notice from the Borrower
pursuant to Section 2.3(d)(1), (i) the amount of the applicable
Unused Letter of Credit Facility and (ii) the Availability of the
Borrower as of such date. If (i) the undrawn amount of the
requested Letter of Credit is not greater than the applicable
Unused Letter of Credit Facility and (ii) the issuance of such
requested Letter of Credit and all commissions, fees, and charges
due from the Borrower in connection with the opening thereof
would not exceed the Availability of the Borrower, the Agent
shall notify the L/C Issuer to such effect and, subject to
satisfaction of all other conditions for issuance thereof, the
L/C Issuer shall issue the requested Letter of Credit on such
requested effective date of issuance.
(3) Notice of Issuance. Promptly after the
issuance of any Letter of Credit by the L/C Issuer, the L/C
Issuer shall give notice to the Agent of the issuance of such
Letter of Credit and the Agent shall in turn give such notice to
the Lenders.
(4) No Extensions or Amendment. The L/C Issuer
shall not be obligated to extend or amend any outstanding Letter
of Credit unless the requirements of this Section 2.3(d) are met
as though a new Letter of Credit were being requested and issued.
With respect to any Letter of Credit which contains any
"evergreen" or automatic renewal provision, each Lender shall be
deemed to have consented to any such extension or renewal unless
any such Lender shall have provided to the Agent and the L/C
Issuer, not less than 30 days prior to the last date on which the
L/C Issuer can in accordance with the terms of the applicable
Letter of Credit decline to extend or renew such Letter of
Credit, written notice that it declines to consent to any such
extension or renewal, provided, that if all of the requirements
of this Section 2.3 are met and no Default or Event of Default
exists, no Lender shall decline to consent to any such extension
or renewal.
(e) Payments Pursuant to Letters of Credit.
(1) Payment of Letter of Credit Obligations. The
Borrower agrees to reimburse the L/C Issuer for any draw under
any Letter of Credit immediately upon demand, and to pay the L/C
Issuer the amount of all other obligations and other amounts
payable to the L/C Issuer under or in connection with any Letter
of Credit immediately when due, irrespective of any claim,
setoff, defense or other right which the Borrower may have at any
time against the L/C Issuer or any other Person.
(2) Revolving Loans to Satisfy Reimbursement
Obligations. In the event that the L/C Issuer honors a draw
under such Letter of Credit and the Borrower shall not have
repaid such amount to the L/C Issuer pursuant to
Section 2.3(e)(1), the Agent shall, upon receiving notice of such
failure, notify each Lender of such failure, and each Lender
shall unconditionally pay to the Agent, for the account of such
L/C Issuer, as and when provided hereinbelow, an amount equal to
such Lender's Pro Rata Share of the amount of such payment in
Dollars and in same day funds. If the Agent so notifies the
Lenders prior to 11:00 a.m. (Pacific time) on any Business Day,
each Lender shall make available to the Agent the amount of such
payment, as provided in the immediately preceding sentence, on
such Business Day. Such amounts paid by the Lenders to the Agent
shall constitute Revolving Loans which shall be deemed to have
been requested by the Borrower pursuant to Section 2.2 as set
forth in Section 4.4 and to have satisfied the reimbursement
obligations relating to the draw under such Letter of Credit,
notwithstanding any failure of conditions precedent to the making
of Revolving Loans, including Availability.
(f) Participations.
(1) Purchase of Participations. Immediately upon
issuance of any Letter of Credit in accordance with
Section 2.3(d), each Lender shall be deemed to have irrevocably
and unconditionally purchased and received without recourse or
warranty, an undivided interest and participation in such Letter
of Credit, equal to such Lender's Pro Rata Share of the face
amount of such Letter of Credit (including, without limitation,
all obligations of the Borrower with respect thereto, and any
security therefor or guaranty pertaining thereto).
(2) Sharing of Reimbursement Obligation Payments.
Whenever the Agent receives a payment from the Borrower on
account of reimbursement obligations in respect of a Letter of
Credit as to which the Agent has previously received for the
account of the issuer thereof payment from a Lender pursuant to
Section 2.3(e)(2), the Agent shall promptly pay to such Lender
such Lender's Pro Rata Share of such payment from the Borrower in
Dollars. Each such payment shall be made by the Agent on the
Business Day on which the Agent receives immediately available
funds paid to such Person pursuant to the immediately preceding
sentence, if received prior to 10:00 a.m. (Pacific time) on such
Business Day and otherwise on the next succeeding Business Day.
(3) Documentation. Upon the request of any
Lender, the Agent shall furnish to such Lender copies of any
Letter of Credit, reimbursement agreements executed in connection
therewith, application for any Letter of Credit and credit
support or enhancement provided through the Agent in connection
with the issuance of any Letter of Credit, and such other
documentation as may reasonably be requested by such Lender.
(4) Obligations Irrevocable. The obligations of
each Lender to make payments to the Agent with respect to any
Letter of Credit or with respect to any credit support or
enhancement provided through the Agent with respect to a Letter
of Credit, and the obligations of the Borrower to make payments
to the L/C Issuer or to the Agent, for the account of the
Lenders, shall be irrevocable, not subject to any qualification
or exception whatsoever, including, without limitation, any of
the following circumstances:
(i) any lack of validity or enforceability
of this Agreement or any of the other Loan Documents;
(ii) the existence of any claim, setoff,
defense or other right which the Borrower may have at any time
against a beneficiary named in a Letter of Credit or any
transferee of any Letter of Credit (or any Person for whom any
such transferee may be acting), any Lender, the Agent, the L/C
Issuer, or any other Person, whether in connection with this
Agreement, any Letter of Credit, the transactions contemplated
herein or any unrelated transactions (including any underlying
transactions between the Borrower or any other Person and the
beneficiary named in any Letter of Credit);
(iii) any draft, certificate or any other
document presented under the Letter of Credit proving to be
forged, fraudulent, invalid or insufficient in any respect or any
statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any
security for the performance or observance of any of the terms of
any of the Loan Documents; or
(v) the occurrence of any Default or Event
of Default.
(g) Recovery or Avoidance of Payments. In the event
any payment by or on behalf of the Borrower received by the L/C
Issuer or the Agent with respect to any Letter of Credit (or any
guaranty by the Borrower or reimbursement obligation of the
Borrower relating thereto) and distributed by the Agent to the
Lenders on account of their respective participations therein, is
thereafter set aside, avoided or recovered from the L/C Issuer or
the Agent in connection with any receivership, liquidation or
bankruptcy proceeding, the Lenders shall, upon demand by the L/C
Issuer or the Agent, pay to the Agent for the account of the L/C
Issuer or the Lenders, as the case may be, their respective Pro
Rata Shares of such amount set aside, avoided or recovered,
together with interest at the rate required to be paid by the L/C
Issuer or the Agent upon the amount required to be repaid by it.
(h) Compensation for Letters of Credit.
(1) Letter of Credit Fee. The Borrower agrees to
pay to the Agent with respect to each Letter of Credit, for the
account of the Lenders, the Letter of Credit Fee specified in and
in accordance with the terms of, Section 3.6.
(2) Issuer Fees and Charges. The Borrower shall
pay monthly in arrears on the last Business Day of the month,
from the date of the issuance of any Letter of Credit, to the L/C
Issuer or to the Agent solely for the account of the L/C Issuer,
a fronting fee in the amount of one-eighth percent (0.125%) per
annum of the face amount of such Letter of Credit (so long as
NationsBank is the L/C Issuer, and such other percentage as may
be agreed to between the Borrower and any subsequent L/C Issuer),
taking into account increases and reductions as specified in such
Letter of Credit, and other charges as are charged by such L/C
Issuer for letters of credit issued by it, including, without
limitation, its standard fees for issuing, administering,
amending, renewing, paying and canceling letters of credit and
all other fees associated with issuing or servicing letters of
credit, as and when assessed.
(i) Indemnification; Exoneration; Power of Attorney.
(1) Indemnification. In addition to amounts
payable as elsewhere provided in this Section 2.3, the Borrower
hereby agrees to protect, indemnify, pay and save the L/C Issuer,
the Lenders and the Agent harmless from and against any and all
claims, demands, liabilities, damages, losses, costs, charges and
expenses (including reasonable attorneys' fees) which the L/C
Issuer or any Lender or the Agent may incur or be subject to as a
consequence, direct or indirect, of the issuance of any Letter of
Credit or the provision of any credit support or enhancement in
connection therewith. The Lenders shall indemnify the L/C Issuer
upon demand (to the extent not reimbursed by or on behalf of the
Borrower and without limiting the obligation of the Borrower to
do so), pro rata, from and against all such claims, demands,
liabilities, damages, losses, costs, charges and expenses which
the L/C Issuer may incur or be subject to as described in the
preceding sentence. The agreement in this Section 2.3(i)(1)
shall survive payments of all Obligations.
(2) Assumption of Risk by the Borrower. As among
the Borrower, the L/C Issuer, the Lenders, and the Agent, the
Borrower assumes all risks of the acts and omissions of, or
misuse of any of the Letters of Credit by, the respective
beneficiaries of such Letters of Credit. In furtherance and not
in limitation of the foregoing, the L/C Issuer, the Lenders and
the Agent shall not be responsible for: (A) the form, validity,
sufficiency, accuracy, genuineness or legal effect of any
document submitted by any Person in connection with the
application for and issuance of and presentation of drafts with
respect to any of the Letters of Credit, even if it should prove
to be in any or all respects invalid, insufficient, inaccurate,
fraudulent or forged; (B) the validity or sufficiency of any
instrument transferring or assigning or purporting to transfer or
assign any Letter of Credit or the rights or benefits thereunder
or proceeds thereof, in whole or in part, which may prove to be
invalid or ineffective for any reason; (C) the failure of the
beneficiary of any Letter of Credit to comply duly with
conditions required in order to draw upon such Letter of Credit;
(D) errors, omissions, interruptions, or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or
otherwise, whether or not they be in cipher; (E) errors in
interpretation of technical terms; (F) any loss or delay in the
transmission or otherwise of any document required in order make
a drawing under any Letter of Credit or of the proceeds thereof;
(G) the misapplication by the beneficiary of any Letter of Credit
of the proceeds of any drawing under such Letter of Credit; or
(H) any consequences arising from causes beyond the control of
the L/C Issuer, the Lenders or the Agent, including, without
limitation, any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto Governmental Authority.
None of the foregoing shall affect, impair or prevent the vesting
of any rights or powers of the L/C Issuer, the Agent or any
Lender under this Section 2.3(i).
(3) Exoneration. In furtherance and extension,
and not in limitation, of the specific provisions set forth
above, any action taken or omitted by the L/C Issuer, the Agent
or any Lender under or in connection with any of the Letters of
Credit or any related certificates, if taken or omitted in the
absence of gross negligence or willful misconduct, shall not put
the L/C Issuer, the Agent or any Lender under any resulting
liability to the Borrower or relieve the Borrower of any of its
obligations hereunder to any such Person.
(4) Account Party. The Borrower hereby
authorizes and directs the L/C Issuer to name the Borrower as the
"Account Party" therein and to deliver to the Agent all
instruments, documents and other writings and property received
by the L/C Issuer pursuant to the Letter of Credit, and to accept
and rely upon the Agent's instructions and agreements with
respect to all matters arising in connection with the Letter of
Credit or the application therefor.
(5) Nonwaiver. Notwithstanding any other
provision of this Section 2.3, the Borrower does not waive any
claim it may have against the L/C Issuer as a result of the gross
negligence or willful misconduct of the L/C Issuer in honoring a
draw under a Letter of Credit if the draw does not substantially
comply with the terms of the Letter of Credit.
(j) Supporting Letter of Credit; Cash Collateral. If,
notwithstanding the provisions of Section 2.3(b) and
Section 12.1, any Letter of Credit is outstanding upon the
termination of this Agreement, then upon such termination the
Borrower shall deposit with the Agent, for the ratable benefit of
the Lenders, with respect to each Letter of Credit then
outstanding, as the Majority Lenders, in their discretion shall
specify, either (A) a standby letter of credit (a "Supporting
Letter of Credit") in form and substance satisfactory to the
Agent, issued by an issuer satisfactory to the Agent in an amount
equal to the greatest amount for which such Letter of Credit may
be drawn, under which Supporting Letter of Credit the Agent is
entitled to draw amounts necessary to reimburse the Agent and the
Lenders for payments made by the Agent and the Lenders under such
Letter of Credit or under any credit support or enhancement
provided through the Agent with respect thereto, or (B) cash in
amounts necessary to reimburse the Agent and the Lenders for
payments made by the Agent or the Lenders under such Letter of
Credit or under any credit support or enhancement provided
through the Agent with respect thereto. Such Supporting Letter
of Credit or deposit of cash shall be held by the Agent, for the
ratable benefit of the Lenders, as security for, and to provide
for the payment of, the aggregate undrawn amount of such Letters
of Credit remaining outstanding. In the event an Event of
Default occurs and is continuing, the Borrower agrees to cash
collateralize outstanding letters of credit ("Designated Cash
Collateral") by means of making Revolving Loans or otherwise but
the Lenders are under no obligation to make Revolving Loans in
excess of the Maximum Revolver Amount or the Availability.
(k) Replacement of L/C Issuer. If the credit rating
of the L/C Issuer falls below A2 as rated by ▇▇▇▇▇'▇ Investors
Services, Inc., then the Borrower may as its option at any time
thereafter replace the then current L/C Issuer (the "Prior L/C
Issuer") with a new L/C Issuer (the "Replacement L/C Issuer")
reasonably satisfactory to the Agent. From and after the time of
the appointment of the Replacement L/C Issuer, all Letters of
Credit will be issued by the Replacement L/C Issuer. At the
Borrower's option and subject to any necessary consent of the
beneficiaries, previously issued Letters of Credit will be re-
issued by the Replacement L/C Issuer on a case by case basis.
Each of the Prior L/C Issuer and the Replacement L/C Issuer shall
have all of the rights of the L/C issuer hereunder with respect
to the respective Letters of Credit issued by it.
2.4 Automated Clearing House Transfers and Overdrafts. The
Borrower may request and the Agent may, in its sole and absolute
discretion, arrange for the Borrower to obtain from Bank of
America ACH Transactions. The Borrower agrees to indemnify and
hold the Agent and the Lenders harmless from all losses,
liabilities, costs, expenses and claims incurred by the Agent and
Lenders arising from or related to such ACH Transactions. The
Borrower acknowledges and agrees that the obtaining of ACH
Transactions from Bank of America (a) is in the sole and absolute
discretion of Bank of America, (b) is subject to all rules and
regulations of Bank of America, and (c) is due to Bank of America
relying on the indemnity of the Agent and the Lenders to Bank of
America with respect to all risks of loss associated with the ACH
Transactions.
2.5 Purpose The proceeds of all Revolving Loans shall be
utilized by the Borrower solely for the purposes of meeting the
Borrower's ongoing working capital needs, and for general
business purposes (including, but not limited to, the making of
Capital Expenditures permitted under Section 9.21).
ARTICLE 3
INTEREST AND FEES
3.1 Interest.
(a) Interest Rates. All outstanding Obligations shall
bear interest on the unpaid principal amount thereof (including,
to the extent permitted by law, on interest thereon not paid when
due) from the date made until paid in full in cash at a rate
determined by reference to the Base Rate or the LIBOR Rate and
clauses (i) or (ii) of the fourth sentence of this
Section 3.1(a), as applicable, but not to exceed the Maximum Rate
described in Section 3.3. Subject to the provisions of
Section 3.2, any of the Revolving Loans may be converted into, or
continued as, Base Rate Revolving Loans or LIBOR Revolving Loans
in the manner provided in Section 3.2. If at any time Revolving
Loans are outstanding with respect to which notice has not been
delivered to the Agent in accordance with the terms of this
Agreement specifying the basis for determining the interest rate
applicable thereto, then those Revolving Loans shall be Base Rate
Revolving Loans and shall bear interest at a rate determined by
reference to the Base Rate until notice to the contrary has been
given to the Agent in accordance with this Agreement and such
notice has become effective. Except as otherwise provided
herein, the outstanding Obligations shall bear interest as
follows: (i) for all Base Rate Revolving Loans and other
Obligations (other than LIBOR Revolving Loans) at a fluctuating
per annum rate equal to the Base Rate plus the Applicable Margin,
and (ii) for all LIBOR Revolving Loans at a per annum rate equal
to the LIBOR Rate plus the Applicable Margin; provided, however,
that
(A) In the event that that the sum of outstanding
Letters of Credit and outstanding Revolving Loans exceeds
$150,000,000, the amount by which the Revolving Loans, when added
to the outstanding Letters of Credit, exceeds $150,000,000 shall
bear interest at the Interest Rate otherwise applicable to such
Revolving Loans plus one-quarter of one percent (0.25%); and
(B) In the event that the Adjusted Net Earnings
for the fiscal year ending on December 31, 1997 exceeds
$53,000,000 and no Event of Default has occurred and is
continuing, the Interest Rate on all Revolving Loans shall
decrease by one-quarter of one percent (0.25%) from the Interest
Rate otherwise applicable to such Revolving Loans effective as of
the first day of the month following receipt by the Agent of the
certified audited financial statements reflecting such Adjusted
Net Earnings (except that if such decrease was not made because
of an Event of Default, then upon the curing thereof, and
provided that the other requirements of this clause (B) remain
satisfied, the decrease shall be made effective as of the first
day of the month following the curing of the Event of Default);
and
(C) In the event that the Adjusted Net Earnings
for the fiscal year ending on December 31, 1997 is less than
$44,000,000, the Interest Rate on all Revolving Loans shall
increase by one-quarter of one percent (0.25%) from the Interest
Rate otherwise applicable to such Revolving Loans effective as of
the first day of the month following receipt of the certified
audited financial statements reflecting such Adjusted Net
Earnings.
Each change in the Base Rate shall be reflected in the interest
rate described in clause (i) above as of the effective date of
such change. All interest charges shall be computed on the basis
of a year of 360 days and actual days elapsed (which results in
more interest being paid than if computed on the basis of a 365-
day year). Interest accrued on all Revolving Loans will be
payable in arrears on the first day of each month hereafter.
(b) Default Rate. If any Default or Event of Default
occurs and is continuing and the Majority Lenders in their
discretion so elect, then, while any such Default or Event of
Default is outstanding, all of the Obligations shall bear
interest at the Default Rate applicable thereto.
3.2 Conversion and Continuation Elections.
(a) The Borrower may, upon irrevocable written notice
to the Agent in accordance with Section 3.2(b):
(i) elect, as of any Business Day, in the case of
Base Rate Revolving Loans to convert any such Revolving Loans (or
any part thereof in an amount not less than $2,000,000, or that
is in an integral multiple of $1,000,000 in excess thereof) into
LIBOR Revolving Loans; or
(ii) elect, as of the last day of the applicable
Interest Period, to continue any LIBOR Revolving Loans having
Interest Periods expiring on such day (or any part thereof in an
amount not less than $2,000,000, or that is in an integral
multiple of $1,000,000 in excess thereof);
provided, that if at any time the aggregate amount of LIBOR
Revolving Loans in respect of any Borrowing is reduced, by
payment, prepayment, or conversion of part thereof to be less
than $1,000,000, such LIBOR Revolving Loans shall automatically
convert into Base Rate Revolving Loans, and on and after such
date the right of the Borrower to continue such Revolving Loans
as, and convert such Revolving Loans into, LIBOR Revolving Loans,
as the case may be, shall terminate.
(b) The Borrower shall deliver a notice of
conversion/continuation substantially in the form of Exhibit C
(each a "Notice of Conversion/Continuation") to be received by
the Agent not later than 11:00 a.m. (Pacific time) at least
three (3) Business Days in advance of the Conversion/
Continuation Date, if the Revolving Loans are to be converted
into or continued as LIBOR Revolving Loans and specifying:
(i) the proposed Conversion/ Continuation Date;
(ii) the aggregate amount of Revolving Loans to be
converted or renewed;
(iii) the type of Revolving Loans resulting
from the proposed conversion or continuation; and
(iv) the duration of the requested Interest
Period.
(c) If upon the expiration of any Interest Period
applicable to LIBOR Revolving Loans, the Borrower has failed to
select timely a new Interest Period to be applicable to LIBOR
Revolving Loans or if any Default or Event of Default then
exists, the Borrower shall be deemed to have elected to convert
such LIBOR Revolving Loans into Base Rate Revolving Loans
effective as of the expiration date of such Interest Period.
(d) The Agent will promptly notify each Lender of its
receipt of a Notice of Conversion/ Continuation. All conversions
and continuations shall be made ratably according to the
respective outstanding principal amounts of the Revolving Loans
with respect to which the notice was given held by each Lender.
(e) During the existence of a Default or Event of
Default, the Borrower may not elect to have a Revolving Loan
converted into or continued as a LIBOR Revolving Loan.
(f) After giving effect to any conversion or
continuation of Revolving Loans, there may not be more than
six (6) different Interest Periods in effect.
3.3 Maximum Interest Rate. In no event shall any interest
rate provided for hereunder exceed the maximum rate legally
chargeable by any Lender under applicable law for loans of the
type provided for hereunder (the "Maximum Rate"). If, in any
month, any interest rate, absent such limitation, would have
exceeded the Maximum Rate, then the interest rate for that month
shall be the Maximum Rate, and, if in future months, that
interest rate would otherwise be less than the Maximum Rate, then
that interest rate shall remain at the Maximum Rate until such
time as the amount of interest paid hereunder equals the amount
of interest which would have been paid if the same had not been
limited by the Maximum Rate. In the event that, upon payment in
full of the Obligations, the total amount of interest paid or
accrued under the terms of this Agreement is less than the total
amount of interest which would, but for this Section 3.3, have
been paid or accrued if the interest rates otherwise set forth in
this Agreement had at all times been in effect, then the Borrower
shall, to the extent permitted by applicable law, pay the Agent,
for the account of the Lenders, an amount equal to the excess of
(a) the lesser of (i) the amount of interest which would have
been charged if the Maximum Rate had, at all times, been in
effect or (ii) the amount of interest which would have accrued
had the interest rates otherwise set forth in this Agreement, at
all times, been in effect, over (b) the amount of interest
actually paid or accrued under this Agreement. In the event that
a court determines that the Agent and/or any Lender has received
interest and other charges hereunder in excess of the Maximum
Rate, such excess shall be deemed received on account of, and
shall automatically be applied to reduce, the Obligations other
than interest, in the inverse order of maturity, and if there are
no Obligations outstanding, the Agent and/or such Lender shall
refund to the Borrower such excess.
3.4 Closing Fee. The Borrower agrees to pay the Agent on
the Initial Funding Date a closing fee (the "Closing Fee") in the
following amounts and to be ratably applied as indicated:
(a) $125,000 to BABC, $93,750 to NationsBank and
$62,500 to Caisse Nationale de Credit Agricole; and
(b) $1,125,000 for the ratable account of the Lenders
according to their Commitments.
The Closing Fee shall be fully earned by the Lenders on the
Initial Funding Date. The Agent, the Lenders and the Borrower
agree that the Closing Fee, unless paid in cash on the Initial
Funding Date, shall be financed by the Lenders as a Revolving
Loan.
3.5 Unused Line Fee. Until the Obligations have been paid
in full and the Agreement terminated, the Borrower agrees to pay,
on the first day of each month and on the Termination Date, to
the Agent, for the ratable account of the Lenders, an unused line
fee (the "Unused Line Fee") equal to three-eighths percent
(0.375%) per annum on the average daily amount by which the Total
Facility exceeded the sum of the average daily outstanding amount
of Revolving Loans and the undrawn face amount of all outstanding
Letters of Credit, during the immediately preceding month or
shorter period if calculated on the Termination Date. The Unused
Line Fee shall be computed from the Initial Funding Date on the
basis of a 360-day year for the actual number of days elapsed.
All payments received by the Agent on account of Accounts or as
proceeds of other Collateral shall be deemed to be credited to
the Borrower's Loan Account immediately upon receipt for purposes
of calculating the unused line fee pursuant to this Section 3.5.
3.6 Letter of Credit Fee. The Borrower agrees to pay to
the Agent, for the ratable account of the Lenders, for each
Letter of Credit, a fee (the "Letter of Credit Fee") equal to one
and three-eighths percent (1.375%) per annum of the undrawn face
amount of each Letter of Credit issued for the Borrower's account
at the Borrower's request, plus all out-of-pocket costs, fees and
expenses incurred by the Agent in connection with the application
for, issuance of, or amendment to any Letter of Credit; provided,
however, that the Letter of Credit Fee set forth above shall be
modified in certain circumstances as follows: (a) in the event
that the Adjusted Net Earnings for the fiscal year ending on
December 31, 1997 exceeds $53,000,000 and no Event of Default has
occurred and is continuing, then as of the first day of the month
following receipt by the Agent of the Borrower's certified
audited financial statements the Letter of Credit Fee shall be
reduced by one-quarter of one percent (0.25%); and (b) in the
event that the Adjusted Net Earnings for the fiscal year ending
on December 31, 1997 is less than $44,000,000, then as of the
first day of the month following receipt by the Agent of the
Borrower's certified audited financial statements the Letter of
Credit Fee shall be increased by one-quarter of one percent
(0.25%). If a decrease under clause (a) of the above proviso was
not made because of an Event of Default, then upon the curing
thereof (and provided that the other requirements of clause (a)
remain satisfied), the decrease shall be made effective as of the
first day of the month following the curing of the Event of
Default. The Letter of Credit Fee shall be payable monthly in
arrears on the first day of each month following any month in
which a Letter of Credit was issued and/or in which a Letter of
Credit remains outstanding. The Letter of Credit Fee shall be
computed on the basis of a 360-day year for the actual number of
days elapsed.
3.7 Other Fees. The Borrower agrees to pay to the Agent
for its own account any and all fees set forth in the Fee Letter
between the Borrower and the Agent.
ARTICLE 4
PAYMENTS AND PREPAYMENTS
4.1 Revolving Loans. The Borrower shall repay the
outstanding principal balance of the Revolving Loans, plus all
accrued but unpaid interest thereon, on the Termination Date.
The Borrower may prepay Revolving Loans at any time, and reborrow
subject to the terms of this Agreement; provided, however, that
with respect to any LIBOR Revolving Loans prepaid by the Borrower
prior to the expiration date of the Interest Period applicable
thereto, the Borrower promises to pay to the Agent for account of
the Lenders the amounts described in Section 5.3. In addition,
and without limiting the generality of the foregoing, upon demand
the Borrower promises to pay to the Agent, for account of the
Lenders, the amount, without duplication, by which the Aggregate
Revolver Outstandings exceed the lesser of (i) the Maximum
Revolver Amount and (ii) the Borrower's Availability (with
Availability for this purpose calculated as if there were no
outstanding Revolving Loans or Letters of Credit).
4.2 Termination of Facility. The Borrower may terminate
this Agreement upon at least thirty (30) Business Days' notice to
the Agent and the Lenders, upon (a) the payment in full of all
outstanding Revolving Loans, together with accrued interest
thereon, and the cancellation of all outstanding Letters of
Credit, (b) the payment of the early termination fee set forth in
the next sentence, (c) the payment in full in cash of all other
Obligations together with accrued interest thereon, and (d) with
respect to any LIBOR Revolving Loans prepaid in connection with
such termination prior to the expiration date of the Interest
Period applicable thereto, the payment of the amounts described
in Section 5.5. If this Agreement is terminated at any time
prior to the Stated Termination Date, whether pursuant to this
Section or pursuant to Section 11.2, the Borrower shall pay to
the Agent, for the account of the Lenders in accordance with each
Lender's Pro Rata Share, an early termination fee determined in
accordance with the following table:
Period during which Early
early termination Termination
occurs Fee
On or prior to the $750,000
First Anniversary
Date
After the First $500,000
Anniversary Date but
on or prior to the
Second Anniversary
Date
After the Second $250,000
Anniversary Date but
on or before the
Third Anniversary
Date
Notwithstanding the foregoing, in the event that all Obligations
under this Agreement are refinanced pursuant to a credit facility
agented by Bank of America or any of its Affiliates after the
first Anniversary Date, then (a) the above referenced applicable
termination fee shall be reduced by one-third, and (b) the
termination fee, as so reduced, shall be payable to the Lenders
other than BABC. If at such time BABC does not then hold at
least one-third of the Commitments, then assignees of BABC which
purchased Commitments from BABC at such time as BABC no longer
held at least one-third of the Commitments or which purchase
resulted in BABC holding less than one-third of the Commitments
(but only to the extent of such assignment reducing BABC's
Commitments below one-third of the Commitments) shall not share
in the termination fee. In addition, in the event that all
Obligations under this Agreement are refinanced pursuant to a
credit facility agented or participated in by NationsBank or any
of its Affiliates after the first Anniversary Date, then
NationsBank shall waive any portion of the termination fee
otherwise payable to NationsBank.
4.3 Payments by the Borrower.
(a) All payments to be made by the Borrower shall be
made without set-off, recoupment or counterclaim. Except as
otherwise expressly provided herein, all payments by the Borrower
shall be made to the Agent for the account of the Lenders at the
Agent's address set forth on the signature page hereto (as it may
be changed pursuant to a notice given in accordance with
Section 15.8), and shall be made in Dollars and in immediately
available funds, no later than 1:00 p.m. (Pacific time) on the
date specified herein. Any payment received by the Agent later
than 1:00 p.m. (Pacific time) shall be deemed to have been
received on the following Business Day and any applicable
interest or fee shall continue to accrue.
(b) Subject to the provisions set forth in the
definition of "Interest Period" herein, whenever any payment is
due on a day other than a Business Day, such payment shall be
made on the following Business Day, and such extension of time
shall in such case be included in the computation of interest or
fees, as the case may be.
(c) Unless the Agent receives notice from the Borrower
prior to the date on which any payment is due to the Lenders that
the Borrower will not make such payment in full as and when
required, the Agent may assume that the Borrower has made such
payment in full to the Agent on such date in immediately
available funds and the Agent may (but shall not be so required),
in reliance upon such assumption, distribute to each Lender on
such due date an amount equal to the amount then due such Lender.
If and to the extent the Borrower has not made such payment in
full to the Agent, each Lender shall repay to the Agent on demand
such amount distributed to such Lender, together with interest
thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Lender until the date repaid.
4.4 Payments as Revolving Loans. All payments of
principal, interest, reimbursement obligations in connection with
Letters of Credit, premiums and other sums payable hereunder,
including all reimbursement for expenses and fees pursuant to
this Agreement may, at the option of the Agent, in its sole
discretion, subject only to the terms of this Agreement, be paid
from the proceeds of Revolving Loans made hereunder, whether made
following a request by the Borrower pursuant to Section 2.2 or a
deemed request as provided in this Section 4.4. The Borrower
hereby irrevocably authorizes the Agent for the purpose of paying
any principal, interest, reimbursement obligations in connection
with Letters of Credit, fees, premiums and other sums payable,
and agrees that all such amounts charged shall constitute
Revolving Loans (including BABC Loans and Agent Advances) and
that all such Revolving Loans so made shall be deemed to have
been requested by the Borrower pursuant to Section 2.2; provided,
however, so long as funds in the Payment Account are not being
transferred to the Agent as a result of the occurrence of a
Triggering Event, the Agent agrees to advise the Borrower (i) of
the interest and fees due by 10:00 a.m. (Pacific time) of the
date due, and if paid by 1:00 p.m. (Pacific time) on such day,
such interest and fees will not be charged to the Loan Account
and (ii) of other amounts due pursuant to the Agreement and if
paid within a reasonable period of time such amounts will not be
charged to the Loan Account.
4.5 Apportionment, Application and Reversal of Payments.
Aggregate principal and interest payments shall be apportioned
ratably among the Lenders (according to the unpaid principal
balance of the Revolving Loans to which such payments relate held
by each Lender) and payments of the fees shall, as applicable, be
apportioned ratably among the Lenders. All payments shall be
remitted to the Agent and all such payments not relating to
principal or interest of specific Revolving Loans, or not
constituting payment of specific fees, and all proceeds of
Accounts or other Collateral received by the Agent, shall be
applied, ratably, subject to the provisions of this Agreement,
first, to pay any fees, indemnities or expense reimbursements
including any amounts relating to ACH Transactions then due to
the Agent from the Borrower (provided, however, that the amount
of ACH Transactions shall not exceed $1,000,000); second, to pay
any fees or expense reimbursements then due to the Lenders from
the Borrower; third, to pay interest due in respect of all
Revolving Loans, including BABC Loans and Agent Advances, and to
pay interest and any fees then due to the L/C Issuer in respect
of Letters of Credit; fourth, to pay or prepay principal of the
BABC Loans and Agent Advances; fifth, to pay or prepay principal
of the Revolving Loans (other than BABC Loans and Agent Advances)
and unpaid reimbursement obligations owing to the Lenders in
respect of Letters of Credit; and sixth, to the payment of any
other Obligation due to the Agent or any Lender by the Borrower,
including any unpaid amounts owing for ACH Transactions.
Notwithstanding anything to the contrary contained in this
Agreement, unless so directed by the Borrower, or unless an Event
of Default is outstanding, neither the Agent nor any Lender shall
apply any payments which it receives to any LIBOR Revolving Loan,
except (a) on the expiration date of the Interest Period
applicable to any such LIBOR Revolving Loan, or (b) in the event,
and only to the extent, that there are no outstanding Base Rate
Revolving Loans. The Agent shall promptly distribute to each
Lender, pursuant to the applicable wire transfer instructions
received from each Lender in writing, such funds as it may be
entitled to receive, subject to a Settlement delay as provided
for in Section 2.2(j). The Agent and the Lenders shall have the
continuing and exclusive right to apply and reverse and reapply
any and all such proceeds and payments to any portion of the
Obligations.
4.6 Indemnity for Returned Payments. If, after receipt of
any payment of, or proceeds applied to the payment of, all or any
part of the Obligations, the Agent or any Lender is for any
reason compelled to surrender such payment or proceeds to any
Person, because such payment or application of proceeds is
invalidated, declared fraudulent, set aside, determined to be
void or voidable as a preference, impermissible setoff, or a
diversion of trust funds, or for any other reason, then the
Obligations or part thereof intended to be satisfied shall be
revived and continue and this Agreement shall continue in full
force as if such payment or proceeds had not been received by the
Agent or such Lender, and the Borrower shall be liable to pay to
the Agent, and hereby does indemnify the Agent and the Lenders
and hold the Agent and the Lenders harmless for, the amount of
such payment or proceeds surrendered. The provisions of this
Section 4.6 shall be and remain effective notwithstanding any
contrary action which may have been taken by the Agent or any
Lender in reliance upon such payment or application of proceeds,
and any such contrary action so taken shall be without prejudice
to the Agent's and the Lenders' rights under this Agreement and
shall be deemed to have been conditioned upon such payment or
application of proceeds having become final and irrevocable. The
provisions of this Section 4.6 shall survive the termination of
this Agreement.
4.7 Agent's and Lenders' Books and Records; Monthly
Statements. The Borrower agrees that the Agent's and each
Lender's books and records showing the Obligations and the
transactions pursuant to this Agreement and the other Loan
Documents shall be admissible in any action or proceeding arising
therefrom, and shall constitute rebuttably presumptive proof
thereof, irrespective of whether any Obligation is also evidenced
by a promissory note or other instrument. The Agent will provide
to the Borrower a monthly statement of Revolving Loans, payments,
and other transactions pursuant to this Agreement. Such
statement shall be deemed correct, accurate, and binding on the
Borrower and an account stated (except for reversals and
reapplications of payments made as provided in Section 4.5 and
corrections of errors discovered by the Agent), unless the
Borrower notifies the Agent in writing to the contrary within
sixty (60) days after such statement is rendered. In the event a
timely written notice of objections is given by the Borrower,
only the items to which exception is expressly made will be
considered to be disputed by the Borrower.
ARTICLE 5
TAXES, YIELD PROTECTION AND ILLEGALITY
5.1 Taxes.
(a) Any and all payments by the Borrower to each
Lender or the Agent under this Agreement and any other Loan
Document shall be made free and clear of, and without deduction
or withholding for any Taxes. In addition, the Borrower shall
pay all Other Taxes.
(b) The Borrower agrees to indemnify and hold harmless
each Lender and the Agent for the full amount of Taxes or Other
Taxes (including any Taxes or Other Taxes imposed by any
jurisdiction on amounts payable under this Section) paid by the
Lender or the Agent and any liability (including penalties,
interest, additions to tax and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Payment under this
indemnification shall be made within 30 days after the date the
Lender or the Agent makes written demand therefor.
(c) If the Borrower shall be required by law to deduct
or withhold any Taxes or Other Taxes from or in respect of any
sum payable hereunder to any Lender or the Agent, then:
(i) the sum payable shall be increased as
necessary so that after making all required deductions and
withholdings (including deductions and withholdings applicable to
additional sums payable under this Section) such Lender or the
Agent, as the case may be, receives an amount equal to the sum it
would have received had no such deductions or withholdings been
made;
(ii) the Borrower shall make such deductions and
withholdings;
(iii) the Borrower shall pay the full amount
deducted or withheld to the relevant taxing authority or other
authority in accordance with applicable law; and
(iv) the Borrower shall also pay to each Lender or
the Agent for the account of such Lender, at the time interest is
paid, all additional amounts which the respective Lender
specifies as necessary to preserve the after-tax yield the Lender
would have received if such Taxes or Other Taxes had not been
imposed.
(d) Within 30 days after the date of any payment by
the Borrower of Taxes or Other Taxes, the Borrower shall furnish
the Agent the original or a certified copy of a receipt
evidencing payment thereof, or other evidence of payment
satisfactory to the Agent.
(e) If the Borrower is required to pay additional
amounts to any Lender or the Agent pursuant to subsection (c) of
this Section, then such Lender shall use reasonable efforts
(consistent with legal and regulatory restrictions) to change the
jurisdiction of its lending office so as to eliminate any such
additional payment by the Borrower which may thereafter accrue,
if such change in the judgment of such Lender is not otherwise
disadvantageous to such Lender. Borrower shall have no
obligation to pay additional amounts pursuant to this Section 5.1
which are owing on account of such Lender's failure to comply
with its obligations under Section 14.10.
5.2 Illegality.
(a) If any Lender determines that the introduction of
any Requirement of Law, or any change in any Requirement of Law,
or in the interpretation or administration of any Requirement of
Law (in each case after the date of this Agreement), has made it
unlawful, or that any central bank or other Governmental
Authority has asserted that it is unlawful, for any Lender or its
applicable lending office to make LIBOR Revolving Loans, then, on
notice thereof by the Lender to the Borrower through the Agent,
any obligation of that Lender to make LIBOR Revolving Loans shall
be suspended until the Lender notifies the Agent and the Borrower
that the circumstances giving rise to such determination no
longer exist.
(b) If a Lender determines that it is unlawful to
maintain any LIBOR Revolving Loan, the Borrower shall, upon its
receipt of notice of such fact and demand from such Lender (with
a copy to the Agent), prepay in full such LIBOR Revolving Loans
of that Lender then outstanding, together with interest accrued
thereon and amounts required under Section 5.3, either on the
last day of the Interest Period thereof, if the Lender may
lawfully continue to maintain such LIBOR Revolving Loans to such
day, or immediately, if the Lender may not lawfully continue to
maintain such LIBOR Revolving Loan. If the Borrower is required
to so prepay any LIBOR Revolving Loan, then concurrently with
such prepayment, the Borrower shall borrow from the affected
Lender, in the amount of such repayment, a Base Rate Revolving
Loan.
5.3 Increased Costs and Reduction of Return.
(a) If any Lender determines that, due to either
(i) the introduction of or any change in the interpretation of
any law or regulation (in each case after the date of this
Agreement) or (ii) the compliance by that Lender with any
guideline or request (in each case after the date of this
Agreement) from any central bank or other Governmental Authority
(whether or not having the force of law), there shall be any
increase in the cost to such Lender of agreeing to make or
making, funding or maintaining any LIBOR Revolving Loans, then
the Borrower shall be liable for, and shall from time to time,
upon demand (with a copy of such demand to be sent to the Agent),
pay to the Agent for the account of such Lender, additional
amounts as are sufficient to compensate such Lender for such
increased costs.
(b) If any Lender shall have determined that (i) the
introduction of any Capital Adequacy Regulation, (ii) any change
in any Capital Adequacy Regulation, (iii) any change in the
interpretation or administration of any Capital Adequacy
Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or
(iv) compliance by the Lender or any corporation or other entity
controlling the Lender with any Capital Adequacy Regulation (in
each case after the date of this Agreement), affects or would
affect the amount of capital required or expected to be
maintained by the Lender or any corporation or other entity
controlling the Lender and (taking into consideration such
Lender's or such corporation's or other entity's policies with
respect to capital adequacy and such Lender's desired return on
capital) determines that the amount of such capital is increased
as a consequence of its Commitments, loans, credits or
obligations under this Agreement, then, upon demand of such
Lender to the Borrower through the Agent, the Borrower shall pay
to the Lender, from time to time as specified by the Lender,
additional amounts sufficient to compensate the Lender for such
increase.
5.4 Replacement of Lender in Event of Adverse Condition.
In the event that any Lender has notified the Borrower that
circumstances exist which would cause the Borrower to become
obligated to pay or the Borrower becomes obligated to pay
additional amounts to any Lender pursuant to Sections 5.1, 5.2,
or 5.3 as a result of any condition described in any such
Section, then, unless such Lender has theretofore taken steps to
remove or cure, and has removed or cured, the circumstances
described in such notice or the conditions creating the cause for
such obligation to pay such additional amounts, as the case may
be, during the ninety (90) day period beginning on the date any
such notice was given, the Borrower may designate another
financial institution which is reasonably acceptable to the Agent
to purchase the Revolving Loans of such Lender and such Lender's
interest in Letters of Credit and such Lender's rights hereunder
and assume such Lender's obligations hereunder, without recourse
to or warranty by, or expense to, such Lender for a purchase
price equal to the outstanding principal amount of the Revolving
Loans payable to such Lender plus any accrued but unpaid interest
on such Revolving Loans and accrued but unpaid Unused Line Fees
in respect of that Lender's Commitment and accrued but unpaid
Letter of Credit Fees and upon such purchase and the payment of
the additional amounts described above and all other Obligations
owing to such Lender, such Lender shall no longer be a party
hereto or have any rights hereunder, and the financial
institution replacing such Lender shall succeed to the rights of
such Lender hereunder.
5.5 Funding Losses. The Borrower shall reimburse each
Lender and hold each Lender harmless from any loss or expense
which the Lender may sustain or incur as a consequence of:
(a) the failure of the Borrower to make on a timely
basis any payment of principal of any LIBOR Revolving Loan;
(b) the failure of the Borrower to borrow, continue or
convert a Revolving Loan after the Borrower has given (or is
deemed to have given) a Notice of Borrowing or a Notice of
Conversion/ Continuation;
(c) the prepayment or other payment (including after
acceleration thereof) of an LIBOR Revolving Loan on a day that is
not the last day of the relevant Interest Period; including any
such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its LIBOR Revolving Loans or
from fees payable to terminate the deposits from which such funds
were obtained.
5.6 Inability to Determine Rates. If the Agent determines
that for any reason adequate and reasonable means do not exist
for determining the LIBOR Rate for any requested Interest Period
with respect to a proposed LIBOR Revolving Loan, or that the
LIBOR Rate for any requested Interest Period with respect to a
proposed LIBOR Revolving Loan does not adequately and fairly
reflect the cost to the Lenders of funding such LIBOR Revolving
Loan, the Agent will promptly so notify the Borrower and each
Lender. Thereafter, the obligation of the Lenders to make or
maintain LIBOR Revolving Loans hereunder shall be suspended until
the Agent revokes such notice in writing. Upon receipt of such
notice, the Borrower may revoke any Notice of Borrowing or Notice
of Conversion/ Continuation then submitted by it. If the
Borrower does not revoke such Notice, the Lenders shall make,
convert or continue the Revolving Loans, as proposed by the
Borrower, in the amount specified in the applicable notice
submitted by the Borrower, but such Revolving Loans shall be
made, converted or continued as Base Rate Revolving Loans instead
of LIBOR Revolving Loans.
5.7 Certificates of Lenders. Any Lender claiming
reimbursement or compensation under this Article 5 shall deliver
to the Borrower (with a copy to the Agent) a certificate setting
forth in reasonable detail the amount payable to the Lender
hereunder and such certificate shall be conclusive and binding on
the Borrower in the absence of manifest error.
5.8 Survival. The agreements and obligations of the
Borrower in this Article 5 shall survive the payment of all other
Obligations.
ARTICLE 6
COLLATERAL
6.1 Grant of Security Interest.
(a) As security for all present and future
Obligations, the Borrower hereby grants to the Agent, for the
ratable benefit of the Agent, the L/C Issuer and the Lenders, a
continuing security interest in, lien on, assignment of, and
right of set-off against, all Property (other than Excluded
Property) in which the Borrower now or hereafter has rights,
regardless of where located, including, without limitation, the
following (in all cases excluding Excluded Property):
(i) all Accounts;
(ii) all Inventory;
(iii) all contract rights, letters of credit,
Assigned Contracts, chattel paper, instruments, fixtures (other
than fixtures relating to Real Estate listed in Schedule 8.32),
documents, and documents of title;
(iv) all General Intangibles;
(v) all Equipment;
(vi) all money, securities, investment property
and other property of any kind of the Borrower in the possession
or under the control of the Agent or any Lender, any assignee of
or participant in the Obligations, or a bailee of any such party
or such party's affiliates;
(vii) all deposit accounts, credits and
balances with and other claims against the Agent or any Lender or
any of its affiliates or any other financial institution in which
the Borrower maintains deposits;
(viii) all books, records and other property
related to or referring to any of the foregoing, including,
without limitation, books, records, account ledgers, data
processing records, computer software and other property and
General Intangibles at any time evidencing or relating to any of
the foregoing; and
(ix) all accessions to, substitutions for and
replacements, products and proceeds of any of the foregoing,
including, but not limited to, proceeds of any insurance
policies, claims against third parties, and condemnation or
requisition payments with respect to all or any of the foregoing.
All of the foregoing, and all other property of the Borrower in
which the Agent, the L/C Issuer or any Lender may at any time be
granted a Lien, is herein collectively referred to as the
"Collateral."
(b) All of the Obligations shall be secured by all of
the Collateral. The Agent may, subject to the provisions of
Articles 13 and 14, in its sole discretion, (i) exchange, waive,
or release any of the Collateral, (ii) apply Collateral and
direct the order or manner of sale thereof as the Agent may
determine, and (iii) settle, compromise, collect, or otherwise
liquidate any Collateral in any manner, all without affecting the
Obligations or the Agent's or any Lender's right to take any
other action with respect to any other Collateral.
6.2 Perfection and Protection of Security Interests.
(a) The Borrower shall, at its expense, perform all
steps requested by the Agent at any time to perfect, maintain,
protect, and enforce the Agent's Liens, including, without
limitation: (i) executing, delivering and/or filing and
recording of the Patent and Trademark Agreements and executing
and filing financing or continuation statements, and amendments
thereof, in form and substance satisfactory to the Agent;
(ii) delivering to the Agent the originals of all instruments,
documents, and chattel paper, and all other Collateral of which
the Agent determines it should have physical possession in order
to perfect and protect any security interest therein, duly
pledged, endorsed or assigned to the Agent without restriction;
(iii) delivering to the Agent all letters of credit on which the
Borrower is named beneficiary; and (iv) taking such other steps
as are deemed necessary or desirable by the Agent to maintain and
protect the Agent's Liens. To the extent permitted by applicable
law, the Agent may file, without the Borrower's signature, one or
more financing statements disclosing the Agent's Liens. If for
any reason the Borrower fails to execute upon the request of the
Agent any financing statement, the Borrower agrees that a carbon,
photographic, photostatic, or other reproduction of this
Agreement or of a financing statement is sufficient as a
financing statement.
(b) Without limiting the generality of the provisions
of Section 6.2(a) the Borrower shall: (i) register ownership of
goods covered by a certificate of title owned by the Borrower in
the name of the Borrower, (ii) hold certificates of title
relating to Included Revenue Equipment, for the benefit of the
Agent, the L/C Issuer and the Lenders, (iii) process each such
certificate of title, including responding to correspondence and
follow-up with the department of motor vehicles or other
appropriate Governmental Authority, to obtain a notation of the
security interest of the Agent on each certificate of title
relating to Included Revenue Equipment, and (iv) deliver such
certificates to the Agent. Subject to the limitations set forth
in Section 6.10(d), at the Borrowers request, but no more
frequently than three times a month, the Agent shall redeliver to
the Borrower certificates in its possession relating to the
related Revenue Equipment sold or otherwise disposed of by the
Borrower, along with appropriate documentation to release the
Agent's Lien; provided, that the Agent shall make a good faith
effort to accommodate additional requests for releases of
certificates in the Agent's possession from time to time in
response to any urgent business need of the Borrower. The
Borrower shall process all requests for registration of
ownership, and all applications for notation of the security
interest in favor of the Agent in all Included Revenue Equipment
promptly, and in any event within five (5) Business Days of the
date any such Included Revenue Equipment is registered or
licensed. The Borrower shall respond to all communications which
could affect the Agent's Lien in any such Included Revenue
Equipment promptly, and in any event shall provide copies of all
such correspondence, excluding routine correspondence relating to
purchases and sales of Included Revenue Equipment, to the Agent
promptly after receipt by the Borrower and concurrently with
transmission of any response or correspondence prepared by the
Borrower.
(c) The Borrower shall use its best efforts to obtain
as promptly as possible a valid, binding and enforceable
Landlord's Waiver from each Person which leases Real Estate to
the Borrower. In any event, not more than 90 days after the
Closing Date, the Borrower shall have delivered valid, binding
and enforceable Landlord's Waivers to the Agent with respect to
not less than the lesser of 80% of the number of doors covered by
the leases listed on Schedule 8.12 or 75% of the leases listed on
Schedule 8.12.
(d) If any Collateral is at any time in the possession
or control of any warehouseman, bailee or any of the Borrower's
agents or processors, then the Borrower shall notify the Agent
thereof and shall notify such Person of the Agent's security
interest in such Collateral and, upon the Agent's request,
instruct such Person to hold all such Collateral for the Agent's
account subject to the Agent's instructions.
(e) From time to time, the Borrower shall, upon the
Agent's request, execute and deliver confirmatory written
instruments pledging to the Agent, for the ratable benefit of the
Agent and the Lenders, the Collateral with respect to the
Borrower, but the Borrower's failure to do so shall not affect or
limit any security interest or any other rights of the Agent or
any Lender in and to the Collateral with respect to the Borrower.
So long as this Agreement is in effect and until all Obligations
(other than Surviving Indemnities) have been fully satisfied, the
Agent's Liens shall continue in full force and effect in all
Collateral (whether or not deemed eligible for the purpose of
calculating the Availability or as the basis for any advance,
loan, extension of credit, or other financial accommodation).
6.3 Location of Collateral. The Borrower represents and
warrants to the Agent and the Lenders that: (a) Schedule 8.12 is
a correct and complete list of the Borrower's chief executive
office, the location of its books and records, and the locations
of all of its other places of business; and (b) Schedule 8.12
correctly identifies any of such facilities and locations that
are not owned by the Borrower and sets forth the names of the
owners and lessors or sublessors of and, to the best of the
Borrower's knowledge, the holders of any mortgages on, such
facilities and locations. The Borrower covenants and agrees that
it will not (i) maintain any Collateral at any location other
than those locations listed for the Borrower on Schedule 8.12;
(ii) otherwise change or add to any of such locations without
giving notice of such changes and additions to the Agent no less
often than quarterly, or (iii) change the location of its chief
executive office from the location identified in Schedule 8.12,
unless it gives the Agent at least thirty (30) days' prior
written notice thereof and executes any and all financing
statements and other documents that the Agent requests in
connection therewith.
6.4 Title to, Liens on, and Sale and Use of Collateral.
The Borrower represents and warrants to the Agent and the Lenders
and agrees with the Agent and the Lenders that: (a) all of the
Collateral is and will continue to be owned by the Borrower free
and clear of all Liens whatsoever, except for Permitted Liens;
(b) the Agent's Liens in the Collateral will not be subject to
any prior Lien, except for Permitted Liens of the type specified
in clauses (e) and (j) of such defined term; (c) the Borrower
will use, store, and maintain the Collateral with all reasonable
care and will use such Collateral for lawful purposes only; and
(d) the Borrower will not, without the Agent's prior written
approval, sell, or dispose of or permit the sale or disposition
of any of the Collateral except for sales of Inventory in the
ordinary course of business and sales of Equipment as permitted
by Section 6.10. The inclusion of proceeds in the Collateral
shall not be deemed to constitute the Agent's or any Lender's
consent to any sale or other disposition of the Collateral except
as expressly permitted herein.
6.5 Appraisals. At the Agent's request in its sole
discretion whenever a Default or Event of Default exists, and at
such other times not more frequently than once a year as the
Borrower desires, the Borrower shall, at its expense, provide the
Agent with appraisals or updates thereof of any or all of the
Included Revenue Equipment, from a credentialed appraiser, and
prepared on a basis satisfactory to the Agent, such appraisals
and updates to include, without limitation, information required
by applicable law and regulation and by the internal policies of
the Lenders.
6.6 Access and Examination; Confidentiality.
(a) The Agent, accompanied by any Lender which so
elects, may at all reasonable times (and at any time when a
Default or Event of Default exists) have access to, examine,
audit, make extracts from or copies of and inspect any or all of
the Borrower's records, files, and books of account and the
Collateral, and discuss the Borrower's affairs with the
Borrower's officers and management. The Borrower will deliver to
the Agent any instrument necessary for the Agent to obtain
records from any service bureau maintaining records for the
Borrower. The Agent may, and at the direction of the Majority
Lenders shall, at any time when a Default or Event of Default
exists, and at the Borrower's expense, make copies of all of the
Borrower's books and records, or require the Borrower to deliver
such copies to the Agent. The Agent may, without expense to the
Agent, use such of the Borrower's respective personnel, supplies,
and premises as may be reasonably necessary for maintaining or
enforcing the Agent's Liens. The Agent shall have the right, at
any time, in the Agent's name or in the name of a nominee of the
Agent, to verify the validity, amount or any other matter
relating to the Accounts, Inventory, or other Collateral, by
mail, telephone, or otherwise.
(b) The Borrower agrees that, subject to the
Borrower's and the Agent's prior consent for uses other than in
a traditional tombstone (disclosing in such tombstone, however,
only the amount of the credit facility provided by, and the
parties to, this Agreement), which consents shall not be
unreasonably withheld or delayed, the Agent and each Lender may
use the Borrower's name in advertising and promotional material
and in conjunction therewith disclose the general terms of this
Agreement. The Agent and each Lender agree to take normal and
reasonable precautions and exercise due care to maintain the
confidentiality of all confidential information provided to the
Agent or such Lender by or on behalf of the Borrower, under this
Agreement or any other Loan Document, and neither the Agent, nor
such Lender nor any of their respective Affiliates shall use any
such information other than in connection with or in enforcement
of this Agreement and the other Loan Documents, except to the
extent that such information (i) was or becomes generally
available to the public other than as a result of disclosure by
the Agent or such Lender, or (ii) was or becomes available on a
nonconfidential basis from a source other than the Borrower,
provided that such source is not bound by a confidentiality
agreement with the Borrower known to the Agent or such Lender;
provided, however, that the Agent and any Lender may disclose
such information (1) at the request or pursuant to any
requirement of any Governmental Authority to which the Agent or
such Lender is subject or in connection with an examination of
the Agent or such Lender by any such Governmental Authority;
(2) pursuant to subpoena or other court process; (3) when
required to do so in accordance with the provisions of any
applicable requirement of law; (4) to the extent reasonably
required in connection with any litigation or proceeding
(including, but not limited to, any bankruptcy proceeding) to
which the Agent, any Lender or their respective Affiliates may be
party (or a party in interest with respect to any bankruptcy
proceeding); (5) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan
Document; (6) to the Agent's or such Lender's independent
auditors, accountants, attorneys and other professional advisors;
(7) to any prospective Participant or assignee under any
Assignment and Acceptance, actual or potential, provided that
such prospective Participant or assignee agrees to keep such
information confidential to the same extent required of the Agent
and the Lenders hereunder; (8) as expressly permitted under the
terms of any other document or agreement regarding
confidentiality to which the Borrower is party or is deemed party
with the Agent or such Lender, and (9) to its Affiliates.
6.7 Collateral Reporting. The Borrower shall provide the
Agent with the following documents at the following times in form
satisfactory to the Agent:
(a) on a weekly basis, a Borrowing Base Certificate
and at the same time, such supporting documentation as the Agent
may request;
(b) on a monthly basis, as of the end of each month,
and received by the end of the 20th day of the following month, a
report including all of the information provided in the Borrowing
Base Certificate;
(c) on a monthly basis, as of the end of each month,
and received by the Agent no later than the 20th day of the
following month, an aging of the Borrower's Accounts, together
with a reconciliation to the Borrower's general ledger, and the
Borrower's computation of ineligible Accounts and reserves
against Availability, certified as accurate and correct by a
Responsible Officer of the Borrower;
(d) on a monthly basis, as of the end of each month,
and received by the Agent no later than the 20th day of the
following month, an aging or open item listing of all Borrower's
accounts payable to the fifteen Account Debtors with the highest
amount of Accounts owed to the Borrower; provided that such
accounts payable information shall not be required with respect
to the Account Debtors to which the Borrower is indebted in an
amount not in excess of $50,000;
(e) on a monthly basis as of the end of each month,
and received by the Agent no later than the 20th day of the
following month (or more frequently if requested by the Agent),
Revenue Equipment reports certifying that the Agent's Liens are
first priority perfected Liens on all Included Revenue Equipment,
and indicating (i) the orderly liquidation value of such Included
Revenue Equipment based on the latest appraisal, (ii) all
additions to and deletions from the Included Revenue Equipment
during such month (and cumulatively from the date of the latest
appraisal), and (iii) the original acquisition cost of such
additions during such month and 70% thereof;
(f) such other reports as to the Collateral of the
Borrower as the Agent shall reasonably request from time to time;
and
(g) with the delivery of each of the foregoing, a
certificate of an officer of the Borrower certifying as to the
accuracy and completeness of the foregoing.
If any of the Borrower's records or reports of the
Collateral are prepared by an accounting service or other agent,
the Borrower hereby authorizes such service or agent to deliver
such records, reports, and related documents to the Agent, for
distribution to the Lenders. Any report required to be delivered
pursuant to this Section 6.7 on a day that is not a Business Day
may be delivered on the next Business Day after such report was
due.
6.8 Accounts.
(a) The Borrower hereby represents and warrants to the
Agent and the Lenders, with respect to the Borrower's Accounts,
that: (i) each existing Account represents, and each future
Account will represent, a bona fide sale or lease and delivery of
goods by the Borrower, or rendition of services by the Borrower,
in the ordinary course of the Borrower's business; (ii) each
existing Account is, and each future Account will be, for a
liquidated amount payable by the Account Debtor thereon on the
terms set forth in the invoice therefor or in the schedule
thereof delivered to the Agent, without any offset, deduction,
defense, or counterclaim except those known to the Borrower and
disclosed to the Agent and the Lenders pursuant to this
Agreement; (iii) no payment will be received with respect to any
Account, and no credit, discount, or extension, or agreement
therefor will be granted on any Account, except (A) in accordance
with the usual and normal business practices of the Borrowers or
(B) as reported to the Agent and the Lenders in accordance with
this Agreement; (iv) each copy of an invoice delivered to the
Agent by the Borrower will be a genuine copy of the original
invoice sent to the Account Debtor named therein; and (v) all
goods described in any invoice representing a sale of goods will
have been delivered to the Account Debtor and all services of the
Borrower described in any invoice representing the rendering of
services will have been performed, except that invoices for
freight or other charges for the shipment of goods may be issued
and dated as of the pick-up date.
(b) Borrower shall not re-date any invoice or sale or
make sales on extended dating beyond that customary in the
Borrower's business or extend or modify any Account. If the
Borrower becomes aware of any matter adversely affecting the
collectability of any Account or Account Debtor involving an
amount greater than $250,000, including information regarding the
Account Debtor's creditworthiness, the Borrower will promptly so
advise the Agent.
(c) Borrower shall not accept any note or other
instrument (except (i) a check or other instrument for the
immediate payment of money, or (ii) in its ordinary course of
business in connection with "workouts" and bankruptcy proceedings
involving account debtors) with respect to any Account without
the Agent's written consent. If the Agent consents to the
acceptance of any such instrument, it shall be considered as
evidence of the Account and not payment thereof and the Borrower
will promptly deliver such instrument to the Agent, endorsed by
the Borrower to the Agent in a manner satisfactory in form and
substance to the Agent. Regardless of the form of presentment,
demand, notice of protest with respect thereto, the Borrower
shall remain liable thereon until such instrument is paid in
full.
(d) The Borrower shall notify the Agent promptly of
all disputes and claims in excess of $100,000, individually, or
$250,000 in the aggregate with any single Account Debtor, and
agrees to settle, contest, or adjust such dispute or claim at no
expense to the Agent or any Lender. No discount, credit or
allowance shall be granted to any such Account Debtor without the
Agent's prior written consent, except for discounts, credits and
allowances made or given in the ordinary course of the Borrower's
business when no Event of Default exists hereunder. The Borrower
shall send the Agent a copy of each credit memorandum or
adjustment in excess of $500,000 as soon as issued or made. The
Agent may, and at the direction of the Majority Lenders shall, at
all times when an Event of Default exists hereunder, settle or
adjust disputes and claims directly with Account Debtors for
amounts and upon terms which the Agent or the Majority Lenders,
as applicable, shall consider advisable and, in all cases, the
Agent will credit the Borrower's Loan Account with only the net
amounts received by the Agent in payment of any Accounts.
6.9 Collection of Accounts; Payments.
(a) Until the Agent notifies the Borrower to the
contrary, the Borrower shall make collection of all Accounts and
other Collateral for the Agent, shall receive all payments as the
Agent's trustee, and shall immediately deliver all payments in
their original form duly endorsed in blank into a Payment Account
established for the account of the Borrower at a bank acceptable
to Agent and subject to documentation acceptable to Agent. All
funds deposited into a Payment Account shall remain subject to
the control of the Borrower until such time as a Triggering Event
shall occur. Upon the happening of a Triggering Event, all funds
deposited into a Payment Account shall be wire transferred each
day to the Agent for application against outstanding Revolving
Loans. In the event that a Triggering Event no longer exists for
a period of ninety (90) consecutive days, the Agent shall
instruct the bank maintaining a Payment Account to cease
transferring funds to the Agent and to resume following the
instructions of the Borrower. If the Agent requests, the
Borrower shall establish a lock-box service for collections of
Accounts at a bank acceptable to the Agent and pursuant to
documentation satisfactory to the Agent. If such lock-box
service is established, the Borrower shall instruct all Account
Debtors to make all payments directly to the address established
for such service. If, notwithstanding such instructions, the
Borrower receives any proceeds of Accounts, it shall receive such
payments as the Agent's trustee, and shall immediately deliver
such payments to the Agent in their original form duly endorsed
in blank or deposit them into a Payment Account, as the Agent may
direct. All collections received in any such lock-box or Payment
Account or directly by the Borrower or the Agent, and all funds
in any Payment Account or other account to which such collections
are deposited shall be subject to the Agent's sole control. The
Agent or the Agent's designee may, at any time following the
occurrence and during the continuance of any Event of Default,
notify Account Debtors that the Accounts have been assigned to
the Agent and of the Agent's security interest therein, and may
collect them directly and charge the collection costs and
expenses to the Borrower's Loan Account as a Revolving Loan. So
long as an Event of Default has occurred and is continuing, the
Borrower, at the Agent's request, shall execute and deliver to
the Agent such documents as the Agent shall require to grant the
Agent access to any post office box in which collections of
Accounts are received.
(b) If sales of Inventory are made, or services are
rendered, for cash, the Borrower shall immediately deliver to the
Agent or deposit into a Payment Account the cash which the
Borrower receives.
(c) All payments, including immediately available
funds received by the Agent at a bank designated by it, received
by the Agent on account of Accounts or as proceeds of other
Collateral will be the Agent's sole property for its benefit and
the benefit of the Lenders and will be credited to the Borrower's
Loan Account (conditional upon final collection) immediately upon
receipt of such funds.
(d) In the event the Borrower repays all of the
Obligations upon the termination of this Agreement or upon
acceleration of the Obligations, other than through the Agent's
receipt of payments on account of the Accounts or proceeds of the
other Collateral, such payment will be credited (conditional upon
final collection) to the Borrower's Loan Account immediately upon
receipt of collected funds.
6.10 Equipment.
(a) The Borrower represents and warrants to the Agent
and the Lenders and agrees with the Agent and the Lenders that
all of the Equipment owned by the Borrower is and will be used or
held for use in the Borrower's business, and is and will be fit
for such purposes. The Borrower shall keep and maintain its
Equipment in good operating condition and repair (ordinary wear
and tear excepted) and shall make all necessary replacements
thereof.
(b) The Borrower shall promptly inform the Agent of
any material additions to or deletions from the Equipment (other
than Excluded Property) and, as required by Section 6.7, all
additions to and deletions from Included Revenue Equipment. The
Borrower will not, without the Agent's prior written consent,
alter or remove any identifying manufacturers serial number,
vehicle identification number or similar symbol or number on any
of the Borrower's Equipment consisting of Collateral.
(c) The Borrower shall not, without the Agent's prior
written consent, sell, lease as a lessor, or otherwise dispose of
any of the Borrower's Equipment (other than Excluded Revenue
Equipment); provided, however, that the Borrower may dispose of
Included Revenue Equipment as permitted by Section 6.10(d), and
may dispose of obsolete or unusable Equipment other than Included
Revenue Equipment which is obsolete or unusable and has a book
value no greater than $1,000,000 in the aggregate in any Fiscal
Year, or $3,000,000 in the aggregate during the term of this
Agreement, without the Agent's consent, subject to the conditions
set forth in the next sentence. In the event any of such
Equipment other than Included Revenue Equipment is sold,
transferred or otherwise disposed of pursuant to the proviso
contained in the immediately preceding sentence, (1) if such
sale, transfer or disposition is effected without replacement of
such Equipment, or such Equipment is replaced by Equipment leased
by the Borrower or by Equipment purchased by the Borrower subject
to a Lien, then the Borrower shall deliver all of the net cash
proceeds of any such sale, transfer or disposition to the Payment
Account, or (2) if such sale, transfer or disposition is made in
connection with the purchase by the Borrower of replacement
Equipment, then the Borrower shall use the proceeds of such sale,
transfer or disposition to purchase such replacement Equipment
and shall deliver to the Agent written evidence of the use of the
proceeds for such purchase. All replacement Equipment purchased
by the Borrower shall be free and clear of all Liens except the
Agent's Lien and Liens specified in clause (j) of the definition
of Permitted Liens.
(d) The Borrower shall not, without the Agent's prior
written consent, sell, lease as a lessor or otherwise dispose of
any Included Revenue Equipment; provided, however, that so long
as no Event of Default has occurred and is continuing, the
Borrower may dispose of Included Revenue Equipment having an
orderly liquidation value no greater than $2,000,000 in the
aggregate in any month and no greater than $8,000,000 in the
aggregate in any Fiscal Year, if such dispositions are made in
the ordinary course of the Borrower's business and consistent
with the Borrower's past practice. The net cash proceeds of such
dispositions shall be delivered or used as provided in clauses
(1) and (2) of the second sentence of Section 6.10(c), as
applicable.
6.11 Assigned Contracts. The Borrower shall fully perform
all of its obligations under each of the Assigned Contracts, and
shall enforce all of its rights and remedies thereunder as it
deems appropriate in its business judgment; provided, however,
that the Borrower shall not take any action or fail to take any
action with respect to its Assigned Contracts which would result
in a waiver or other loss of any material right or remedy of the
Borrower thereunder. Without limiting the generality of the
foregoing, the Borrower shall take all action necessary or
appropriate to permit, and shall not take any action which would
have any materially adverse effect upon, the full enforcement of
all indemnification rights under its Assigned Contracts. The
Borrower shall not, without the Agent's and the Majority Lenders'
prior written consent, modify, amend, supplement, compromise,
satisfy, release, or discharge any of its Assigned Contracts, any
collateral securing the same, any Person liable directly or
indirectly with respect thereto, or any agreement relating to any
of its Assigned Contracts or the collateral therefor if any
modification or other action would materially adversely affect
the business, operations or condition of the Borrower. The
Borrower shall notify the Agent and the Lenders in writing,
promptly after the Borrower becomes aware thereof, of any event
or fact which could give rise to a claim by it for
indemnification under any of its Assigned Contracts, and shall
diligently pursue such right and report to the Agent on all
further developments with respect thereto. The Borrower shall
remit directly to the Payment Account, all amounts received by
the Borrower as indemnification or otherwise pursuant to its
Assigned Contracts. If the Borrower shall fail after the Agent's
demand to pursue diligently any right under its Assigned
Contracts, or if an Event of Default then exists, the Agent may,
and at the direction of the Majority Lenders shall, directly
enforce such right in its own or the Borrower's name and may
enter into such settlements or other agreements with respect
thereto as the Agent or the Majority Lenders, as applicable,
shall determine. In any suit, proceeding or action brought by
the Agent for the benefit of the Lenders under any Assigned
Contract for any sum owing thereunder or to enforce any provision
thereof, the Borrower shall indemnify and hold the Agent and
Lenders harmless from and against all expense, loss or damage
suffered by reason of any defense, setoff, counterclaims,
recoupment, or reduction of liability whatsoever of the obligor
thereunder arising out of a breach by the Borrower of any
obligation thereunder or arising out of any other agreement,
indebtedness or liability at any time owing from the Borrower to
or in favor of such obligor or its successors. All such
obligations of the Borrower shall be and remain enforceable only
against the Borrower and shall not be enforceable against the
Agent. Notwithstanding any provision hereof to the contrary, the
Borrower shall at all times remain liable to observe and perform
all of its duties and obligations under its Assigned Contracts,
and the Agent's or any Lender's exercise of any of their
respective rights with respect to the Collateral shall not
release the Borrower from any of such duties and obligations.
Neither the Agent nor any Lender shall be obligated to perform or
fulfill any of the Borrower's duties or obligations under its
Assigned Contracts or to make any payment thereunder, or to make
any inquiry as to the nature or sufficiency of any payment or
property received by it thereunder or the sufficiency of
performance by any party thereunder, or to present or file any
claim, or to take any action to collect or enforce any
performance, any payment of any amounts, or any delivery of any
property.
6.12 Documents, Instruments, and Chattel Paper. The
Borrower represents and warrants to the Agent and the Lenders
that (a) all documents, instruments, and chattel paper
describing, evidencing, or constituting Collateral, and all
signatures and endorsements thereon, are and will be complete,
valid, and genuine to the best of the Borrower's knowledge or
except as is disclosed to the Agent, and (b) all goods evidenced
by such documents, instruments, and chattel paper are and will be
owned by the Borrower, free and clear of all Liens other than
Permitted Liens.
6.13 Right to Cure. The Agent may, in its discretion, and
shall, at the direction of the Majority Lenders, pay any amount
or do any act required of the Borrower hereunder or under any
other Loan Document in order to preserve, protect, maintain or
enforce the Obligations, the Collateral or the Agent's Liens
therein, and which the Borrower fails to pay or do, including,
without limitation, payment of any judgment against the Borrower,
any insurance premium, any warehouse charge, any finishing or
processing charge, any landlord's claim, and any other Lien upon
or with respect to the Collateral. All payments that the Agent
makes under this Section 6.13 and all out-of-pocket costs and
expenses that the Agent pays or incurs in connection with any
action taken by it hereunder shall be charged to the Borrower's
Loan Account as a Revolving Loan . Any payment made or other
action taken by the Agent under this Section 6.13 shall be
without prejudice to any right to assert an Event of Default
hereunder and to proceed thereafter as herein provided.
6.14 Power of Attorney. The Borrower hereby appoints the
Agent and the Agent's designee as the Borrower's attorney in
fact, with power: (a) to endorse the Borrower's name on any
checks, notes, acceptances, money orders, or other forms of
payment or security that come into the Agent's or any Lender's
possession; (b) to sign the Borrower's name on any invoice, ▇▇▇▇
of lading, warehouse receipt or other document of title relating
to any Collateral, on drafts against customers, on assignments of
Accounts, on notices of assignment, financing statements and
other public records; (c) so long as any Event of Default has
occurred and is continuing, to notify the post office authorities
to change the address for delivery of the Borrower's mail to an
address designated by the Agent and to receive, open and dispose
of all mail addressed to the Borrower; (d) to send requests for
verification of Accounts to customers or Account Debtors
according to the Agent's usual procedures; and (e) to do all
things necessary to carry out this Agreement. The Borrower
ratifies and approves all acts of such attorney. None of the
Lenders or the Agent nor their attorneys will be liable for any
acts or omissions or for any error of judgment or mistake of fact
or law. This power, being coupled with an interest, is
irrevocable until this Agreement has been terminated and the
Obligations (other than Surviving Indemnities) have been fully
satisfied.
6.15 The Agent's and Lenders' Rights, Duties and
Liabilities. The Borrower assumes all responsibility and
liability arising from or relating to the use, sale or other
disposition of the Collateral. Neither the Agent, nor any
Lender, nor any of their respective officers, directors,
employees or agents shall be liable or responsible in any way for
the safekeeping of any of the Collateral, or for any loss or
damage thereto, or for any diminution in the value thereof, or
for any act of default of any warehouseman, carrier, forwarding
agency or other person whomsoever, all of which shall be at the
Borrower's sole risk. The Obligations shall not be affected by
any failure of the Agent or any Lender to take any steps to
perfect the Agent's Liens or to collect or realize upon the
Collateral, nor shall loss of or damage to the Collateral release
the Borrower from any of the Obligations. So long as any Event
of Default shall have occurred and be continuing, the Agent may
(but shall not be required to), and at the direction of the
Majority Lenders shall, without notice to or consent from the
Borrower, ▇▇▇ upon or otherwise collect, extend the time for
payment of, modify or amend the terms of, compromise or settle
for cash, credit, or otherwise upon any terms, grant other
indulgences, extensions, renewals, compositions, or releases, and
take or omit to take any other action with respect to the
Collateral, any security therefor, any agreement relating
thereto, any insurance applicable thereto, or any Person liable
directly or indirectly in connection with any of the foregoing,
without discharging or otherwise affecting the liability of the
Borrower for the Obligations or under this Agreement or any other
agreement now or hereafter existing between the Agent and/or any
Lender and the Borrower, except to the extent that Obligations
are paid as a result of any such action.
ARTICLE 7
BOOKS AND RECORDS; FINANCIAL INFORMATION; NOTICES
7.1 Books and Records. The Borrower shall maintain, at all
times, correct and complete books, records and accounts in which
complete, correct and timely entries are made of its transactions
in accordance with GAAP applied consistently with the audited
Financial Statements required to be delivered pursuant to
Section 7.2(a). The Borrower shall, by means of appropriate
entries, reflect in such accounts and in all Financial Statements
proper liabilities and reserves for all taxes and proper
provision for depreciation and amortization of property and bad
debts, all in accordance with GAAP. The Borrower shall maintain
at all times books and records pertaining to the Collateral in
such detail, form and scope as the Agent or any Lender shall
reasonably require, including, but not limited to, records of
(a) all payments received and all credits and extensions granted
with respect to the Accounts; (b) the return, rejections,
repossession, stoppage in transit, loss, damage, or destruction
of any Inventory; and (c) all other dealings affecting the
Collateral.
7.2 Financial Information. The Borrower shall promptly
furnish to the Agent, in sufficient copies for distribution by
the Agent to each Lender, all such financial information as the
Agent or any Lender shall reasonably request, and notify its
auditors and accountants that the Agent, on behalf of the
Lenders, is authorized to obtain such information directly from
them. Without limiting the foregoing, the Borrower will furnish
to the Agent, in sufficient copies for distribution by the Agent
to each Lender, in such detail as the Agent or the Lenders shall
request, the following:
(a) As soon as available, but in any event not later
than one hundred twenty (120) days after the close of each Fiscal
Year, consolidated audited and consolidating unaudited balance
sheets, statements of income and expense, cash flows and of
stockholders' equity for the Parent, the Borrower and their
Subsidiaries for such Fiscal Year, and the accompanying notes
thereto, setting forth in each case in comparative form figures
for the previous Fiscal Year, all in reasonable detail, fairly
presenting the financial position and the results of operations
of the Parent, the Borrower and their Subsidiaries as at the date
thereof and for the Fiscal Year then ended, and prepared in
accordance with GAAP. Such statements shall be examined in
accordance with generally accepted auditing standards by and, in
the case of such statements performed on a consolidated basis,
accompanied by a report thereon unqualified as to scope of
independent certified public accountants selected by the Borrower
and reasonably satisfactory to the Agent. The Borrower,
simultaneously with retaining such independent public accountants
to conduct such annual audit, shall send a letter to such
accountants, with a copy to the Agent and the Lenders, notifying
such accountants that one of the primary purposes for retaining
such accountants' services and having audited financial
statements prepared by them is for use by the Agent and the
Lenders.
(b) As soon as available, but in any event not later
than thirty (30) days after the end of each month (other than a
month which is the end of a fiscal quarter), consolidated
unaudited balance sheets of the Parent, the Borrower and their
Subsidiaries as at the end of such month, and consolidated
unaudited statements of income and expense and cash flows for the
Parent, the Borrower and their Subsidiaries for such month and
for the period from the beginning of the Fiscal Year to the end
of such month, all in reasonable detail, fairly presenting the
financial position and results of operations of the Parent, the
Borrower and their consolidated Subsidiaries as at the date
thereof and for such periods, and prepared in accordance with
GAAP applied consistently with the audited Financial Statements
required to be delivered pursuant to Section 7.2(a). The
Borrower shall certify by a certificate signed by its chief
financial officer that all such statements have been prepared in
accordance with GAAP and present fairly, subject to normal year-
end adjustments, the Borrower's financial position as at the
dates thereof and its results of operations for the periods then
ended. With respect to the last month of each Fiscal Year, the
consolidated financial information described in this Section
7.2(b) shall be provided on a preliminary basis and in draft form
not later than sixty (60) days after the close of such month.
(c) As soon as available, but in any event not later
than forty-five (45) days after the close of each fiscal quarter
other than the fourth quarter of a Fiscal Year, consolidated and
consolidating unaudited balance sheets of the Parent, the
Borrower and their Subsidiaries as at the end of such quarter,
and consolidated and consolidating unaudited statements of income
and expense and statement of cash flows for the Parent, the
Borrower and their Subsidiaries for such quarter and for the
period from the beginning of the Fiscal Year to the end of such
quarter, all in reasonable detail, fairly presenting the
financial position and results of operation of the Parent, the
Borrower and their Subsidiaries as at the date thereof and for
such periods, prepared in accordance with GAAP consistent with
the audited Financial Statements required to be delivered
pursuant to Section 7.2(a). The Borrower shall certify by a
certificate signed by its chief financial officer that all such
statements have been prepared in accordance with GAAP and present
fairly, subject to normal year-end adjustments, the Borrower's
financial position as at the dates thereof and its results of
operations for the periods then ended.
(d) With each of the audited Financial Statements
delivered pursuant to Section 7.2(a), a certificate of the
independent certified public accountants that examined such
statement to the effect that they have reviewed and are familiar
with this Agreement and that, in examining such Financial
Statements, they did not become aware of any fact or condition
which at the time of such examination constituted a Default or
Event of Default, except for those, if any, described in
reasonable detail in such certificate.
(e) With each of the annual audited Financial
Statements delivered pursuant to Section 7.2(a), and within forty-
five (45) days after the end of each of the first three fiscal
quarters, a certificate of the chief financial officer of the
Borrower (i) setting forth in reasonable detail the calculations
required to establish that the Borrower was in compliance with
the covenants set forth in Sections 9.21 through 9.24 during the
period covered in such Financial Statements and as at the end
thereof, and (ii) stating that, except as explained in reasonable
detail in such certificate, (A) all of the representations and
warranties of the Borrower contained in this Agreement and the
other Loan Documents are correct and complete in all material
respects as at the date of such certificate as if made at such
time, (B) the Borrower is, at the date of such certificate, in
compliance in all material respects with all of its respective
covenants and agreements in this Agreement and the other Loan
Documents, (C) no Default or Event of Default then exists or
existed during the period covered by such Financial Statements,
(D) describing in reasonable detail all material trends, changes,
and developments in each and all Financial Statements; and
(E) describing the variances of the figures in the corresponding
budgets and prior Fiscal Year financial statements. If such
certificate discloses that a representation or warranty is not
correct or complete, or that a covenant has not been complied
with, or that a Default or Event of Default existed or exists,
such certificate shall set forth what action the Borrower has
taken or proposes to take with respect thereto.
(f) No sooner than 60 days and not less than 30 days
prior to the beginning of each Fiscal Year, annual forecasts (to
include forecasted consolidated balance sheets, statements of
income and expenses and statements of cash flow) for the Parent,
the Borrower and their Subsidiaries as at the end of and for each
quarter of such Fiscal Year; provided, that each Lender
acknowledges that, as of the date of this Agreement, such
requirement has been satisfied with respect to Fiscal Year 1997.
(g) Promptly after filing with the PBGC and the IRS, a
copy of each annual report or other filing filed with respect to
each Plan of the Borrower.
(h) Promptly upon receipt thereof by the Borrower, a
copy of each actuarial report received by the Borrower from an
outside Person concerning any Pension Plan.
(i) Promptly after receipt of actuarial information
relating to any Multi-Employer Plan reflecting a change in the
amount of the Unfunded Pension Liability of the Borrower, notice
of the aggregate amount of Unfunded Pension Liability of the
Borrower.
(j) Promptly upon the filing thereof, copies of all
reports, if any, to or other documents filed by the Parent, the
Borrower or any of their Subsidiaries with the Securities and
Exchange Commission under the Exchange Act, and all reports,
notices, or statements sent or received by the Parent, the
Borrower or any of their Subsidiaries to or from the holders of
any equity interests of the Parent, the Borrower (other than
routine non-material correspondence sent by shareholders of the
Parent to the Parent) or of any Debt for borrowed money of the
Parent, the Borrower or any of their Subsidiaries registered
under the Securities Act of 1933 or to or from the trustee under
any indenture under which the same is issued.
(k) As soon as available, but in any event not later
than 15 days after the Parent's or the Borrower's receipt
thereof, a copy of all management reports and management letters
prepared for the Parent or the Borrower or any of their
Subsidiaries by the independent certified public accountants of
the Parent or the Borrower.
(l) Promptly after their preparation, copies of any
and all proxy statements, financial statements, and reports which
the Parent makes available to its shareholders.
(m) Promptly after filing with the IRS, a copy of each
income tax return filed by the Parent, the Borrower or by any of
their Subsidiaries.
(n) Such additional information as the Agent and/or
any Lender may from time to time reasonably request regarding the
financial and business affairs of the Parent, the Borrower or any
of their Subsidiaries.
7.3 Notices to the Lenders. The Borrower shall notify the
Agent, and, with respect to matters described in clauses (a),
(c), (d), (e), (f) and (g), shall also notify each Lender, in
writing of the following matters at the following times:
(a) Promptly after becoming aware of any Default or
Event of Default.
(b) Promptly after becoming aware of the assertion by
the holder of any capital stock of any Loan Party or of any Debt
of any Loan Party of $5,000,000 or more that a default exists
with respect thereto or that such Loan Party is not in compliance
with the terms thereof, or the threat or commencement by such
holder of any enforcement action because of such asserted default
or non-compliance.
(c) Promptly after becoming aware of any material
adverse change in the property, business, operations, or
condition (financial or otherwise) of the Parent and its
Subsidiaries taken as a whole.
(d) Promptly after becoming aware of any pending or
threatened action, suit, proceeding, or counterclaim by any
Person, or any pending or threatened investigation by a
Governmental Authority, which may materially and adversely affect
the Collateral, the repayment of the Obligations, the Agent's or
any Lender's rights under the Loan Documents, or the property,
business, operations, or condition (financial or otherwise) of a
Loan Party.
(e) Promptly after becoming aware of any pending or
threatened strike, work stoppage, unfair labor practice claim, or
other labor dispute affecting the Parent, the Borrower or any of
their Subsidiaries in a manner which could reasonably be expected
to have a Material Adverse Effect.
(f) Promptly after becoming aware of any violation of
any law, statute, regulation, or ordinance of a Governmental
Authority affecting the Parent, the Borrower or any of their
Subsidiaries which could reasonably be expected to have a
Material Adverse Effect.
(g) Promptly after receipt of any notice of any
violation by the Parent, the Borrower or any of their
Subsidiaries of any Environmental Law which could reasonably be
expected to have a Material Adverse Affect or that any
Governmental Authority has asserted that the Parent, the Borrower
or any of their Subsidiaries is not in compliance with any
Environmental Law or is investigating such Person's compliance
therewith.
(h) Promptly after receipt of any written notice that
the Parent, the Borrower or any of their Subsidiaries is or may
be liable to any Person as a result of the Release or threatened
Release of any Contaminant or that the Parent, the Borrower or
any of their Subsidiaries is subject to investigation by any
Governmental Authority evaluating whether any remedial action is
needed to respond to the Release or threatened Release of any
Contaminant which, in any case, is reasonably likely to give rise
to liability in excess of $5,000,000.
(i) Promptly after receipt of any written notice of
the imposition of any Environmental Lien against any Property of
the Parent, the Borrower or any of their Subsidiaries.
(j) Any change in the Borrower's name, state of
incorporation, or form of organization, trade names or styles
under which the Borrower will create Accounts, or to which
instruments in payment of Accounts may be made payable and, with
respect to any jurisdiction where the filing of a financing
statement with the Secretary of State (or comparable central
filing location) of such jurisdiction would be insufficient to
perfect the security interest of the Agent in the Collateral
located in such jurisdiction if there is only one place of
business in such jurisdiction, notice of any reduction in the
number of places of business in such jurisdiction if such
reduction results in three or fewer places of business within
such jurisdiction, in each case at least thirty (30) days prior
thereto (except that, in the case of any change in trade names or
styles, notice shall be sufficient if given at any time prior to
such change).
(k) Within ten (10) Business Days after the Parent,
the Borrower or any ERISA Affiliate knows or has reason to know,
that an ERISA Event or a nonexempt prohibited transaction (as
defined in Sections 406 of ERISA and 4975 of the Code) has
occurred, and, when known, any action taken or threatened by the
IRS, the DOL or the PBGC with respect thereto.
(l) Upon request, or, in the event that such filing
reflects a significant change with respect to the matters covered
thereby, within ten (10) Business Days after the filing thereof
with the PBGC, the DOL or the IRS, as applicable, or, in the case
of a Multi-Employer Plan, within ten (10) Business Days after
receipt thereof by the Borrower or any ERISA Affiliate, copies of
the following: (i) each annual report (form 5500 series),
including Schedule B thereto, filed with the PBGC, the DOL or the
IRS with respect to each Plan, (ii) a copy of each funding waiver
request filed with the PBGC, the DOL or the IRS with respect to
any Plan and all communications received by the Parent, the
Borrower or any ERISA Affiliate from the PBGC, the DOL or the IRS
with respect to such request, and (iii) a copy of each other
filing or notice filed with the PBGC, the DOL or the IRS, with
respect to each Plan of either the Parent, the Borrower or any
ERISA Affiliate.
(m) Upon request, copies of each actuarial report for
any Plan or Multi-employer Plan and annual report for any Multi-
employer Plan; and within ten (10) Business Days after receipt
thereof by the Parent, the Borrower or any ERISA Affiliate,
copies of the following: (i) any notices of the PBGC's intention
to terminate a Plan or to have a trustee appointed to administer
such Plan; (ii) any favorable or unfavorable determination letter
from the IRS regarding the qualification of a Plan under
Section 401(a) of the Code; or (iii) any notice from a Multi-
employer Plan regarding the imposition of withdrawal liability.
(n) Within ten (10) Business Days upon the occurrence
thereof: (i) any changes in the benefits of any existing Plan,
the establishment of any new Plan or the commencement of
contributions to any Plan to which the Parent, the Borrower or
any ERISA Affiliate was not previously contributing which
increase the Borrower's annual costs with respect thereto by an
amount in excess of $5,000,000; or (ii) any failure by the
Parent, the Borrower or any ERISA Affiliate to make a required
installment or any other required payment under Section 412 of
the Code on or before the due date for such installment or
payment.
(o) Within ten (10) Business Days after the Parent,
the Borrower or any ERISA Affiliate knows or has reason to know
that any of the following events has or will occur: (i) a Multi-
employer Plan has been or will be terminated; (ii) the
administrator or plan sponsor of a Multi-employer Plan intends to
terminate a Multi-employer Plan; or (iii) the PBGC has instituted
or will institute proceedings under Section 4042 of ERISA to
terminate a Multi-employer Plan.
(p) Promptly after becoming aware of the occurrence of
any strike by employees of a Loan Party.
Each notice given under this Section shall describe the subject
matter thereof in reasonable detail, and shall set forth the
action that the Parent, the Borrower, any of their Subsidiaries,
or any ERISA Affiliate, as applicable, has taken or proposes to
take with respect thereto. To the extent that such notices are
required to be given upon a Person becoming aware of an indicated
matter or upon a Person's receipt of an indicated or other
communication, such Person shall be a Responsible Officer, any
comparable officer of the Parent, or any senior vice president or
any executive vice president of the Parent or the Borrower.
ARTICLE 8
GENERAL WARRANTIES AND REPRESENTATIONS
Each Loan Party warrants and represents to the Agent
and the Lenders that except as hereafter disclosed to and
accepted by the Agent and the Majority Lenders in writing:
8.1 Authorization, Validity, and Enforceability of this
Agreement and the Loan Documents. Each Loan Party has the
corporate power and authority to execute, deliver and perform
this Agreement and the other Loan Documents, and in the case of
the Borrower to incur the Obligations, and to grant to the Agent
Liens upon and security interests in the Collateral. Each Loan
Party has taken all necessary corporate action (including without
limitation, obtaining approval of its stockholders if necessary)
to authorize its execution, delivery, and performance of this
Agreement and the other Loan Documents. No consent, approval, or
authorization of, or declaration or filing with, any Governmental
Authority, and no consent of any other Person, is required in
connection with the each Loan Party's execution, delivery and
performance of this Agreement and the other Loan Documents,
except for those already duly obtained. This Agreement and the
other Loan Documents have been duly executed and delivered by
each Loan Party, and constitute its legal, valid and binding
obligations enforceable against it in accordance with their
respective terms without defense, setoff or counterclaim. Each
Loan Party's execution, delivery, and performance of this
Agreement and the other Loan Documents do not and will not
conflict with, or constitute a violation or breach of, or
constitute a default under, or result in the creation or
imposition of any Lien upon the Property of such Loan Party or
any of its Subsidiaries by reason of the terms of (a) any
contract, mortgage, Lien (other than the Agent's Lien), lease,
agreement, indenture, or instrument to which such Loan Party is a
party or which is binding upon it, (b) any Requirement of Law
applicable to such Loan Party or any of its Subsidiaries, or (c)
the certificate or articles of incorporation or by-laws of such
Loan Party or any of its Subsidiaries.
8.2 Validity and Priority of Security Interest. The
provisions of this Agreement and the other Loan Documents create
legal and valid Liens on all the Collateral in favor of the
Agent, for the ratable benefit of the Lenders, and such Liens
constitute perfected and continuing Liens on all the Collateral,
having priority over all other Liens on the Collateral (other
than Liens specified in clauses (e) or (j) of the term Permitted
Liens), securing all the Obligations, and enforceable against the
Borrower (and other Loan Parties as to Loan Documents to which
they are parties) and all third parties.
8.3 Organization and Qualification. Each Loan Party (a) is
duly incorporated and organized and validly existing in good
standing under the laws of the state of its incorporation, (b) is
qualified to do business as a foreign corporation and is in good
standing in the jurisdictions set forth on Schedule 8.3 which are
the only jurisdictions in which qualification is necessary in
order for it to own or lease its property and conduct its
business and (c) has all requisite power and authority to conduct
its business and to own its property.
8.4 Corporate Name; Prior Transactions. During the five
(5) year period ending on the Closing Date, no Loan Party has not
been known by or used any other corporate or fictitious name, or
been a party to any merger or consolidation, or acquired all or
substantially all of the assets of any Person, or acquired any of
its property outside of the ordinary course of business.
8.5 Subsidiaries and Affiliates. Schedule 8.5 is a correct
and complete list of the name and relationship to the Loan
Parties of each and all of their Subsidiaries and other
Affiliates. Each such Subsidiary is (a) duly incorporated and
organized and validly existing in good standing under the laws of
its state of incorporation set forth on Schedule 8.5, and
(b) qualified to do business as a foreign corporation and in good
standing in each jurisdiction in which the failure to so qualify
or be in good standing could reasonably be expected to have a
material adverse effect on any such Subsidiary's business,
operations, prospects, property, or condition (financial or
otherwise) and (c) has all requisite power and authority to
conduct its business and own its property.
8.6 Financial Statements and Projections.
(a) The Borrower has delivered to the Agent and the
Lenders the audited balance sheet and related statements of
income, retained earnings, cash flows, and changes in
stockholders equity for the Borrower and its Subsidiaries as of
December 31, 1995, and for the Fiscal Year then ended,
accompanied by the report thereon of the Borrower's independent
certified public accountants, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP. The Borrower
has also delivered to the Agent and the Lenders the internally
prepared unaudited balance sheet and related statements of income
and cash flows for the Borrower and its Subsidiaries as of August
31, 1996. Such financial statements are attached hereto as
Exhibit F.
(b) The Latest Projections when submitted to the
Lenders as required herein represent the Borrower's best estimate
of the future financial performance of the Borrower and its
consolidated Subsidiaries for the periods set forth therein. The
Latest Projections have been prepared on the basis of the
assumptions set forth therein, which the Borrower believes are
fair and reasonable in light of current and reasonably
foreseeable business conditions at the time submitted to the
Lender.
(c) The pro forma consolidated balance sheet of the
Parent, the Borrower and their Subsidiaries as at June 30, 1996,
as described in Form 10 presents fairly and accurately their
consolidated financial condition as at such date assuming the
transactions contemplated by the Transition Agreements had
occurred on such date and the Initial Funding Date had been such
date, and has been prepared in accordance with GAAP.
8.7 Capitalization. As of the date of this Agreement, the
Borrower's authorized capitalized stock consists of 100,000
shares of common stock, par value $10.00 per share, of which
100,000 shares are validly issued and outstanding, fully paid and
non-assessable.
8.8 Solvency. The Borrower is Solvent prior to and after
giving effect to the making of the Revolving Loans to be made on
the Initial Funding Date and the issuance of the Letters of
Credit to be issued on the Initial Funding Date, and shall remain
Solvent during the term of this Agreement.
8.9 Debt. After giving effect to the making of the
Revolving Loans to be made on the Initial Funding Date, the Loan
Parties and their Subsidiaries have no Debt, except (a) the
Obligations, (b) Debt described on Schedule 8.9, and (c) trade
payables and other contractual obligations arising in the
ordinary course of business.
8.10 Restricted Payments. From June 30, 1996 to the Closing
Date, no Restricted Payments were declared, paid, or made upon or
in respect of any capital stock or other securities of the Parent
or any of its Subsidiaries.
8.11 Title to Property. Except as set forth on
Schedule 8.12 hereto, the Borrower has good and marketable title
in fee simple to its Real Estate listed in Schedule 8.12, and
each of the Loan Parties has good, indefeasible, and merchantable
title to all of its Property (including, without limitation, the
assets reflected on the August 31, 1996 Financial Statements
delivered to the Agent and the Lenders, except as disposed of in
the ordinary course of business since the date thereof), free of
all Liens except Permitted Liens.
8.12 Real Estate; Leases. Schedule 8.12 sets forth as of
the date of this Agreement a correct and complete list of all
Real Estate owned in fee simple by any Loan Party, all leases and
subleases of real or personal property by any Loan Party as
lessee or sublessee (other than leases of personal property as to
which each Loan Party is lessee or sublessee for which the value
of such personal property is less than $250,000 individually or
$5,000,000 in the aggregate).
8.13 Proprietary Rights. Schedule 8.13 sets forth a correct
and complete list of all of the Proprietary Rights of each Loan
Party as of the date hereof. None of such Proprietary Rights is
subject to any licensing agreement or similar arrangement except
as set forth on Schedule 8.13. To the best knowledge of the Loan
Parties, none of the Proprietary Rights infringes on or conflicts
with any other Person's rights, and no other Person's property
infringes on or conflicts with the Proprietary Rights. The
Proprietary Rights described on Schedule 8.13 constitute all of
the software, data, documentation, advertising and promotional
materials, and other Proprietary Rights reasonably necessary or
useful to the current and anticipated future conduct of each Loan
Party's business and upon Default the Agent or its designee shall
be entitled to use and exercise all such property and Proprietary
Rights. The Former Parent and the Parent have entered into
valid, binding, and enforceable agreements transferring, or
licensing for a period ending not prior to the Stated Termination
Date, to the Borrower all Proprietary Rights reasonably necessary
or useful to the conduct of the Borrower's business.
8.14 Trade Names and Terms of Sale. All trade names or
styles under which the Borrower or any of its Subsidiaries will
create Accounts, or to which instruments in payment of Accounts
may be made payable, are listed on Schedule 8.14.
8.15 Litigation. Except as set forth on Schedule 8.15,
there is no pending or (to the best of the Loan Parties'
knowledge) threatened, action, suit, proceeding, or counterclaim
by any Person, or investigation by any Governmental Authority, or
any basis for any of the foregoing, which could reasonably be
expected to cause a Material Adverse Effect.
8.16 Restrictive Agreements. None of the Loan Parties nor
any of their Subsidiaries is a party to any contract or
agreement, or subject to any charter or other corporate
restriction, which affects its ability to execute, deliver, and
perform the Loan Documents and repay the Obligations or which
materially and adversely affects or, insofar as the Loan Parties
can reasonably foresee, could materially and adversely affect,
the property, business, operations, or condition (financial or
otherwise) of the Loan Parties or any of their Subsidiaries, or
would in any respect cause a Material Adverse Effect.
8.17 Labor Disputes. Except as set forth on Schedule 8.17,
(a) there is no collective bargaining agreement or other labor
contract covering employees of any of the Loan Parties or any of
their Subsidiaries, (b) no such collective bargaining agreement
or other labor contract is scheduled to expire during the term of
this Agreement, (c) no union or other labor organization is
seeking to organize, or to be recognized as, a collective
bargaining unit of employees of any Loan Party or any of its
Subsidiaries or for any similar purpose, and (d) there is no
pending or (to the best of the Loan Parties' knowledge)
threatened, strike, work stoppage, material unfair labor practice
claim, or other material labor dispute against or affecting any
Loan Party or its Subsidiaries or their employees.
8.18 Environmental Laws. Except as otherwise disclosed on
Schedule 8.18 or in the report entitled "CFMF Real Estate
Environmental Report" and dated April 8, 1996:
(a) Each Loan Party has complied in all material
respects with all Environmental Laws applicable to their Real
Estate and business, and no Loan Party nor any of their present
Real Estate or operations, nor their past property or operations,
is subject to any enforcement order from or liability agreement
with any Governmental Authority or private Person respecting
(i) material non-compliance with any Environmental Law or
(ii) any potential material liabilities and costs or remedial
action arising from the Release or threatened Release of a
Contaminant.
(b) Each Loan Party has obtained all material permits
necessary for their current operations under Environmental Laws,
and all such permits are in good standing and each Loan Party is
in material compliance with all terms and conditions of such
permits.
(c) No Loan Party nor, to the best of their knowledge,
any of their predecessors in interest, has in material violation
of any Environmental Laws stored, treated or disposed of any
hazardous waste on any Real Estate, as defined pursuant to 40 CFR
Part 261 or any equivalent Environmental Law.
(d) No Loan Party has received any summons, complaint,
order or similar written notice that it is currently in material
non-compliance with, or that any Governmental Authority is
investigating its material non-compliance with, any Environmental
Laws or that it is or may be materially liable to any other
Person as a result of a Release or threatened Release of a
Contaminant.
(e) None of the present or past operations of any Loan
Party is currently the subject of any investigation by any
Governmental Authority evaluating whether any material remedial
action is needed to respond to a Release or threatened Release of
a Contaminant.
(f) There is not as of the date of this Agreement, nor
to the best knowledge of any Loan Party has there ever been on or
in any Real Estate:
(1) any underground storage tanks or surface
impoundments,
(2) any asbestos-containing material, or
(3) any polychlorinated biphenyls (PCB's) used in
hydraulic oils, electrical transformers or other equipment.
(g) No Loan Party has filed any notice under any
requirement of Environmental Law reporting a material spill or
material accidental and unpermitted release or discharge of a
Contaminant into the environment.
(h) No Loan Party has entered into any negotiations or
settlement agreements with any Person (including, without
limitation, the prior owner of its property) imposing material
obligations or liabilities on any Loan Party with respect to any
remedial action in response to the Release of a Contaminant or
environmentally related claim.
(i) None of the products manufactured, distributed or
sold by any Loan Party contain asbestos containing material.
(j) No Environmental Lien has attached to any Real
Estate of any Loan Party.
8.19 No Violation of Law. Neither the Parent, the Borrower
nor any of their Subsidiaries is in violation of any law,
statute, regulation, ordinance, judgment, order, or decree
applicable to it which violation could reasonably be expected to
have a Material Adverse Effect.
8.20 No Default. Neither the Parent, the Borrower nor any
of their Subsidiaries is in default with respect to any note,
indenture, loan agreement, mortgage, lease, deed, or other
agreement to which the Parent, the Borrower or any of their
Subsidiaries is a party or by which it is bound, which default
could reasonably be expected to have a Material Adverse Effect.
8.21 ERISA Compliance.
(a) As of the date of the most recent information
received by the Borrower prior to the date of this Agreement, the
aggregate amount of Unfunded Pension Liability among all Multi-
employer Plans to which the Loan Parties may be liable (based
generally on figures for 1994) was calculated to be approximately
$153,000,000.
(b) Except as specifically disclosed in Schedule 8.21:
(i) Each Plan is in compliance in all material
respects with the applicable provisions of ERISA, the Code and
other federal or state law. Each Plan which is intended to
qualify under Section 401(a) of the Code has received a favorable
determination letter from the IRS, or will be submitted to the
IRS for a determination letter before the end of its remedial
amendment period, and to the best knowledge of the Loan Parties,
nothing has occurred which would cause the loss of such
qualification. The Loan Parties and each ERISA Affiliate has
made all required contributions to any Plan subject to
Section 412 of the Code, and no application for a funding waiver
or an extension of any amortization period pursuant to
Section 412 of the Code has been made with respect to any Plan.
(ii) There are no pending or, to the best
knowledge of the Loan Parties, threatened claims, actions or
lawsuits, or action by any Governmental Authority, with respect
to any Plan which has resulted or could reasonably be expected to
result in a Material Adverse Effect. There has been no nonexempt
prohibited transaction or violation of the fiduciary
responsibility rules with respect to any Plan which has resulted
or could reasonably be expected to result in a Material Adverse
Effect.
(iii) (A) No ERISA Event has occurred or is
reasonably expected to occur; (B) no Pension Plan that is not a
Multi-employer Plan has any Unfunded Pension Liability;
(C) neither any Loan Party nor any ERISA Affiliate has incurred,
or reasonably expects to incur, any liability under Title IV of
ERISA with respect to any Pension Plan (other than premiums due
and not delinquent under Section 4007 of ERISA); (D) neither any
Loan Party nor any ERISA Affiliate has incurred, or reasonably
expects to incur, any liability (and no event has occurred which,
with the giving of notice under Section 4219 of ERISA, would
result in such liability) under Section 4201 or 4243 of ERISA
with respect to a Multi-employer Plan; and (E) neither any Loan
Party nor any ERISA Affiliate has engaged in a transaction that
could be subject to Section 4069 or 4212(c) of ERISA.
8.22 Taxes. The Former Parent, on behalf of the Parent, the
Borrower and their Subsidiaries, has filed all Federal and other
tax returns and reports required to be filed, and has paid all
Federal and other taxes, assessments, fees and other governmental
charges levied or imposed upon them or their properties, income
or assets otherwise due and payable.
8.23 Regulated Entities. None of the Parent, the Borrower,
any of their Subsidiaries, or any Person controlling any of the
foregoing, is an "Investment Company" within the meaning of the
Investment Company Act of 1940, none of the Parent, the Borrower
or any of their Subsidiaries is subject to regulation under the
Public Utility Holding Company Act of 1935, the Federal Power
Act, any state public utilities code, or any other Federal or
state statute or regulation limiting its ability to incur
indebtedness.
8.24 Use of Proceeds; Margin Regulations. The proceeds of
the Revolving Loans are to be used for the purposes described in
Section 2.5. None of the Parent, the Borrower or any of their
Subsidiaries is engaged in the business of purchasing or selling
Margin Stock or extending credit for the purpose of purchasing or
carrying Margin Stock.
8.25 Copyrights, Patents, Trademarks and Licenses, etc.
Each Loan Party owns or is licensed or otherwise has the right to
use all of the patents, trademarks, service marks, trade names,
copyrights, copyrightable subject matter (including, without
limitation, computer software documentation, advertising
material, brochures, and databases), data, contractual
franchises, authorizations and other subject matter and rights
that are reasonably necessary for the operation of their
businesses, without conflict with the rights of any other Person.
To the best knowledge of the Loan Parties, no slogan or other
advertising device, product, process, method, substance, part or
other material now employed, or now contemplated to be employed,
by any Loan Party infringes upon any rights held by any other
Person. No claim or litigation regarding any of the foregoing is
pending or threatened, and no patent, invention, device,
application, statute, law, rule, regulation, standard or code is
pending or, to the knowledge of the Loan Parties, proposed,
which, in either case, could reasonably be expected to have a
Material Adverse Effect. Upon Default, the Agent or its designee
shall be entitled to use and exercise all such property and
rights described in this Section 8.25.
8.26 No Material Adverse Change. As of the date of this
Agreement no Material Adverse Effect has occurred since the date
of the Financial Statements referred to in Section 8.6.
8.27 Full Disclosure. None of the representations or
warranties made by the Borrower or any other Loan Party in the
Loan Documents as of the date such representations and warranties
are made or deemed made, and none of the statements contained in
any exhibit, report, statement or certificate furnished by or on
behalf of the Borrower or any other Loan Party in connection with
the Loan Documents (including the Form 10), contains any untrue
statement of a material fact or omits any material fact required
to be stated therein or necessary to make the statements made
therein, in light of the circumstances under which they are made,
not misleading as of the time when made or delivered.
8.28 Material Agreements. Schedule 8.28 hereto sets forth
all material agreements and contracts to which any Loan Party is
a party or is bound as of the date of this Agreement.
8.29 Bank Accounts. Schedule 8.29 contains a complete and
accurate list of all bank accounts maintained by any Loan Party
with any bank or other financial institution.
8.30 Included Revenue Equipment. Schedule 8.30 hereto sets
forth a correct and complete list of Included Revenue Equipment
as of the date of this Agreement.
8.31 Excluded Revenue Equipment. Schedule 8.31 hereto sets
forth a correct and complete list of Excluded Revenue Equipment.
8.32 Former Parent Liens. Schedule 8.32 sets forth a
correct and complete list of the Real Estate upon which the
Borrower has granted or may grant on or prior to the Initial
Funding Date Liens to the Former Parent to secure indemnification
obligations contained in the Transition Agreements (the "Former
Parent Obligations"). The Borrower may grant Liens on Real
Estate having a fair market value not greater than $25,000,000 as
determined by an appraisal in form and substance satisfactory to
the Agent, at the time of the grant to further secure the Former
Parent Obligations to the extent required by agreements in
existence on the Initial Funding Date, and to secure liabilities
to other creditors.
ARTICLE 9
AFFIRMATIVE AND NEGATIVE COVENANTS
The Borrower covenants to the Agent and each Lender
that, so long as any of the Obligations (other than Surviving
Indemnities) remain outstanding or this Agreement is in effect:
9.1 Taxes and Other Obligations. Each Loan Party shall
(a) file when due all tax returns and other reports which it is
required to file; (b) pay, or provide for the payment, when due,
of all taxes, fees, assessments and other governmental charges
against it or upon its property, income and franchises, make all
required withholding and other tax deposits, and establish
adequate reserves for the payment of all such items, and provide
to the Agent and the Lenders, upon request, satisfactory evidence
of its timely compliance with the foregoing; and (c) pay when due
all Debt owed by it and all claims of materialmen, mechanics,
carriers, warehousemen, landlords and other like Persons, and all
other indebtedness owed by it and perform and discharge in a
timely manner all other obligations undertaken by it; provided,
however, so long as a Loan Party has notified the Agent in
writing, it need not pay any Debt, tax, fee, assessment, or
governmental charge, that it is (i) contesting in good faith by
appropriate proceedings diligently pursued, the affected Loan
Party or (ii) has established proper reserves for as provided in
GAAP; provided, further, that no Lien (other than a Permitted
Lien) results from such non-payment.
9.2 Corporate Existence and Good Standing. Each Loan Party
shall maintain its corporate existence and its qualification and
good standing in all jurisdictions in which the failure to
maintain such existence and qualification or good standing could
reasonably be expected to have a material adverse effect on its
property, business, operations, prospects, or condition
(financial or otherwise).
9.3 Compliance with Law and Agreements; Maintenance of
Licenses. Each Loan Party shall comply, in all material respects
with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business (including the Federal Fair
Labor Standards Act). Each Loan Party shall obtain and maintain
all licenses, permits, franchises, and governmental
authorizations necessary to own its property and to conduct its
business as conducted on the Closing Date. Each Loan Party shall
not modify, amend or alter its certificate or article of
incorporation other than in a manner which does not adversely
affect the rights of the Lenders or the Agent.
9.4 Maintenance of Property. Each Loan Party shall
maintain all of its property necessary and useful in the conduct
of its business, in good operating condition and repair, ordinary
wear and tear excepted.
9.5 Insurance.
(a) Each Loan Party shall maintain, with financially
sound and reputable insurers having a rating of at least A-VII or
better by Best Rating Guide, insurance against loss or damage by
fire with extended coverage; theft, burglary, pilferage and loss
in transit; public liability and third party property damage;
larceny, embezzlement or other criminal liability; business
interruption; public liability and third party property damage;
and such other hazards or of such other types as is customary for
Persons engaged in the same or similar business, as the Agent, in
its discretion, or acting at the direction of the Majority
Lenders, shall specify, in amounts, and under policies acceptable
to the Agent and the Majority Lenders. Without limiting the
foregoing, each Loan Party shall also maintain, flood insurance,
in the event of a designation of the area in which any Real
Estate and any of the Equipment located on such Real Estate is
located as "flood prone" or a "flood risk area" (hereinafter
"SFHA"), as defined by the Flood Disaster Protection Act of 1973,
in an amount to be reasonably determined by the Agent, and shall
comply with the additional requirements of the National Flood
Insurance Program as set forth in said Act. Upon the Majority
Lenders' request, each Loan Party shall maintain flood insurance
for its Equipment which is, at any time, located in a SFHA.
(b) Each Loan Party shall cause the Agent, for the
ratable benefit of the Lenders, to be named in each such policy
covering or relating to Collateral, and other insurance policies
as required by the Agent, as secured party or mortgagee and sole
loss payee or additional insured, in a manner acceptable to the
Agent. Each policy of insurance shall contain a clause or
endorsement requiring the insurer to give not less than thirty
(30) days' prior written notice to the Agent in the event of
cancellation of the policy for any reason whatsoever and a clause
or endorsement stating that the interest of the Agent shall not
be impaired or invalidated by any act or neglect of the Borrower,
the Parent or any of their Subsidiaries or the owner of any
premises for purposes more hazardous than are permitted by such
policy. All premiums for such insurance shall be paid by the
applicable Loan Party when due, and certificates of insurance
and, if requested by the Agent or any Lender, photocopies of the
policies, shall be delivered to the Agent, in each case in
sufficient quantity for distribution by the Agent to each of the
Lenders. If the Borrower fails to procure such insurance or to
pay the premiums therefor when due, the Agent may, and at the
direction of the Majority Lenders shall, do so from the proceeds
of Revolving Loans.
(c) The Borrower shall promptly notify the Agent and
the Lenders of any loss, damage, or destruction to the Collateral
in excess of $500,000 per occurrence, whether or not covered by
insurance. All insurance proceeds relating to Collateral shall
be remitted to the Payment Account.
9.6 Environmental Laws.
(a) Each Loan Party shall to, conduct its business in
compliance with all Environmental Laws applicable to it,
including, without limitation, those relating to the generation,
handling, use, storage, and disposal of any Contaminant. Each
Loan Party shall take prompt and appropriate action to respond to
any non-compliance with Environmental Laws and shall regularly
report to the Agent on such response.
(b) Without limiting the generality of the foregoing,
each Loan Party shall submit to the Agent and the Lenders
annually, commencing on the first Anniversary Date, and on each
Anniversary Date thereafter, an update of the status of each
environmental compliance or liability issue. The Agent or any
Lender may request copies of technical reports prepared by the
Borrower or any other Loan Party and its communications with any
Governmental Authority to determine whether the affected Loan
Party is proceeding reasonably to correct, cure or contest in
good faith any alleged non-compliance or environmental liability.
Such Loan Party shall, at the Majority Lenders' request and at
such Loan Party's expense, (a) retain an independent
environmental engineer acceptable to the Agent to evaluate the
site, including tests if appropriate, where the non-compliance or
alleged non-compliance with Environmental Laws has occurred and
prepare and deliver to the Agent, in sufficient quantity for
distribution by the Agent to the Lenders, a report setting forth
the results of such evaluation, a proposed plan for responding to
any environmental problems described therein, and an estimate of
the costs thereof, and (b) provide to the Agent and the Lenders a
supplemental report of such engineer whenever the scope of the
environmental problems, or the response thereto or the estimated
costs thereof, shall change in any material respect.
9.7 Compliance with ERISA. Each Loan Party shall, and
shall cause each of its ERISA Affiliates to: (a) maintain each
Plan in compliance in all material respects with the applicable
provisions of ERISA, the Code and other federal or state law;
(b) cause each Plan which is qualified under Section 401(a) of
the Code to maintain such qualification; (c) make all required
contributions to any Plan subject to Section 412 of the Code;
(d) not engage in a nonexempt prohibited transaction or violation
of the fiduciary responsibility rules with respect to any Plan;
and (e) not engage in a transaction that could be subject to
Section 4069 or 4212(c) of ERISA.
9.8 Mergers, Consolidations or Sales. None of the Loan
Parties shall enter into any transaction of merger,
reorganization, or consolidation, or transfer, sell, assign,
lease, or otherwise dispose of all or any part of its property,
or wind up, liquidate or dissolve, or agree to do any of the
foregoing, except (i) for any merger of any Loan Party with and
into the Borrower; (ii) for sales or other dispositions of
Equipment in the ordinary course of business that are obsolete or
no longer useable by such Loan Party in its business, or that are
otherwise permitted by Section 6.10; and (iii) sales of Real
Estate, provided that, in the case of Real Estate, no Event of
Default has occurred and is continuing, in an amount not to
exceed $25,000,000 during the term of this Agreement provided the
net proceeds of all sales are deposited into the Payment Account.
9.9 Restricted Payments; Capital Change; Restricted
Investments. None of the Loan Parties shall: (i) directly or
indirectly declare or make, or incur any liability to make, any
Restricted Payments, except (A) Restricted Payments to the
Borrower by its Subsidiaries, (B) provided that no Event of
Default has occurred and is continuing or would result from such
action, Restricted Payments to the Parent by the Borrower not in
excess of thirty-three percent (33%) of the consolidated net
income of the Parent, the Borrower and their Subsidiaries on a
Fiscal Year, year-to-date basis, and (C) repurchases of stock of
the Parent for use in the employee benefit plans of the Borrower;
(ii) make any change in its capital structure which could have a
Material Adverse Effect; or (iii) make any Restricted Investment
except for (X) acquisitions of Equipment to be used in the
business of the Borrower so long as the acquisition costs thereof
constitute Capital Expenditures permitted under Section 9.21,
(Y) acquisitions of all of the stock, in a non-hostile manner, of
entities in a business similar to that of the Borrower, provided
that any domestic Subsidiaries resulting from such acquisitions
comply with the requirements of Section 9.19, and
(Z) acquisitions of all or substantially all of the assets of a
business so long as such assets are to be used in the Borrower's
business; provided, however, that without the consent of the
Lenders the cost of stock and assets acquired pursuant to
clauses (Y) and (Z) in the aggregate does not exceed $5,000,000
during any Fiscal Year; and provided, further, that no Event of
Default has occurred and is continuing or would result from
acquisitions described in clauses (X), (Y) and (Z).
9.10 Transactions Affecting Collateral or Obligations. None
of the Loan Parties shall enter into any transaction which would
be reasonably expected to have a Material Adverse Effect.
9.11 Guaranties. None of the Loan Parties shall make,
issue, or become liable on any Guaranty, except (i) Guaranties of
the Obligations in favor of the Agent, and (ii) Guaranties of
obligations of Affiliates permitted by Section 9.14.
9.12 Debt. None of the Loan Parties shall incur or
maintain any Debt, other than: (a) the Obligations; (b) trade
payables and contractual obligations to suppliers and customers
incurred in the ordinary course of business; (c) provided that no
Event of Default has occurred and is continuing or would result
from such action, Debt of the Parent and the Borrower (which
includes financing Capital Expenditures permitted under
Section 9.21) in an aggregate amount outstanding at any time not
to exceed the greater of $25,000,000 or fifty percent (50%) of
the amount of aggregate Capital Expenditures permitted under
Section 9.21 then or previously permitted, provided, however,
that the amount of additional Debt other than for the purpose of
financing Revenue Equipment may not exceed $25,000,000
outstanding at any time during the term of this Agreement; and
(d) other Debt existing on the Closing Date and reflected in the
Financial Statements attached hereto as Exhibit F or listed on
Schedule 8.9. The terms and conditions of any agreement
(including amendments, modifications, waivers and restatements of
existing agreements) entered into by the Borrower relating to
Synthetic Leases shall not contain any financial covenants which
are more restrictive on the Borrower than the financial covenants
set forth in Sections 9.22, 9.23 and 9.24 of this Agreement and
any amendments or modifications to the interest rate or the
amortization shall be acceptable to the Agent.
9.13 Prepayment. None of the Loan Parties shall voluntarily
prepay any Debt, except the Obligations in accordance with the
terms of this Agreement.
9.14 Transactions with Affiliates. Except as set forth
below, none of the Loan Parties shall, sell, transfer,
distribute, or pay any money or property, including, but not
limited to, any fees or expenses of any nature (including, but
not limited to, any fees or expenses for management services), to
any Affiliate, or lend or advance money or property to any
Affiliate, or invest in (by capital contribution or otherwise) or
purchase or repurchase any stock or indebtedness, or any
property, of any Affiliate, or become liable on any Guaranty of
the indebtedness, dividends, or other obligations of any
Affiliate. Notwithstanding the foregoing, provided that no Event
of Default has occurred and is continuing or would result from
such action, (a) each Loan Party may engage in transactions with
Affiliates in the ordinary course of business, in amounts and
upon terms fully disclosed to the Agent and the Lenders, and no
less favorable to such Loan Party than would be obtained in a
comparable arm's-length transaction with a third party who is not
an Affiliate, provided, that excluding Guaranties which do not
constitute a Guaranty of Debt for Borrowed Money, the aggregate
amount of the Loan Parties' aggregate investments in, loans to,
and Guaranties for the benefit of, Subsidiaries and Affiliates
made following the Closing Date shall not exceed $5,000,000 at
any one time outstanding, (b) the Loan Parties may make loans or
advances in the ordinary course of its business to their officers
and directors in an aggregate amount not to exceed $3,000,000 at
any one time outstanding, and (c) the Borrower may provide
fundings to ▇▇▇▇▇▇ to enable it to make payments to its employees
and vendors in the ordinary course of business in connection with
services provided to the other Loan Parties and their
Subsidiaries.
9.15 Investment Banking and Finder's Fees. None of the Loan
Parties shall pay or agree to pay, or reimburse any other party
with respect to, any investment banking or similar or related
fee, underwriter's fee, finder's fee, or broker's fee to any
Person in connection with this Agreement. The Loan Parties shall
defend and indemnify the Agent and the Lenders against and hold
them harmless from all claims of any Person that the Borrower is
obligated to pay for any such fees, and all costs and expenses
(including without limitation, attorneys' fees) incurred by the
Agent and/or any Lender in connection therewith.
9.16 Business Conducted. None of the Loan Parties shall
engage directly or indirectly, in any line of business other than
the businesses and related businesses in which the Loan Parties
are engaged on the Closing Date.
9.17 Liens. None of the Loan Parties shall create, incur,
assume, or permit to exist any Lien on any property now owned or
hereafter acquired by it, except Permitted Liens.
9.18 Sale and Leaseback Transactions. None of the Loan
Parties shall, directly or indirectly, enter into any arrangement
with any Person providing for it to lease or rent property that
it has sold or will sell or otherwise transfer to such Person,
unless such transaction is a transaction permitted under
Section 9.12 or involves an operating lease.
9.19 New Subsidiaries. None of the Loan Parties shall,
directly or indirectly, organize, create, acquire or permit to
exist any Subsidiary other than (a) those listed on Schedule 8.5,
and (b) provided that no Event of Default has occurred and is
continuing or would result from such action, new Subsidiaries to
engage in businesses similar to such Loan Party's businesses,
provided, that in the event a Loan Party forms any domestic
Subsidiary, (1) the stock of such new domestic Subsidiary shall
be pledged to the Agent for the benefit of the Lenders, (2) such
new domestic Subsidiary shall execute a Guaranty containing
representation and warranties and covenants acceptable to the
Agent, in favor of the Agent for the benefit of the Lenders,
which Guaranty shall be secured by a first priority Lien upon all
assets of such new domestic Subsidiary, and (3) such new domestic
Subsidiary shall become a party to this Agreement and other
relevant Loan Documents, all in a manner in substance and form
satisfactory to the Agent.
9.20 Fiscal Year. The Borrower shall not change its Fiscal
Year.
9.21 Capital Expenditures. None of the Loan Parties shall
make or incur any Capital Expenditure if, after giving effect
thereto, the aggregate amount of all Capital Expenditures (net of
proceeds from sales of fixed assets) by the Loan Parties on a
consolidated basis would exceed $30,000,000 for Fiscal Year 1997,
$35,000,000 for Fiscal Year 1998 and $60,000,000 for each Fiscal
Year thereafter until the Stated Termination Date; provided,
however, that up to $15,000,000 of unused permitted Capital
Expenditures in a given Fiscal Year may be carried over to the
following Fiscal Year.
9.22 Adjusted Net Earnings. The Parent, the Borrower and
their Subsidiaries on a consolidated basis will not permit the
Adjusted Net Earnings for the fiscal period specified below,
measured at the end of each fiscal quarter on a Fiscal Year to
date basis for 1997 and on a rolling four quarter basis
thereafter, to be less than the amount set forth below opposite
such fiscal quarter:
Period Amount
March 1997 $5,000,000
June 1997 $15,000,000
September 1997 $27,000,000
December 1997 $40,000,000
March 1998 $43,000,000
June 1998 $45,000,000
September 1998 $48,000,000
December 1998 $52,000,000
March 1999 $54,000,000
June 1999 $56,000,000
September 1999 $58,000,000
December 1999 and $60,000,000
thereafter
9.23 Adjusted Tangible Net Worth. The Parent, the Borrower
and their Subsidiaries on a consolidated basis will not permit
Adjusted Tangible Net Worth calculated without regard to the
increase, not to exceed $10,000,000 (after giving effect to
income taxes), in the worker's compensation accrual reserve over
and above the level of such reserve reflected in the Latest
Projections dated September 9, 1996 and delivered to the Agent,
to be less than the following amounts:
Period Amount
December 1996 $210,000,000
March 1997 through $195,000,000
December 1997
March 1998 through $190,000,000
September 1998
December 1998 $195,000,000
March 1999 through $190,000,000
September 1999
December 1999 and $200,000,000
thereafter
9.24 Fixed Charge Coverage Ratio. The Parent, the Borrower
and their Subsidiaries on a consolidated basis will not permit
the Fixed Charge Coverage Ratio, measured at the end of each
fiscal quarter, beginning March 1997, on a Fiscal Year to date
basis for 1997 and a rolling four quarter basis thereafter, to be
less than the ratio set forth below opposite such fiscal quarter:
Period Ratio
March 1997 0.5 to 1.0
June 1997 0.8 to 1.0
September 1997 1.0 to 1.0
December 1997 1.1 to 1.0
through June 1999
September 1999 1.15 to 1.0
December 1999 and 1.2 to 1.0
thereafter
9.25 Use of Proceeds. The Borrower shall not, and shall not
suffer or permit any Subsidiary to, use any portion of the
Revolving Loan proceeds, directly or indirectly, (i) to purchase
or carry Margin Stock, (ii) to repay or otherwise refinance
indebtedness of the Borrower or others incurred to purchase or
carry Margin Stock, (iii) to extend credit for the purpose of
purchasing or carrying any Margin Stock, or (iv) to acquire any
security in any transaction that is subject to Section 13 or 14
of the Exchange Act.
9.26 Restrictions on Canadian Freightways. The Borrower
shall cause Canadian Freightways to maintain substantially all of
its unconsolidated assets (other than shares in its Subsidiaries)
as directly owned assets of Canadian Freightways, it being
understood that during the ordinary course of business assets are
bought, sold, replaced, substituted and replenished; provided
that, notwithstanding the foregoing, Canadian Freightways may
transfer any assets to the Borrower.
9.27 Further Assurances. The Loan Parties shall execute and
deliver, or cause to be executed and delivered, to the Agent
and/or the Lenders such documents and agreements, and shall take
or cause to be taken such actions, as the Agent or any Lender
may, from time to time, reasonably request to carry out the terms
and conditions of this Agreement and the other Loan Documents.
9.28 Cooperation. The Loan Parties shall cooperate with the
Agent and the Lenders in the syndication of the Total Facility
and shall meet with other prospective lenders as may be
reasonably requested by the Agent and the Lenders.
ARTICLE 10
CONDITIONS OF CLOSING AND LENDING
10.1 Conditions Precedent to the Closing Date. The
obligation of the Agent, the L/C Issuer and each Lender to
execute and deliver this Agreement is subject to the following
conditions precedent having been satisfied in a manner
satisfactory to the Agent, the L/C Issuer and each Lender:
(a) This Agreement and the other Loan Documents have
been executed by each party thereto and the Loan Parties shall
have performed and complied with all covenants, agreements and
conditions contained herein and the other Loan Documents which
are required to be performed or complied with them before or on
such Closing Date.
(b) All representations and warranties made hereunder
and in the other Loan Documents shall be true and correct as of
the Closing Date as if made on such date.
(c) No Default or Event of Default shall exist on the
Closing Date.
(d) The Agent, the L/C Issuer and the Lenders shall
have received such opinions of counsel for the Borrower and the
other Loan Parties as the Agent, the L/C Issuer or any Lender
shall reasonably request, each such opinion to be in a form,
scope, and substance reasonably satisfactory to the Agent, the
Lenders, and their respective counsel.
(e) The Agent shall have received:
(i) The Parent Guaranty;
(ii) The Parent Security Agreement;
(iii) The Parent Pledge Agreement;
(iv) The Stock Pledge Agreement;
(v) The Intercreditor Agreement;
(vi) The Patent and Trademark Agreements;
(vii) The ▇▇▇▇▇▇ Guaranty;
(viii) The ▇▇▇▇▇▇ Security Agreement;
(ix) The Blocked Account Agreement as required to be delivered to
the Agent pursuant to Section 6.9;
(x) A projected pro forma balance sheet of the Borrower dated as
of November 30, 1996 which balance sheet shall reflect no
material adverse changes from the pro forma balance sheet dated
June 30, 1996, and showing the Borrower to have at least
$215,000,000 in equity (calculated without regard to the
increase, not to exceed $10,000,000 (after giving effect to
income taxes) in the worker's compensation accrual reserve over
and above the level of such reserve reflected in the Latest
Projections);
(xi) Financial information of the Parent, the Borrower and their
Subsidiaries for the most recent fiscal quarter in the form
provided to the Securities and Exchange Commission;
(xii) The Transition Agreements and all such other related
documents, instruments and agreements as the Agent shall request
in connection therewith substantially in final form;
(xiii) Duly executed financing statements executed by each
Loan Party under all jurisdictions that the Agent may deem
necessary or desirable in order to perfect the Agent's Lien and
such documentation as the Agent may require with respect to the
actions taken or to be taken to perfect the Agent's Liens in
Eligible Revenue Equipment;
(xiv) Copies of UCC lien searches with respect to the
Borrower for the states of California, Oregon, or Illinois, in
each case certified by the Secretary of State of the applicable
jurisdiction, under all jurisdictions;
(xv) Duly executed UCC-3 Termination Statements and such other
instruments, in form and substance satisfactory to the Agent, as
shall be necessary to terminate and satisfy all Liens on the
Property of the Borrower and of other Loan Parties (except
Permitted Liens);
(xvi) Certified copies of resolutions of the Board of
Directors of each of the Borrower, the Parent and ▇▇▇▇▇▇
approving (A) the execution and delivery of the Loan Documents to
which the applicable corporation is a party, (B) the performance
of the Obligations and obligations of the Parent or ▇▇▇▇▇▇ under
Loan Documents to which it is a party, and (C) the consummation
of the transactions contemplated by the Loan Documents;
(xvii) A certificate of the Secretary or an Assistant
Secretary of each of the Borrower, the Parent and ▇▇▇▇▇▇
certifying the names and true signatures of the officers of each
of the Borrower, the Parent and ▇▇▇▇▇▇, respectively, authorized
to sign the Loan Documents;
(xviii) A copy of the Certificate of Incorporation of each of
the Borrower, the Parent and ▇▇▇▇▇▇, certified by the Secretary
of State of the State of Delaware as of a recent date;
(xix) A copy of the Bylaws of each of the Borrower, the
Parent and ▇▇▇▇▇▇, certified by the Secretary or an Assistant
Secretary of the Borrower and the Parent, respectively, as of the
date of this Agreement as being accurate and complete; and
(xx) A Certificate of the Secretary of State of the State of
Delaware certifying that each of the Borrower, the Parent and
▇▇▇▇▇▇ is in good standing as of a recent date.
(f) There shall have occurred no material adverse
change (as determined by the Lenders in their sole discretion) in
business, operations, profits or prospects of the Borrower since
the financial statements dated August 31, 1996, and the Borrower
shall, as of the Closing Date, have met the financial performance
projections contained in the Latest Projections delivered to the
Lenders.
(g) The Agent shall have received evidence, in form,
scope, and substance, reasonably satisfactory to the Agent, of
all insurance coverage as required by this Agreement.
(h) The Agent shall have received certified copies of
all consents or approvals of any Government Authority or other
Person which the Agent determines is required in connection with
the transactions contemplated by this Agreement.
(i) The Agent and the Lenders shall have had an
opportunity, if they so choose, to examine the books of account
and other records and files of the Borrower and other Loan
Parties and to make copies thereof, and to conduct a pre-closing
audit which shall include, without limitation, verification of
Account, and Availability, and the results of such examination
and audit shall have been satisfactory to the Agent and the
Lenders in all respects.
(j) All proceedings taken or to be taken and all
transactions consummated or to be consummated as contemplated by
the Transition Agreements and this Agreement, all other Loan
Documents and all documents and papers relating to any thereof or
hereunder, including amendments, modifications or waivers to
agreements relating to Synthetic Leases, shall be satisfactory in
form, scope, and substance to the Agent and the Lenders, and the
Lenders shall be satisfied with respect to the terms and
conditions of, and all matters relating to or affecting, the
transfer and tax free exchange of all shares of the Borrower from
the Former Parent to the Parent.
(k) The Borrower shall have used its best efforts
between November 19, 1996 and the Closing Date to obtain as
promptly as possible an executed Landlord's Waiver from each
Person which leases real property to the Borrower.
(l) The Agent and the Borrower shall have entered into
the Post-Closing Letter.
Execution and delivery to the Agent by the L/C Issuer
and a Lender of a counterpart of this Agreement shall be deemed
confirmation by the L/C Issuer and such Lender that (i) all
conditions precedent in this Section 10.1 have been fulfilled to
the satisfaction of the L/C Issuer and such Lender and (ii) the
decision of the L/C Issuer and such Lender to execute and deliver
to the Agent an executed counterpart of this Agreement was made
by the L/C Issuer or such Lender, as applicable, independently
and without reliance on the Agent or any other Lender as to the
satisfaction of any condition precedent set forth in this
Section 10.1.
10.2 Conditions Precedent to the Initial Funding Date.
The obligation of the Lenders to make the initial Revolving Loans
on the Initial Funding Date, and the obligation of the L/C Issuer
to issue any Letter of Credit on the Initial Funding Date and the
obligation of the Lenders to participate in Letters of Credit
issued on the Initial Funding Date, are subject to the following
conditions precedent having been satisfied in a manner
satisfactory to the Agent, the L/C Issuer and each Lender:
(a) Upon making any Revolving Loans or issuing any
Letters of Credit on the Initial Funding Date (including any
Revolving Loans made to finance the Closing Fee or otherwise
pursuant to Section 4.4 as reimbursement for fees, costs and
expenses then payable under this Agreement) and with all its
obligations current, the Borrower would have Availability in an
amount no less than $100,000,000.
(b) All representations and warranties made hereunder
and in the other Loan Documents shall be true and correct as of
the Initial Funding Date as if made on such date.
(c) No Default or Event of Default shall exist on the
Initial Funding Date, or would exist after giving effect to the
Loans to be made, and the issuance of any Letters of Credit, on
such date.
(d) The Borrower shall have paid all fees and expenses
of the Agent and the Attorney Costs, including the fees and
expenses of the Agent's outside counsel, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ llp,
and attorneys fees and costs incurred by each co-syndication
agent as required by Section 15.7, in connection with any of the
Loan Documents and the transactions contemplated thereby, in each
case to the extent such fees and expenses have been billed.
(e) The Borrower shall have paid in full the Closing
Fee.
(f) The Distribution shall have occurred or shall
occur substantially contemporaneously with the Initial Funding
Date.
The acceptance by the Borrower of any Revolving Loans
made on, or of any Letter of Credit issued on, the Initial
Funding Date shall be deemed to be a representation and warranty
made by the Borrower to the effect that all of the conditions
precedent to the making of such Revolving Loans or the issuance
of such Letter of Credit have been satisfied, with the same
effect as delivery to the Agent, the L/C Issuer and the Lenders
of a certificate signed by a Responsible Officer of the Borrower,
dated the Closing Date, to such effect.
The issuance of any Letter of Credit by the L/C Issuer
and the making of any Revolving Loan by a Lender shall be deemed
confirmation by the L/C Issuer and such Lender, as applicable,
that (i) all conditions precedent in this Section 10.2 have been
fulfilled to the satisfaction of the L/C Issuer and such Lender,
and (ii) the decision of the L/C Issuer to issue any Letter of
Credit and of such Lender to fund any Revolving Loan was made by
the L/C Issuer or such Lender, as applicable, independently and
without reliance on the Agent, the L/C Issuer any other Lender as
to the satisfaction of any condition set forth in this
Section 10.2.
10.3 Conditions Precedent to Each Loan. The obligation of
the Lenders to make each Loan, including the initial Revolving
Loans on the Initial Funding Date, and the obligation of the L/C
Issuer to issue any Letter of Credit and the obligation of the
Lenders to participate in Letters of Credit, shall be subject to
the further conditions precedent that on and as of the date of
any such extension of credit:
(a) the following statements shall be true, and the
acceptance by the Borrower of any extension of credit shall be
deemed to be a statement to the effect set forth in clauses
(i) and (ii), with the same effect as the delivery to the Agent
and the Lenders of a certificate signed by a Responsible Officer,
dated the date of such extension of credit, stating that:
(i) The representations and warranties contained
in this Agreement and the other Loan Documents are correct in all
material respects on and as of the date of such extension of
credit as though made on and as of such date, except to the
extent the Agent and the Lenders have been notified by the
Borrower that any representation or warranty is not correct and
the Majority Lenders have explicitly waived in writing compliance
with such representation or warranty; and except that the
Borrower may, from time to time, submit to the Agent, the L/C
Issuer and each Lender updated Schedules 8.3, 8.5, 8.9, 8.15,
8.17, 8.18, 8.29 and 8.32;
(ii) No event has occurred and is continuing, or
would result from such extension of credit, which constitutes a
Default or an Event of Default; and
(b) without limiting Section 10.3(a), the amount of
the Availability shall be sufficient to make such Revolving Loan
or to issue such Letters of Credit without exceeding the
Availability or the Maximum Revolving Amount; provided, however,
that the foregoing conditions precedent are not conditions to
each Lender (i) participating in or reimbursing the L/C Issuer
for such Lenders' Pro Rata Share of any drawings under Letters of
Credit as provided in Section 2.3, or (ii) participating in or
reimbursing BABC or the Agent for such Lenders' Pro Rata Share of
any BABC Loan or Agent Advance as provided in Sections 2.2(h),
(i) and (j).
ARTICLE 11
DEFAULT; REMEDIES
11.1 Events of Default. It shall constitute an event of
default ("Event of Default") if any one or more of the following
shall occur for any reason:
(a) any failure to pay the principal of or interest or
premium on any of the Obligations when due, whether upon demand
or otherwise;
(b) any representation or warranty made or deemed made
by the Borrower in this Agreement or by the Borrower or any of
its Subsidiaries in any of the other Loan Documents, any
Financial Statement, or any certificate furnished by the Borrower
or any of its Subsidiaries at any time to the Agent or any Lender
shall prove to be untrue in any material respect as of the date
on which made, deemed made, or furnished;
(c) any default shall occur in the observance or
performance of any of the covenants and agreements contained in
this Agreement and such default shall continue for thirty (30)
days after defaulting Loan Party becomes aware or should have
become aware of the occurrence of such default (except that no
thirty-day period shall apply to a default with respect to
Sections 6.2, 6.3, 6.4 (other than clause (c)), 6.5, 6.6(a), 6.7,
6.8(a), 6.8(b), 6.8(c), 6.8(d), 6.9, 6.10(b), 6.10(c), 6.10(d),
6.11, 7.2 (other than (g), (h), (j) and (k) thereof), 7.3, 9.2,
9.5 (other than insurance unrelated to the Collateral), 9.8, 9.9
through and including 9.16, or 9.18 through and including 9.27),
any other Loan Documents or any other agreement entered into at
any time to which the Borrower or any other Loan Party and the
Agent or any Lender are party (subject to any cure provisions
contained in any such Loan Document or other agreement), or if
any such Loan Document or other agreement shall terminate (other
than in accordance with its terms or the terms hereof or with the
written consent of the Agent and the Majority Lenders) or become
void or unenforceable (without the written consent of the Agent
and the Majority Lenders);
(d) default shall occur with respect to any Debt For
Borrowed Money (other than the Obligations) in an outstanding
principal amount which exceeds $5,000,000, or under any agreement
or instrument under or pursuant to which any such Debt For
Borrowed Money may have been issued, created, assumed, or
guaranteed by the Borrower or any other Loan Party, and such
default shall continue for more than the period of grace, if any,
therein specified, if the effect thereof (with or without the
giving of notice or further lapse of time or both) is to
accelerate, or to permit the holders of any such Debt For
Borrowed Money to accelerate, the maturity of any such Debt For
Borrowed Money; or any such Debt For Borrowed Money shall be
declared due and payable or be required to be prepaid (other than
by a regularly scheduled required prepayment) prior to the stated
maturity thereof;
(e) any of the Loan Parties shall (i) file a voluntary
petition in bankruptcy or file a voluntary petition or an answer
or otherwise commence any action or proceeding seeking
reorganization, arrangement or readjustment of its debts or for
any other relief under the federal Bankruptcy Code, as amended,
or under any other bankruptcy or insolvency act or law, state or
federal, now or hereafter existing, or consent to, approve of, or
acquiesce in, any such petition, action or proceeding; (ii) apply
for or acquiesce in the appointment of a receiver, assignee,
liquidator, sequestrator, custodian, monitor, trustee or similar
officer for it or for all or any part of its property; (iii) make
an assignment for the benefit of creditors; or (iv) be unable
generally to pay its debts as they become due;
(f) an involuntary petition or proposal shall be filed
or an action or proceeding otherwise commenced seeking
reorganization, arrangement, consolidation or readjustment of the
debts of any of the Loan Parties or for any other relief under
the Bankruptcy Code, as amended, or under any other bankruptcy or
insolvency act or law, state or federal, now or hereafter
existing and either (i) such petition, proposal, action or
proceeding shall not have been dismissed within a period of sixty
(60) days after its commencement or (ii) an order for relief
against such Loan Party shall have been entered in such
proceeding;
(g) a receiver, assignee, liquidator, sequestrator,
custodian, monitor, trustee or similar officer for or for all or
any part of its property shall be appointed and shall remain in
place for a period of thirty (30) days; or a warrant of
attachment, execution or similar process shall be issued against
any part of its property and such warrant, execution or similar
process shall not have been vacated, discharged, stayed,
satisfied or bonded against pending appeal within thirty (30)
days from entry thereof;
(h) any Loan Party shall file a certificate of
dissolution under applicable state law or shall be liquidated,
dissolved or wound-up or shall commence or have commenced against
it any action or proceeding for dissolution, winding-up or
liquidation, or shall take any corporate action in furtherance
thereof;
(i) all or any material part of the property of any
Loan Party shall be nationalized, expropriated or condemned,
seized or otherwise appropriated, or custody or control of such
property or of such Loan Party shall be assumed by any
Governmental Authority or any court of competent jurisdiction at
the instance of any Governmental Authority, except where
contested in good faith by proper proceedings diligently pursued
where a stay of enforcement is in effect;
(j) any Guaranty of the Obligations shall be
terminated, revoked or declared void or invalid;
(k) one or more judgments or orders for the payment of
money aggregating in excess of $500,000 in excess of the amounts
covered by insurance, shall be rendered against any Loan Party,
and any such judgment or order shall not be paid or appealed
within the time period for appeal or not be bonded against or
stayed pending any appeal;
(l) any loss, theft, damage or destruction of any item
or items of Collateral or other property of any Loan Party occurs
which (i) materially and adversely affects its property,
business, operation, prospects, or condition; and (ii) is not
adequately covered by insurance;
(m) there occurs a Material Adverse Effect;
(n) there is filed against any Loan Party any civil or
criminal action, suit or proceeding under any federal or state
racketeering statute (including, without limitation, the
Racketeer Influenced and Corrupt Organization Act of 1970), which
action, suit or proceeding (1) is not dismissed within one
hundred twenty (120) days, and (2) could reasonably be expected
to result in the confiscation or forfeiture of any material
portion of the Collateral;
(o) for any reason other than the failure of the Agent
to take any action available to it to maintain perfection of the
Agent's Liens, pursuant to the Loan Documents, any Loan Document
ceases to be in full force and effect or any Lien with respect to
any material portion of the Collateral intended to be secured
thereby ceases to be, or is not, valid, perfected and prior to
all other Liens (other than Permitted Liens) or is terminated,
revoked or declared void;
(p) (i) an ERISA Event shall occur with respect to a
Pension Plan or Multi-employer Plan which has resulted or could
reasonably be expected to result in liability of the Borrower
under Title IV of ERISA to the Pension Plan, Multi-employer Plan
or the PBGC in an aggregate amount in excess of $10,000,000; or
(ii) any Loan Party or any ERISA Affiliate shall fail to pay when
due, after the expiration of any applicable grace period, any
installment payment with respect to its withdrawal liability
under Section 4201 of ERISA under a Multi-employer Plan in an
aggregate amount in excess of $10,000,000; or
(q) there occurs a Change of Control.
11.2 Remedies.
(a) If a Default or an Event of Default occurs and is
continuing, the Agent may, in its discretion, and shall, at the
direction of the Majority Lenders, do one or more of the
following at any time or times and in any order, without notice
to or demand on the Borrower: (i) reduce the Maximum Revolver
Amount, or the advance rates against Eligible Accounts and/or
Revenue Equipment used in computing the Availability, or reduce
one or more of the other elements used in computing the
Availability; (ii) restrict the amount of or refuse to make
Revolving Loans; (iii) restrict or refuse to arrange for Letters
of Credit; and (iv) cash collateralize outstanding undrawn
amounts under Letters of Credit by causing Revolving Loans to be
made or otherwise. If an Event of Default occurs and is
continuing, the Agent shall, at the direction of the Majority
Lenders, do one or more of the following, in addition to the
actions described in the preceding sentence, at any time or times
and in any order, without notice to or demand on the Borrower:
(a) terminate the Commitments and this Agreement; (b) declare any
or all Obligations to be immediately due and payable; provided,
however, that upon the occurrence of any Event of Default
described in Sections 11.1(e), 11.1(f), or 11.1(g), the
Commitments shall automatically and immediately expire and all
Obligations shall automatically become immediately due and
payable without notice or demand of any kind; and (c) pursue its
other rights and remedies under the Loan Documents and applicable
law.
(b) If an Event of Default occurs and is continuing:
(i) the Agent shall have for the benefit of the Lenders, in
addition to all other rights of the Agent and the Lenders, the
rights and remedies of a secured party under the UCC; (ii) the
Agent may, at any time, take possession of the Collateral and
keep it on the Borrower's premises, at no cost to the Agent or
any Lender, or remove any part of it to such other place or
places as the Agent may desire, or the Borrower shall, upon the
Agent's demand, at the Borrower's cost, assemble the Collateral
and make it available to the Agent at a place reasonably
convenient to the Agent; and (iii) the Agent may sell and deliver
any Collateral at public or private sales, for cash, upon credit
or otherwise, at such prices and upon such terms as the Agent
deems advisable, in its sole discretion, and may, if the Agent
deems it reasonable, postpone or adjourn any sale of the
Collateral by an announcement at the time and place of sale or of
such postponed or adjourned sale without giving a new notice of
sale. Without in any way requiring notice to be given in the
following manner, the Borrower agrees that any notice by the
Agent of sale, disposition or other intended action hereunder or
in connection herewith, whether required by the UCC or otherwise,
shall constitute reasonable notice to the Borrower if such notice
is mailed by registered or certified mail, return receipt
requested, postage prepaid, or is delivered personally against
receipt, at least fifteen (15) Business Days prior to such action
to the Borrower's address specified on the signature pages
hereto, as such address may be modified by a notice given in
accordance with Section 15.8. If any Collateral is sold on terms
other than payment in full at the time of sale, no credit shall
be given against the Obligations until the Agent or the Lenders
receive payment, and if the buyer defaults in payment, the Agent
may resell the Collateral without further notice to the Borrower.
In the event the Agent seeks to take possession of all or any
portion of the Collateral by judicial process, the Borrower
irrevocably waives: (a) the posting of any bond, surety or
security with respect thereto which might otherwise be required;
(b) any demand for possession prior to the commencement of any
suit or action to recover the Collateral; and (c) any requirement
that the Agent retain possession and not dispose of any
Collateral until after trial or final judgment. The Borrower
agrees that the Agent has no obligation to preserve rights to the
Collateral or marshal any Collateral for the benefit of any
Person. The Agent is hereby granted a license or other right to
use, without charge, the Borrower's labels, patents, copyrights,
name, trade secrets, trade names, trademarks, and advertising
matter, or any similar property, in completing production of,
advertising or selling any Collateral, and the Borrower's rights
under all licenses and all franchise agreements shall inure to
the Agent's benefit for such purpose. The proceeds of sale shall
be applied first to all expenses of sale, including attorneys'
fees, and then to the Obligations in whatever order the Agent
elects. The Agent will return any excess to the Borrower and the
Borrower shall remain liable for any deficiency.
(c) If an Event of Default occurs and is continuing,
the Borrower hereby waives all rights to notice and hearing prior
to the exercise by the Agent of the Agent's rights to repossess
the Collateral without judicial process or to relevy, attach or
levy upon the Collateral without notice or hearing.
(d) If the Agent, at the direction of the Majority
Lenders terminates this Agreement upon an Event of Default, the
Borrower shall pay the Agent, for the account of the Lenders,
immediately upon termination, an early termination penalty equal
to the early termination fee that would have been payable under
Article 4 if this Agreement had been terminated on that date
pursuant to the Borrower's election.
ARTICLE 12
TERM AND TERMINATION
12.1 Term and Termination. The term of this Agreement shall
end on the Stated Termination Date. The Agent upon direction
from the Majority Lenders shall terminate this Agreement without
notice upon the occurrence of an Event of Default. Upon the
effective date of termination of this Agreement for any reason
whatsoever, all Obligations (including, without limitation, all
unpaid principal of, accrued interest on and prepayment
penalties, if any, with respect to the Revolving Loans) shall
become immediately due and payable and Borrower shall immediately
arrange for the cancellation of Letters of Credit then
outstanding. Notwithstanding the termination of this Agreement,
until all Obligations (other than Surviving Indemnities) are
indefeasibly paid and performed in full in cash, the Borrower
shall remain bound by the terms of this Agreement and shall not
be relieved of any of its Obligations hereunder, and the Agent
and the Lenders shall retain all their rights and remedies
hereunder (including, without limitation, the Agent's Liens in
and all rights and remedies with respect to all then existing and
after-arising Collateral).
12.2 Termination if Conditions Not Satisfied. This
Agreement shall terminate and have no further force or effect
(other than Surviving Indemnities) if the Initial Funding Date
has not occurred on or before December 31, 1996.
ARTICLE 13
AMENDMENTS; WAIVER; PARTICIPATIONS; ASSIGNMENTS; SUCCESSORS
13.1 No Waivers Cumulative Remedies. No failure by the
Agent or any Lender to exercise any right, remedy, or option
under this Agreement or any present or future supplement thereto,
or in any other agreement between or among any Loan Party and the
Agent and/or any Lender, or delay by the Agent or any Lender in
exercising the same, will not operate as a waiver thereof. No
waiver by the Agent or any Lender will be effective unless it is
in writing, and then only to the extent specifically stated.
No waiver by the Agent or the Lenders on any occasion shall
affect or diminish the Agent's and each Lender's rights
thereafter to require strict performance by the Borrower and the
other Loan Parties of any provision of this Agreement. The
Agent's and each Lender's rights under this Agreement will be
cumulative and not exclusive of any other right or remedy which
the Agent or any Lender may have.
13.2 Amendments and Waivers. No amendment or waiver of any
provision of this Agreement or any other Loan Document, and no
consent with respect to any departure by the any Loan Party
therefrom, shall be effective unless the same shall be in writing
and signed by the Majority Lenders (or by the Agent at the
written request of the Majority Lenders) and the affected Loan
Party and then any such waiver or consent shall be effective only
in the specific instance and for the specific purpose for which
given; provided, however, that no such waiver, amendment, or
consent shall, unless in writing and signed by all the Lenders
and the affected Loan Party and acknowledged by the Agent, do any
of the following:
(a) increase or extend the Commitment of any Lender;
(b) postpone or delay any date fixed by this Agreement
or any other Loan Document for any payment of principal,
interest, fees or other amounts due to the Lenders (or any of
them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of interest
specified herein on any Revolving Loan, or any fees or other
amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or of the
aggregate unpaid principal amount of the Revolving Loans which is
required for the Lenders or any of them to take any action
hereunder;
(e) amend this Section or any provision of the
Agreement providing for consent or other action by all Lenders;
(f) release any Guaranty or release any Collateral
other than as permitted by Section 14.11;
(g) change the definitions of "Majority Lenders" or
"Required Lenders"; or
(h) increase the "Account Advance Rate," "Maximum
Revenue Equipment Advance," "Maximum Revolver Amount," "Revenue
Equipment Advance Rate," "Total Facility" or "Unused Letter of
Credit Facility."
and, provided further, that no amendment, waiver or consent
shall, unless in writing and signed by the Agent, affect the
rights or duties of the Agent under this Agreement or any other
Loan Document. In addition, with respect to the percentages set
forth in clauses (e) and (j) in the definition of "Eligible
Accounts," neither such percentage shall be increased without the
prior consent of the Majority Lenders.
13.3 Assignments; Participations.
(a) Any Lender may, with the written consent of the
Agent (which consent shall not be unreasonably withheld) and,
unless a Default has occurred and is continuing with the written
consent of the Borrower (such consent of the Borrower not to be
unreasonably withheld), assign and delegate to one or more
assignees that are commercial banks, other financial institutions
or a purchaser or successor in interest to substantially all of a
Lender's loan portfolio (provided that no written consent of the
Agent or the Borrower shall be required in connection with any
assignment and delegation by a Lender to an Affiliate of such
Lender or to such purchaser or successor in interest) (each an
"Assignee") all, or any ratable part of all, of the Revolving
Loans, the Commitments and the other rights and obligations of
such Lender hereunder, in a minimum amount of $15,000,000 (except
that each Person which is a Lender as of the Closing Date may, on
a one-time basis, assign a minimum amount of $10,000,000) or if
less the entire amount of such Lender's Commitment; provided,
however, that the Borrower and the Agent may continue to deal
solely and directly with such Lender in connection with the
interest so assigned to an Assignee until (i) written notice of
such assignment, together with payment instructions, addresses
and related information with respect to the Assignee, shall have
been given to the Borrower and the Agent by such Lender and the
Assignee; (ii) such Lender and its Assignee shall have delivered
to the Borrower and the Agent an Assignment and Acceptance in the
form of Exhibit D ("Assignment and Acceptance") and (iii) the
assignor Lender or Assignee has paid to the Agent a processing
fee in the amount of $3,000.
(b) From and after the date that the Agent notifies
the assignor Lender that it has received an executed Assignment
and Acceptance and payment of the above-referenced processing
fee, (i) the Assignee thereunder shall be a party hereto and, to
the extent that rights and obligations, including, but not
limited to, the obligation to participate in credit support or
other enhancement for Letters of Credit hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall
have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan
Documents have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights and be released from its
obligations under this Agreement (and in the case of an
Assignment and Acceptance covering all or the remaining portion
of an assigning Lender's rights and obligations under this
Agreement, such Lender shall cease to be a party hereto).
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (1) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
this Agreement or any other Loan Document furnished pursuant
hereto; (2) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of the Borrower or the performance or
observance by the Borrower of any of its obligations under this
Agreement or any other Loan Document furnished pursuant hereto;
(3) such Assignee confirms that it has received a copy of this
Agreement, together with such other documents and information as
it has deemed appropriate to make its own credit analysis and
decision to enter into such Assignment and Acceptance; (4) such
Assignee will, independently and without reliance upon the Agent,
such assigning Lender or any other Lender, and based on such
documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not
taking action under this Agreement; (5) such Assignee appoints
and authorizes the Agent to take such action as agent on its
behalf and to exercise such powers under this Agreement as are
delegated to the Agent by the terms hereof, together with such
powers as are reasonably incidental thereto; and (6) such
Assignee agrees that it will perform in accordance with their
terms all of the obligations which by the terms of this Agreement
are required to be performed by it as a Lender.
(d) Immediately upon each Assignee's making its
processing fee payment under the Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee
and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce
such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time sell to one or more
commercial banks, or other financial institutions, or other
Persons not Affiliates of the Borrower (a "Participant")
participating interests in any Revolving Loans, the Commitment of
that Lender and the other interests of that Lender (the
"originating Lender") hereunder and under the other Loan
Documents; provided, however, that (i) the originating Lender's
obligations under this Agreement shall remain unchanged, (ii) the
originating Lender shall remain solely responsible for the
performance of such obligations, (iii) the Borrower and the Agent
shall continue to deal solely and directly with the originating
Lender in connection with the originating Lender's rights and
obligations under this Agreement and the other Loan Documents,
and (iv) no Lender shall transfer or grant any participating
interest under which the Participant has rights to approve any
amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had
not sold such participation; except that, if amounts outstanding
under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence
of an Event of Default, each Participant shall be deemed to have
the right of set-off in respect of its participating interest in
amounts owing under this Agreement to the same extent, and
subject to the same limitation, as if the amount of its
participating interest were owing directly to it as a Lender
under this Agreement.
(f) Notwithstanding any other provision in this
Agreement, any Lender may at any time create a security interest
in, or pledge, all or any portion of its rights under and
interest in this Agreement in favor of any Federal Reserve Bank
in accordance with Regulation A of the FRB or U.S. Treasury
Regulation 31 CFR 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted
under applicable law.
ARTICLE 14
THE AGENT
14.1 Appointment and Authorization. Each Lender hereby
designates and appoints BankAmerica Business Credit, Inc. as its
Agent under this Agreement and the other Loan Documents and each
Lender hereby irrevocably authorizes the Agent to take such
action on its behalf under the provisions of this Agreement and
each other Loan Document and to exercise such powers and perform
such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers
as are reasonably incidental thereto. The Agent agrees to act as
such on the express conditions contained in this Article 14. The
provisions of this Article 14 are solely for the benefit of the
Agent and the Lenders and the Borrower shall have no rights as a
third party beneficiary of any of the provisions contained herein
(other than Sections 14.9, 14.10, 14.11, 14.12(a) and 14.16(d)).
Notwithstanding any provision to the contrary contained elsewhere
in this Agreement or in any other Loan Document, the Agent shall
not have any duties or responsibilities, except those expressly
set forth herein, nor shall the Agent have or be deemed to have
any fiduciary relationship with any Lender, and no implied
covenants, functions, responsibilities, duties, obligations or
liabilities shall be read into this Agreement or any other Loan
Document or otherwise exist against the Agent. Without limiting
the generality of the foregoing sentence, the use of the term
"agent" in this Agreement with reference to the Agent is not
intended to connote any fiduciary or other implied (or express)
obligations arising under agency doctrine of any applicable law.
Instead, such term is used merely as a matter of market custom,
and is intended to create or reflect only an administrative
relationship between independent contracting parties. Except as
expressly otherwise provided in this Agreement, the Agent shall
have and may use its sole discretion with respect to exercising
or refraining from exercising any discretionary rights or taking
or refraining from taking any actions which the Agent is
expressly entitled to take or assert under this Agreement and the
other Loan Documents, including, without limitation, (a) the
determination of the applicability of ineligibility criteria with
respect to the calculation of the Availability, (b) the making of
Agent Advances pursuant to Section 2.2(i), and (c) the exercise
of remedies pursuant to Section 11.2, and any action so taken or
not taken shall be deemed consented to by the Lenders.
14.2 Delegation of Duties. The Agent may execute any of its
duties under this Agreement or any other Loan Document by or
through agents, employees or attorneys-in-fact and shall be
entitled to advice of counsel concerning all matters pertaining
to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it
selects as long as such selection was made without gross
negligence or willful misconduct.
14.3 Liability of Agent. None of the Agent-Related Persons
shall (i) be liable for any action taken or omitted to be taken
by any of them under or in connection with this Agreement or any
other Loan Document or the transactions contemplated hereby
(except for its own gross negligence or willful misconduct),
(ii) be responsible in any manner to any of the Lenders for any
recital, statement, representation or warranty made by the
Borrower or any Subsidiary or Affiliate of the Borrower, or any
officer thereof, contained in this Agreement or in any other Loan
Document, or in any certificate, report, statement or other
document referred to or provided for in, or received by the Agent
under or in connection with, this Agreement or any other Loan
Document, or the validity, effectiveness, genuineness,
enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Borrower or any other party
to any Loan Document to perform its obligations hereunder or
thereunder or (iii) be liable for permitting the Borrower to
retain or obtain any certificate of title for some period of time
to facilitate licensing, noting the Agent's Lien (for the benefit
of the secured parties) on the certificates, or the purchase,
sale, transfer or other disposition of the Included Revenue
Equipment. No Agent-Related Person shall be under any obligation
to any Lender to ascertain or to inquire as to the observance or
performance of any of the agreements contained in, or conditions
of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Borrower or any of the
Borrower's Subsidiaries or Affiliates.
14.4 Reliance by Agent.
(a) The Agent shall be entitled to rely, and shall be
fully protected in relying, upon any writing, resolution, notice,
consent, certificate, affidavit, letter, telegram, facsimile,
telex or telephone message, statement or other document or
conversation believed by it to be genuine and correct and to have
been signed, sent or made by the proper Person or Persons, and
upon advice and statements of legal counsel (including counsel to
the Borrower), independent accountants and other experts selected
by the Agent. The Agent shall be fully justified in failing or
refusing to take any action under this Agreement or any other
Loan Document unless it shall first receive such advice or
concurrence of the Majority Lenders as it deems appropriate and,
if it so requests, it shall first be indemnified to its
satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or
continuing to take any such action. The Agent shall in all cases
be fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a
request or consent of the Majority Lenders and such request and
any action taken or failure to act pursuant thereto shall be
binding upon all of the Lenders.
(b) For purposes of determining compliance with the
conditions specified in Section 10.1, each Lender that has
executed this Agreement shall be deemed to have consented to,
approved or accepted or to be satisfied with, each document or
other matter either sent by the Agent to such Lender for consent,
approval, acceptance or satisfaction, or required thereunder to
be consented to or approved by or acceptable or satisfactory to
the Lender.
14.5 Notice of Default. The Agent shall not be deemed to
have knowledge or notice of the occurrence of any Default or
Event of Default, except with respect to defaults in the payment
of principal, interest and fees required to be paid to the Agent
for the account of the Lenders, unless the Agent shall have
received written notice from a Lender or the Borrower referring
to this Agreement, describing such Default or Event of Default
and stating that such notice is a "notice of default." The Agent
will notify the Lenders of its receipt of any such notice. The
Agent shall take such action with respect to such Default or
Event of Default as may be requested by the Majority Lenders in
accordance with Article 11; provided, however, that unless and
until the Agent has received any such request, the Agent may (but
shall not be obligated to) take such action, or refrain from
taking such action, with respect to such Default or Event of
Default as it shall deem advisable.
14.6 Credit Decision. Each Lender acknowledges that none of
the Agent-Related Persons has made any representation or warranty
to it, and that no act by the Agent hereinafter taken, including
any review of the affairs of the Borrower and its Affiliates,
shall be deemed to constitute any representation or warranty by
any Agent-Related Person to any Lender. Each Lender represents
to the Agent that it has, independently and without reliance upon
any Agent-Related Person and based on such documents and
information as it has deemed appropriate, made its own appraisal
of and investigation into the business, prospects, operations,
property, financial and other condition and creditworthiness of
the Borrower and its Affiliates, and all applicable bank
regulatory laws relating to the transactions contemplated hereby,
and made its own decision to enter into this Agreement and to
extend credit to the Borrower. Each Lender also represents that
it will, independently and without reliance upon any Agent-
Related Person and based on such documents and information as it
shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking
action under this Agreement and the other Loan Documents, and to
make such investigations as it deems necessary to inform itself
as to the business, prospects, operations, property, financial
and other condition and creditworthiness of the Borrower and its
Affiliates. Except for notices, reports and other documents
expressly herein required to be furnished to the Lenders by the
Agent, the Agent shall not have any duty or responsibility to
provide any Lender with any credit or other information
concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of the Borrower
and its Affiliates which may come into the possession of any of
the Agent-Related Persons.
14.7 Indemnification. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of the Borrower and without limiting
the obligation of the Borrower to do so), pro rata, from and
against any and all Indemnified Liabilities as such term is
defined in Section 15.11; provided, however, that no Lender shall
be liable for the payment to the Agent-Related Persons of any
portion of such Indemnified Liabilities resulting solely from
such Person's gross negligence or willful misconduct. Without
limitation of the foregoing, each Lender shall reimburse the
Agent upon demand for its ratable share of any costs or
out-of-pocket expenses (including Attorney Costs) incurred by the
Agent in connection with the preparation, execution, delivery,
administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or
legal advice in respect of rights or responsibilities under, this
Agreement, any other Loan Document, or any document contemplated
by or referred to herein, to the extent that the Agent is not
reimbursed for such expenses by or on behalf of the Borrower.
The undertaking in this Section shall survive the payment of all
Obligations hereunder and the resignation or replacement of the
Agent.
14.8 Agent in Individual Capacity. BABC and its Affiliates
may make loans to, issue letters of credit for the account of,
accept deposits from, acquire equity interests in and generally
engage in any kind of banking, trust, financial advisory,
underwriting or other business with the Borrower and its
Subsidiaries and Affiliates as though BABC were not the Agent
hereunder and without notice to or consent of the Lenders. The
Lenders acknowledge that, pursuant to such activities, BABC or
its Affiliates may receive information regarding the Borrower or
its Affiliates (including information that may be subject to
confidentiality obligations in favor of the Borrower or such
Subsidiary) and acknowledge that the Agent shall be under no
obligation to provide such information to them. With respect to
its Loans, BABC shall have the same rights and powers under this
Agreement as any other Lender and may exercise the same as though
it were not the Agent, and the terms "Lender" and "Lenders"
include BABC in its individual capacity.
14.9 Successor Agent. The Agent may resign as Agent upon 30
days' notice to the Lenders and the Borrower. BABC agrees to
resign if at any time it does not have any Commitments or hold
any Revolving Loans; provided, however, that if the sale by BABC
of its Commitments and Revolving Loans, which results in no
further Commitments or Revolving Loans outstanding hereunder by
BABC, is part of a sale, transfer or other disposition by BABC of
substantially all of its loan portfolio, BABC shall resign and
such purchaser or transferee shall become the successor Agent
hereunder. If the Agent resigns under this Agreement, subject to
the proviso in the preceding sentence, the Majority Lenders shall
appoint from among the Lenders a successor agent for the Lenders;
provided that unless a Default has occurred, such appointment
shall be subject to the prior written consent of the Borrower,
such consent not to be unreasonably withheld. If no successor
agent is appointed prior to the effective date of the resignation
of the Agent, the Agent may appoint, after consulting with the
Lenders, a successor agent from among the Lenders. Upon the
acceptance of its appointment as successor agent hereunder, such
successor agent shall succeed to all the rights, powers and
duties of the retiring Agent and the term "Agent" shall mean such
successor agent and the retiring Agent's appointment, powers and
duties as Agent shall be terminated. After any retiring Agent's
resignation hereunder as Agent, the provisions of this Article 14
shall inure to its benefit as to any actions taken or omitted to
be taken by it while it was Agent under this Agreement. If no
successor agent has accepted appointment as Agent by the date
which is 30 days following a retiring Agent's notice of
resignation, the retiring Agent's resignation shall nevertheless
thereupon become effective and the Lenders shall perform all of
the duties of the Agent hereunder until such time, if any, as the
Majority Lenders appoint a successor agent as provided for above.
14.10 Withholding Tax.
(a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the Code and such
Lender claims exemption from, or a reduction of, U.S. withholding
tax under Sections 1441 or 1442 of the Code, such Lender agrees
to deliver to the Agent and to the Borrower:
(i) if such Lender claims an exemption from, or a
reduction of, withholding tax under a United States tax treaty,
properly completed IRS Forms 1001 and W-8 before the payment of
any interest in the first calendar year and before the payment of
any interest in each third succeeding calendar year during which
interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed
copies of IRS Form 4224 before the payment of any interest is due
in the first taxable year of such Lender and in each succeeding
taxable year of such Lender during which interest may be paid
under this Agreement, and IRS Form W-9; and
(iii) such other form or forms (including
forms replacing the forms describe above) as may be required
under the Code or other laws of the United States as a condition
to exemption from, or reduction of, United States withholding
tax.
Such Lender agrees to promptly notify the Agent and the Borrower
of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.
(b) If any Lender claims exemption from, or reduction
of, withholding tax under a United States tax treaty by providing
IRS Form 1001 and such Lender sells, assigns, grants a
participation in, or otherwise transfers all or part of the
Obligations of the Borrower to such Lender, such Lender agrees to
notify the Agent and the Borrower of the percentage amount in
which it is no longer the beneficial owner of Obligations of the
Borrower to such Lender. To the extent of such percentage
amount, the Agent will treat such Lender's IRS Form 1001 as no
longer valid.
(c) If any Lender claiming exemption from United
States withholding tax by filing IRS Form 4224 with the Agent and
the Borrower sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of the
Borrower to such Lender, such Lender agrees to undertake sole
responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.
(d) If any Lender is entitled to a reduction in the
applicable withholding tax, the Agent may withhold from any
interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to the Agent,
then the Agent may withhold from any interest payment to such
Lender not providing such forms or other documentation an amount
equivalent to the applicable withholding tax.
(e) If the IRS or any other Governmental Authority of
the United States or other jurisdiction asserts a claim that the
Agent did not properly withhold tax from amounts paid to or for
the account of any Lender (because the appropriate form was not
delivered, was not properly executed, or because such Lender
failed to notify the Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason), such Lender shall
indemnify the Agent and the Borrower fully for all amounts paid,
directly or indirectly, by the Agent as tax or otherwise,
including penalties and interest, and including any taxes imposed
by any jurisdiction on the amounts payable to the Agent under
this Section, together with all costs and expenses (including
Attorney Costs). The obligation of the Lenders under this
subsection shall survive the payment of all Obligations and the
resignation or replacement of the Agent.
14.11 Collateral Matters.
(a) The Lenders hereby irrevocably authorize the
Agent, at its option and in its sole discretion, to release any
Agent's Lien upon any Collateral (i) upon the termination of the
Commitments and payment and satisfaction in full by Borrower of
all Loans and reimbursement obligations in respect of Letters of
Credit, and the termination of all outstanding Letters of Credit
(whether or not any of such obligations are due) and all other
Obligations (other than Surviving Indemnities); (ii) constituting
property being sold or disposed of (A) pursuant to the procedures
set forth in Section 6.2(b), or (B) as to other property if the
Borrower certifies to the Agent that the sale or disposition is
made in compliance with Section 9.8 (and the Agent may rely
conclusively on any such certificate, without further inquiry);
(iii) constituting property in which the Borrower owned no
interest at the time the Lien was granted or at any time
thereafter; or (iv) constituting property leased to the Borrower
under a lease which has expired or been terminated in a
transaction permitted under this Agreement. Except as provided
above, the Agent will not release any of the Agent's Liens
without the prior written authorization of the Lenders; provided
that the Agent may, in its discretion, release the Agent's Liens
on Collateral valued in the aggregate not in excess of $2,000,000
in any Fiscal Year without the prior written authorization of the
Lenders. Upon request by the Agent or the Borrower at any time,
the Lenders will confirm in writing the Agent's authority to
release any Agent's Liens upon particular types or items of
Collateral pursuant to this Section 14.11.
(b) Upon receipt by the Agent of any authorization
required pursuant to Section 14.11(a) from the Lenders of the
Agent's authority to release any Agent's Liens upon particular
types or items of Collateral, and upon at least five (5) Business
Days' prior written request by the Borrower, the Agent shall
(and is hereby irrevocably authorized by the Lenders to) execute
such documents as may be necessary to evidence the release of the
Agent's Liens upon such Collateral; provided, however, that
(i) the Agent shall not be required to execute any such document
on terms which, in the Agent's opinion, would expose the Agent to
liability or create any obligation or entail any consequence
other than the release of such Liens without recourse or
warranty, and (ii) such release shall not in any manner
discharge, affect or impair the Obligations or any Liens (other
than those expressly being released) upon (or obligations of the
Borrower in respect of) all interests retained by the Borrower,
including (without limitation) the proceeds of any sale, all of
which shall continue to constitute part of the Collateral.
(c) The Agent shall have no obligation whatsoever to
any of the Lenders to assure that the Collateral exists or is
owned by the Borrower or is cared for, protected or insured or
has been encumbered, or that the Agent's Liens have been properly
or sufficiently or lawfully created, perfected, protected or
enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of
care, disclosure or fidelity, or to continue exercising, any of
the rights, authorities and powers granted or available to the
Agent pursuant to any of the Loan Documents, it being understood
and agreed that in respect of the Collateral, or any act,
omission or event related thereto, the Agent may act in any
manner it may deem appropriate, in its sole discretion given the
Agent's own interest in the Collateral in its capacity as one of
the Lenders and that the Agent shall have no other duty or
liability whatsoever to any Lender as to any of the foregoing.
(d) From time to time as reasonably requested by any
Lender, the Agent shall request information from any Loan Party
pursuant to this Agreement and shall provide such information to
such Lender.
14.12 Restrictions on Actions by Lenders; Sharing of
Payments.
(a) Each of the Lenders agrees that it shall not,
without the express consent of all Lenders, and that it shall, to
the extent it is lawfully entitled to do so, upon the request of
all Lenders, set off against the Obligations, any amounts owing
by such Lender to the Borrower or any accounts of the Borrower
now or hereafter maintained with such Lender. Each of the
Lenders further agrees that it shall not, unless specifically
requested to do so by the Agent, take or cause to be taken any
action to enforce its rights under this Agreement or against the
Borrower, including, without limitation, the commencement of any
legal or equitable proceedings, to foreclose any Lien on, or
otherwise enforce any security interest in, any of the
Collateral; provided, however, that no such request shall be
required if the Agent has resigned and no successor Agent has
been appointed.
(b) If at any time or times any Lender shall receive
(i) by payment, foreclosure, setoff or otherwise, any proceeds of
Collateral or any payments with respect to the Obligations of the
Borrower to such Lender arising under, or relating to, this
Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from the Agent
pursuant to the terms of this Agreement, or (ii) payments from
the Agent in excess of such Lender's ratable portion of all such
distributions by the Agent, such Lender shall promptly (1) turn
the same over to the Agent, in kind, and with such endorsements
as may be required to negotiate the same to the Agent, or in same
day funds, as applicable, for the account of all of the Lenders
and for application to the Obligations in accordance with the
applicable provisions of this Agreement, or (2) purchase, without
recourse or warranty, an undivided interest and participation in
the Obligations owed to the other Lenders so that such excess
payment received shall be applied ratably as among the Lenders in
accordance with their Pro Rata Shares; provided, however, that if
all or part of such excess payment received by the purchasing
party is thereafter recovered from it, those purchases of
participations shall be rescinded in whole or in part, as
applicable, and the applicable portion of the purchase price paid
therefor shall be returned to such purchasing party, but without
interest except to the extent that such purchasing party is
required to pay interest in connection with the recovery of the
excess payment.
14.13 Agency for Perfection. Each Lender hereby
appoints each other Lender as agent for the purpose of perfecting
the Lenders' security interest in assets which, in accordance
with Article 9 of the UCC can be perfected only by possession.
Should any Lender (other than the Agent) obtain possession of any
such Collateral, such Lender shall notify the Agent thereof, and,
promptly upon the Agent's request therefor shall deliver such
Collateral to the Agent or in accordance with the Agent's
instructions.
14.14 Payments by Agent to Lenders. All payments to be
made by the Agent to the Lenders shall be made by bank wire
transfer or internal transfer of immediately available funds to
their respective wire transfer accounts listed on the signature
pages below; or pursuant to such other wire transfer instructions
as each Lender may designate for itself by written notice to the
Agent. Concurrently with each such payment, the Agent shall
identify whether such payment (or any portion thereof) represents
principal, premium or interest on the Revolving Loans or
otherwise.
14.15 Concerning the Collateral and the Related Loan
Documents. Each Lender authorizes and directs the Agent to enter
into this Agreement and the other Loan Documents relating to the
Collateral, for the ratable benefit of the L/C Issuer and the
Lenders. Each Lender agrees that any action taken by the Agent
or Majority Lenders in accordance with the terms of this
Agreement or the other Loan Documents relating to the Collateral,
and the exercise by the Agent or the Majority Lenders of their
respective powers set forth therein or herein, together with such
other powers that are reasonably incidental thereto, shall be for
the benefit of and binding upon the L/C Issuer and all of the
Lenders.
14.16 Field Audit and Examination Reports; Disclaimer by
Lenders. Except as otherwise expressly set forth in this
Agreement, by signing this Agreement, each Lender:
(a) is deemed to have requested that the Agent furnish
such Lender, promptly after it becomes available, a copy of each
field audit or examination report (each a "Report" and
collectively, "Reports") prepared by the Agent;
(b) expressly agrees and acknowledges that neither
BABC nor the Agent (i) makes any representation or warranty as to
the accuracy of any Report, or (ii) shall be liable for any
information contained in any Report;
(c) expressly agrees and acknowledges that the Reports
are not comprehensive audits or examinations, that the Agent or
other party performing any audit or examination will inspect only
specific information regarding the Borrower and will rely
significantly upon the Borrower's books and records, as well as
on representations of the Borrower's personnel;
(d) agrees to keep all Reports confidential and
strictly for its internal use, and not to distribute except to
its participants or prospective participants or assignees, or use
any Report in any other manner; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees:
(i) to hold the Agent and any such other Lender preparing a
Report harmless from any action the indemnifying Lender may take
or conclusion the indemnifying Lender may reach or draw from any
Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make
to the Borrower, or the indemnifying Lender's participation in,
or the indemnifying Lender's purchase of, a loan or loans of the
Borrower; and (ii) to pay and protect, and indemnify, defend and
hold the Agent and any such other Lender preparing a Report
harmless from and against, the claims, actions, proceedings,
damages, costs, expenses and other amounts (including, without
limitation Attorney Costs) incurred by the Agent and any such
other Lender preparing a Report as the direct or indirect result
of any third parties who might obtain all or part of any Report
through the indemnifying Lender.
14.17 Co-Agents. None of the Lenders identified on the
facing page or signature pages of this Agreement as a "co-agent"
or as a "co-syndication agent" shall have any right, power,
obligation, liability, responsibility or duty under this
Agreement other than those applicable to all Lenders as such.
Without limiting the foregoing, none of the Lenders so identified
as a "co-syndication agent" shall have or be deemed to have any
fiduciary relationship with any Lender. Each Lender acknowledges
that it has not relied, and will not rely, on any of the Lenders
so identified in deciding to enter into this Agreement or in
taking or not taking action hereunder.
ARTICLE 15
MISCELLANEOUS
15.1 Cumulative Remedies; No Prior Recourse to Collateral.
The enumeration herein of the Agent's and each Lender's rights
and remedies is not intended to be exclusive, and such rights and
remedies are in addition to and not by way of limitation of any
other rights or remedies that the Agent and the Lenders may have
under the UCC or other applicable law. The Agent and the Lenders
shall have the right, in their sole discretion, to determine
which rights and remedies are to be exercised and in which order.
The exercise of one right or remedy shall not preclude the
exercise of any others, all of which shall be cumulative. The
Agent and the Lenders may, without limitation, proceed directly
against the Borrower to collect the Obligations without any prior
recourse to the Collateral. No failure to exercise and no delay
in exercising, on the part of the Agent or any Lender, any right,
remedy, power or privilege hereunder, shall operate as a waiver
thereof; nor shall any single or partial exercise of any right,
remedy, power or privilege hereunder preclude any other or
further exercise thereof or the exercise of any other right,
remedy, power or privilege.
15.2 Severability. The illegality or unenforceability of
any provision of this Agreement or any instrument or agreement
required hereunder shall not in any way affect or impair the
legality or enforceability of the remaining provisions of this
Agreement or any instrument or agreement required hereunder.
15.3 Governing Law; Choice of Forum; Service of Process;
Jury Trial Waiver.
(a) THIS AGREEMENT SHALL BE INTERPRETED AND THE RIGHTS
AND LIABILITIES OF THE PARTIES HERETO DETERMINED IN ACCORDANCE
WITH THE INTERNAL LAWS (AS OPPOSED TO THE CONFLICT OF LAWS
PROVISIONS PROVIDED THAT PERFECTION ISSUES WITH RESPECT TO
ARTICLE 9 OF THE UCC MAY GIVE EFFECT TO APPLICABLE CHOICE OR
CONFLICT OF LAW RULES SET FORTH IN ARTICLE 9 OF THE UCC) OF THE
STATE OF CALIFORNIA; PROVIDED THAT THE AGENT AND THE LENDERS
SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.
(b) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE
COURTS OF THE STATE OF CALIFORNIA OR OF THE UNITED STATES FOR THE
NORTHERN OR CENTRAL DISTRICT OF CALIFORNIA, AND BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH OF THE LOAN PARTIES, THE AGENT
AND THE LENDERS CONSENTS, FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, TO THE NON-EXCLUSIVE JURISDICTION OF THOSE COURTS.
EACH OF THE LOAN PARTIES, THE AGENT AND THE LENDERS IRREVOCABLY
WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF
VENUE OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT
MAY NOW OR HEREAFTER HAVE TO THE BRINGING OF ANY ACTION OR
PROCEEDING IN SUCH JURISDICTION IN RESPECT OF THIS AGREEMENT OR
ANY DOCUMENT RELATED HERETO. NOTWITHSTANDING THE FOREGOING:
(1) THE AGENT AND THE LENDERS SHALL HAVE THE RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST THE BORROWER OR ANY OTHER LOAN PARTY
OR ANY OF THEIR RESPECTIVE PROPERTY IN THE COURTS OF ANY OTHER
JURISDICTION THE AGENT OR THE LENDERS DEEM NECESSARY OR
APPROPRIATE IN ORDER TO REALIZE ON THE COLLATERAL OR OTHER
SECURITY FOR THE OBLIGATIONS AND (2) EACH OF THE PARTIES HERETO
ACKNOWLEDGES THAT ANY APPEALS FROM THE COURTS DESCRIBED IN THE
IMMEDIATELY PRECEDING SENTENCE MAY HAVE TO BE HEARD BY A COURT
LOCATED OUTSIDE THOSE JURISDICTIONS.
(c) EACH OF THE LOAN PARTIES HEREBY WAIVES PERSONAL
SERVICE OF ANY AND ALL PROCESS UPON IT AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS MAY BE MADE BY REGISTERED MAIL (RETURN RECEIPT
REQUESTED) DIRECTED TO THE BORROWER AT ITS ADDRESS SET FORTH ON
THE SIGNATURE PAGE OF THIS AGREEMENT (AS SUCH ADDRESS MAY BE
MODIFIED BY A NOTICE GIVEN PURSUANT TO SECTION 15.8 AND SERVICE
SO MADE SHALL BE DEEMED TO BE COMPLETED FIVE (5) DAYS AFTER THE
SAME SHALL HAVE BEEN SO DEPOSITED IN THE U.S. MAILS. NOTHING
CONTAINED HEREIN SHALL AFFECT THE RIGHT OF AGENT OR THE LENDERS
TO SERVE LEGAL PROCESS BY ANY OTHER MANNER PERMITTED BY LAW.
(d) NOTWITHSTANDING ANY OTHER PROVISION OF THIS
AGREEMENT TO THE CONTRARY, ANY CONTROVERSY OR CLAIM BETWEEN OR
AMONG THE PARTIES, INCLUDING BUT NOT LIMITED TO THOSE ARISING OUT
OF OR RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT AND
ANY CLAIM BASED ON OR ARISING FROM AN ALLEGED TORT, SHALL AT THE
REQUEST OR EITHER PARTY HERETO BE DETERMINED BY BINDING
ARBITRATION. The arbitration shall be conducted in accordance
with the United States Arbitration Act (Title 9, U.S. Code),
notwithstanding any choice of law provision in this Agreement,
and under the Commercial Rules of the American Arbitration
Association ("AAA"). The arbitrator(s) shall give effect to
statutes of limitation in determining any claim. Any controversy
concerning whether an issue is arbitrable shall be determined by
the arbitrator(s). Judgment upon the arbitration award may be
entered in any court having jurisdiction. The institution and
maintenance of an action for judicial relief or pursuant to a
provisional or ancillary remedy shall not constitute a waiver of
the right of either party, including the plaintiff, to submit the
controversy or claim to arbitration if any other party contests
such action for judicial relief.
(e) Notwithstanding the provisions of (d) above, no
controversy or claim shall be submitted to arbitration without
the consent of all parties if, at the time of the proposed
submission, such controversy or claim arises from or related to
an obligation to the Lender which is secured by real estate
property collateral (exclusive of real estate space lease
assignments). If all the parties do not consent to submission of
such a controversy or claim to arbitration, the controversy or
claim shall be determined as provided in Section 15.3(f).
(f) At the request of either party a controversy or
claim which is not submitted to arbitration as provided and
limited in Section 15.3(d) and (e) shall be determined by
judicial reference. If such an election is made, the parties
shall designate to the court a referee or referees selected under
the auspices of the AAA in the same manner as arbitrators are
selected in AAA-sponsored proceedings. The presiding referee of
the panel, or the referee if there is a single referee, shall be
an active attorney or retired judge. Judgment upon the award
rendered by such referee or referees shall be entered in the
court in which such proceeding was commenced.
(g) No provision of Sections 15.3(d) through (f) shall
limit the right of the Agent or the Lenders to exercise self-help
remedies such as setoff, foreclosure against or sale of any real
or personal property collateral or security, or obtaining
provisional or ancillary remedies from a court of competent
jurisdiction before, after, or during the pendency of any
arbitration or other proceeding. The exercise of a remedy does
not waive the right of either party to resort to arbitration or
reference. At the Agent's option, foreclosure under a deed of
trust or mortgage may be accomplished either by exercise of power
of sale under the deed of trust or mortgage or by judicial
foreclosure.
15.4 WAIVER OF JURY TRIAL.
(a) SUBJECT TO THE PROVISIONS OF SECTION 15.3(d), THE
LOAN PARTIES, THE LENDERS AND THE AGENT EACH WAIVE THEIR
RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF
ACTION BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY
OR THEREBY, IN ANY ACTION, PROCEEDING OR OTHER LITIGATION OF ANY
TYPE BROUGHT BY ANY OF THE PARTIES AGAINST ANY OTHER PARTY OR ANY
AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER WITH
RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE LOAN
PARTIES, THE LENDERS AND THE AGENT EACH AGREE THAT ANY SUCH CLAIM
OR CAUSE OF ACTION SHALL BE TRIED BY A COURT TRIAL WITHOUT A
JURY. WITHOUT LIMITING THE FOREGOING, THE PARTIES FURTHER AGREE
THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED BY
OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER
PROCEEDING WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE
VALIDITY OR ENFORCEABILITY OF THIS AGREEMENT OR THE OTHER LOAN
DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF. THIS WAIVER SHALL
APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.
(b) EACH OF THE LOAN PARTIES AGREES THAT IT WILL NOT
ASSERT AGAINST AGENT OR ANY LENDER ANY CLAIM FOR CONSEQUENTIAL,
INCIDENTAL, SPECIAL OR PUNITIVE DAMAGES IN CONNECTION WITH THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR THE TRANSACTIONS
CONTEMPLATED HEREBY OR THEREBY.
15.5 Survival of Representations and Warranties. All of the
Borrower's representations and warranties contained in this
Agreement shall survive the execution, delivery, and acceptance
thereof by the parties, notwithstanding any investigation by the
Agent or the Lenders or their respective agents.
15.6 Other Security and Guaranties. The Agent, may, without
notice or demand and without affecting the Borrower's or any
other Loan Party's obligations hereunder, from time to time:
(a) take from any Person and hold collateral (other than the
Collateral) for the payment of all or any part of the Obligations
and exchange, enforce or release such collateral or any part
thereof; and (b) accept and hold any endorsement or guaranty of
payment of all or any part of the Obligations and release or
substitute any such endorser or guarantor, or any Person who has
given any Lien in any other collateral as security for the
payment of all or any part of the Obligations, or any other
Person in any way obligated to pay all or any part of the
Obligations.
15.7 Fees and Expenses. The Borrower agrees to pay to the
Agent, for its benefit, to each Lender with respect to costs and
expenses specified in clause (i) below, and to NationsBank with
respect to audit costs to the extent specified in clause (f)
below, in each case on demand, all reasonable costs and expenses
that Agent (or as applicable, the Lenders or NationsBank) pays or
incurs in connection with the negotiation, preparation,
syndication, consummation, administration, enforcement,
restructuring, work-out and termination of this Agreement or any
of the other Loan Documents, including, without limitation:
(a) Attorney Costs; (b) costs and expenses (including attorneys'
and paralegals' fees and disbursements which shall include the
allocated costs of Agent's in-house counsel fees and
disbursements) for any amendment, supplement, waiver, consent, or
subsequent closing in connection with the Loan Documents and the
transactions contemplated thereby; (c) costs and expenses of lien
and title searches and title insurance; (d) taxes, fees and other
charges for filing financing statements and continuations, and
other actions to perfect, protect, and continue the Agent's Liens
(including costs and expenses paid or incurred by the Agent in
connection with the consummation of Agreement); (e) sums paid or
incurred to pay any amount or take any action required of the
Borrower or any of its Affiliates under the Loan Documents that
the Borrower or any such Affiliate fails to pay or take;
(f) costs of appraisals, inspections, and verifications of the
Collateral, including, without limitation, travel, lodging, and
meals for inspections of the Collateral and the Borrower's
operations by the Agent or its agents and/or NationsBank plus
$500 per day (or portion thereof) for each agent or employee of
the Agent and/or NationsBank with respect to each field
examination or audit and the preparation of reports thereof),
provided, that any audits conducted or participated in by
NationsBank shall not exceed one audit per Fiscal Year or be
longer than five (5) calendar days; (g) costs and expenses of
forwarding loan proceeds, collecting checks and other items of
payment, and establishing and maintaining Payment Accounts and
lock boxes; (h) costs and expenses of preserving and protecting
the Collateral; (i) costs and expenses (including attorneys' and
paralegals' fees and disbursements) incurred by each Lender after
the occurrence and during the continuance of an Event of Default
relating to a work-out or restructuring of the Obligations or the
exercise of remedies; (j) costs and expenses (including
attorneys' and paralegals' fees and disbursements which shall
include the allocated cost of Agent's in-house counsel fees and
disbursements) paid or incurred to obtain payment of the
Obligations, enforce the Agent's Liens, sell or otherwise realize
upon the Collateral, and otherwise enforce the provisions of the
Loan Documents, or to defend any claims made or threatened
against the Agent or any Lender arising out of the transactions
contemplated hereby (including without limitation, preparations
for and consultations concerning any such matters); and (k) out
of pocket costs of the Lenders incurred in connection with
bankruptcy or insolvency proceedings involving the Loan Parties,
including without limitation fees and out of pocket expenses of
counsel to the Lenders and consultants retained by the Agent.
The Borrower also agrees to pay the reasonable attorneys fees and
costs incurred by each of NationsBank and Caisse Nationale De
Credit Agricole (including the allocated costs of their in-house
counsel fees and disbursements) in connection with the
documentation of this Agreement in an amount not to exceed
$30,000 in the aggregate. The foregoing shall not be construed
to limit any other provisions of the Loan Documents regarding
costs and expenses to be paid by the Borrower. All of the
foregoing costs and expenses shall be charged to the Borrower's
Loan Account as Revolving Loans as described in Section 4.4.
15.8 Notices. Except as otherwise provided herein, all
notices, demands and requests that any party is required or
elects to give to any other shall be in writing, or by a
telecommunications device capable of creating a written record,
and any such notice shall become effective (a) upon personal
delivery thereof, including, but not limited to, delivery by
overnight mail and courier service, (b) four (4) days after it
shall have been mailed by United States mail, first class,
certified or registered, with postage prepaid, or (c) in the case
of notice by such a telecommunications device, when properly
transmitted, in each case addressed to the party to be notified
at its address set forth on the signature pages below; or to such
other address as such party may designate for itself by like
notice. Failure or delay in delivering copies of any notice,
demand, request, consent, approval, declaration or other
communication to the persons designated above to receive copies
shall not adversely affect the effectiveness of such notice,
demand, request, consent, approval, declaration or other
communication.
15.9 Waiver of Notices. Unless otherwise expressly provided
herein, the Borrower waives presentment, protest and notice of
demand or dishonor and protest as to any instrument, notice of
intent to accelerate the Obligations and notice of acceleration
of the Obligations, as well as any and all other notices to which
it might otherwise be entitled. No notice to or demand on the
Borrower which the Agent or any Lender may elect to give shall
entitle the Borrower to any or further notice or demand in the
same, similar or other circumstances.
15.10 Binding Effect. The provisions of this Agreement
shall be binding upon and inure to the benefit of the respective
representatives, successors, and assigns of the parties hereto;
provided, however, that no interest herein may be assigned by the
Borrower without prior written consent of the Agent and each
Lender. The rights and benefits of the Agent and the Lenders
hereunder shall, if such Persons so agree, inure to any party
acquiring any interest in the Obligations or any part thereof.
15.11 Indemnity of the Agent and the Lenders by the
Borrower. The Borrower agrees to defend, indemnify and hold the
Agent-Related Persons, and each Lender and each of its respective
officers, directors, employees, counsel, agents and
attorneys-in-fact (each, an "Indemnified Person") harmless from
and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, charges,
expenses and disbursements (including Attorney Costs) of any kind
or nature whatsoever which may at any time (including at any time
following repayment of the Revolving Loans and the termination,
resignation or replacement of the Agent or replacement of any
Lender) be imposed on, incurred by or asserted against any such
Person in any way relating to or arising out of this Agreement or
any document contemplated by or referred to herein, or the
transactions contemplated hereby, or any action taken or omitted
by any such Person under or in connection with any of the
foregoing, including with respect to any investigation,
litigation or proceeding (including any Insolvency Proceeding or
appellate proceeding) related to or arising out of this
Agreement, any other Loan Document, or the Revolving Loans or the
use of the proceeds thereof which arise from assertions by third
parties, whether or not any Indemnified Person is a party thereto
(all the foregoing, collectively, the "Indemnified Liabilities");
provided, that the Borrower shall have no obligation hereunder to
any Indemnified Person with respect to Indemnified Liabilities
resulting solely from the gross negligence or willful misconduct
of such Indemnified Person. The agreements in this Section shall
survive payment of all other Obligations.
15.12 Final Agreement. This Agreement and the other
Loan Documents are intended by the Borrower, the Agent and the
Lenders to be the final, complete, and exclusive expression of
the agreement between them. This Agreement supersedes any and
all prior oral or written agreements relating to the subject
matter hereof (other than the Fee Letter). No modification,
rescission, waiver, release, or amendment of any provision of
this Agreement or any other Loan Document shall be made, except
by a written agreement signed by the Borrower (or other affected
Loan Party) and a duly authorized officer of each of the Agent
the Required Lenders, the Majority Lenders or all of the Lenders,
as the case may be. This Agreement is subject to the terms of an
Intercreditor Agreement dated as of the date of this Agreement
among BABC, as Agent, the Parent, Menlo Logistics, Inc., ▇▇▇▇▇
Air Freight Corporation and Con-Way Transportation Services, Inc.
15.13 Counterparts. This Agreement may be executed in
any number of counterparts, and by the Agent, each Lender, the
Borrower and the other Loan Parties in separate counterparts,
each of which shall be an original, but all of which shall
together constitute one and the same agreement.
15.14 Captions. The captions contained in this
Agreement are for convenience of reference only, are without
substantive meaning and should not be construed to modify,
enlarge, or restrict any provision.
15.15 Right of Setoff. In addition to any rights and
remedies of the Lenders provided by law, if an Event of Default
exists or the Revolving Loans have been accelerated, each Lender
is authorized at any time and from time to time, without prior
notice to the Borrower (or other affected Loan Party), any such
notice being waived by the Borrower(and the other Loan Parties)
to the fullest extent permitted by law, to set off and apply any
and all deposits (general or special, time or demand, provisional
or final) at any time held by, and other indebtedness at any time
owing by, such Lender to or for the credit or the account of the
Borrower (or other affected Loan Party) against any and all
Obligations owing to such Lender, now or hereafter existing,
irrespective of whether or not the Agent or such Lender shall
have made demand under this Agreement or any Loan Document and
although such Obligations may be contingent or unmatured. Each
Lender agrees promptly to notify the Borrower (or other affected
Loan Party) and the Agent after any such set-off and application
made by such Lender; provided, however, that the failure to give
such notice shall not affect the validity of such set-off and
application. NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL
EXERCISE ANY RIGHT OF SET-OFF, BANKER'S LIEN, OR THE LIKE AGAINST
ANY DEPOSIT ACCOUNT OR PROPERTY OF THE BORROWER (OR OTHER LOAN
PARTY) HELD OR MAINTAINED BY SUCH LENDER WITHOUT THE PRIOR
WRITTEN UNANIMOUS CONSENT OF THE LENDERS.
IN WITNESS WHEREOF, the parties have entered into this
Agreement on the date first above written.
Notices: "BORROWER"
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Consolidated Freightways
Chief Financial Officer Corporation of Delaware, a
Consolidated Freightways Delaware corporation
Corporation of Delaware
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇ Name:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Title:Senior Vice President
and Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ Telephone No.:▇▇▇-▇▇▇-▇▇▇▇
Director, Financial Accounting Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Consolidated Freightways
Corporation of Delaware
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Notices: "PARENT"
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ Consolidated Freightways
Chief Financial Officer Corporation, a Delaware
Consolidated Freightways corporation
Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
By:/s/▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇ Name:▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Title:Senior Vice President
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Director, Financial Accounting
Consolidated Freightways
Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
Notices: "▇▇▇▇▇▇"
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Chief Financial Officer Corporation, a Delaware
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ corporation
Corporation
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇ Name:▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇ Title:Vice President and Treasurer
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇ Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Director, Financial Accounting
▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
Corporation
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
or
▇▇▇▇ ▇.▇. ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Tel: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
"AGENT"
BankAmerica Business Credit,
Inc., as the Agent
By:/s/▇▇▇▇▇ ▇▇▇▇▇
Name:▇▇▇▇▇ ▇▇▇▇▇
Title:Senior Vice President
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
"LENDERS"
Commitment: $75,000,000 BankAmerica Business Credit,
Inc., as a Lender
By:/s/▇▇▇▇▇ ▇▇▇▇▇
Name:▇▇▇▇▇ ▇▇▇▇▇
Title:Senior Vice President
Address: ▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Wire transfer information:
ABA No.: ▇▇▇-▇▇▇-▇▇▇
Attention: Bank of America
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Acct. No.: 12575-03561
Reference: Consolidated
Freightways
Commitment: $35,000,000 NationsBank of Texas, N.A., as a
Lender
By:/s/▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Address: NationsBank of Texas,
N.A.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: 214/▇▇▇-▇▇▇▇
Telecopy No.: 214/508-3501
Wire transfer information:
ABA No.: ▇▇▇▇▇▇▇▇▇
Attention: Business Credit/
Regional Manager:
URGENT
Acct. No.: 0180019471
Reference: Consolidated
Freightways
Corporation of
Delaware
Commitment: $20,000,000 Caisse Nationale De Credit
Agricole, as a Lender
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇
Copy all notices to: Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇ Title: Vice President
Caisse Nationale De Credit Address: Caisse Nationale De
Agricole Credit
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
4390 ▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
94111 Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇ Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Wire transfer information:
ABA No.: 021-000238
Attention: ▇▇▇▇▇▇
Acct. No.: Credit Agricole-
Chicago Branch
#63000205
Reference: Consolidated
Freightways
Commitment: $35,000,000 Transamerica Business Credit
Corporation, as a Lender
By:/s/▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
Wire transfer information:
ABA No.: ▇▇▇▇▇▇▇▇▇
Acct. No.: 52-95416
First Chicago
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Reference: Consolidated Freightways
Commitment: $25,000,000 Congress Financial Corporation
(Western), as a Lender
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President
Address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Wire transfer information:
ABA No.: ▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
Acct. No.: 322-020530
Reference: Consolidated
Freightways
Corp. of Delaware
Commitment: $20,000,000 The CIT Group/Business Credit,
Inc., as a Lender
By:/s/▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Name: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Assistant Vice President
Address: The CIT
Group/Business
Credit, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇
▇▇▇▇▇
Telephone No.:(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
Wire transfer information:
ABA No.: ▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-
0199
Acct. No.: 144054227
Reference: Consolidated
Freightways
Corporation of
Delaware
Commitment: $15,000,000 BTM Capital Corporation, as a
Lender
By:/s/▇▇▇▇▇▇▇ ▇. York Jr.
Name: ▇▇▇▇▇▇▇ ▇. York Jr.
Title: Senior Vice President
Address: BTM Capital
Corporation
▇▇▇▇▇▇▇▇ ▇▇▇▇ Center
LB-101
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: 214/▇▇▇-▇▇▇▇
Telecopy No.: 214/954-0781
Wire transfer information:
ABA No.: ▇▇▇-▇▇▇-▇▇▇
Attention: ▇▇▇ ▇▇▇▇▇▇▇
Acct. No.: DDA # 521-11235
Reference: Consolidated
Freightways
Corporation of
Delaware
"L/C ISSUER"
NationsBank of Texas, N.A., as
L/C Issuer
By:/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Vice President
Address: ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.: ▇▇▇-▇▇▇-▇▇▇▇
Telecopy No.: ▇▇▇-▇▇▇-▇▇▇▇
AMENDMENT NO. 1 TO
LOAN AND SECURITY AGREEMENT
This Amendment No. 1 to Loan and Security
Agreement is made as of February 28, 1997 by and among each
of the undersigned and amends that certain Loan and Security
Agreement, dated as of November 27, 1996 (the "Loan
Agreement"), among the financial institutions listed on the
signature pages thereof as lenders (such financial
institutions, together with their respective successors and
assigns, are referred to hereinafter each individually as a
"Lender" and collectively as the "Lenders"), BankAmerica
Business Credit, Inc., a Delaware corporation, as agent for
the Lenders (in its capacity as agent, the "Agent"),
NationsBank of Texas, N.A., as the L/C Issuer and as co-
syndication agent for the Lenders, Caisse Nationale De
Credit Agricole, as co-agent for the Lenders, Consolidated
Freightways Corporation of Delaware, a Delaware corporation,
(the "Borrower"), Consolidated Freightways Corporation (the
"Parent") and ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ Corporation ("▇▇▇▇▇▇").
Capitalized terms used herein without definition have the
meanings assigned thereto in the Loan Agreement.
RECITALS
A.The Borrower has requested that certain provisions
of the Loan Agreement be amended as more fully described
below.
B.On the terms and subject to the conditions set forth
in this Amendment, the parties to the Loan Agreement have
agreed to the amendments to the Loan Agreement as set forth
below.
AGREEMENT
In consideration of the foregoing, and for good and
valuable consideration, the receipt of which is hereby
acknowledged, the undersigned hereby agree as follows:
ARTICLE 1
AMENDMENTS TO LOAN AND SECURITY AGREEMENT
1.1 Amendment to the Definition of "Excluded
Revenue Equipment". The definition of "Excluded Revenue
Equipment" set forth in Section 1.1 of the Agreement is
hereby amended and restated to read in its entirety as
follows:
"Excluded Revenue Equipment" means the
Revenue Equipment listed on Schedule 8.31,
together with any personal property (such as
licenses, maintenance contracts and insurance
contracts) which directly, specifically and
exclusively relates to such Excluded Revenue
Equipment. For the avoidance of doubt, Excluded
Revenue Equipment shall include (a) any Revenue
Equipment leased as of November 27, 1996 pursuant
to a Synthetic Lease, and (b) any replacement of
any such Revenue Equipment to the extent that such
Revenue Equipment (i) was lost, damaged, destroyed
or taken in connection with a casualty, (ii) was
replaced with proceeds received as a result of
such casualty, and (iii) was replaced by
replacement Revenue Equipment which is leased by
the Borrower under a lease agreement with the same
lessor; provided that the monthly payments due
under such lease agreement with respect to such
replacement Revenue Equipment do not exceed the
monthly payments which would have been payable
under the Synthetic Lease with respect to the
Revenue Equipment which was the subject of the
casualty. For the avoidance of doubt, the states
listed on Schedule 8.31 with respect to Excluded
Revenue Equipment identify the Excluded Revenue
Equipment as of January 23, 1997. Changes in the
state of location of Excluded Revenue Equipment
(or Included Revenue Equipment) on and after
November 27, 1996 shall not affect the
characterization of Revenue Equipment as Excluded
Revenue Equipment or Included Revenue Equipment."
1.2 Amendment to the Definition of "Permitted
Liens". Clause (h) of the definition of "Permitted Liens"
set forth in Section 1.1 of the Agreement is hereby amended
and restated to read in its entirety as follows:
"(h) Liens on Excluded Revenue Equipment and any
Lien (i) in favor of ABN AMRO Bank, N.V., as Agent,
under the Security Agreement dated as of January 23,
1997 (without giving effect to any amendment thereto,
the "ABN AMRO Security Agreement") made by the Borrower
in favor of and ABN AMRO Bank, N.V., as Agent for
certain "Lessors", in the "Collateral" (as defined in
the ABN AMRO Security Agreement) described in Section
1(d) of the ABN AMRO Security Agreement to the extent
that such Collateral applies both to Vehicles (as
defined in the ABN AMRO Security Agreement) and to
Included Revenue Equipment, or (ii) in favor of
BankAmerica Leasing & Capital Corp., as lessor under a
Synthetic Lease, or in favor of the Former Parent if
the Former Parent has guaranteed the Borrower's
obligations under such Synthetic Lease, if and only if
the description of collateral in the applicable
security agreement applies both to Included Revenue
Equipment and to Excluded Revenue Equipment, and the
collateral described in, and terms and conditions of,
the applicable security agreement are substantially the
same (except that the collateral description may relate
to other vehicles within the definition of Excluded
Revenue Equipment) as the collateral described in, and
the terms and conditions of, the ABN AMRO Security
Agreement;"
1.3 Amendment of Schedule 8.31 and 8.32.
Schedule 8.31 is hereby amended and restated to read in
its entirety as set forth on Schedule 8.31 attached
hereto. Schedule 8.32 is hereby amended and restated
to read in its entirety as set forth on Schedule 8.32
attached hereto.
ARTICLE 2
CONSENT TO AMENDMENT AND RESTATEMENT
OF THE INTERCREDITOR AGREEMENT
2.1 Consent to Amendment and Restatement of the
Intercreditor Agreement. By its signature below, each
Lender consents to the execution and delivery of the Amended
and Restated Intercreditor Agreement substantially in the
form attached hereto as Exhibit A.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
Each Loan Party warrants and represents to the Agent
and the Lenders that:
3.1 Representations and Warranties True and
Correct. The representations and warranties contained in
the Agreement and the other Loan Documents are correct in
all material respects on and as of the date hereof.
3.2 No Default or Event of Default. No event has
occurred and is continuing which constitutes a Default or an
Event of Default.
ARTICLE 4
MISCELLANEOUS
4.1 Effective Date. This Amendment shall be
effective as of the date when the Agent has received a duly
executed counterpart of this Amendment from each of the
Borrower, the Parent, ▇▇▇▇▇▇ and the Majority Lenders.
4.2 Governing Law. This Amendment shall be
interpreted and the rights and liabilities of the parties
hereto determined in accordance with the internal laws (as
opposed to the conflict of laws provisions) of the State of
California.
4.3 Counterparts. This Amendment may be executed
in any number of counterparts, and by the Agent, each
Lender, the Borrower, Parent and ▇▇▇▇▇▇ in separate
counterparts, each of which shall be an original, but all of
which shall together constitute one and the same agreement.
IN WITNESS WHEREOF, the parties have entered into
this Amendment on the date first above written.
"BORROWER"
Consolidated Freightways
Corporation of Delaware, a
Delaware corporation
By:/s/▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name:▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title:Executive Vice President and CFO
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.:(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇
"PARENT"
Consolidated Freightways
Corporation, a Delaware
corporation
By:/s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Name :▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Executive Vice President and CFO
Address: ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Telephone No.:(▇▇▇) ▇▇▇-▇▇▇▇
Telecopy No.: (▇▇▇) ▇▇▇-▇▇▇▇