SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
WELLS FARGO BANK (TEXAS) NATIONAL ASSOCIATION,
AS AGENT FOR ITSELF AND OTHER BANKS
AND
FFE TRANSPORTATION SERVICES, INC.,
AS BORROWER,
AND CERTAIN OF ITS AFFILIATES
MARCH 1, 2000
TABLE OF CONTENTS
PAGE
----
ARTICLE I DEFINITIONS.................................................................................6
ARTICLE II AMOUNTS AND TERMS OF CREDIT COMMITMENTS...................................................19
Section 2.1 Commitments...........................................................................19
Section 2.2 The Notes.............................................................................20
Section 2.3 Repayment of Loans....................................................................20
Section 2.4 Interest and Fees.....................................................................20
Section 2.5 Borrowing Procedure...................................................................23
Section 2.6 Optional Prepayments, Conversions and Continuations of Loans..........................23
Section 2.7 Mandatory Prepayments.................................................................23
Section 2.8 Minimum Amounts.......................................................................24
Section 2.9 Certain Notices.......................................................................24
Section 2.10 Use of Proceeds.......................................................................25
Section 2.11 Fees..................................................................................25
Section 2.12 Computations..........................................................................26
Section 2.13 Termination or Reduction of Commitments...............................................26
Section 2.14 Letters of Credit.....................................................................26
Section 2.15 Method of Payment.....................................................................29
Section 2.16 Pro Rata Treatment....................................................................30
Section 2.17 Sharing of Payments, Etc..............................................................30
Section 2.18 Non-Receipt of Funds by Agent.........................................................30
Section 2.19 Withholding Taxes.....................................................................31
Section 2.20 Withholding Tax Exemption.............................................................32
Section 2.21 Reinstatement of Obligations..........................................................32
Section 2.22 Additional Costs......................................................................32
Section 2.23 Limitation on Types of Loans..........................................................34
Section 2.24 Illegality............................................................................34
Section 2.25 Treatment of Affected Loans...........................................................35
Section 2.26 Compensation..........................................................................35
Section 2.27 Capital Adequacy......................................................................36
ARTICLE III CONDITIONS PRECEDENT.....................................................................36
Section 3.1 Conditions Precedent to Initial Loans and Letters of Credit...........................36
Section 3.2 Conditions of Subsequent Advances.....................................................38
Section 3.3 Effect of Request for any Subsequent Advance or Conversion or ..........................
Continuation, or Request for Letter of Credit.........................................39
ARTICLE IV CERTAIN REPRESENTATIONS AND WARRANTIES....................................................40
Section 4.1 Corporate Existence and Authority; Names..............................................40
Section 4.2 Financial Statements..................................................................40
Section 4.3 Compliance with Laws and Documents; Existing Defaults.................................40
Section 4.4 Enforceability........................................................................41
Section 4.5 Payment of Taxes......................................................................41
Section 4.6 Plan Obligations......................................................................41
Section 4.7 Purpose of Advances and Letters of Credit.............................................42
Section 4.8 Ownership of the Companies............................................................42
Section 4.9 Existing Indebtedness.................................................................42
Section 4.10 Rights in Properties; Existing Liens..................................................42
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Section 4.11 Material Agreements...................................................................42
Section 4.12 Environmental Matters.................................................................42
Section 4.13 Common Enterprise.....................................................................43
Section 4.14 Workers' Compensation.................................................................43
Section 4.15 Year 2000.............................................................................43
ARTICLE V CERTAIN COVENANTS OF THE COMPANIES.........................................................43
Section 5.1 Affirmative Covenants.................................................................43
Section 5.2 Negative Covenants....................................................................49
ARTICLE VI DEFAULT...................................................................................51
Section 6.1 Payment of Obligations................................................................51
Section 6.2 Covenants.............................................................................51
Section 6.3 Misrepresentation.....................................................................52
Section 6.4 Voluntary Debtor Relief...............................................................52
Section 6.5 Involuntary Debtor Relief.............................................................52
Section 6.6 Judgments.............................................................................52
Section 6.7 Attachment............................................................................53
Section 6.8 Acceleration of Other Debt............................................................53
Section 6.9 Other Agreements......................................................................53
ARTICLE VII REMEDIES.................................................................................53
Section 7.1 Acceleration..........................................................................53
Section 7.2 Loans and Letters of Credit...........................................................53
Section 7.3 Judgment..............................................................................53
Section 7.4 Rights................................................................................53
Section 7.5 Default with Respect to Base Rate Loans...............................................53
Section 7.6 Default with Respect to LIBOR Loans...................................................53
Section 7.7 Default with Respect to Letters of Credit.............................................54
Section 7.8 Automatic Acceleration Due to Certain Defaults........................................54
ARTICLE VIII THE AGENT...............................................................................54
Section 8.1 Appointment and Authorization; Administration; Duties.................................54
Section 8.2 Advances and Payments.................................................................55
Section 8.3 Sharing of Setoffs....................................................................56
Section 8.4 Distribution of Information...........................................................56
Section 8.5 Notice to Banks.......................................................................56
Section 8.6 Liability of Agent....................................................................56
Section 8.7 Reimbursement and Indemnification.....................................................57
Section 8.8 Rights of Agent.......................................................................58
Section 8.9 Independent Investigation and Credit Decision by Banks................................58
Section 8.10 Successor Agent.......................................................................58
ARTICLE IX MISCELLANEOUS.............................................................................59
Section 9.1 Performance by Agent and the Banks....................................................59
Section 9.2 Waivers...............................................................................59
Section 9.3 Cumulative Rights.....................................................................59
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Section 9.4 Other Rights and Remedies.............................................................59
Section 9.5 Expenditures of Agent and Banks.......................................................60
Section 9.6 Form and Number of Documents..........................................................60
Section 9.7 Accounting Terms......................................................................60
Section 9.8 Money.................................................................................60
Section 9.9 Headings..............................................................................60
Section 9.10 Articles, Sections, Exhibits and Schedules............................................60
Section 9.11 Number and Gender of Words............................................................61
Section 9.12 Business Day..........................................................................61
Section 9.13 Notices...............................................................................61
Section 9.14 Parties Bound.........................................................................61
Section 9.15 Exceptions to Covenants...............................................................61
Section 9.16 Successors and Assigns................................................................62
Section 9.17 Effect of Investigations..............................................................63
Section 9.18 Governing Law.........................................................................63
Section 9.19 Maximum Interest Rate.................................................................64
Section 9.20 Invalid Provisions....................................................................65
Section 9.21 Entirety and Amendments...............................................................65
Section 9.22 Survival of Representations...........................................................65
Section 9.23 Setoff................................................................................66
Section 9.24 Multiple Counterparts.................................................................66
Section 9.25 Term of Agreement.....................................................................66
Section 9.26 NO ORAL AGREEMENTS....................................................................66
Section 9.27 Amendment and Restatement.............................................................66
Section 9.28 AGREEMENT FOR BINDING ARBITRATION.....................................................66
4
INDEX TO EXHIBITS AND SCHEDULES
SCHEDULES
---------
1.1 Commitments
2.14 Letters of Credit
4.3 Litigation
4.9 Existing Indebtedness
4.11 Material Agreements
EXHIBITS
--------
A Borrowing Base Report
B Notice of Advance
C Revolving Credit Note
D Swingline Note
E Quarterly Report
F New Entity Agreement
G Assignment and Acceptance
H Arbitration Agreement
I Security Agreement
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SECOND AMENDED AND RESTATED CREDIT AGREEMENT
THIS SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
March 1, 2000, among FFE TRANSPORTATION SERVICES, INC., a Delaware corporation
("Borrower"), FROZEN FOOD EXPRESS INDUSTRIES, INC., a Texas corporation
("Parent"), FFE, INC., a Delaware corporation ("FFE"), CONWELL CORPORATION, a
Delaware corporation ("Conwell"), W & B REFRIGERATION SERVICE COMPANY, a
Delaware corporation ("W&B"), LISA MOTOR LINES, INC., a Delaware corporation
("LML"), FROZEN FOOD EXPRESS, INC., a Texas corporation ("Express"), CONWELL
CARTAGE, INC., a Texas corporation ("Cartage"), MIDDLETON TRANSPORTATION
COMPANY, a Texas corporation ("Middleton"), COMPRESSORS PLUS, INC., a Texas
corporation ("CPI"), AEL TRANSPORTS, INC., a Delaware corporation ("AEL"), FLEET
NATIONAL BANK (formerly known as BANKBOSTON, N.A.) ("Fleet"), a national banking
association, CHASE BANK OF TEXAS, NATIONAL ASSOCIATION (formerly known as TEXAS
COMMERCE BANK, NATIONAL ASSOCIATION), a national banking association ("Chase"),
WELLS FARGO BANK (TEXAS), NATIONAL ASSOCIATION (formerly known as First
Interstate Bank of Texas, N.A.), a national banking association, each other
entity which may from time to time become party hereto as a lender hereunder or
any successor or assignee thereof (collectively, other than the Companies, the
"BANKS") and Wells Fargo as agent for the Banks (in such capacity, "AGENT")
W I T N E S E T H:
- - - - - - - - -
WHEREAS, Borrower, Parent, FFE, Conwell, W & B, LML, Express, Cartage,
Middleton, AEL, CPI, Fleet, Wells Fargo, Chase and Agent are parties to that
certain Amended and Restated Credit Agreement dated as of December 30, 1992 (as
it has been amended by that certain First Amendment to Amended and Restated
Credit Agreement dated as of May 24, 1993, and that certain Second Amendment to
Amended and Restated Credit Agreement dated December 31, 1999, "EXISTING
AGREEMENT");
WHEREAS, the parties hereto desire to amend and restate the Existing
Agreement;
NOW, THEREFORE, for good and valuable consideration, the receipt and
adequacy of which are hereby acknowledged, the parties hereto hereby agree that
the Existing Agreement is amended and restated to read in its entirety as
follows:
ARTICLE I
DEFINITIONS
As used herein, meanings indicated the following terms shall have the
meanings indicated:
"ADDITIONAL COSTS" shall have the meaning set forth in SECTION 2.22(a).
"ADJUSTMENT DATE" shall have the meaning set forth in SECTION
2.4(b)(iii).
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"ADVANCE" means the disbursement of an amount or amounts loaned or to
be loaned by any Bank to Borrower hereunder.
"AFFILIATE" means, as to any Person, any other Person (a) that directly
or indirectly, through one or more intermediaries, controls or is controlled by,
or is under common control with, such first Person, (b) that directly or
indirectly beneficially owns or holds five percent or more of any class of
voting capital stock of such first Person, or (c) five percent or more of the
voting capital stock of which is directly or indirectly beneficially owned or
held by such first Person. The term "control" means the possession, directly or
indirectly, of the power to direct or cause direction of the management and
policies of a Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, in no event shall Agent or any Bank
be deemed an Affiliate of Borrower, Parent or any Subsidiaries.
"AGENT" means Wells Fargo Bank (Texas), National Association in its
capacity as administrative agent for the Banks under this Agreement, and its
successors and assigns in such capacity.
"AGREEMENT" means this Second Amended and Restated Credit Agreement, as
it may be amended, renewed, extended, or restated from time to time.
"APPLICABLE LENDING OFFICE" means for each Bank and each Type of Loan,
the lending office of such Bank (or of an Affiliate of such Bank) designated for
such Type of Loan below its name on the signature pages hereof (or, with respect
to a Bank that becomes a party to this Agreement pursuant to an assignment made
in accordance with SECTION 9.16, in the Assignment and Acceptance executed by
it) or such other office of such Bank (or an Affiliate of such Bank) as such
Bank may from time to time specify to Agent as the office by which its Loans of
such Type are to be made and maintained.
"APPLICABLE RATE" shall have the meaning set forth in SECTION 2.4(a).
"ARTICLE(S)" shall have the meaning set forth in SECTION 9.10.
"ASSIGNEE " shall have the meaning set forth in SECTION 9.16(b).
"ASSIGNING BANK" shall have the meaning set forth in SECTION 9.16(b).
"ASSIGNMENT AND ACCEPTANCE" means an Assignment and Acceptance in
substantially the form of EXHIBIT G.
"BANKS" means as defined in the introductory paragraph.
"BASE RATE" means the rate of interest per annum then most recently
established by Wells Fargo as its prime or base rate of interest (which rate may
not be the lowest rate of interest charged by Wells Fargo, each change in the
Base Rate to become effective, without notice to Borrower, as of the opening of
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business on the effective date of each change in the Base Rate; provided,
however, that, in the event Wells Fargo is no longer Agent hereunder for
whatever reason, the aforesaid reference in this definition to Wells Fargo shall
instead be deemed to mean and refer to such Bank as may from time to time be
Agent hereunder, in such Bank's capacity as a Bank hereunder, or such other Bank
as may from time to time be specified by the Banks in their discretion, which
Base Rate shall be established by such Bank in accordance with its internal
policies and procedures applicable from time to time.
"BASE RATE LOAN" means a Loan that bears interest at the Base Rate.
"BASE RATE MARGIN" shall have the meaning set forth in SECTION
2.4(b)(i).
"BORROWER" shall mean FFE Transportation Services, Inc., a Delaware
corporation.
"BORROWING BASE" means the sum of (i) an amount equal to ninety percent
(90%) of the Net Book Value of Vehicles that are not subject to any Lien other
than Liens in favor of Agent and the Banks, plus (ii) eighty percent (80%) of
the aggregate Eligible Accounts; all calculated in accordance with GAAP based
upon consolidated financial information of Parent and the Subsidiaries. The
Borrowing Base shall be determined by Agent from time to time in its good faith
judgment.
"BORROWING BASE REPORT" means a report prepared and executed by
Borrower, substantially in the form of EXHIBIT A attached hereto appropriately
completed, in form and substance satisfactory to Agent evidencing the
calculation of the Borrowing Base.
"BUSINESS DAY" means (a) any day on which commercial banks are not
authorized or required to close in Dallas, Texas, or San Francisco, California,
and (b) with respect to all Advances, payments, Conversions, Continuations,
Interest Periods and notices in connection with LIBOR Loans, any day which is a
Business Day described in clause (a) above and which is also a day on which
dealings in Dollar deposits are carried out in the London interbank market.
"CALCULATION PERIOD" shall have the meaning set forth in SECTION
2.4(b)(i).
"CAPITAL EXPENDITURE" means any and all expenditures by a Person for
(i) an asset which will be used in a year or years subsequent to the year in
which the expenditure is made and which asset is properly classified in relevant
financial statements of such Person as equipment, real property or improvements,
fixed assets or a similar type of capitalized asset in accordance with GAAP,
(ii) an asset relating to or acquired in connection with an acquired business,
and (iii) any and all acquisition costs related to (i) and (ii) above.
"CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986, as the same may be amended from time to time.
"CLOSING DATE" means March 1, 2000.
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"CODE" means the Uniform Commercial Code of Texas or any such other
jurisdiction, as applicable.
"COLLATERAL" means any property or assets in which a security interest,
pledge or other such interest has been or from time to time may be granted to
Agent and the Banks to secure the Obligations.
"COMMITMENT" means, with respect to each Bank, the obligation of such
Bank, in accordance with this Agreement, to make or continue Loans and to make
or participate in Letter of Credit Liabilities in an aggregate principal amount
at any one time outstanding up to but not exceed the amount set forth opposite
the name of such Bank on SCHEDULE 1.1 or, if such Bank is party to an Assignment
and Acceptance, as set forth in the most recent Assignment and Acceptance of
such Bank, and as the same may be increased or decreased pursuant to this
Agreement or as otherwise set forth in this Agreement.
"COMMITMENT FEE RATE" shall have the meaning set forth in SECTION
2.4(b)(iii).
"COMPANIES" means Parent, Borrower and the Other Subsidiaries, and a
"Company" means any of Parent, Borrower or an Other Subsidiary.
"CONSOLIDATED TANGIBLE NET WORTH" means the total consolidated capital
and surplus accounts of the Companies determined in accordance with GAAP;
provided that, in the computation of the capital and surplus accounts, there
shall not be included any value for Operating Rights and other intangible
assets.
"CONSOLIDATED TOTAL LIABILITIES" means, at any time, all liabilities
that, in accordance with GAAP, should be classified as such on a consolidated
balance sheet of the Companies.
"CONTINUE", "CONTINUATION" and "CONTINUED" shall refer to the
continuation pursuant to SECTION 2.6 of any LIBOR Loan as a LIBOR Loan from one
Interest Period to the next Interest Period.
"CONTRACT RATE" shall have the meaning set forth in SECTION 9.19(a).
"CONVERT", "CONVERSION" and "CONVERTED" shall refer to a conversion
pursuant to SECTION 2.1(b), Section 2.6, SECTION 2.22, or SECTION 2.24 of one
Type of Loan into another Type of Loan.
"CURRENT FINANCIALS" shall have the meaning set forth in SECTION 4.2.
"DEBT COVERAGE RATIO" shall have the meaning set forth in SUBSECTION
5.1(k).
"DEBTOR RELIEF LAWS" means any applicable liquidation, conservatorship,
bankruptcy, moratorium, rearrangement, insolvency, reorganization, or similar
debtor relief laws affecting the rights of creditors generally from time to time
in effect."DEFAULT" shall have the meaning set forth in Article VI.
9
"DEPOSIT" shall have the meaning set forth in SECTION 7.7.
"DOLLARS" or $" have the meaning set forth in SECTION 9.8.
"EBITDAR" shall have the meaning set forth in SECTION 5.1(f).
"ELIGIBLE ACCOUNTS" means, as of any date, an amount equal to the
aggregate net invoice or ledger amount owing on all trade accounts receivable of
the Companies for goods sold or leased or services rendered, after deducting
(without duplication): (i) each such account that is unpaid 90 days after the
original invoice date thereof, (ii) all such accounts in which a Person (other
than the Banks specifically as security for the Obligations) has a Lien, (iii)
the amount of all discounts, allowances, rebates, credits and adjustments to
such accounts, (iv) all contra accounts, setoffs, defenses or counterclaims
asserted by or available to the Persons obligated on such accounts, provided,
however, that with respect to freight claims which constitute a part of accrued
claims liability, only the current or short-term portion thereof shall be so
deducted, (v) all accounts with respect to which goods are placed on
consignment, guaranteed sale or other terms by reason of which the payment by
the account debtor may be conditional, (vi) the amount billed for or
representing retainage, if any, until all prerequisites to the immediate payment
of retainage have been satisfied, (vii) all such accounts owed by account
debtors which are known to any officer of any Company, Agent or any Bank to be
insolvent, (viii) all such accounts owing by Affiliates of a Company, (ix) all
accounts in which the account debtor is not a resident of the United States
unless such accounts are supported by a letter of credit issued by a bank
acceptable to Agent or by foreign credit insurance issued by a Person acceptable
to Agent (x) all accounts in which the account debtor is the United States or
any department, agency or instrumentality of the United States, except to the
extent acknowledgment of assignment to the Banks, specifically as security for
the Obligations, of such account in compliance with the Federal Assignment of
Claims Act and other applicable Law has been received by Agent, (xi) all
accounts in which Agent, does not have a first priority, perfected Lien, and
(xii) all accounts otherwise unacceptable to Agent or the Required Banks in its
or their sole reasonable discretion.
"ERISA" shall have the meaning set forth in SECTION 4.6.
"EXHIBITS" shall have the meaning set forth in SECTION 9.10.
"EXISTING INDEBTEDNESS" shall have the meaning set forth in SECTION
4.9.
"FEDERAL FUNDS RATE" means, for any day, the weighted average of the
rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published or quoted on the
next succeeding Business Day by the Federal Reserve Bank of New York.
"FEE LETTER " shall have the meaning set forth in SECTION 8.1(d).
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"FINAL MATURITY DATE " means the Revolving Credit Commitment
Termination Date.
"FINANCIAL STATEMENTS" includes, but is not necessarily limited to,
balance sheets, profit and loss statements, reconciliations of capital and
surplus, statements of cash flows prepared on a consolidated basis, and the
footnotes thereto.
"FINANCING LEASE" means any lease of property which shall, in
accordance with GAAP, be capitalized on a balance sheet of a Company.
"FIXED CHARGE COVERAGE RATIO" shall have the meaning set forth in
SECTION 5.1(f).
"FIXED CHARGES" shall have the meaning set forth in SECTION 5.1(f).
"FUNDED DEBT" shall have the meaning set forth in SECTION 5.1(k).
"GAAP" means generally accepted accounting principles, applied on a
consistent basis, set forth in authoritative pronouncements issued by the
American Institute of Certified Public Accounts, the Financial Accounting
Standards Board, the Securities and Exchange Commission, the International
Accounting Standards Committee, and any other comparable governing body, which
are applicable in the circumstances as of the date in question, and the
requisite that such principles are applied on a consistent basis means that the
accounting principles observed in a current period are comparable in all
material respects to those applied in a preceding period.
FFE TRANSPORTATION SERVICES, INC., ET AL. "GOVERNMENTAL REQUIREMENT" means any
Law, statute, code, ordinance, order, rule, regulation, judgment, decree,
injunction, franchise, permit, certificate, license, authorization or other
directive or requirement of any federal, state, county, municipal, parish, or
other Tribunal or any department, commission, board, court, agency or any other
instrumentality of any of them.
"GROUP MEMBER" means any Person which is a member with any Company in
an "affiliated service group" as defined in SECTION 414(m) of the IRC, a
"controlled group of corporations" as defined in SECTION 1563 of the IRC, or any
"trades or businesses . . . which are under common control" as defined by
SECTION 414(c) of the IRC.
"GUARANTY AGREEMENT" means a guaranty agreement, in form and substance
satisfactory to the Banks, pursuant to which a Company (other than Borrower)
guarantees prompt payment and performance of the Obligations, and "Guaranty
Agreements" means all of such agreements.
"HAZARDOUS MATERIALS" means "hazardous substances," "hazardous waste"
or "hazardous constituents" in CERCLA, RCRA or any other federal, state or local
environmental statute or regulation.
"HIGHEST LAWFUL RATE" means, with respect to any Bank, the maximum
non-usurious interest rate, if any, that any time or from time to time may be
contracted for, taken, reserved, charged or received with respect to the
particular Obligations as to which such rate is to be determined, payable to
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such Bank pursuant to this Agreement or any other Loan Paper, under Laws
applicable to such Bank which are presently in effect or, to the extent allowed
by law, under such applicable Laws which may hereafter be in effect and which
allow a higher maximum non-usurious interest rate than applicable Laws now
allow. The Highest Lawful Rate shall be calculated in a manner that takes into
account any and all fees, payments and other charges in respect of the Loan
Papers that constitute interest under applicable Law. Each change in any
interest rate provided for herein based upon the Highest Lawful Rate resulting
from a change in the Highest Lawful Rate shall take effect without notice to
Borrower or any other Person at the time of such change in the Highest Lawful
Rate. For purposes of determining the Highest Lawful Rate under Texas law, the
applicable rate ceiling shall be the indicated rate ceiling described in, and
computed in accordance with, Sections 303.003, 303.008, and 303.009 of the Texas
Finance Code, as amended and in effect from time to time, or any successor or
replacement statute; PROVIDED, HOWEVER, that, to the extent permitted by
applicable Law, Agent shall have the right to change the applicable rate ceiling
from time to time in accordance with applicable Law.
"INDEBTEDNESS" means the unpaid balance of, or aggregate potential
obligations on, all indebtedness for borrowed money, all liabilities for the
deferred payment of the purchase price of property, and all other obligations
and liabilities for the deferred payment of money, including, but not limited
to, guaranties, obligations evidenced by promissory notes, chattel paper,
Financing Leases or other contractual obligations (provided that, with respect
to the Companies, such other contractual obligations not specifically described
above are included in the definition of Consolidated Total Liabilities).
"INITIAL COST" means: (i) in the case of a new Vehicle, the bona fide
price which, the purchaser actually pays to the dealer or manufacturer,
including trade-in allowance, plus the sum of the following amounts, if any,
actually paid by the purchaser which are not included in the price paid to the
dealer or manufacturer: (A) dealer's delivery and handling charges; (B) the cost
of any original equipment which may be added; (C) excise tax on the Vehicle; (D)
any sale and use taxes; (E) freight charges; and (F) other expenses required to
effect delivery of the Vehicle to the purchaser; less the sum of: (G) all
discounts obtained by the purchaser and (H) the amount, if any, by which the
trade-in allowance exceeds the Net Book Value of the Vehicle traded in; and (ii)
in the case of a used Vehicle acquired by a Company, an amount equal to the fair
market value of such Vehicle or an amount acceptable to Agent.
"INTEREST PERIOD" means, with respect to any LIBOR Loan, a period
commencing: (i) on any date upon which, pursuant to a Notice of Activity or
otherwise pursuant to the provisions of this Agreement, the principal amount of
such LIBOR Loan begins to accrue interest at the LIBOR Rate, or (ii) on the last
day of the immediately preceding Interest Period, in the case of a Continuation
to a successive Interest Period, and ending one (1), two (2), three (3) or six
(6) months thereafter as Borrower shall elect in accordance with the provisions
of SECTION 2.2; provided, that: (A) any Interest Period which would otherwise
end on a day which is not a LIBOR Business Day shall be extended to the next
succeeding LIBOR Business Day, unless such LIBOR Business Day falls in another
calendar month, in which case such Interest Period shall end on the next
preceding LIBOR Business Day; (B) any Interest Period which begins on the last
LIBOR Business Day of a calendar month (or a day for which there is no
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numerically corresponding day in the calendar month at the end of such Interest
Period) shall, subject to clause (A) above, end on the last LIBOR Business Day
of the appropriate subsequent calendar month, and (C) any Interest Period that
would otherwise end after the Revolving Credit Commitment Termination Date shall
end on the Revolving Credit Commitment Termination Date.
"IRC" shall mean the Internal Revenue Code of 1986, as amended.
"ISSUING BANK" shall mean, with respect to any Letter of Credit, the
Bank that has issued or agreed to issue such Letter of Credit.
"LAWS" means any and all applicable laws, statutes, ordinances, rules,
regulations, orders, writs, injunctions, and/or decrees of the United States,
any state or commonwealth, any territory or possession, any foreign country, or
any Tribunal.
"LETTER OF CREDIT" shall have the meaning assigned to such term in
SECTION 2.14.
"LETTER OF CREDIT LIABILITIES" means, at any time, the aggregate
undrawn face amounts of all outstanding Letters of Credit and all Reimbursement
Obligations.
"LIBOR BUSINESS DAY" shall mean a day on which dealings in Dollars are
carried out in the London Inter-Bank Eurocurrency market.
"LIBOR LOAN" means a Loan that bears interest at the LIBOR Rate.
"LIBOR RATE" as applied to any LIBOR Loan made by any Bank hereunder,
shall mean the quotient of (i) the rate per annum (rounded upwards, if
necessary, to the nearest 1/16th of 1%) offered to Wells Fargo Bank, National
Association at approximately 11:00 a.m. London time (or as soon thereafter as
practicable) two Business Days prior to the first day of such Interest Period by
leading banks in the London interbank market of U.S. Dollar deposits in
immediately available funds having a term comparable to such Interest Period and
in an amount comparable to the principal amount of the LIBOR Loan applicable to
Wells Fargo to which such Interest Period relates divided by (ii) the remainder
of (A) 1.00 minus (B) the LIBOR Reserve Percentage applicable to such LIBOR
Loan. The determination by Agent of the LIBOR Rate shall, in the absence of
manifest error, be conclusive.
"LIBOR RATE MARGIN" shall have the meaning as set forth in SECTION
2.4(b)(ii).
"LIBOR RESERVE PERCENTAGE" shall mean, with respect to each Interest
Period, a percentage (expressed as a decimal) equal to the daily average during
such Interest Period of the percentages in effect on each day of such Interest
Period, as prescribed by the Board of Governors of the Federal Reserve System
(or any successor), for determining reserve requirements applicable to
"eurocurrency liabilities" pursuant to Regulation D or any other then applicable
regulation of the Board of Governors (or any successor) which prescribes reserve
requirements applicable to "eurocurrency liabilities," as presently defined in
Regulation D, or any eurocurrency funding. Without limiting the effect of the
13
foregoing, the LIBOR Reserve Percentage shall reflect any other reserves
required to be maintained by such member banks by reason of any change in laws
against any category of liabilities which includes deposits by reference to
which the LIBOR Rate is to be determined or any category of extensions of credit
or other assets which include LIBOR Loans.
"LIEN" means any security interest, mortgage, pledge, lien, claim,
charge, encumbrance, title retention agreement, lessor's interest under a
Financing Lease or analogous instrument, in, of or on any of the Companies'
property (or any other Person's property if the context so requires).
"LITIGATION" means any proceeding, claim, lawsuit and/or investigation
conducted or threatened by or before any Tribunal, including, but not limited
to, proceedings, claims, lawsuits and/or investigations under or pursuant to any
environmental, occupational safety and health, antitrust, unfair competition,
securities, taxation or other Law, or under or pursuant to any contract,
agreement or other instrument.
"LOANS" shall have the meaning assigned to such term in SECTION 2.1 and
shall include all Swingline Advances.
"LOAN PAPERS" means this Agreement, the Notes, the Guaranty Agreements
and any and all certificates, mortgages, deeds of trust, security agreements and
other documents and agreements executed and/or delivered in connection with the
making of Loans or the issuing of Letters of Credit or otherwise pursuant to the
terms of this Agreement and any future amendments and supplements thereto and
restatements thereof.
"MARGIN REGULATIONS" means Regulations T, U and X of the Board of
Governors of the Federal Reserve System, as in effect from time to time.
"MARGIN STOCK" means "margin stock" as defined in Regulation U of the
Board of Governors of the Federal Reserve System, as in effect from time to
time.
"MATERIAL ADVERSE EFFECT" means any effect which might reasonably be
expected to be material and adverse to the financial condition or business
operations of any of the Companies.
"NET BOOK VALUE" with respect to each Vehicle, means the Initial Cost
of such Vehicle to a Company, depreciated on a straight-line basis with an
amortization period not exceeding thirty-six (36) months for passenger cars,
eighty-five (85) months for tractors, eighty-five (85) months for trailers,
eighty-five (85) months for refrigeration units, or forty-eight (48) months for
all other Vehicles, and a salvage value not exceeding twenty percent (20%) of
Initial Cost for all Vehicles, but the term "Net Book Value" shall not include
the value of any Vehicle which is no longer owned by a Company or which has been
(i) destroyed, confiscated by a governmental authority, converted, or lost, or
(ii) restricted from use, attached by legal process, or immobilized due to lack
of repair for a period of forty-five (45) consecutive calendar days.
14
"NET INCOME" means, for any period and any Person, the sum of the
following calculated without duplication: (a) such Person's consolidated net
income (or loss) determined in conformity with GAAP; MINUS (b) nonrecurring,
extraordinary gains, including, without limitation, any nonrecurring death
benefits under life insurance policies.
"NEW ENTITY" shall have the meaning set forth in SECTION 9.14.
"NONBUSINESS DAY" shall have the meaning set forth in SECTION 9.12.
"NOTES" means the Swingline Note and the Revolving Credit Notes.
"NOTICE OF LOAN ACTIVITY" means the written notice given by Borrower to
Agent of a Advance, Conversion, Continuation or issuance of a Letter of Credit,
which shall be substantially in the form of Exhibit B attached.
"OBLIGATIONS" means all present and future obligations and liabilities,
and all renewals and extensions thereof, or any part thereof, of Borrower or any
other Company to Agent and/or any one or more of the Banks and created or
evidenced by or existing or arising out of or pursuant to this Agreement, the
Revolving Credit Notes, the Swingline Note or any one or more of the other Loan
Papers (including, without limitation, the Principal Obligation, the
Reimbursement Obligation arising pursuant to any Letters' of Credit, and all
other indebtedness, obligations, fees and liabilities arising pursuant to this
Agreement, or otherwise) and all interest accruing thereon and costs, expenses
and attorneys' fees incurred in the enforcement or collection thereof,
regardless of whether such obligations and liabilities are direct, indirect,
fixed, contingent, liquidated, unliquidated, joint, several, or joint and
several, including, but not limited to, the obligations and liabilities arising
pursuant to any of the Loan Papers, and all renewals and extensions thereof, or
any part thereof, and all present and future amendments thereto.
"OPERATING RIGHTS" means the operating rights, franchises,
certificates, authorizations, permits and licenses of Borrower and the other
Companies.
"OTHER SUBSIDIARY" means any Person of which an aggregate of 50% or
more of the issued and outstanding voting stock, or 50% or more of the equity
interests, at the time at which any determination is being made, is owned of
record or beneficially, directly or indirectly, by any Company.
"OUTSTANDING REVOLVING CREDIT" means, at any particular time, the sum
of (a) the aggregate outstanding principal amount of the Loans (including
Swingline Advances), PLUS (b) all Letter of Credit Liabilities.
"PARENT" means Frozen Food Express Industries, Inc., a Texas
corporation.
"PERMITTED INVESTMENTS" means investments in (i) indebtedness,
evidenced by notes maturing not more than one hundred eighty (180) days after
the date of issue, issued or guaranteed by the federal government of the United
States of America, or any agency thereof, (ii) certificates of deposit, maturing
not more than one hundred eighty (180) days after the date of issue, issued by
commercial banking institutions, each of which is a member of the Federal
Reserve System and which has combined capital and surplus and undivided profits
15
of not less than $100,000,000.00, or any other financial institution if the
amount on deposit is fully insured by The Federal Deposit Insurance Corporation,
(iii) commercial paper, maturing not more than one hundred eighty (180) days
after the date of issue, issued by a corporation (other than an affiliate of the
Companies) with a rating of "P-1" (or its then equivalent) according to Moody's
Investors Service, Inc., "A-l" (or its then equivalent) according to Standard &
Poor's Corporation or "F-l" (or its then equivalent) according to Fitch's
Investors Service, Inc., or issued by any Bank with a rating of "P-3" (or its
then equivalent) according to Moody's Investors Service Inc., or "A-3" (or its
then equivalent) according to Standard & Poor's Corporation, (iv) money market
funds that invest only in securities which mature within one (1) year after the
date of purchase and which have ratings meeting the standard of (iii) above, or
(v) securities issued or guaranteed by an agency of the United States of
America.
"PERMITTED LIENS" means with respect to any asset or property (or any
interest therein),
a. Liens (if any) securing the Notes in favor of Agent and/or
the Banks;
b. The following, if the validity and amount thereof are being
contested in good faith and by appropriate legal proceedings and so
long as (i) levy and execution thereon have been stayed and continue to
be stayed, (ii) they do not in the aggregate materially detract from or
threaten the value of the asset or property, or materially impair the
use thereof in the operation of any Company's business, and (iii) a
reserve therefor, if appropriate, has been established in accordance
with GAAP: claims and Liens for taxes due and payable; claims and Liens
upon and defects of title to real and personal property, including any
attachment of personal or real property or other legal process prior to
adjudication of a dispute on the merits; claims and Liens of mechanics,
materialmen, warehousemen, landlords or carriers, or similar Liens; and
adverse judgments on appeal;
c. Liens for taxes not past due;
d. Mechanics', materialmen's, warehousemen's, landlords' or
carriers' Liens for services or materials for which payment is not past
due;
e. Liens in favor of the lessor on the assets being leased
under any operating lease or Financing Lease;
f. Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that do
not (individually or in the aggregate) materially affect the value of
the assets encumbered thereby or materially impair the ability of
Borrower or the other Companies to use such assets in their respective
businesses, and none of which is violated in any material respect by
existing or proposed structures or land use;
g. Liens resulting from good faith deposits to secure payments
of workmen's compensation or other social security programs or to
secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, and contracts (other than for payment of borrowed
money); and
16
h. Liens evidenced by that certain financing statement
numbered 96-00107040 filed with the State of Texas against W&B.
"PERSON" means any individual, firm, corporation, association,
partnership, joint venture, trust, other entity or Tribunal.
"PLAN" means all (present, prior (including terminated and transferred)
and future) plans, programs agreements, arrangements and methods of contribution
or compensation providing any remuneration or benefits other than current cash
compensation to any current or former employee of any Company or any other Group
Member or to any other Person who provides services to any Company or any other
Group Member whether or not subject to ERISA; and includes, but is not limited
to, pension, retirement, profit sharing, stock bonus, nonqualified deferred
compensation, disability, medical, dental, workers compensation, health
insurance, life insurance, incentive plans, vacation benefits and fringe
benefits.
"POTENTIAL DEFAULT" means the occurrence of an event or condition that
with notice or lapse of time would become a Default.
"PRINCIPAL OBLIGATION" means, as of the date of any determination
thereof, the aggregate unpaid principal balance of all Loans (including
Swingline Advances) and Reimbursement Obligations made by any Bank up to the
time in question.
"PRO RATA SHARE" means, with respect to each Bank and from time to
time, an amount equal to the quotient obtained by dividing such Bank's
Commitment by the aggregate amount of the Commitments or, if all the Commitments
are terminated, the quotient obtained by dividing such Bank's outstanding Loans
by the aggregate outstanding Loans of all Banks.
"QUARTERLY REPORT" shall have the meaning set forth in SUBSECTION
5.1(a).
"RCRA" means the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal Act
Amendments of 1980, and the Hazardous and Solid Waste Amendments of 1984, as the
same may be amended from time to time.
"REGULATORY CHANGE" means, with respect to any Bank, any change after
the Closing Date in any U.S. federal or state, or any foreign, Laws or
regulations or the adoption or making after such date of any interpretations,
directives or requests applying to a class of lenders including such Bank of or
under any U.S. federal or state, or any foreign, Laws or regulations (whether or
not having the force of law) by any Tribunal charged with the interpretation or
administration thereof.
"REIMBURSEMENT OBLIGATION" shall have the meaning assigned to such term
in SECTION 2.14(d).
17
"REPORTABLE EVENT" has the meaning assigned to that term in Title IV of
ERISA.
"REQUIRED BANKS" means, as of the date of any determination thereof,
any two or more of the Banks, that hold, in the aggregate, sixty-six and
one-half of one percent (66.5%) or more of the sum of the Principal Obligation
then outstanding PLUS the aggregate face amount of the Letters of Credit then
outstanding, or, if no Principal Obligation or Letter of Credit is then
outstanding, any two or more of the Banks, that hold, in the aggregate,
sixty-six and one-half of one percent (66.5%) or more of the Commitments. For
purposes of this definition, the effects of rounding to the nearest cent shall
not be taken into account.
"REVOLVING CREDIT COMMITMENT TERMINATION DATE" shall mean June 1, 2000,
or such earlier date upon which the obligation of the Banks to make Loans is
terminated pursuant to the terms of this Agreement.
"REVOLVING CREDIT NOTES" shall have the meaning set forth in SUBSECTION
2.2, and "REVOLVING CREDIT NOTE" shall mean any of such promissory notes.
"SCHEDULES" shall have the same meaning set forth in SECTION 9.10.
"SECTION(S)" shall have the meaning set forth in SECTION 9.10.
"SECURITY AGREEMENTS" means (a) security agreements, pledge agreements
and other agreements, documents or instruments executed by the Borrower, Parent
or any Subsidiary dated the Closing Date (or such other date as any such Person
may execute such Security Agreement), (b) any such agreement, document or
instrument at any time executed pursuant to SECTION 5.1(a) hereof, evidencing or
creating a Lien as security for the Obligations and in form and substance
reasonably satisfactory to Agent, and (c) any and all amendments, modifications,
supplements, renewals, extensions, restatements or replacements thereof.
"SUBSIDIARIES" means FFE, Borrower, Conwell, W & B, LML, Express,
Cartage, Middleton, AEL and CPI, and shall also mean and include any New Entity
which has executed and delivered a Guaranty Agreement and letter as provided in
SECTION 9.14 and has not been released or otherwise discharged from its
obligations thereunder.
"SWINGLINE ADVANCE" means as defined in SECTION 2.1(a).
"SWINGLINE LENDER" means Wells Fargo Bank (Texas), National Association
in its capacity as the lender of Swingline Advances, and any successor or
assignee in such capacity.
"SWINGLINE NOTE" has the meaning set forth in SECTION 2.2, and any
amendments, modifications or restatements thereto.
"TAXES" means any and all present and future taxes, levies, imposts,
deductions, withholdings, assessments, fees or other charges from time to time
or at any time imposed by any Laws or by any Tribunal (excluding taxation of the
income of the Banks).
18
"TRIBUNAL" means any state, commonwealth, federal, foreign,
territorial, or other court or governmental department, commission, board,
bureau, agency or instrumentality.
"TYPE" means any type of Loan (i.e., Base Rate Loan or LIBOR Loan).
"VEHICLES" means all trucks, tractors, trailers, buses, passenger cars,
and other similar units, and all other automotive vehicles, related equipment
and accessories, refrigeration units, tires and tubes in which Parent, Borrower
or any Subsidiary now or hereafter owns an interest, but shall not include any
such trucks, tractors, trailers, buses, cars, other similar units, vehicles,
equipment, accessories, refrigeration units, tires or tubes (i) that are leased
to any Company by any Person other than another Company or (ii) that are
"inventory" as such term is defined in Chapter or Article 9 of the Code .
ARTICLE II
AMOUNTS AND TERMS OF CREDIT COMMITMENTS
Section 2.1 Commitments. Section COMMITMENTS.
(a) LOANS. Subject to the terms and conditions of this Agreement
(including, without limitation, SECTION 2.13), each Bank severally agrees to
make one or more revolving credit loans to Borrower from time to time from and
including the Closing Date to but excluding the Revolving Credit Commitment
Termination Date in an aggregate principal amount outstanding not to exceed the
positive remainder of (i) the amount of such Bank's Commitment as then in
effect, MINUS (ii) such Bank's Pro Rata Share of the Letter of Credit
Liabilities then outstanding (such revolving credit loans referred to in this
SECTION 2.1(a) now or hereafter made by the Banks to Borrower from and including
and after the Closing Date and all Revolving Credit Loans [as defined in the
Existing Agreement] outstanding under the Existing Agreement as of the Closing
Date are hereinafter collectively called the "LOANS"); PROVIDED, HOWEVER, that
the Outstanding Revolving Credit shall not at any time exceed the Borrowing Base
then most recently determined. Subject to the foregoing limitations and the
other terms and conditions of this Agreement, Borrower may borrow, repay and
reborrow the Loans hereunder prior to the Revolving Credit Commitment
Termination Date. The Borrowing Base shall be determined in good faith by Agent
each calendar quarter in connection with the delivery of the Borrowing Base
Report to be delivered in accordance with SECTION 5.1(l), subject to Agent's
right to redetermine the Borrowing Base in accordance with the immediately
succeeding sentence. In addition, the Borrowing Base may be redetermined at any
time and from time to time by Agent in good faith upon the occurrence and during
the continuation of a Potential Default. Notwithstanding anything to the
contrary contained in this Agreement, Borrower may from time to time request,
and Swingline Lender may at its discretion from time to time advance (but shall
in no event be obligated to advance), Loans which are to be funded solely by
Agent (the "SWINGLINE ADVANCES"); PROVIDED, HOWEVER, that (A) the aggregate
principal amount of the Swingline Advances outstanding at any time shall not
exceed $3,000,000 and the aggregate principal amount of the Loans outstanding at
any time (inclusive of the Swingline Advances) shall not exceed the Commitments,
(B) all Swingline Advances shall be and shall remain as Base Rate Loans, and (C)
Swingline Lender shall give each Bank written notice of the aggregate
19
outstanding principal amount of the Swingline Advances upon the written request
of any Bank (but no more often than once every calendar quarter). Furthermore,
upon one Business Day's prior written notice given by the Agent to the other
Banks at any time and from time to time (including, without limitation, at any
time following the occurrence of a Potential Default) and, in any event and
without the necessity of any such notice, on the Business Day immediately
preceding the Revolving Credit Commitment Termination Date, each Bank
(including, without limitation, Swingline Lender) severally agrees,
notwithstanding anything to the contrary contained in this Agreement, the
existence of any Potential Default or the inability or failure of Borrower or
any of the Subsidiaries to satisfy any condition precedent to funding any of the
Loans contained in SECTIONS 3.1 and 3.2 (which conditions precedent shall not
apply to this sentence), to make a Loan, in the form of a Base Rate Loan, in an
amount equal to its Pro Rata Share of the aggregate principal amount of the
Swingline Advances then outstanding, and the proceeds of such Loans shall be
promptly applied by Agent as a repayment of the aggregate principal amount of
the Swingline Advances then outstanding.
(b) CONTINUATION AND CONVERSION OF LOANS. Subject to the terms of this
Agreement, Borrower may borrow the Loans as Base Rate Loans or LIBOR Loans and
Borrower may Continue LIBOR Loans or Convert Loans of one Type into Loans of the
other Type; PROVIDED, however, that Swingline Advances shall be borrowed as Base
Rate Loans and may not be converted to LIBOR Loans at any time.
(c) LENDING OFFICES. Loans of each Type made by each Bank shall be made
and maintained at such Bank's Applicable Lending Office for Loans of such Type.
Section 2.2 THE NOTES. The Loans made by each Bank shall be evidenced
by a single promissory note (each a "REVOLVING CREDIT NOTE") of Borrower in
substantially the form of EXHIBIT C hereto, dated the Closing Date, payable to
the order of such Bank in a principal amount equal to its Commitment as
originally in effect, and otherwise duly completed; PROVIDED, however, that the
Swingline Advances made by Swingline Lender shall be evidenced by a single
promissory note (the "SWINGLINE NOTE") of Borrower in substantially the form of
EXHIBIT D hereto, dated the Closing Date, payable to the order of Swingline
Lender in a principal amount equal to $3,000,000, and otherwise duly completed.
Each Bank is hereby authorized by Borrower to endorse on the schedule (or a
continuation thereof) attached to each Note of such Bank, to the extent
applicable, the date, amount and Type of and the Interest Period (if applicable)
for each Loan made by such Bank to Borrower and the amount of each payment or
prepayment of principal of such Loan received by such Bank, provided that any
failure by such Bank to make any such endorsement shall not affect the
obligations of Borrower, Parent or any other Subsidiary under such Note or this
Agreement in respect of such Loan.
Section 2.3 REPAYMENT OF LOANS. Borrower shall pay the outstanding
principal amount on all Loans, including Swingline Advances, on the Revolving
Credit Commitment Termination Date. If any payment of principal becomes due and
payable on a day other than a Business Day, the maturity thereof shall be
extended to the next succeeding Business Day and interest shall be payable at
the then applicable rate during such extension.
Section 2.4 Interest and Fees.
20
(a) INTEREST RATE. Borrower shall pay to the Agent for the account of
each Bank interest on the unpaid principal amount of each Loan made by such Bank
for the period commencing on the date of such Loan to but excluding the date
such Loan is due, at a fluctuating rate per annum equal to the Applicable Rate.
The term "APPLICABLE RATE" means (i) with respect to Base Rate Loans outstanding
from day to day, the lesser of (A) the Highest Lawful Rate or (B) the Base Rate
PLUS the Base Rate Margin and (ii) with respect to LIBOR Loans outstanding from
day to day, the lesser of (A) the Highest Lawful Rate or (B) the LIBOR Rate PLUS
the LIBOR Rate Margin.
(b) DETERMINATIONS OF MARGINS AND FEES. The margins identified in
SECTION 2.4(a) and the fees payable under SECTION 2.11 shall be defined and
determined as follows:
(i) "BASE RATE MARGIN" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the
first Adjustment Date (as defined below), one-half of one percent
(0.50%) per annum and (ii) during each period from and including one
Adjustment Date to but excluding the next Adjustment Date (herein a
"CALCULATION PERIOD"), the percent per annum set forth in the table
below under the heading "BASE RATE MARGIN" and opposite the Funded Debt
to EBITDAR Ratio which corresponds to the Funded Debt to EBITDAR Ratio
set forth in, and as calculated in accordance with, the applicable
Quarterly Report.
(ii) "LIBOR RATE MARGIN" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the
first Adjustment Date, one and three-fourths of one percent (1.75%) per
annum and (ii) during each Calculation Period, the percent per annum
set forth in the table below under the heading "LIBOR RATE MARGIN" and
opposite the Funded Debt to EBITDAR Ratio which corresponds to the
Funded Debt to EBITDAR Ratio set forth in, and as calculated in
accordance with, the applicable Quarterly Report.
(iii) "COMMITMENT FEE RATE" shall mean (i) during the period
commencing on the Closing Date and ending on but not including the
first Adjustment Date, seven-twentieths of one percent (0.35%) per
annum and (ii) during each Calculation Period, the percent per annum
set forth in the table below under the heading "COMMITMENT FEE RATE"
and opposite the Funded Debt to EBITDAR Ratio which corresponds to the
Funded Debt to EBITDAR Ratio set forth in, and as calculated in
accordance with, the applicable Quarterly Report
===============================================================================================
LIBOR Rate Commitment
Funded Debt to EBITDAR Base Rate Margin Margin Fee Rate
===============================================================================================
Greater than or equal to 3.00 0.75% 2.00% 0.40%
-----------------------------------------------------------------------------------------------
Greater than or equal to 2.50 but less than 3.00 0.50% 1.75% 0.35%
-----------------------------------------------------------------------------------------------
Greater than or equal to 2.00 but less than 2.50 0.25% 1.50% 0.25%
-----------------------------------------------------------------------------------------------
Greater than or equal to 1.50 but less than 2.00 0.00% 1.25% 0.25%
-----------------------------------------------------------------------------------------------
Less than 1.50 0.00% 1.00% 0.20%
===============================================================================================
21
Upon delivery of each Quarterly Report pursuant to this Agreement, commencing
with such Quarterly Report delivered as of the period ending on December 31,
1999, the LIBOR Rate Margin (for Interest Periods commencing after the
applicable Adjustment Date), the Base Rate Margin and the Commitment Fee Rate
shall automatically be adjusted in accordance with the Funded Debt to EBITDAR
Ratio set forth therein and the table set forth above, such automatic adjustment
to take effect as of the first Business Day after the receipt by the Agent of
the related Quarterly Report (each such Business Day when such margins or fees
change pursuant to this sentence or the next following sentence, herein an
"ADJUSTMENT DATE"). If Parent fails to deliver such Quarterly Report which so
sets forth the Funded Debt to EBITDAR Ratio within the period of time required
by this Agreement or if a Default exists and the Agent provides notice to
Parent: (i) the LIBOR Rate Margin (for Interest Periods commencing after the
applicable Adjustment Date) shall automatically be adjusted to two percent
(2.0%) per annum; (ii) the Base Rate Margin shall automatically be adjusted to
three-fourths of one percent (0.75%); and (iii) the Commitment Fee Rate shall
automatically be adjusted to two-fifths of one percent (0.40%), such automatic
adjustments to take effect as of the first Business Day after the last day on
which Parent was required to deliver the applicable Quarterly Report in
accordance with this Agreement or, in the case of a Default, on the date the
written notice is given to Parent and to remain in effect until subsequently
adjusted in accordance herewith upon the delivery of such Quarterly Report or,
in the case of a Default, when such Default has been cured to the satisfaction
of the Agent or waived by the Required Banks.
(c) COMPUTATION OF INTEREST AND FEES. Interest based on the Base Rate
and, the LIBOR Rate and all fees shall be calculated on the basis of actual days
elapsed, but computed as if each calendar quarter consisted of 90 days and each
calendar year consisted of 360 days, subject to limitations of the Highest
Lawful Rate. Each determination by Agent of the Base Rate and/or the LIBOR Rate
shall, in the absence of manifest error, be conclusive and binding.
(d) RECAPTURE OF INTEREST LOST AS A RESULT OF INTEREST LIMITATIONS. If
at any time the rate of interest applicable to any Loan exceeds the Highest
Lawful Rate, the rate of interest which such Loan bears shall be limited to the
Highest Lawful Rate, but, notwithstanding any subsequent reductions in the
Applicable Rate, the rate of interest which such Loan bears shall not thereafter
be reduced below the Highest Lawful Rate until such time as the total amount of
interest accrued on such Loan equals the amount of interest which would have
accrued if the Applicable Rate had at all times been in effect.
(e) PAYMENT DATES. Accrued interest on the Loans shall be due and
payable in arrears as follows:
(i) in the case of Base Rate Loans, on the last day of each
fiscal quarter and on the Final Maturity Date; and
(ii) in the case of LIBOR Loans, on the last day of the
Interest Period with respect thereto, and, in the case of a LIBOR Loan
having a Interest Period of six (6) months, on the day in the third
succeeding calendar month numerically corresponding to the commencement
date of such Interest Period (or, if no numerically corresponding date
exists, on the last Business Day of such third succeeding calendar
month) and on the Final Maturity Date.
22
(iii) If any payment of interest becomes due and payable on a
day other than a Business Day, the maturity thereof shall be extended
on the next succeeding Business Day and interest shall be payable at
the then Applicable Rate during such extension.
Notwithstanding anything to the contrary contained herein, upon and during the
continuance of an Default, any principal hereunder and overdue interest on the
Loan, shall bear interest, payable on demand, for each day from and including
the date payment thereof was due to, but excluding, the date of actual payment,
at a rate per annum equal to the Highest Lawful Rate.
Section 2.5 BORROWING PROCEDURE.
(a) Borrower shall give Agent notice of each borrowing of Loans
hereunder in accordance with SECTION 2.9. Not later than 12:00 noon (Dallas,
Texas time) on the date specified for each Advance hereunder, each Bank will
make available the amount of the Loan to be made by it on such date to Agent, at
the Applicable Lending Office of Agent, in immediately available funds, for the
account of Borrower. The amount so received by Agent shall, subject to the terms
and conditions of this Agreement, be made available to Borrower promptly by wire
transfer of immediately available funds to a deposit account maintained by
Borrower and reasonably acceptable to Agent;
(b) SWINGLINE ADVANCES. The procedure for requesting and repaying
Swingline Advances, and certain other terms relating to Swingline Advances, are
set forth in that certain Wells Fargo Bank (Texas), National Association
Application and Agreement for Cash Management Services executed by Borrower as
of February 10, 1999, as amended, restated, renewed or otherwise modified from
time to time (the "SWEEP AGREEMENT"), the terms of which are incorporated herein
and, to the extent such terms irreconcilably conflict with this Agreement, the
terms of this Agreement shall control.
Section 2.6 OPTIONAL PREPAYMENTS, CONVERSIONS AND CONTINUATIONS OF
LOANS. Subject to SECTION 2.7, Borrower shall have the right from time to time
to prepay the principal of the Loans, to Convert all or part of a Loan of one
Type into a Loan of another Type or to Continue LIBOR Loans; PROVIDED that: (a)
Borrower shall give Agent notice of each such prepayment, Conversion or
Continuation as provided in SECTION 2.9, (b) LIBOR Loans may only be Converted
on the last day of the Interest Period, (c) except for Conversions of LIBOR
Loans into Base Rate Loans, no Conversions or Continuations shall be made while
a Potential Default or Default has occurred and is continuing, and (d) Swingline
Advances may not be Converted into LIBOR Loans.
Section 2.7 Mandatory Prepayments.
23
(a) LOANS. If at any time the Outstanding Revolving Credit exceeds an
amount equal to the lesser of the Commitments then in effect or the Borrowing
Base then most recently determined or redetermined, within one Business Day
after the occurrence thereof Borrower shall pay to Agent the amount of such
excess as a prepayment of the Loans.
(b) VEHICLE SALES. Borrower shall also prepay the outstanding Loans in
accordance with the terms of SUBSECTION 5.1(q).
(c) APPLICATION OF MANDATORY PREPAYMENTS. Any prepayments hereunder
shall first be applied to any outstanding Swingline Advances and shall then be
applied to the remaining Loans as set forth in SECTION 2.17.
Section 2.8 MINIMUM AMOUNTS. Except for Conversions pursuant to
SECTIONS 2.22 and 2.24, each Advance and each Conversion of principal of the
Loans shall be in an amount at least equal to (a) $3,000,000 or an integral
multiple of $1,000,000 in excess thereof with respect to LIBOR Loans or (b)
$1,000,000 or an integral multiple of $100,000 in excess thereof with respect to
Base Rate Loans other than Swingline Advances (Advances, prepayments or
Conversions of or into Loans of different Types or, in the case of LIBOR Loans,
having different Interest Periods at the same time hereunder shall be deemed
separate Advances, prepayments and Conversions for purposes of the foregoing,
one for each Type or Interest Period). Furthermore, all optional prepayments of
principal of the Loans (other than Swingline Advances) shall be in an amount
equal to $3,000,000 or an integral multiple of $1,000,000 in excess thereof.
Section 2.9 CERTAIN NOTICES. Notices by Borrower to Agent of
terminations or reductions of Commitments, of Advances, Conversions,
Continuations and prepayments of Loans and of the duration of Interest Periods
shall be irrevocable and shall be effective only if received by Agent not later
than 12:00 noon (Dallas, Texas time) on the Business Day prior to the date of
the relevant termination, reduction, Advance, Conversion, Continuation or
prepayment or the first day of such Interest Period specified below:
----------------------------------------------------------------------
Number of
Notice Business Days Prior
----------------------------------------------------------------------
Terminations or Reductions of Commitments 5
----------------------------------------------------------------------
Borrowings of Loans as Base Rate Loans 1
----------------------------------------------------------------------
Borrowings of Loans as LIBOR Loans 3
----------------------------------------------------------------------
Conversions or Continuations of Loans 3
----------------------------------------------------------------------
Prepayments of Loans which are Base Rate Loans 1
----------------------------------------------------------------------
Prepayments of Loans which are LIBOR Loans 3
----------------------------------------------------------------------
Each such notice of termination or reduction shall specify the amount of the
Commitments to be terminated or reduced. Each such notice of Advance,
Conversion, Continuation or prepayment shall specify the Loans to be borrowed,
Converted, Continued or prepaid and the amount (subject to SECTION 2.8 hereof)
and Type of the Loans to be borrowed, Converted, Continued or prepaid (and, in
the case of a Conversion, the Type of Loans to result from such Conversion), the
date of Advance, Conversion, Continuation or prepayment (which shall be a
Business Day) and whether such Loan is to be a Swingline Advance. Notices of
Advances, Conversions, Continuations or prepayments shall be in the form of
EXHIBIT B hereto, appropriately completed as applicable. Each such notice of the
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duration of an Interest Period shall specify the Loans to which such Interest
Period is to relate. Agent shall promptly notify the Banks of the contents of
each such notice. In the event that Borrower fails to select the Type of Loan,
or the duration of any Interest Period for any LIBOR Loan, within the time
period and otherwise as provided in this SECTION 2.9, such Loan (if outstanding
as LIBOR Loan) will be automatically Converted into a Base Rate Loan on the last
day of the preceding Interest Period for such Loan or (if outstanding as a Base
Rate Loan) will remain as, or (if not then outstanding) will be made as, a Base
Rate Loan. Borrower may not borrow any LIBOR Loans, Convert any Loans into LIBOR
Loans or Continue any Loans as LIBOR Loans if the interest rate for such LIBOR
Loans would exceed the Highest Lawful Rate.
Section 2.10 Use of Proceeds.
(a) Borrower agrees with Agent and the Banks that (i) the proceeds of
the Loans to be made on and after the Closing Date shall be used by Borrower,
Parent and the Subsidiaries for working capital and general corporate purposes
and (ii) the Letters of Credit requested to be issued pursuant to this Agreement
shall be used for insurance and contract performance by Borrower, Parent and the
Subsidiaries and for other purposes approved by Agent.
(b) None of the proceeds of any Loan have been or will be used to
acquire any security in any transaction that is subject to Section 13 or 14 of
the Securities Exchange Act of 1934, as amended, or to purchase or carry any
margin stock (within the meaning of Regulations T, U or X of the Board of
Governors of the Federal Reserve System).
Section 2.11 FEES. Borrower agrees to pay the following fees in
connection with the each Bank's commitment to make Loans and Issuing Bank's
commitment to issue Letters of Credit:
(a) A Letter of Credit fee is payable to the Agent for the account of
the Banks in accordance with their respective Pro Rata Shares, for the term of
each Letter of Credit at the applicable LIBOR Rate Margin per annum of the
aggregate undrawn amount of such Letter of Credit. The fee for each Letter of
Credit issued hereunder shall be payable on or before the issuance of such
Letter of Credit and on each anniversary of the issuance of such Letter of
Credit; and
(b) An issuance fee is payable to Agent for the account of the Issuing
Bank for the term of each Letter of Credit in an amount equal to
three-twentieths of one percent (0.15%) per annum of the aggregate face amount
of each Letter of Credit outstanding from time to time, which fee is payable
upon issuance of each Letter of Credit and on each anniversary of the issuance
of such Letter of Credit;
(c) Upon any amendment or modification of a Letter of Credit, a Letter
of Credit amendment fee shall be paid to the Issuing Bank, for its own account,
as determined pursuant to the Issuing Bank's customary procedures;
25
(d) A commitment fee shall be paid to Agent, for the account of each
Bank, on the daily average of the unused or unfunded amount of such Bank's
Commitment, for the period from and including the Closing Date to and including
the Revolving Credit Commitment Termination Date, at a rate equal to the
applicable Commitment Fee Rate per annum based on a 360 day year and the actual
number of days elapsed, which accrued commitment fees shall be payable in
arrears on the last day of each fiscal quarter of Parent and on the Revolving
Credit Commitment Termination Date. Any and all Swingline Advances outstanding
from time to time shall be wholly excluded, and shall not count as used or
funded amounts, for purposes of determining the unused or unfunded amount of
each Bank's Commitment.
Section 2.12 COMPUTATIONS. Interest and fees payable by Borrower
hereunder and under the other Loan Papers on all Loans shall be computed on the
basis of a year of 360 days and the actual number of days elapsed (including the
first day but excluding the last day) occurring in the period for which payable
unless, in the case of interest, such calculation would result in a usurious
rate, in which case interest shall be calculated on the basis of a year of 365
or 366 days, as the case may be.
Section 2.13 TERMINATION OR REDUCTION OF COMMITMENTS.
(a) Notwithstanding anything to the contrary contained in this
Agreement, the Commitments shall automatically terminate at 8:00 a.m. (Dallas,
Texas time) on the Revolving Credit Commitment Termination Date.
(b) Borrower shall have the right to terminate or reduce in part the
unused portion of the Commitments at any time and from time to time, PROVIDED
that (i) it shall give notice of each such termination or reduction as provided
in SECTION 2.9 and (ii) each partial reduction shall be in an aggregate amount
at least equal to $5,000,000 or an integral multiple of $100,000 in excess
thereof. The Commitments may not be reinstated after they have been terminated
or increased after they have been reduced.
Section 2.14 LETTERS OF CREDIT.
(a) Subject to the terms and conditions of this Agreement, Borrower may
utilize the Commitments by requesting that the Issuing Bank issue standby
Letters of Credit (each a "LETTER OF CREDIT"); PROVIDED, that no Letter of
Credit shall be issued if, after giving effect to the issuance thereof, the
Outstanding Revolving Credit would exceed the Borrowing Base then most recently
determined. Upon the date of issue of each Letter of Credit, the Issuing Bank
shall be deemed, without further action by any party hereto, to have sold to
each Bank, and each Bank shall be deemed, without further action by any party
hereto, to have purchased from the Issuing Bank, a participation to the extent
of such Bank's Pro Rata Share of the Commitments.
(b) Borrower shall give the Issuing Bank (with a copy to Agent) at
least three (3) Business Days prior notice (effective upon receipt and
irrevocable unless appropriately revoked sufficiently prior to issuance of the
Letter of Credit) specifying the date of each Letter of Credit and the nature of
the transactions to be supported thereby. Upon receipt of such notice and
confirmation by the Issuing Bank with Agent that such Letter of Credit may be
26
issued in compliance with this Agreement, the Issuing Bank shall promptly notify
Agent of the contents thereof and of each such Bank's Pro Rata Share of the
amount of the proposed Letter of Credit, and Agent shall promptly thereupon
notify the Bank's of such information. In addition, the Issuing Bank shall
promptly deliver to the Agent a photocopy of such Letter of Credit. Each Letter
of Credit shall have an expiration date that does not exceed one year from the
date of issuance (unless specifically consented to by Agent and the Issuing
Bank) and that does not extend beyond the Revolving Credit Commitment
Termination Date, shall be payable in Dollars, shall support a transaction
entered into in the ordinary course of business of Borrower, Parent or a
Subsidiary, shall be satisfactory in form and substance to the Issuing Bank, and
shall be issued pursuant to such agreements, documents and instruments as the
Issuing Bank may reasonably require, none of which shall be inconsistent with
this Agreement (and to the extent they irreconcilably conflict with this
Agreement, the terms of this Agreement shall control). Each Letter of Credit
shall (i) provide for the payment of drafts presented for, on or thereunder by
the beneficiary in accordance with the terms thereof, when such drafts are
accompanied by the documents (if any) described in the Letter of Credit and (ii)
to the extent not inconsistent with the terms hereof, be subject to the Uniform
Customs and Practice for Documentary Credits (1993 Revision), International
Chamber of Commerce Publication No. 500 (together with any subsequent revision
thereof approved by a Congress of the International Chamber of Commerce and
adhered to by the Issuing Bank, the "UCP"), and shall, as to matters not
governed by the UCP, be governed by, and construed and interpreted in accordance
with, the Laws of the State of Texas.
(c) Upon receipt from any Letter of Credit beneficiary of any demand
for payment or other drawing under such Letter of Credit, the Issuing Bank shall
promptly notify Borrower and each Bank as to the amount to be paid as a result
of such demand or drawing and the respective payment date. If at any time the
Issuing Bank shall make a payment to a beneficiary of a Letter of Credit
pursuant to a drawing under such Letter of Credit, each Bank will pay to the
Issuing Bank, immediately upon the Issuing Bank's demand at any time commencing
after such payment until reimbursement therefor in full by Borrower, an amount
equal to such Bank's Pro Rata Share of such payment, together with interest on
such amount for each day from the date of such payment to the date of payment by
such Bank of such amount at a rate of interest per annum equal to the Federal
Funds Rate.
(d) Borrower shall be irrevocably and unconditionally obligated to
immediately reimburse the Issuing Bank for any amounts paid by the Issuing Bank
upon any drawing under any Letter of Credit, without presentment, demand,
protest or other formalities of any kind (each such reimbursement obligation,
herein a "REIMBURSEMENT OBLIGATION"). The Issuing Bank will pay to each Bank
such Bank's Pro Rata Share of all amounts received from or on behalf of Borrower
for application in payment, in whole or in part, of the Reimbursement Obligation
in respect of any Letter of Credit, but only to the extent such Bank has made
payment to the Issuing Bank in respect of such Letter of Credit pursuant to
SUBSECTION (c) above. Outstanding Reimbursement Obligations shall bear interest
at the Highest Lawful Rate and such interest shall be payable on demand.
27
(e) The Reimbursement Obligations of Borrower under this Agreement and
the other Loan Papers shall be absolute, unconditional and irrevocable, and
shall be performed strictly in accordance with the terms of this Agreement and
the other Loan Papers under all circumstances whatsoever, including, without
limitation, the following circumstances:
(i) Any lack of validity or enforceability of any Letter of
Credit or any other Loan Papers;
(ii) Any amendment or waiver of or any consent to departure
from any Loan Papers;
(iii) The existence of any claim, setoff, counterclaim,
defense or other right which Borrower or any other Person may have at
any time against any beneficiary of any Letter of Credit, Agent, the
Issuing Bank, the Banks or any other Person, whether in connection with
this Agreement or any other Loan Papers or any unrelated transaction;
(iv) Any statement, draft or other document presented under
any 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 whatsoever;
(v) Payment by the Issuing Bank under any Letter of Credit
against presentation of a draft or other document that does not comply
with the terms of such Letter of Credit, PROVIDED, that such payment
shall not have constituted gross negligence or willful misconduct of
the Issuing Bank; and
(vi) Any other circumstance whatsoever, whether or not similar
to any of the foregoing, provided that such other circumstance or event
shall not have been the result of the gross negligence or willful
misconduct of the Issuing Bank.
Section 2.15
(f) Borrower assumes all risks of the acts or omissions of any
beneficiary of any Letter of Credit with respect to its use of such Letter of
Credit. Neither Agent, the Issuing Bank, the Banks nor any of their respective
officers or directors shall have any responsibility or liability to Borrower or
any other Person for: (a) the failure of any draft to bear any reference or
adequate reference to any Letter of Credit, or the failure of any documents to
accompany any draft at negotiation, or the failure of any Person to surrender or
to take up any Letter of Credit or to send documents apart from drafts as
required by the terms of any Letter of Credit, or the failure of any Person to
note the amount of any instrument on any Letter of Credit, (b) errors,
omissions, interruptions or delays in transmission or delivery of any messages,
(c) the validity, sufficiency or genuineness of any draft or other document, or
any endorsement(s) thereon, even if any such draft, document or endorsement
should in fact prove to be in any and all respects invalid, insufficient,
fraudulent or forged or any statement therein is untrue or inaccurate in any
respect, (d) the payment by the Issuing Bank to the beneficiary of any Letter of
Credit against presentation of any draft or other document that does not comply
with the terms of the Letter of Credit, or (e) any other circumstance whatsoever
28
in making or failing to make any payment under a Letter of Credit; PROVIDED,
HOWEVER, that, notwithstanding the foregoing, Borrower shall have a claim
against the Issuing Bank, and the Issuing Bank shall be liable to Borrower, to
the extent of any direct, but not indirect or consequential, damages suffered by
Borrower which Borrower proves in a final nonappealable judgment were caused by
(i) the Issuing Bank's willful misconduct or gross negligence in determining
whether documents presented under any Letter of Credit complied with the terms
thereof or (ii) the Issuing Bank's willful failure to pay under any Letter of
Credit after presentation to it of documents strictly complying with the terms
and conditions of such Letter of Credit. The Issuing Bank may accept documents
that appear on their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary.
(g) All letters of credit issued pursuant to the Existing Agreement and
outstanding on the Closing Date, and all letters of credit issued by Chase in
favor of Borrower or another Company and outstanding as of the Closing Date, all
of which are listed on SCHEDULE 2.14, shall be deemed to be Letters of Credit
issued pursuant to this Agreement.
Section 2.16 METHOD OF PAYMENT. All payments of principal, interest,
fees and other amounts to be made by Borrower, Parent or any Subsidiary under
this Agreement or any other Loan Paper shall be made via wire transfer of funds
to Agent c/o Wells Fargo Bank, NA, San Francisco, California, ABA # 1210-00248,
for Account No.1234567890, Payee Name Syndic/WFBCORP/Money Bags Customer;
Reference: Money Bags Customer, for the account of each Bank's Applicable
Lending Office in Dollars and in immediately available funds, without setoff,
deduction or counterclaim, not later than 12:00 noon (Dallas, Texas time) on the
date on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding
Business Day). Borrower or such other Person shall, at the time of making each
such payment, specify to Agent the sums payable by such Person under this
Agreement or the other Loan Document to which each such payment is to be applied
(and in the event that such Person fails to so specify, or if an Default has
occurred and is continuing or if a Potential Default would exist after the
making of such payment, Agent may apply such payment to such Person's Loans,
Reimbursement Obligations and other Obligations in such order and manner as
Agent may elect, subject to SECTION 2.16). Upon the occurrence and during the
continuation of a Default, all proceeds of any Collateral and all other funds of
Borrower, Parent or any Subsidiary in the possession of Agent or any Bank may be
applied by Agent to the Obligations in such order and manner as Agent may elect,
subject to the provisions of SECTION 2.16. Notwithstanding the foregoing, if a
Default has occurred and is continuing, Agent and the Banks agree among
themselves that all such payments, proceeds and funds, shall be applied (or, in
the case of Letter of Credit Liabilities consisting of the undrawn face amount
of Letters of Credit, held by Agent as cash collateral for application against)
pro rata to the Outstanding Revolving Credit. Each payment received by Agent
under this Agreement or any other Loan Paper for the account of the Bank shall
be paid promptly to such Bank, in immediately available funds, for the account
of such Bank's Applicable Lending Office. Whenever any payment under this
Agreement or any other Loan Paper shall be stated to be due on a day that is not
a Business Day, such payment may be made on the next succeeding Business Day,
and such extension of time shall in such case be included in the computation of
the payment of interest and commitment fee, as the case may be.
29
Section 2.17 PRO RATA TREATMENT. Except to the extent otherwise
provided in this Agreement: (a) each Loan (other than Swingline Advances) shall
be made by the Banks under SECTION 2.1, each payment of commitment fees under
SECTION 2.11 shall be made for the account of the Banks, and each termination or
reduction of the Commitments under SECTION 2.13 shall be applied to the
appropriate Commitments of the applicable Banks, pro rata according to the
respective unused Commitments; (b) the making, Conversion and Continuation of
Loans of a particular Type (other than Conversions provided for by SECTION 2.25)
shall be made pro rata among the Banks holding Loans of such Type according to
the amounts of their respective appropriate Commitments; (c) each payment and
prepayment by Borrower of principal of or interest on Loans of a particular Type
shall be made to Agent for the account of the Banks holding Loans of such Type
pro rata in accordance with the respective unpaid principal amounts of such
Loans held by such Banks; (d) Interest Periods for Loans of a particular Type
shall be allocated among the Banks holding Loans of such Type pro rata according
to the respective principal amounts held by such Banks; and (e) the Banks (other
than the Issuing Bank) shall purchase participations in the Letters of Credit
pro rata in accordance with their respective Pro Rata Share.
Section 2.18 SHARING OF PAYMENTS, ETC. If a Bank shall obtain payment
of any principal of or interest on any of the Obligations due to such Bank
hereunder through the exercise of any right of setoff, banker's lien,
counterclaim or similar right, or otherwise, it shall promptly purchase from the
other Banks participations in the Obligations held by the other Banks in such
amounts, and make such adjustments from time to time, as shall be equitable to
the end that all Banks shall share pro rata in accordance with the unpaid
principal and interest on the Obligations then due to each of them. To such end,
all Banks shall make appropriate adjustments among themselves (by the resale of
participations sold or otherwise) if all or any portion of such excess payment
is thereafter rescinded or must otherwise be restored. Each of Borrower, Parent
and the Subsidiaries agrees, to the fullest extent it may effectively do so
under applicable Law, that any Bank so purchasing a participation in the
Obligations by the other Banks may exercise all rights of setoff, banker's lien,
counterclaim or similar rights with respect to such participation as fully as if
such Bank were a direct holder of Obligations in the amount of such
participation. Nothing contained herein shall require any Bank to exercise any
such right or shall affect the right of any Bank to exercise, and retain the
benefits of exercising, any such right with respect to any other indebtedness,
liability or obligation of Borrower, Parent or any of the Subsidiaries.
Section 2.19 NON-RECEIPT OF FUNDS BY AGENT. Unless Agent shall have
been notified by a Bank or Borrower ("Payor") prior to the date on which such
Bank is to make payment to Agent of the proceeds of a Loan to be made by it
hereunder or Borrower is to make a payment to Agent for the account of one or
more of Banks, as the case may be (such payment being herein called the
"REQUIRED PAYMENT"), which notice shall be effective upon receipt, that Payor
does not intend to make the Required Payment to Agent, Agent may assume that the
Required Payment has been made and may, in reliance upon such assumption (but
shall not be required to), make the amount thereof available to the intended
recipient on such date and, if Payor has not in fact made the Required Payment
to Agent, the recipient of such payment shall, on demand, pay to Agent the
amount made available to it together with interest thereon in respect of the
period commencing on the date such amount was so made available by Agent until
the date Agent recovers such amount at a rate per annum equal to the Federal
Funds Rate for such period.
30
Section 2.20 WITHHOLDING TAXES.
(a) All payments by Borrower of principal of and interest on the Loans
and the Letter of Credit Liabilities and of all fees and other amounts payable
under the Loan Papers shall be made free and clear of, and without deduction by
reason of, any present or future taxes, levies, duties, imposts, assessments or
other charges levied or imposed by any Tribunal (other than any taxes imposed on
the taxable income of Agent or any Bank or any lending office of Agent or such
Bank by any jurisdiction in which Agent or such Bank or any such lending office
is located). If any such taxes, levies, duties, imposts, assessments or other
charges are so levied or imposed, Borrower will (i) make additional payments in
such amounts so that every net payment of principal of and interest on the Loans
and the Letter of Credit Liabilities and of all other amounts payable by it
under the Loan Papers, after withholding or deduction for or on account of any
such present or future taxes, levies, duties, imposts, assessments or other
charges (including any tax imposed on or measured by taxable income of a Bank
attributable to payments made to or on behalf of a Bank pursuant to this SECTION
2.19 and any penalties or interest attributable to such payments), will not be
less than the amount provided for herein or therein absent such withholding or
deduction (PROVIDED that Borrower shall not have any obligation to pay such
additional amounts to any Bank to the extent that such taxes, levies, duties,
imposts, assessments or other charges are levied or imposed by reason of the
failure of such Bank to comply with the provisions of SECTION 2.20), (ii) make
such withholding or deduction and (iii) remit the full amount deducted or
withheld to the relevant Tribunal in accordance with applicable Law. Without
limiting the generality of the foregoing, Borrower will, upon written request of
any Bank, reimburse each such Bank for the amount of (A) such taxes, levies,
duties, imports, assessments or other charges so levied or imposed by any
Tribunal and paid by such Bank as a result of payments made by Borrower under or
with respect to the Loans other than such taxes, levies, duties, imports,
assessments and other charges previously withheld or deducted by Borrower which
have previously resulted in the payment of the required additional amount to
Bank, and (B) such taxes, levies, duties, assessments and other charges so
levied or imposed with respect to any Bank reimbursement under the foregoing
CLAUSE (A), so that the net amount received by such Bank (net of payments made
under or with respect to the Loans and the Letter of Credit Liabilities) after
such reimbursement will not be less than the net amount such Bank would have
received if such taxes, levies, duties, assessments and other charges on such
reimbursement had not been levied or imposed. Borrower shall furnish promptly to
Agent for distribution to each affected Bank, as the case may be, upon request
of such Bank, official receipts evidencing any such payment, withholding or
reduction.
(b) Borrower will indemnify Agent and each Bank (without duplication)
against, and reimburse Agent and each Bank for, all present and future taxes,
levies, duties, imposts, assessments or other charges (including interest and
penalties) levied or collected (whether or not legally or correctly imposed,
assessed, levied or collected), excluding, however, any taxes imposed on the
overall taxable income of Agent or such Bank or any lending office of Agent or
such Bank by any jurisdiction in which Agent or such Bank or any such lending
office is located, on or in respect of this Agreement, any of the Loan Papers or
the Obligations or any portion thereof ("REIMBURSABLE TAXES"). Any such
indemnification shall be on an after-tax basis, taking into account any such
reimbursable taxes imposed on the amounts paid as indemnity.
31
(c) If and to the extent actually known by such Bank, each Bank will
use reasonable efforts to notify Borrower and Agent, in a reasonably prompt
fashion after such assignment is made, of any assignment of the Commitment or
the Loans by such Bank to an Eligible Assignee which is subject to a withholding
tax that will impose any payment obligation upon Borrower pursuant to this
SECTION 2.19. Each Bank will use reasonable efforts to notify Borrower and Agent
of any amounts to be paid by Borrower pursuant to this SECTION 2.19 in a
reasonably prompt fashion after such Bank becomes aware of the circumstances
which require the payment of such amounts by Borrower.
Section 2.21 WITHHOLDING TAX EXEMPTION. Each Bank that is not
incorporated or otherwise formed under the Laws of the U.S. or a state thereof
agrees that it will, prior to or on or about the Closing Date or the date upon
which it becomes a party to this Agreement, deliver to Borrower and Agent two
duly completed copies of U.S. Internal Revenue Service Form 1001, 4224 or W-8,
as appropriate, certifying in any case that such Bank is entitled to receive
payments from Borrower under any Loan Paper without deduction or withholding of
any U.S. federal income taxes. Each Bank which so delivers a Form 1001, 4224 or
W-8 further undertakes to deliver to Borrower and Agent two additional copies of
such form (or a successor form) on or before the date such form expires or
becomes obsolete or after the occurrence of any event requiring a change in the
most recent form so delivered by it, and such amendments thereto or extensions
or renewals thereof as may be reasonably requested by Borrower or Agent, in each
case certifying that such Bank is entitled to receive payments from Borrower
under any Loan Paper without deduction or withholding of any U.S. federal income
taxes, unless an event (including without limitation any change in treaty, Law
or regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Bank from duly completing and delivering any such form with respect
to it and such Bank advises Borrower and Agent that it is not capable of
receiving such payments without any deduction or withholding of U.S. federal
income tax.
Section 2.22 REINSTATEMENT OF OBLIGATIONS. REINSTATEMENT OF
OBLIGATIONS. Notwithstanding anything to the contrary contained in this
Agreement or any other Loan Paper, if the payment of any amount of principal of
or interest with respect to the Loans, the Reimbursement Obligations or any
other amount of the Obligations, or any portion thereof, is rescinded, voided or
must otherwise be refunded by Agent, any Bank or Issuing Bank upon the
insolvency, bankruptcy or reorganization of Borrower or any of the Subsidiaries
or otherwise for any reason whatsoever, then each of (a) the Obligations, (b)
the Loan Papers (including, without limitation, this Agreement, the Notes, the
Guaranty Agreements and the Security Agreement), (c) the indebtedness,
liabilities and obligations of Borrower, Parent and the Subsidiaries under the
Loan Papers, and (d) all Liens for the benefit of Agent and the Banks created
under or evidenced by the Loan Papers, will be automatically reinstated and
become automatically effective and in full force and effect, all to the extent
that and as though such payment so rescinded, voided or otherwise refunded had
never been made.
Section 2.24 ADDITIONAL COSTS.
32
(a) Borrower shall pay directly to each Bank from time to time, within
ten days after the request of such Bank, the costs incurred by such Bank which
such Bank reasonably determines are attributable to its making or maintaining of
any LIBOR Loans or its obligation to make any of such Loans, or any reduction in
any amount receivable by such Bank hereunder in respect of any such Loans or
obligations (such increases in costs and reductions in amounts receivable being
herein called "ADDITIONAL COSTS"), resulting from any Regulatory Change
occurring after the Closing Date which:
(i) changes the basis of taxation of any amounts payable to
such Bank under this Agreement or its Notes in respect of any of such
Loans (other than income taxes and franchise taxes attributable to net
income of such Bank or its Applicable Lending Office for any of such
Loans by the jurisdiction in which such Bank has its principal office
or such Applicable Lending Office);
(ii) imposes or modifies any reserve, special deposit, minimum
capital, capital ratio or similar requirement relating to any
extensions of credit or other assets of, or any deposits with or other
liabilities or commitments of, such Bank (including any of such Loans
or any deposits referred to in the definition of "LIBOR Rate" in
SECTION 1.1 hereof, but excluding the LIBOR Reserve Percentage to the
extent it is included in the calculation of the LIBOR Rate); or
(iii) imposes any other condition affecting this Agreement or
the Notes or any of such extensions of credit or liabilities or
commitments.
Each applicable Bank will notify Borrower (with a copy to Agent) of any
event occurring after the Closing Date which will entitle such Bank to
compensation pursuant to this SECTION 2.22(a) as promptly as
practicable after it obtains knowledge thereof and determines to
request such compensation, and (if so requested by Borrower) will, if
and to the extent that it is reasonably feasible for such Bank to do so
given administrative and other considerations, designate a different
Applicable Lending Office for the LIBOR Loans of such Bank if such
designation will avoid the need for, or reduce the amount of, such
compensation and will not, in the reasonable opinion of such Bank,
violate any Law, rule or regulation or be in any way disadvantageous to
such Bank. Each applicable Bank will furnish Borrower with a
certificate setting forth the basis and the amount of each request of
such Bank for compensation under this SECTION 2.22(a). If any Bank
requests compensation from Borrower under this SECTION 2.22(a),
Borrower may, by notice to such Bank (with a copy to Agent), suspend
the obligation of such Bank to make or Continue making, or Convert Base
Rate Loans into, LIBOR Loans until the Regulatory Change giving rise to
such request ceases to be in effect (in which case the provisions of
SECTION 2.25 hereof shall be applicable).
(b) Without limiting the effect of the foregoing provisions of this
SECTION 2.22, in the event that, by reason of any Regulatory Change, any Bank
either (i) incurs Additional Costs based on or measured by the excess above a
specified level of the amount of a category of deposits or other liabilities of
such Bank which includes deposits by reference to which the interest rate on
33
LIBOR Loans is determined as provided in this Agreement or a category of
extensions of credit or other assets of such Bank which includes LIBOR Loans or
(ii) becomes subject to restrictions on the amount of such a category of
liabilities or assets which it may hold, then, if such Bank so elects by notice
to Borrower (with a copy to Agent), the obligation of such Bank to make or
Continue making, or Convert Base Rate Loans into, LIBOR Loans hereunder shall be
suspended until such Regulatory Change ceases to be in effect (in which case the
provisions of SECTION 2.25 hereof shall be applicable).
(c) Determinations and allocations by any Bank for purposes of this
SECTION 2.22 of the effect of any Regulatory Change on its costs of maintaining
its obligation to make Loans or issue Letters of Credit or of making or
maintaining Loans or issuing Letters of Credit or on amounts receivable by it in
respect of Loans or Letters of Credit, and of the additional amounts required to
compensate such Bank in respect of any Additional Costs, shall be conclusive in
the absence of manifest error, provided that such determinations and allocations
are made on a reasonable basis.
Section 2.25 LIMITATION ON TYPES OF LOANS. Anything herein to the
contrary notwithstanding, if with respect to any LIBOR Loans for any Interest
Period therefor:
(a) Agent determines (which determination shall be made reasonably and
in good faith and shall be conclusive absent manifest error) that quotations of
interest rates for the relevant deposits referred to in the definition of "LIBOR
Rate" in SECTION 1.1 hereof are not being provided in the relative amounts or
for the relative maturities for purposes of determining the rate of interest for
such Loans as provided in this Agreement; or
(b) any Bank determines (which determination shall be in good faith and
shall be conclusive absent manifest error) and notifies Agent that the relevant
rates of interest referred to in the definition of "LIBOR Rate" in SECTION 1.1
hereof on the basis of which the rate of interest for such Loans for such
Interest Period is to be determined do not accurately reflect the cost to such
Bank of making or maintaining such Loans for such Interest Period;
then Agent shall give Borrower prompt notice thereof and, so long as such
condition remains in effect, such Bank shall be under no obligation to make
LIBOR Loans or to Convert Base Rate Loans into LIBOR Loans and Borrower shall,
on the last day(s) of the then current Interest Period(s) for the outstanding
LIBOR Loans, either prepay such Loans or Convert such Loans into Base Rate Loans
in accordance with the terms of this Agreement.
Section 2.26 ILLEGALITY. Notwithstanding any other provision of this
Agreement, in the event that it becomes unlawful for any Bank or its Applicable
Lending Office to (a) honor its obligation to make LIBOR Loans or (b) maintain
LIBOR Loans, then such Bank shall promptly notify Borrower thereof (with a copy
to Agent) and such Bank's obligation to make or maintain LIBOR Loans and to
Convert Base Rate Loans into LIBOR Loans hereunder shall be suspended until such
time as such Bank may again make and maintain LIBOR Loans (in which case the
provisions of SECTION 2.25 hereof shall be applicable).
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Section 2.27 TREATMENT OF AFFECTED LOANS. If the obligation of any Bank
to make or Continue, or to Convert Base Rate Loans into, LIBOR Loans is
suspended pursuant to SECTION 2.22 or 2.24 hereof, such Bank's LIBOR Loans shall
be automatically Converted into Base Rate Loans on the last day(s) of the then
current Interest Period(s) for the LIBOR Loans (or, in the case of a Conversion
required by SECTION 2.22(b) or 2.24 hereof, on such earlier date as such Bank
may specify to Borrower (with a copy to Agent) and, unless and until such Bank
gives notice as provided below that the circumstances specified in SECTION 2.22
or 2.24 hereof which gave rise to such Conversion no longer exist:
(a) To the extent that such Bank's LIBOR Loans have been so Converted,
all payments and prepayments of principal which would otherwise be applied to
such Bank's LIBOR Loans shall be applied instead to its Base Rate Loans; and
(b) All Loans which would otherwise be made or Continued by such Bank
as LIBOR Loans shall be made as or Converted into Base Rate Loans and all Loans
of such Bank which would otherwise be Converted into LIBOR Loans shall be
Converted instead into (or shall remain as) Base Rate Loans.
If such Bank gives notice to Borrower (with a copy to Agent) that the
circumstances specified in SECTION 2.22 or 2.24 hereof which gave rise to the
Conversion of such Bank's LIBOR Loans pursuant to this SECTION 2.25 no longer
exist (which such Bank agrees to do promptly upon such circumstances ceasing to
exist) at a time when LIBOR Loans are outstanding, such Bank's Base Rate Loans
shall be automatically Converted, on the first day(s) of the next succeeding
Interest Period(s) for such outstanding LIBOR Loans, to the extent necessary so
that, after giving effect thereto, all Loans held by Banks holding LIBOR Loans
and by such Bank are held pro rata (as to principal amounts, Types and Interest
Periods) in accordance with their respective Commitment.
Section 2.28 COMPENSATION. Borrower shall pay to Agent for the account
of each Bank, promptly upon the request of such Bank through Agent, such amount
or amounts as shall be sufficient (in the reasonable opinion of such Bank) to
compensate it for any loss, cost or expense incurred by it as a result of:
(a) any payment, prepayment or Conversion of a LIBOR Loan for any
reason (including, without limitation, the acceleration of the outstanding Loans
pursuant to this Agreement) on a date other than the last day of an Interest
Period for such Loan; or
(b) any failure by Borrower for any reason (including, without
limitation, the failure of any conditions precedent specified in ARTICLE 3 to be
satisfied) to borrow, Convert or prepay a LIBOR Loan on the date for such
Advance, Conversion or prepayment specified in the relevant notice of Advance,
prepayment or Conversion under this Agreement.
The loss (as opposed to cost or expense) to be compensated under CLAUSE (a) of
this SECTION 2.26 shall not exceed an amount equal to the excess, if any, of (i)
the amount of interest which otherwise would have accrued on the principal
amount so paid, prepaid or Converted to the last day of the Interest Period at
the applicable rate for such LIBOR Loan over (ii) the cost to the applicable
Bank of the interest component of such LIBOR Loan which otherwise would have
accrued.
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Section 2.29 CAPITAL ADEQUACY. If, after the Closing Date, any Bank
shall have determined that the adoption or implementation of any applicable Law,
rule or regulation regarding capital adequacy, or any change therein, or any
change in the interpretation or administration thereof by any central bank or
other Tribunal charged with the interpretation or administration thereof, or
compliance by such Bank (or its parent) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any
central bank or other Tribunal, has or would have the effect of reducing the
rate of return on such Bank's (or its parent's) capital as a consequence of its
obligations hereunder or the transactions contemplated hereby to a level below
that which such Bank (or its parent) could have achieved but for such adoption,
implementation, change or compliance (taking into consideration such Bank's
policies with respect to capital adequacy) by an amount deemed by such Bank to
be material, then from time to time, within ten Business Days after demand by
such Bank (with a copy to Agent), Borrower shall pay to such Bank such
additional amount or amounts as will compensate such Bank (or its parent) for
such reduction. A certificate of such Bank claiming compensation under this
SECTION 2.27 and setting forth the additional amount or amounts to be paid to it
hereunder shall be conclusive absent manifest error, PROVIDED that the
determination thereof is made on a reasonable basis. In determining such amount
or amounts, such Bank may use any reasonable averaging and attribution methods.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 CONDITIONS PRECEDENT TO INITIAL LOANS AND LETTERS OF
CREDIT. The obligation of the Banks to make the initial Loans (including
Swingline Advances) and to issue the initial Letter of Credit shall be subject
to the fulfillment of the following conditions precedent on or before the
Closing Date in a manner satisfactory to the Banks:
(a) Each Bank shall have received the following:
(i) A copy of resolutions approving this Agreement and
authorizing the transactions contemplated in this Agreement and the
other Loan Papers, duly adopted by the Board of Directors of each of
the Companies, accompanied by a certificate of the President and
Secretary of the respective Company, dated the date hereof, that such
copy is a true and correct copy of resolutions duly adopted at a
meeting (which may be held if permitted by applicable Law and, if
required by such Law, by the Bylaws of the respective Company, by
conference telephone or similar communications equipment by means of
which all persons participating in a meeting can hear each other) of,
or by the unanimous written consent of (if permitted by applicable Law
and, if required by such Law, by the Bylaws of the respective
Company),the Board of Directors of the respective Company, and that
such resolutions have not been amended, modified, repealed, or revoked
in any respect, and are in full force and effect as of the date hereof.
36
(ii) A certificate of incumbency of all officers of Borrower
and each Company who will be authorized to execute or attest this
Agreement or any document delivered pursuant hereto on behalf of
Borrower or such Company, dated the date hereof, executed by the
President and the Secretary of Borrower or such Company.
(iii) The articles of incorporation of Borrower and each
Company certified by the Secretary of State of the state of its
incorporation and dated a current date.
(iv) The bylaws of Borrower and each Company certified by its
President and Secretary.
(v) Certificates of the appropriate government officials of
the state of incorporation of Borrower and each Company as to its
existence and, to the extent applicable, good standing and certificates
of the appropriate government officials of each state in which Borrower
and each Company is required to qualify to do business and where
failure to so qualify could reasonably be expected to have a Material
Adverse Effect, as to such Person's qualification to do business and
good standing in such state, all dated a current date.
(vi) Its Revolving Credit Note and, with respect to Agent, its
Swingline Note, each duly executed by Borrower.
(vii) A Guaranty Agreement (or ratification thereof, if
applicable), in form and substance satisfactory to the Banks,
appropriately executed and delivered by each of the Companies other
than Borrower.
(viii) The Security Agreement in substantially the form of
EXHIBIT I and executed by the Borrower and each Company; Code, tax and
judgment Lien search reports listing all documentation on file against
Borrower and each Company in each jurisdiction in which such entity has
its principal place of business or when Collateral is or will be
located; and executed documentation as the Agent may deem necessary to
perfect or protect its Liens, including, without limitation: (i)
financing statements under the Code and other applicable documentation
under the Laws of any jurisdiction with respect to the perfection of
Liens; (ii) lien subordinations from the landlords of the locations of
each entity containing such access agreements and subordinations as
Agent may require; and (iii) waivers, subordinations or acknowledgments
from all other third parties who have possession or control of any
Collateral.
(ix) Duly executed UCC-3 termination statements, mortgage
releases and such other documentation as shall be necessary to
terminate or release all existing Liens on the assets of Borrower or
the Companies other than those Permitted Liens.
(x) Certificates of insurance summarizing the insurance
policies of the Borrower and the Companies required by this Agreement
and reflecting Agent as additional insured under such policies and as
loss payee with respect to all policies covering Collateral.
37
(xi) An opinion of counsel for Borrower and the Companies,
substantially in form and substance acceptable to the Banks and their
counsel, covering favorably such matters relating or incident to the
transactions contemplated by this Agreement and the other Loan Papers
as the Banks may request.
(xii) The fees due on the Closing Date as described in the Fee
Letter.
(xiii) Such other documents as Agent or any Bank may
reasonably request.
(b) The representations and warranties contained in ARTICLE IV of this
Agreement shall be true and correct in all material respects on and as of such
date with the same effect as if made on and as of such date.
(c) No Default or Potential Default, shall be in existence on such date
or after giving effect to such initial Loans or Letter of Credit.
(d) All corporate and legal proceedings and all documents required to
be completed and executed by the provisions of, and all instruments to be
executed in connection with the transactions contemplated by, this Agreement and
any related agreements shall be satisfactory in form and substance to Agent and
the Banks, and Agent and the Banks shall have received all information and
copies of all documents, including records of corporate proceedings, required by
this Agreement and any related agreements to be executed or which Agent or any
Bank may reasonably have requested in connection therewith, such documents,
where appropriate, to be certified by proper corporate or governmental
authorities.
(e) No legal proceeding shall be pending or threatened against Borrower
or any other Company by or before any, Tribunal which could reasonably be
expected to have a Material Adverse Effect.
(f) The consummation of such Loans or issuance of such Letter of Credit
shall not violate any applicable provision of any Law.
(g) The existing revolving loan facility between Borrower and Wells
Fargo, individually, in the maximum principal amount of $1,000,000 shall have
been terminated.
Section 3.2 CONDITIONS OF SUBSEQUENT ADVANCES. The obligation of the
Banks to make any Advance or Continuation or Conversion requested to be made by
it prior to the Revolving Credit Commitment Termination Date, or issue any
Letter of Credit, shall be subject to the fulfillment of each of each following
conditions precedent on or before the date of such Advance, Continuation,
Conversion or issuance of Letter of Credit in a manner satisfactory to Agent,
the Issuing Bank, the Swingline Lender and the Banks, as applicable:
(a) Agent and such Bank shall have received the notice regarding such
Advance in compliance with this Agreement or, in the case of any Conversion or
Continuation, Agent and such Bank shall either have received the notice
regarding such activity in compliance with this Agreement or Agent and such Bank
shall have received notice regarding such Letter of Credit pursuant to this
Agreement.
38
(b) The representations and warranties contained in ARTICLE IV of this
Agreement shall be true and correct in all material respects when made and as of
the date of such Advance, Continuation, Conversion or Letter of Credit, as the
case may be, with the same effect as if made on and as of such date.
(c) No Default or Potential Default, shall be in existence on the date
of any Advance, Conversion, Continuation or Letter of Credit, or after giving
effect to such Advance, Conversion, Continuation or Letter of Credit.
(d) With regard to a Letter of Credit (i) Agent shall have received
payment of the fees as provided in SECTION 2.11; (ii) the Issuing Bank shall
have received an application and agreement for issuance of letter of credit,
promissory note and/or reimbursement agreement relating to such Letter of Credit
duly executed by Borrower with respect thereto, on the Issuing Bank's standard
form; and (iii) the form and substance of the Letter of Credit shall be
reasonably satisfactory to the Issuing Bank.
(e) All corporate and legal proceedings and all documents required to
be completed and executed by the provisions of, and all instruments to be
executed in connection with the transactions contemplated by, this Agreement and
any other Loan Paper shall be satisfactory in form and substance to Agent and
the Banks and shall remain valid and effective and shall not have been revoked
or attempted to be revoked and Agent and the Banks shall have received all
information and copies of all documents, including records of corporate
proceedings, required by this Agreement and any related agreements to be
executed or which Agent or any Bank may reasonably have requested in connection
therewith, such documents, where appropriate, to be certified by proper
corporate or governmental authorities.
(f) No legal proceeding shall be pending or threatened against Borrower
or any other Company by or before any Tribunal which could reasonably be
expected to have a Material Adverse Effect.
(g) The consummation of such Advance, Conversion or Continuation or
issuance of such Letter of Credit shall not violate any applicable provisions of
any Law.
(h) Any Bank's obligations to make any Advance or issue any Letter of
Credit hereunder shall not have been terminated pursuant to any provision of
this Agreement.
(i) There shall not have occurred any event or series of events that
has had or is likely to have a Material Adverse Effect on the financial
performance or business activities of Parent or any Subsidiary.
Section 3.3 EFFECT OF REQUEST FOR ANY SUBSEQUENT ADVANCE OR CONVERSION
OR CONTINUATION, OR REQUEST FOR LETTER OF CREDIT. Each notice requesting an
Advance, each notice requesting a Conversion or Continuation, and each request
for issuance of a Letter of Credit, shall be deemed to be a representation and
warranty that the matters set forth in SUBSECTIONS 3.2(b) and (c) and in ARTICLE
IV are true and correct as of the date of the requested Advance, Conversion,
Continuation or Letter of Credit.
39
Section 3.4 LANDLORD LIEN WAIVERS. Borrower and each Company covenants
that it will use its best efforts to obtain lien waivers from each of the
landlords of the property where any Collateral is located within sixty (60) days
after the Closing Date. ARTICLE IV CERTAIN REPRESENTATIONS AND WARRANTIES
Borrower and each other Company jointly and severally represent and
warrant to Agent and the Banks that:
Section 4.1 CORPORATE EXISTENCE AND AUTHORITY; NAMES. Each Company (i)
is a corporation duly organized, validly existing, and in good standing under
the Laws of its State of incorporation (ii) is duly qualified to transact
business as a foreign corporation in each jurisdiction where the nature and
extent of its business and properties require the same, and (iii) possesses all
requisite authority, power, licenses, permits, and franchises to conduct its
business and execute, deliver, and comply with the terms of the Loan Papers,
which have been duly authorized and approved by all necessary corporate action
and for which no approval or consent of any Tribunal is required.
Section 4.2 FINANCIAL STATEMENTS. The consolidated Financial Statements
of Parent as of September 30, 1999, and the Quarterly Reports (the "CURRENT
FINANCIALS") heretofore furnished to the Banks, were prepared in accordance with
GAAP and fairly present the consolidated financial conditions and the results of
operations of the Companies as of, and for the portion of the fiscal year ending
on, such dates. There were no material liabilities, direct or indirect, fixed or
contingent, of the Companies as of the date of the Current Financials which are
not reflected therein or in the notes thereto. Except for transactions directly
related to, or specifically contemplated by, this Agreement and transactions
heretofore disclosed in writing to the Banks, there have been no material
adverse changes in the respective financial conditions of the Companies from
those shown in the Current Financials between such date and the date hereof, nor
has any Company incurred any material liability, direct or indirect, fixed, or
contingent, except for the Existing Indebtedness.
Section 4.3 COMPLIANCE WITH LAWS AND DOCUMENTS; EXISTING DEFAULTS. None
of the Companies is, nor will the execution, delivery and the performance of and
compliance with the terms of the Loan Papers cause any of the Companies to be:
(i) in violation of any Laws or the Certificates or Articles of Incorporation or
Bylaws of any of the Companies in any respect which could have any effect
whatsoever upon the validity, performance or enforceability of any of the terms
of the Loan Papers or which could reasonably be expected to have a Material
Adverse Effect; or (ii) in default (nor has any event occurred which, with
notice or lapse of time or both, could constitute a default) under any material
agreement (including the Existing Agreement) or instrument to which any Company
is a party or under which any Company or any of its property is bound. Except as
set forth on SCHEDULE 4.3 attached hereto (Known Litigation Schedule), none of
the Companies is involved in, nor is any Company aware of the threat of, any
Litigation where the maximum aggregate potential loss to the Borrower, the
Parent and the Companies is greater than $250,000; none of the Litigation
described on the Known Litigation Schedule could reasonably be expected to have
a Material Adverse Effect; and, except as set forth on the Known Litigation
Schedule, there are no outstanding or unpaid judgments against any of the
Companies.
40
Section 4.4 ENFORCEABILITY. The execution, delivery and performance of
the Loan Papers to which each of the Companies is a party have been duly
authorized by resolutions of the board of directors of such Company. The Loan
Papers have been duly and validly executed and delivered by each of the
Companies that is a party thereto and constitute the legal, valid and binding
obligations of the Companies, enforceable against the Companies in accordance
with their respective terms, except as limited by bankruptcy, insolvency or
other Laws of general application relating to the enforcement of creditors'
rights and general principles of equity.
Section 4.5 PAYMENT OF TAXES. Borrower and the other Companies have
filed all federal, state and other tax returns and reports required to be filed,
and have paid all Taxes required by them to the extent that such Taxes have
become due (except to the extent that the same are being contested in good faith
by appropriate proceedings diligently prosecuted and as to which adequate
reserves have been set aside in conformity with GAAP).
Section 4.6 PLAN OBLIGATIONS. Except for the Frozen Food Express
Industries, Inc. Employees Health Benefit Plan ("HEALTH PLAN") and the Conwell
Voluntary Employee Injury Benefit Plan dated effective as of June 1, 1995 (the
"INJURY BENEFIT PLAN") which are not so summarized, the Frozen Food Express
Industries, Inc. Notice of Annual Meeting of Shareholders to be held April 22,
1999 (the "PROXY STATEMENT") contains a full and accurate listing and summary of
the provisions of all Plans which are being currently maintained, established or
contributed to by any Company or any other Group Member. Without limiting the
generality of the foregoing, no Company or other Group Member has maintained,
established or contributed to (i) an "employee pension benefit plan" as defined
in SECTION 3(2) of the Employee Retirement Income Security Act of 1974, as
amended, and the regulations and rulings thereunder ("ERISA") which is subject
to the provisions of Title IV of ERISA, or (ii) a "multiemployer plan" as such
term is defined in SECTION 4001 of ERISA. No Company has provided, or agreed to
provide, benefits under the Health Plan to any former employee or dependent of
such employee for periods subsequent to the severance of such employee's
employment, other than as specifically required under SECTION 4980B of the IRC.
There has been no Reportable Event or prohibited transaction (within the meaning
of SECTION 486 of ERISA and SECTION 4975 of the IRC) with respect to any Plan,
all contributions to any Plan have been made in cash or stock and, there have
been no loans or other extensions of credit, except loans to participants in
Plans, which loans are and have been in compliance with section 408 of ERISA.
Conwell, W&B, Cartage, Borrower and LML have adopted, and all
participating employees are covered by, the Injury Benefit Plan. The Injury
Benefit Plan is an "Employee Welfare Benefit Plan" as defined in SECTION 3(l) of
ERISA. All provisions of the Injury Benefit Plan are governed by ERISA.
41
Section 4.7 PURPOSE OF ADVANCES AND LETTERS OF CREDIT. The proceeds of
the Advances hereunder will be used for working capital purposes of the
Companies, to pay Reimbursement Obligations, for Capital Expenditures permitted
by SECTION 5.2(h) and for other general corporate purposes. None of the proceeds
of the Loans will be used, directly or indirectly, for the purpose, whether
immediate, incidental or ultimate, of purchasing or carrying any Margin Stock
and none of such proceeds will be used in violation of applicable Law
(including, without limitation, the Margin Regulations). The Letters of Credit
will be issued in the ordinary course of the Companies' businesses, primarily in
connection with insurance claims made.
Section 4.8 OWNERSHIP OF THE COMPANIES. (i) Parent owns all of the
issued and outstanding capital stock of FFE, Express, Cartage and Middleton (ii)
FFE owns all of the issued and outstanding stock of Borrower, Conwell, W&B, AEL
and Lisa, (iii) W&B owns all of the issued and outstanding capital stock of CPI,
and (iv) except as provided in this SECTION 4.8, none of the Companies has any
Other Subsidiary.
Section 4.9 EXISTING INDEBTEDNESS. Except as fully described in
SCHEDULE 4.9 attached hereto (the "EXISTING INDEBTEDNESS"), none of the
Companies is directly, indirectly or contingently obligated with respect to any
Indebtedness for borrowed money.
Section 4.10 RIGHTS IN PROPERTIES; EXISTING LIENS. Each of the
Companies has good indefeasible title to or valid leasehold interests in its
properties and assets, real and personal, including the properties, assets and
leasehold interests reflected in the financial statements described in SECTION
4.2 , and none of such properties or assets is subject to a Lien other than
Permitted Liens .
Section 4.11 MATERIAL AGREEMENTS. Attached hereto as SCHEDULE 4.11 is a
description of all material agreements to which any Company is a party or its
assets may be bound or affected.
Section 4.12 Environmental Matters.
(a) Each of the Companies is in compliance in all material respects
with all federal, state and local Laws and regulations now applicable to its
business and operations or which (to its knowledge) will be applicable thereto
relating to pollution control and environmental contamination, including, but
not limited to, all Laws and regulations governing the generation, use,
collection, treatment, storage, transportation, recovery, removal, discharge or
disposal of Hazardous Materials.
(b) To the best of each Company's knowledge, there are no presently
outstanding allegations that any Company is now or at any time prior hereto was
in material violation of such Laws and regulations; there are no material
administrative or judicial proceedings presently pending against any Company
pursuant to such Laws or regulations; and there is no material claim presently
outstanding against any Company which was asserted pursuant to such Laws or
regulations.
42
(c) There are no facts or circumstances known to any Company that could
form the basis for the assertion of any material claim against any Company
relating to environmental matters, including, but not limited to, any claim
arising from past or present environmental practices asserted under CERCLA, RCRA
or any other federal, state or local environmental statute.
Section 4.13 COMMON ENTERPRISE. Each Company expects to derive benefit
from this Agreement, both on its separate capacity and as a member of an
affiliated and integrated corporate group.
Section 4.14 WORKERS' COMPENSATION. Neither Borrower nor any of the
other Companies are subscribers to the Texas Workers' Compensation Act. Borrower
and each other Company has taken all reasonable precautions that may be
necessary or appropriate to minimize the risk of loss associated with claims
that would otherwise be covered by the Texas Workers' Compensation Act. Such
precautions include, as appropriate and in consideration of the nature of each
employee's duties, without limitation, (i) the implementation of safety
programs, employee training programs, drug screening of employees and
pre-employment physicals, and (ii) the purchasing of insurance with substantial
and reasonable adequate coverage available for such risks.
Section 4.15 YEAR 2000. Any reprogramming required to permit the proper
functioning, in and following the year 2000 of (i) Parent's and the
Subsidiaries' computer systems and (ii) equipment containing embedded microchips
(including systems and equipment supplied by other or with which Parent's or the
Subsidiaries' systems interface) and the testing of all such systems and
equipment, as so reprogrammed, has been completed. The computer and management
information systems of Parent and the Subsidiaries are and, with ordinary course
upgrading and maintenance, will continue for the term of this Agreement to be,
sufficient to permit Parent and the Subsidiaries to conduct their respective
businesses without Material Adverse Effects. ARTICLE V CERTAIN COVENANTS OF THE
COMPANIES
Section 5.1 AFFIRMATIVE COVENANTS. Until the Obligations have been paid
and performed in full and the obligation of the Banks to make Loans or issue
Letters of Credit have been irrevocably terminated, the Companies shall:
(a) QUARTERLY REPORT. On or before forty-five (45) days after the end
of the first, second and third calendar quarters, and on or before ninety (90)
days after the fourth calendar quarter, deliver to each Bank a Quarterly Report
(herein so called), in the form of EXHIBIT E attached hereto with the blanks
completed accurately to reflect the facts for the immediately preceding calendar
quarter, signed by the chief financial officer or Vice President of Finance of
Borrower.
(b) FINANCIAL STATEMENTS. Deliver to each Bank, as soon as practicable,
(i) and in any event within ninety (90) days after the end of each fiscal year
of Parent, complete and detailed Financial Statements (prepared on a
consolidated basis), including balance sheet, operating statement,
43
reconciliation of earned surplus and such supporting schedules as any Bank may
request, accompanied by the certificate of a firm of independent public
accountants acceptable to the Banks that such statements have been prepared in
accordance with GAAP and fairly present the consolidated financial condition of
the Companies during the fiscal year just ended, and that during the course of
their audit of the Companies, nothing came to their attention that caused them
to believe the Companies were not in compliance with the terms of SUBSECTIONS
5.1(f), 5.1(k), 5.2(a) and 5.2(f), (ii) and in any event within forty-five (45)
days after the end of such calendar quarter, consolidated balance sheets of the
Companies as of the close of such quarter, consolidated operating statements of
the Companies for the part of the fiscal year ended at the close of such quarter
and a reconciliation of earned surplus for the Companies during such quarter,
accompanied by the certificate of the chief financial officer or Vice President
of Finance of Borrower that such statements are true and correct, were prepared
in accordance with GAAP and fairly present the consolidated financial conditions
and results of operations of the Companies, and (iii) after a request by any
Bank, such other information pertaining to the Companies and their affairs as
such Bank shall from time to time request in writing.
(c) INSURANCE. Maintain, and cause each other Company to maintain,
insurance with such insurance companies, in such amounts, and covering such
risks as shall be satisfactory to the Banks, with loss payable to the Banks;
deliver to the Banks certificates evidencing such insurance and, within ninety
(90) days after the close of each fiscal year of Borrower, a report certified by
the chief financial officer or Vice President of Finance of Borrower describing
all insurance of the Companies in force as of the close of the fiscal year just
ended; and cause all fire and casualty insurance policies on Vehicles and real
estate, to which Liens in favor of the Banks have attached, to be made payable
to the Companies and the Banks, as their interests may appear, and in such event
deliver certificates evidencing such insurance to the Banks.
(d) TAXES. Pay and discharge, and cause each other Company to pay and
discharge, before delinquent, all Taxes assessed upon any Company or any of the
assets of any Company, or any part thereof; provided, however, that any Company
may defer the payment of any Taxes (i) which are being diligently contested in
good faith by appropriate proceedings, and (ii) for which reserves deemed
adequate by the Banks have been set aside to the satisfaction of the Banks for
the payment thereof; and further provided, that, if and to the extent any such
contested Taxes are finally adjudicated to be valid, Borrower or a Company will
promptly discharge them and for such purpose may use the reserve related
thereto.
(e) OPERATING RIGHTS, ETC. Maintain and preserve, and cause each other
Company to maintain and preserve, its Operating Rights, licenses, franchises,
certificates, corporate qualification and good standing in all appropriate
states and other appropriate authorities necessary to carry on its businesses,
as an interstate and intrastate motor carrier or otherwise, in all states in
which it does business.
(f) FIXED CHARGE COVERAGE RATIO. As of the last day of each fiscal
quarter during the period set forth in the table below, maintain a Fixed Charge
Coverage Ratio at all times equal to or greater than the rate set forth opposite
the applicable fiscal quarter ending date on the table below. "FIXED CHARGE
COVERAGE RATIO" shall mean, as of the date of any determination thereof for the
twelve (12) month period ending as of the date of any determination, the ratio
of (i) the amount of the Companies' consolidated EBITDAR to (ii) the amount of
44
the Companies' consolidated Fixed Charges; all as determined in conformity with
GAAP. "EBITDAR" means, for any period and any Person the total of the following,
each calculated without duplication, for such Person on a consolidated basis for
such period: (a) Net Income; PLUS (b) any provision for (or less any benefit
from) income or franchise taxes included in determining Net Income; PLUS (c)
interest expense deducted in determining Net Income; PLUS (d) amortization and
depreciation expense deducted in determining Net Income; PLUS (e) lease and
rental expenses paid under operating leases or rental agreements intended to
produce income and deducted in determining Net Income; PLUS (f) for calculations
that include the fiscal quarter ending December 31, 1999, $17,498,554; MINUS (g)
any dividends or redemptions of capital stock paid in cash during such period.
"FIXED CHARGES" means all interest expenses, the amount of lease and rental
expenses associated with all operating leases and rental agreements that are not
cancelable within the immediately subsequent 12-month period, taxes actually
paid, the portion of long-term debt actually paid and lease expenses under
capitalized leases.
========================================================================
Minimum Fixed Charge
Fiscal Quarter Ending Coverage Ratio
========================================================================
From the Closing Date through and including June
30, 2000 1.15 to 1.00
------------------------------------------------------------------------
From July 1, 2000, and thereafter 1.25 to 1.00
========================================================================
(g) INFORMATION AND OTHER DOCUMENTS, NEW ENTITIES. Except as otherwise
may be provided in SECTION 9.14, cause each New Entity to execute and deliver to
Agent a Guaranty Agreement and an agreement in the form of EXHIBIT F attached
hereto with the blanks completed accurately; and a Security Agreement in
substantially the form of EXHIBIT I hereto, and deliver, and cause each Company
to deliver, to the Banks such information (not otherwise required to be
furnished herein) respecting the business affairs, assets, and liabilities of
any of the Companies, and such opinions, certifications and documents, in
addition to those herein mentioned, as any Bank may reasonably request, and
allow, and cause each other Company to allow, the Banks or their agents to
inspect any of the records and properties of any Company, from time to time,
during reasonable business hours.
(h) PAYMENT OF DEBTS. Pay and discharge, and cause each other Company
to pay and discharge, when due all debts, liabilities and obligations of
Borrower and each other Company; provided that the covenant contained in this
subsection is solely for the benefit of the Banks and their successors and
assigns; and provided further that neither Borrower nor any other Company shall
be required to pay any such debt, liability or obligation if the validity
thereof is being diligently contested in good faith and reserves deemed adequate
by the Banks have been recorded therefor in accordance with GAAP.
(i) MAINTENANCE OF EXISTENCE, ASSETS. Maintain, and cause each other
Company to maintain, its corporate and legal existence, and keep, and cause each
other Company to keep, all assets in good repair, working order and condition,
and from time to time make all necessary and proper repairs, renewals,
replacements, additions, betterments and improvements thereto, to the end that
the business of Borrower and each other Company may be properly, efficiently and
advantageously conducted at all times in accordance with sound and prudent
standards of business management.
45
(j) EXPENSES.
(i) Pay all reasonable expenses which the Banks incur in
connection with (A) the negotiation and preparation of this Agreement,
the Loan Papers and any security agreement, deed of trust or mortgage
or other agreement or document contemplated hereby, (B) any Default,
(C) the repossession, storage, or sale of Vehicles or real estate, (D)
the collection of the accounts, (E) the enforcement by Agent or any
Bank of its rights against the accounts or any other Collateral, (F)
the collection of the Obligations and (G) the enforcement of
obligations of the Companies hereunder, including, but not limited to,
court costs and reasonable fees to the attorneys for Agent and the
Banks for providing legal services in connection therewith; provided,
however, that Borrower shall be obligated to pay only the fees and
expenses of Agent's counsel in connection with the negotiation and
preparation of this Agreement and the other Loan Papers.
(ii) WHETHER OR NOT ANY LOAN IS EVER FUNDED, INDEMNIFY AGENT
AND THE BANKS AND HOLD AGENT AND THE BANKS HARMLESS FROM AND AGAINST
ANY AND ALL LIABILITIES, LOSSES, DAMAGES, COSTS AND EXPENSES OF ANY
KIND (INCLUDING, WITHOUT LIMITATION, EXPENSES OF LITIGATION, COURT
COSTS AND THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL FOR AGENT
AND THE BANKS (OR OF ANY OTHER PERSON ENGAGED BY AGENT OR ANY BANK) IN
CONNECTION WITH ANY INVESTIGATIVE, ADMINISTRATIVE OR JUDICIAL
PROCEEDING, WHETHER OR NOT AGENT OR ANY BANK SHALL BE DESIGNATED A
PARTY THERETO) WHICH MAY BE INCURRED BY AGENT OR ANY BANK, RELATING TO
OR ARISING OUT OF THIS AGREEMENT OR THE OTHER LOAN PAPERS OR ANY ACTUAL
OR PROPOSED USE OF PROCEEDS OF THE LOANS HEREUNDER; PROVIDED, THAT,
AGENT AND THE BANKS SHALL NOT HAVE THE RIGHT TO BE INDEMNIFIED
HEREUNDER FOR THEIR OWN OR THEIR REPRESENTATIVE'S OR AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT AS DETERMINED BY A COURT OF COMPETENT
JURISDICTION. IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT
THE INDEMNITY PROVIDED FOR HEREIN IS INTENDED TO AND SHALL INDEMNIFY
AND PROTECT AGENT AND THE BANKS FROM THE CONSEQUENCES OF THEIR OWN
NEGLIGENCE (AS OPPOSED TO GROSS NEGLIGENCE OR WILLFUL MISCONDUCT),
WHETHER OR NOT THAT NEGLIGENCE IS THE SOLE OR CONCURRING CAUSE OF ANY
LIABILITY, LOSS, DAMAGE, COST OR EXPENSE OF ANY KIND.
(iii) Any amount to be paid under this Subsection to Agent or
any Bank shall be a demand obligation owing by Borrower and if not paid
within fifteen (15) days of demand by Agent or such Bank thereof shall
bear interest from the date of expenditure by Agent or such Bank until
paid at the Highest Lawful Rate.
(iv) The obligations of Borrower under this Subsection shall
survive payment of the Obligations and assignment of any right
hereunder.
46
(k) DEBT COVERAGE RATIO. Maintain a Debt Coverage Ratio equal to or
less than the ratio set forth opposite the applicable fiscal quarter ending date
in the table below. As of the last day at each fiscal quarter during the periods
set forth in the table below, "DEBT COVERAGE RATIO" is defined to mean, as of
the date of any determination thereof, the ratio of (i) Funded Debt as of such
measurement date to (ii) EBITDAR for the twelve (12) month period then ending,
all as determined in conformity with GAAP. "FUNDED DEBT" means as to any Person
at any time (without duplication) (a) all obligations of such person for
borrowed money, including, without limitation, any notes payable to the seller
in connection with any acquisition and the Loans; (b) all obligations of such
Person evidenced by bonds, notes, debentures, or other similar instruments; (c)
the aggregate minimum amount of all lease or rental payments to be paid under
operating leases or rental agreements that are not cancelable; (d) all
capitalized lease obligations of such Person; (e) all obligations of others,
which such Person has guaranteed or given surety for or for which such Person
has otherwise personally secured or indemnified such others; (f) all obligations
secured by a Lien existing on property owned by such Person, whether or not the
obligations secured thereby have been assumed by such Person or are non-recourse
to the credit of such Person; (g) all reimbursement obligations of such Person
(whether contingent or otherwise) in respect of letters of credit, bankers'
acceptances, surety or other bonds and similar instruments (including the
Reimbursement Obligations).
=========================================================================
Maximum Debt
Fiscal Quarter Ending Coverage Ratio
=========================================================================
From the Closing Date through and including June 30,
2000 3.25 to 1.00
-------------------------------------------------------------------------
From July 1, 2000, and thereafter 3.00 to 1.00
=========================================================================
(l) BORROWING BASE REPORTS. Deliver to each Bank, concurrently with the
delivery of the Financial Statements under SUBSECTION 5.1(a) and the Financial
Statements under SUBSECTION 5.1(b), a Borrowing Base Report dated as of the end
of the immediately preceding calendar quarter.
(m) ERISA. Immediately upon becoming aware of the occurrence of any
event or condition which has the result that any of the representations or
warranties contained in SECTION 4.6, if made on and again as of any date on or
after the date of this Agreement, cease to be true, Borrower shall give the
Banks a written notice specifying (i) the nature of such events or condition,
(ii) what action Borrower and the other Companies are taking or propose to take
with respect thereto, and (iii) when known, any action taken by the Internal
Revenue Service or the Department of Labor with respect thereto. With respect to
any Plan maintained or adopted by any Company, such Company will at all times
make prompt payments of contributions required to be made to meet the minimum
funding standards of ERISA.
(n) LAWS. Each Company will comply with the provisions of any and all
Laws, and with the provisions of all agreements, documents and instruments
material to its business and operations, and maintain its ability to perform its
obligations under all such agreements, documents and instruments.
47
(o) WORKERS' COMPENSATION. Any Company that is or becomes a
nonsubscriber to the Texas Workers' Compensation Act shall take all reasonable
precautions that may be necessary or appropriate from time to time to minimize
the risk of loss to Borrower and the other Companies associated with claims that
would otherwise be covered by the Texas Workers' Compensation Act if such,
Company had continued to Subscribe to such Act. Such precautions shall include,
without limitation, (i) the implementation of safety programs, employee training
programs, drug screening of employee and pre-employment physical (unless
prohibits by law), (ii) the purchasing of insurance with substantial and
reasonably adequate coverage available for such risks and (iii) the maintenance
of a welfare benefit plan, identical or similar to the Injury Benefit Plan, that
is governed by ERISA in all respects.
(p) PROJECTIONS. As soon as available and in any event before December
1 of each fiscal year of Parent, Borrower will deliver (i) a forecasted
consolidated balance sheet and statements of income and cash flow of Parent and
the Subsidiaries on a quarterly basis, including the assumptions utilized in the
preparation of such projections (in narrative form) for the two (2) forthcoming
fiscal years and a proforma projection of Parent's compliance with the financial
covenants in this Agreement for the same period.
(q) FURTHER ASSURANCES AND COLLATERAL MATTERS. (i) The Parent will, and
will cause each other Company to execute and deliver such further documentation
and take such further action as may be requested by the Agent to carry out the
provisions and purposes of the loan Papers and to create, preserve, protect and
perfect the Liens of Agent for the benefit of itself and the Banks in the
Collateral. (ii) At any time and from time to time upon the written request of
any Bank, within 15 days after such request, Parent shall and shall cause each
of the Subsidiaries to, grant a Lien to the Banks in all or any part of (A) the
Vehicles and (B) to the extent permitted under applicable laws, the Operating
Rights of Parent and the Subsidiaries, upon such terms as may be acceptable to
the Banks, and will execute and deliver, and will cause the Subsidiaries to
execute and deliver, to Agent and the Banks such documents, in form and
substance satisfactory to Agent and its counsel and the Banks, as may be
necessary or appropriate to evidence and provide for the same, including,
without limitation, assignments of, and security agreements granting security
interests in, all right, title and interest of Parent and each Subsidiary in all
of the foregoing. Any Bank making any such request for Collateral shall promptly
deliver a copy of such written request to Agent and the other Banks. (iii) Upon
written request from Borrower, Agent shall, from time to time, take all steps
necessary to release the Lien in favor of Agent and the Banks against any one or
more Vehicles; PROVIDED, Agent shall not be obligated to release any such Lien
unless (A) the Vehicle being released from the Lien is being sold or otherwise
disposed in the ordinary course of business and for fair market value; (B) after
giving effect to the Lien release, the outstanding amount of the Obligations
will not be greater than the product of eighty-five percent (85%) multiplied by
the aggregate Net Book Value of all the remaining Vehicles in which Agent has a
first-priority, fully perfected Lien; and (C) immediately upon consummation of
the sale or other disposal of the Vehicle on which the Lien was released,
Borrower shall prepay the Loans in an amount equal to the Net Book Value of such
Vehicle.
48
(r) ACCOUNTS RECEIVABLE REPORT. As soon as available, and in any event
within twenty (20) days after the end of each month a summary accounts
receivable aging report for Borrower showing all accounts receivable of Borrower
that are 1-30, 31-60, 61-90, and over 90 days past the invoice date.
Section 5.2 NEGATIVE COVENANTS. Until the Obligations have been paid
and performed in full and the obligation of the Banks to make Loans and to issue
Letters of Credit have been irrevocably terminated, none of the Companies shall,
directly or indirectly, without the prior written consent of the Banks:
(a) MINIMUM TANGIBLE NET WORTH. Permit, as of the last day of any
fiscal quarter, Parent's Consolidated Tangible Net Worth to be less than the sum
of (i) $80,000,000, PLUS (ii) eighty-five percent (85%) of its positive,
consolidated net income for each fiscal quarter after December 31, 1999 (I.E.,
any negative net income for a fiscal quarter shall not reduce the minimum
Consolidated Tangible Net Worth), PLUS (iii) one hundred percent (100%) of the
net proceeds from any issuances of equity securities by Parent or other
contributions to the capital or equity of Parent.
(b) TRANSFER OF OPERATING RIGHTS. Create, incur, grant, assume or
suffer to exist any Lien on, nor sell, transfer or otherwise dispose of, any
present or future Operating Rights of any Company, including but not limited to
franchises, certificates, authorizations, permits and licenses.
(c) LOANS, INVESTMENTS, AND MERGERS. Make any loan to or investment in,
nor purchase stock or other securities of, nor merge or consolidate with, nor
purchase all or substantially all of the assets of, any Person other than
Borrower or another Company, except (i) mergers, consolidations, and
acquisitions after which Borrower or another Company is the surviving and
controlling entity and no Default or Potential Default exists, (ii) secured
loans to owner-operators who have independent contractor service agreements with
Borrower or any other Company, (iii) loans to the Employee Stock Ownership Plan
and Trust for Employees of Borrower not at any one time in excess of $5,000,000
in the aggregate; (iv) loans, other than the foregoing, not at any one time in
excess of $1,000,000 in the aggregate, (v) Permitted Investments and (vi) other
investments from time to time in an amount outstanding at any time less than or
equal to $100,000.
(d) CONTINGENT LIABILITIES. Assume, guarantee, purchase, agree to
purchase or suffer to exist any other liability, direct or indirect, for the
payment of any obligation for borrowed money or other similar Indebtedness,
except to Bank, of any Person, other than Borrower or another Company, in an
aggregate amount in excess of $5,000,000 at any time outstanding.
(e) DIVIDENDS AND DISTRIBUTIONS. Declare, order, pay, make or set apart
any sum for (a) any dividend or other distribution, direct or indirect, on
account of any shares of any class of stock of Parent or any other Company now
or hereafter outstanding; (b) any redemption, conversion, exchange, retirement,
sinking fund or similar payment, purchase or other acquisition for value, direct
or indirect, of any shares of any class of stock of Parent or any other Company
now or hereafter outstanding; or (c) any payment made to retire, or to obtain
the surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Parent or any other Company now or hereafter
outstanding except:
49
(i) The Parent and each other Company may from time to time
redeem its stock that was issued pursuant to the terms of employee
stock option plans offered by each such Company, respectively, on or
before the Closing Date; PROVIDED that the maximum amount of such
redeemed stock shall be an amount equal to or less than 1% of the
capital stock of the Parent or such Subsidiary, as applicable, as of
the Closing Date.
(ii) In addition to the redemptions permitted under clause (i)
above, the Parent may from time to time redeem its stock, PROVIDED that
the aggregate maximum amount of the redemption price for such stock
shall not be greater than the proceeds of death benefits received by
Parent under life insurance policies.
(iii) If no Default or Potential Default exists, Parent may
declare and pay cash dividends from time to time if on the date each
such dividend is declared Borrower delivers to Agent computations
showing (A) that the Debt Coverage Ratio of Parent and its consolidated
subsidiaries as of the date such dividends are declared is, after
giving effect to such dividends, equal to or less than 2.5 to 1.00; (B)
that the Debt Coverage Ratio of Parent and its consolidated
Subsidiaries determined pro forma as of the date of the most recently
delivered Quarterly Report as if such dividend had already been
declared and paid is equal to or less than 2.5 to 1.00; and (C) that
Parent and each other Company would otherwise be in compliance with all
other financial covenants contained in this Agreement if such financial
covenants were measured as of the date such dividend is paid and after
giving effect to such dividend.
(iv) The Companies may make, declare or pay dividends and make
other distributions with respect to their capital stock to the extent
necessary to permit the Borrower to pay the Obligations and to pay
expenses and taxes incurred in the ordinary course of business.
(v) Borrower and any other Company may declare and pay
dividends on their common stock payable solely in shares of common
stock.
(f) INDEBTEDNESS. Assume, create or suffer to exist any Indebtedness
except (i) Indebtedness owed to the Banks pursuant to this Agreement, (ii)
additional Indebtedness not for borrowed money incurred in the ordinary course
of business constituting trade payables and accrued liabilities, including,
without limitation, accrued Taxes and payroll obligations, (iii) Existing
Indebtedness, and (iv) additional Indebtedness for borrowed money incurred in
the ordinary course of business not to exceed at any time $1,000,000 in
aggregate amount with respect to all Companies.
(g) SALES OF ASSETS. Be a party to any sale, transfer, or other
disposition of all or any substantial part of Borrower's or any other Company's
property, assets or business, and in any event will not sell, transfer or
otherwise dispose of any of Parent's interest in the Subsidiaries (including,
without limitation, any of the stock of the Subsidiaries).
50
(h) CAPITAL EXPENDITURES. Permit the aggregate amount of all Capital
Expenditures made by the Companies, during any, twelve (12) month period (net of
the proceeds of the sale or exchange of any fixed assets), to exceed
$25,000,000.
(i) NEGATIVE PLEDGE. Borrower and each of the other Companies will not
create, assume or suffer to exist any Lien on any asset or property (or any
interest therein) now owned or hereafter acquired by Borrower or any other
Company, except: (i) any Lien existing pursuant to any order of attachment,
distraint or similar legal process arising in connection with court proceedings
so long as the execution or other enforcement thereof is effectively stayed and
the claims secured thereby are being contested in good faith by appropriate
proceedings, and (ii) Permitted Liens.
(j) TRANSACTIONS WITH AFFILIATES. The Companies will not enter into any
transaction with any Affiliate except in the ordinary course and pursuant to the
reasonable requirements of their businesses and upon fair and reasonable terms
no less favorable to the Companies than would result in a comparable arm's
length transaction with a Person who is not an Affiliate; PROVIDED, however,
that the Companies may enter into lease agreements, as lessee, with Affiliates
for tractors or trailers with lease payments less than or equal to the aggregate
amount of $200,000 per month.
(k) ERISA. No Company or other Group Member will (i) establish,
maintain or participate in any way in a Plan that is subject to the provisions
of Title IV of ERISA, or (ii) provide benefits under any health plan to former
employees in excess of those provided on the date hereof, without the prior
written consent of the Banks.
ARTICLE VI
DEFAULT
As used herein, the term "DEFAULT" means the occurrence of any one or
more of the following events:
Section 6.1 PAYMENT OF OBLIGATIONS. The failure of Borrower to pay to
Agent or any Bank, as required, when due the Principal Obligation, or interest
thereon, or any part thereof, or any Reimbursement Obligation, and such failure
continues for a period of ten (10) days after the due date.
Section 6.2 COVENANTS.
(a) A breach of any of the covenants in SUBSECTIONS 5.1(e), 5.1(f),
5.1(i), 5.1(k) or SECTION 5.2.
(b) The failure of Borrower or any other Company to punctually and
properly observe, keep and perform each of its covenants and agreements in
SUBSECTIONS 5.1(d) and 5.1(h), and such failure continues for a period of ten
(10) days after the discovery of the breach by a Company or after notice from
any Bank.
51
(c) The failure of Borrower or any other Company to observe, keep and
perform each of its covenants and agreements in SUBSECTIONS 5.1(a), 5.1(b),
5.1(c), 5.1(g) or 5.1(l), and such failure continues for a period of ten (10)
days after Agent notifies Borrower of the breach.
(d) The failure of Borrower or any other Company punctually and
properly to observe, keep and perform each of its covenants and agreements
(other than the covenants to pay the Principal Obligation, and interest thereon,
the commitment fee, the Reimbursement Obligations, and the covenants specified
in SUBSECTIONS 6.2(a), 6.2(b), and 6.2(c)) contained herein or in the other Loan
Papers, and such failure continues for a period of thirty (30) days after Agent
notifies Borrower of the breach.
Section 6.3 MISREPRESENTATION. The discovery by Agent or any Bank that
any statement, representation or warranty in this Agreement, any other Loan
Paper or in any writing ever delivered to Agent or any Bank pursuant to the
provisions hereof, is false, misleading, or erroneous in any material respect,
and the reason giving rise to such situation is not corrected to the
satisfaction of the Banks within thirty (30) days after notice thereof has been
given by Agent to Borrower.
Section 6.4 VOLUNTARY DEBTOR RELIEF. Borrower or any other Company
shall (i) have entered voluntarily against it an order for relief under any
Debtor Relief Laws, (ii) execute an assignment for the benefit of creditors, or
(iii) not pay, or admit in writing its inability to pay, its debts generally as
they become due, or (iv) apply for or consent to the appointment of a receiver,
trustee, custodian or liquidator of it, or of all or a substantial part of its
assets, or (v) file a voluntary petition in bankruptcy or a petition or answer
seeking reorganization or an arrangement with creditors or seeking to take
advantage of, or any other relief under, any Debtor Relief Laws, or (vi) file an
answer admitting the material allegations of, or consenting to, or default in, a
petition filed against it in any Debtor Relief Laws proceeding, or (vii)
institute or voluntarily be or become a party to any other judicial proceedings
intended to effect a discharge of its debts, in whole or in part, or a
postponement of the maturity or the collection thereof, or a suspension of any
of the remedial rights of Bank granted in this Agreement or under any Law.
Section 6.5 INVOLUNTARY DEBTOR RELIEF. An order, judgment or decree
shall be entered by any court of competent jurisdiction approving a petition
seeking reorganization of Borrower or any other Company, or appointing a
receiver, trustee, custodian or liquidator of Borrower or any other Company, or
of all or any substantial part of the assets of Borrower or any other Company,
and such order, judgment or decree is not appealed from within the time allowed
by Law, with a stay of proceedings or supersedeas, or, if appealed from in the
manner aforesaid, when such order, judgment or decree becomes final, and in any
event, if and when such reorganization, receivership, trusteeship, custodianship
or liquidation proceedings shall have been in force for sixty (60) days.
Section 6.6 JUDGMENTS. Any of the Companies fails to pay any money
judgment against it at least ten (10) days prior to the date on which any of the
assets of any of the Companies may be lawfully sold to satisfy such judgment.
52
Section 6.7 ATTACHMENT. The failure to have discharged within a period
of thirty (30) days after the commencement thereof any attachment, sequestration
or similar proceedings against any of the assets of Borrower or any other
Company.
Section 6.8 DEFAULT OF OTHER DEBT. The default under any promissory
note or other evidence of Indebtedness in an amount equal to or greater than
$500,000 executed by Borrower or any other Company, or the default by any
obligee under any Indebtedness or any other obligation in an amount equal to or
greater than $500,000 under any credit or other agreement under which Borrower
or any other Company is an obligor.
Section 6.9 OTHER AGREEMENTS. The occurrence of any event which would
constitute, or with notice or lapse of time or both could constitute, a default
under any chattel mortgage, assignment, security agreement, deed of trust,
mortgage or other agreement delivered to Agent or any Bank.
ARTICLE VII
REMEDIES
If a Default occurs and is continuing, Agent may, at its election, and,
at the request of the Required Banks, Agent shall do any one or more of the
following:
Section 7.1 ACCELERATION. Declare the entire unpaid balance of the
Obligations and all other Indebtedness of any one or more of Borrower or the
other Companies to the Banks, or any part thereof, immediately due and payable,
whereupon it shall be due and payable.
Section 7.2 LOANS AND LETTERS OF CREDIT. Refuse to make additional
Loans (including Swingline Advances) or issue additional Letters of Credit, and
thereafter the Banks shall have no obligation whatsoever to make additional
Loans or issue additional Letters of Credit. If any Bank or the Issuing Bank
refuses to make additional Loans or issue additional Letters of Credit, all
duties and obligations of Borrower and the other Companies, and all rights and
powers of Agent and the Banks, under this Agreement shall continue in full force
and effect until the full and final payment and performance of the Obligations.
Section 7.3 JUDGMENT. Reduce any claim to judgment.
Section 7.4 RIGHTS. Exercise any and all rights and remedies which
Agent, the Issuing Bank or any Bank may have under any Loan Paper, at Law, or in
equity, or otherwise.
Section 7.5 DEFAULT WITH RESPECT TO BASE RATE LOANS. If a Default under
the Agreement shall occur and the same shall have been declared by Agent, then
Borrower shall immediately prepay the outstanding Base Rate Loans and all
interest accrued thereon if and to the extent the same is then due and payable.
Section 7.6 DEFAULT WITH RESPECT TO LIBOR LOANS. If a Default under
this Agreement shall occur and the same shall have been declared by Agent, then
Borrower shall immediately prepay the outstanding LIBOR Loans and all interest
accrued thereon and all losses and expenses in connection with such prepayment
pursuant to SECTION 2.26 if and to the extent the same is then due and payable.
53
Section 7.7 DEFAULT WITH RESPECT TO LETTERS OF CREDIT. If a Default
under the Agreement shall occur and the same shall have been declared by Agent,
then, upon the request of Agent, Borrower shall be required to deposit
immediately with Agent, in immediately available funds, an amount equal to (i)
the aggregate amount of all then outstanding Letters of Credit; plus (ii) the
aggregate amount of all other sums due and payable under any of the Loan Papers
regarding the Letters of Credit (the "DEPOSIT"), Borrower's obligation to pay
the Deposit to be absolute and unconditional, the Deposit to be deposited in a
special interest bearing account with Agent to ensure reimbursement of any
drawings under such Letters of Credit and payment of all other amounts due and
payable under any of the Loan Papers regarding the Letters of Credit.
Section 7.8 AUTOMATIC ACCELERATION DUE TO CERTAIN DEFAULTS.
Notwithstanding anything to the contrary contained herein, if a Default referred
to in SECTION 6.4 or SECTION 6.5 occurs and is continuing, then the entire
unpaid balance of the Obligations and all other Indebtedness of any one or more
of Borrower or the other Companies to the Banks shall immediately, and
concurrently with the occurrence of such Default, become due and payable in full
without any further action or notification of any kind required of Agent or any
of the Banks, including, without limitation, presentment, demand, protest or
notice of protest, dishonor, intention to accelerate or acceleration, all of
which are expressly hereby waived by Borrower and the other Companies.
ARTICLE VIII
THE AGENT
Section 8.1 APPOINTMENT AND AUTHORIZATION; ADMINISTRATION; DUTIES. (a)
The general administration of the Loan Papers and any other documents
contemplated by this Agreement shall be by Wells Fargo or its designees, and
each Bank hereby appoints Wells Fargo as its agent hereunder and under the other
Loan Papers with such powers as are specifically delegated to the Agent by the
terms of the Loan Papers, together with such other powers as we reasonably
incidental thereto. Agent shall not be required to take any action with respect
to any Default except as may be expressly provided in ARTICLE VI or as may be
directed by the Required Banks. In the event the Required Banks so direct Agent
to take any action hereunder, Agent agrees to commence taking such action within
a reasonable period of time and to diligently pursue such action or to submit
its resignation pursuant to SECTION 8.10. Except as otherwise provided herein or
otherwise agreed to by the Banks and Agent, each of the Banks hereby irrevocably
authorizes Agent, at its discretion, to take or refrain from taking such actions
as Agent on its behalf and to exercise or refrain from exercising such powers
under the Loan Papers and any other documents contemplated by this Agreement as
are delegated by the terms hereof or thereof, as appropriate, together with all
powers reasonably incidental thereto. Notwithstanding the foregoing or any term
or provision of this Agreement, Agent shall have no duties or responsibilities
except as expressly set forth in this Agreement or the other Loan Papers.
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(b) Each Bank irrevocably appoints and authorizes Agent to hold the
Collateral (if any) and enforce the Liens (if any) granted to the Banks as
security for the Obligations and to take such action as Agent on its behalf and
to exercise such powers under this Agreement and the other Loan Papers as are
delegated to Agent by the terms hereof or thereof, together with all such powers
as are reasonably incidental thereto, provided, however, that, as between and
among the Banks, Agent will not prosecute, settle or compromise any claim
against Borrower or any other Company or release or institute enforcement or
foreclosure proceedings against any Collateral or guaranty securing the
Obligations, except with the consent of the Required Banks. Without limiting the
generality of the foregoing, each Bank authorizes Agent to (i) enter into any
Loan Papers securing payment of the Obligations in the capacity of agent for and
on behalf of the Banks and (ii) to administer all of the Collateral and to
enforce the interests of the Banks therein in accordance with the Loan Papers.
Any action for enforcement of the interests of the Banks under the Loan Papers
shall be taken either as Agent for the Banks or directly in the respective names
of the Banks, as counsel to Agent may at the time advise. Subject to SECTION
9.21, the Banks consent and agree that any action taken by Agent or with the
consent or at the direction of the Required Banks as provided herein shall be
taken for and on behalf of all Banks, including those who may not have so
consented or directed, in order to protect or enforce the Liens securing the
Obligations; provided that any Bank may direct Agent not to act for or on its
behalf in any such proceeding if such Bank executes in favor of Agent a release
of its rights to share in the benefits of any such action and a release of its
legal and beneficial interest in the Lien created by the Loan Papers on the
Collateral which is the subject of such action. Each Bank, Borrower and the
other Companies agree that Agent is not a fiduciary for the Banks or for
Borrower or any other Company but simply is acting in the capacity described
herein to alleviate administrative burdens for all parties hereto and that Agent
has no duties or responsibilities to the Banks, Borrower or any other Company
except those expressly set forth herein.
(c) The Banks hereby authorize Agent (in its sole discretion) (i) to
appoint sub-agents (including any Bank) to be the holders of record of any Lien
to be granted to Agent (for its benefit and the benefit of the Banks) or the
Banks or to hold on behalf of Agent any Collateral or instruments relating
thereto; and (ii) so long as a Default shall not have occurred and be
continuing, to release a Lien granted to it (for its benefit and the benefit of
the Banks) on any asset sold or otherwise disposed of in accordance with the
terms hereof.
(d) AGENT FEE. Borrower shall pay to Agent the fees provided in that
certain letter agreement dated January 26, 2000, between Agent and Borrower (the
"Fee Letter").
Section 8.2 ADVANCES AND PAYMENTS. On the date of each Advance, Agent
shall be authorized, but not obligated, to advance, for the account of each of
the Banks making such Advance, the amount of the Advance to be made by it in
accordance with its Commitment hereunder if and to the extent that such Bank
does not make such amount timely available to Agent for advance to Borrower
pursuant to this Agreement. Each of the Banks agrees to immediately reimburse
Agent in immediately available funds for any amount so advanced on its behalf by
Agent. If any such reimbursement is not made in immediately available funds on
the same day on which Agent shall have made any such amount available on behalf
of any Bank, such Bank shall pay interest to Agent at a rate per annum equal to
Agent's cost of obtaining overnight funds in the Dallas Federal Funds market.
All amounts to be paid to any of the Banks by Agent shall be credited to the
Banks, forthwith after collection by Agent, in immediately available funds
either by wire transfer or deposit in such Bank's account with Agent, or as such
Bank and the Agent shall from time to time agree.
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Section 8.3 SHARING OF SETOFFS. Each of the Banks agrees that if it
shall, through the exercise of a right of banker's lien, setoff or counterclaim
against Borrower or any other Company, including, but not limited to, a secured
claim under the Bankruptcy Code or other security interest arising with respect
to or in lieu of such secured claim and received by such Bank under any
applicable bankruptcy, insolvency or other similar Law, or otherwise obtain
payment in respect of any obligation owing to such Bank as a result of which the
unpaid portion of its Loans is proportionately less than the unpaid portion of
the Loans of other Banks (based upon the respective Commitment of the Banks),
(i) it shall promptly purchase at par (and shall be deemed to have thereupon
purchased) from such other Banks a participation in the Loans of such other
Banks, so that the aggregate unpaid principal amount of each of the Banks' Loans
shall be in the same proportion to the aggregate unpaid principal amount of all
Loans then outstanding as the principal of its Loans prior to the obtaining of
such payment was to the principal amount of all Loans outstanding prior to the
obtaining of such payment, (ii) it shall pay interest calculated at the Federal
Funds Rate to such other Banks on the amount purchased from the date it received
such payment until the date of the purchase of such participation; and (iii)
such other adjustments shall be made from time to time as shall be equitable to
ensure that the Banks share such payment PRO RATA. Notwithstanding anything to
the contrary contained herein, if a Bank shall obtain payment under any
circumstances contemplated herein while any Obligations shall remain
outstanding, such Bank shall promptly turn over such payment to Agent for
distribution to the Banks on account of the Obligations as provided herein.
Borrower and the Companies expressly consent to the foregoing arrangements and
agree that any Bank or Banks holding (or deemed to be holding) a participation
in any of the Loans or other Obligations may exercise any and all rights of
banker's lien, setoff or counterclaim with respect to any and all monies owing
by Borrower or any other Company to such Bank.
Section 8.4 DISTRIBUTION OF INFORMATION. Agent will forward to all of
the Banks copies of all financial statements and reports of a material nature
furnished to it hereunder by Borrower or any Company other than those which are
by the terms hereof to be distributed by Borrower or any such Company directly
to the Banks.
Section 8.5 NOTICE TO BANKS. Upon receipt by Agent from Borrower of any
communication calling for an action on the part of the Banks (including, without
limitation, a Notice of Loan Activity), or upon notice to Agent of any Default,
Agent will in turn promptly give notice to the Banks in writing of the nature of
such communication or of the Default, as the case may be.
Section 8.6 LIABILITY OF AGENT. (a) Agent, when acting on behalf of the
Banks, may execute any of its duties under this Agreement by or through its
officers, directors, employees, attorneys or agents. All such officers,
directors, employees, attorneys and agents, when exercising the rights or
performing the duties of Agent, shall be deemed to be included in the term
"Agent." Neither Agent nor its officers, directors, employees, attorneys or
agents shall be liable to the Banks or any of them for any action taken or
omitted to be taken in good faith, or be responsible to the Banks or to any of
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them for the consequences of any oversight or error of judgment, or for any
loss, unless the same shall happen through its gross negligence or willful
misconduct. Agent and its officers, directors, employees, attorneys and agents
shall in no event be liable to the Banks or to any of them for any action taken
or omitted to be taken by it pursuant to instructions received by it from any of
the Banks or in reliance upon the advice of counsel selected by it. Without
limiting the foregoing, neither Agent nor any of its officers, directors,
employees, attorneys or agents shall be responsible to any of the Banks for the
due execution, validity, genuineness, effectiveness, sufficiency or
enforceability of, or for any statement, warranty or representation in, or for
the perfection of any Lien contemplated by, this Agreement or any other Loan
Paper, or shall be required to ascertain or to make any inquiry concerning the
performance or observance by Borrower or any Company of any of the terms,
conditions, covenants or agreements of this Agreement or any other Loan Paper.
(b) Neither Agent nor any of its officers, directors, employees,
attorneys or agents shall have any responsibility to Borrower or any other
Company on account of the failure or delay in performance or breach by any of
the Banks, Borrower or any other Company of any of their respective obligations
under this Agreement or any other Loan Paper.
(c) Agent, as agent hereunder, shall be entitled to rely on any
communication, instrument or document reasonably believed by it to be genuine or
correct and to have been signed or sent by a person or persons believed by it to
the proper person or persons, and it shall be entitled to rely on advice of
legal counsel, independent public accountants and other professional advisers
and experts selected by it.
Section 8.7 REIMBURSEMENT AND INDEMNIFICATION. EACH OF THE BANKS AGREES
(I) TO REIMBURSE AGENT, IN ACCORDANCE WITH SUCH BANK'S PRO RATA SHARE, FOR (A)
EXPENSES, (B) INTERNAL CHARGES APPROVED BY THE REQUIRED BANKS OR (C) FEES
INCURRED FOR THE BENEFIT OF THE BANKS UNDER THE LOAN PAPERS, INCLUDING COUNSEL
FEES AND COMPENSATION OF AGENTS AND EMPLOYEES PAID FOR SERVICES RENDERED ON
BEHALF OF THE BANKS, AND ANY OTHER EXPENSE INCURRED IN CONNECTION WITH THE
PREPARATION, EXECUTION, ADMINISTRATION, MONITORING OR ENFORCEMENT THEREOF, (II)
TO INDEMNIFY AND HOLD HARMLESS AGENT AND ANY OF ITS OFFICERS, DIRECTORS,
EMPLOYEES, ATTORNEYS OR AGENTS, ON DEMAND, FROM AND AGAINST ANY AND ALL
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS,
COSTS, EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE
IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST IT OR ANY OF THEM IN ANY WAY
RELATING TO OR ARISING OUT OF THIS AGREEMENT OR ANY OTHER LOAN PAPER OR ANY
ACTION TAKEN OR OMITTED BY IT OR ANY OF THEM UNDER THIS AGREEMENT OR ANY OTHER
LOAN PAPER (EXCEPT SUCH AS SHALL RESULT FROM THEIR GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT) TO THE EXTENT NOT REIMBURSED BY BORROWER OR THE OTHER COMPANIES AND
(III) THAT AGENT MAY OFFSET DISTRIBUTIONS OF PRINCIPAL, INTEREST AND FEES DUE TO
A BANK BY THE AMOUNT OF UNREIMBURSED AMOUNTS DUE AND OWING IN ACCORDANCE WITH
THE PROVISIONS OF THIS SECTION 9.7 IF SUCH BANK HAS NOT REIMBURSED OR
INDEMNIFIED AGENT UPON A WRITTEN REQUEST BY AGENT FOR SUCH REIMBURSEMENT OR
INDEMNIFICATION.
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Section 8.8 RIGHTS OF AGENT. It is understood and agreed that Agent
shall have the same rights, powers and obligations hereunder (including the
right to give such instructions) as the other Banks and may exercise such rights
and powers, as well as its rights and powers under other agreements and
instruments to which it is or may be party, and engage in other transactions
with Borrower or any other Company, as though it were not the Agent under this
Agreement.
Section 8.9 INDEPENDENT INVESTIGATION AND CREDIT DECISION BY BANKS.
Each Bank acknowledges and agrees that it has decided to enter into this
Agreement and to make extensions of credit hereunder based on its own analysis
of (i) the transactions contemplated hereby, (ii) the creditworthiness of
Borrower and the other Companies, (iii) this Agreement and the other Loan Papers
and (iv) the business, legal and other issues relating thereto, and further
acknowledges and agrees that Agent shall bear no responsibility therefor. Each
Bank acknowledges and agrees that it will, independently and without reliance
upon Agent or any other Bank, continue to make its own credit decisions and
other decisions regarding the taking or not taking of any action under this
Agreement or the other Loan Papers.
Section 8.10 SUCCESSOR AGENT. Agent may resign at any time by giving at
least two (2) Business Days' prior notice thereof to the Banks and Borrower.
Agent may be removed at any time by the Required Banks upon at least thirty (30)
days' prior notice by the Required Banks to Agent, Borrower and the Banks but
only (i) for cause consisting of Agent's gross negligence or willful misconduct
or (ii) following a declaration of the insolvency of Agent or the appointment of
a receiver of Agent by appropriate federal or state regulators and if and only
if, as a result thereof, Agent fails and, in the reasonable opinion of Borrower,
Agent is not, within thirty (30) days thereafter, acquired by another financial
institution that may reasonably be expected to adequately and properly perform
the duties and obligations of Agent hereunder. Upon any such resignation or
removal, the Required Banks shall have the right to appoint a successor Agent
from among the Banks. If no successor Agent shall have been so appointed by the
Required Banks and shall have accepted such appointment, within sixty (60) days
after the retiring Agent's giving of notice of resignation, the retiring Agent
may, on behalf of the Banks but with the consent of the Required Banks, which
consent shall not be unreasonably withheld, appoint a successor Agent, which
shall be either a Bank, or a commercial bank reasonably acceptable to Borrower
organized under the Laws of the United States of America or of the State of
Texas. If no such successor Agent is appointed due to a proposed successor
Agent's reasonable unacceptability to Borrower or due to the failure of the
Required Banks to consent to such proposed successor Agent, then Agent shall
appoint a successor Agent from among the Banks after consulting with Borrower
and the Banks, which successor Agent shall be obligated to accept such
appointment. Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring Agent,
and the retiring Agent shall be discharged from its duties and obligations under
this Agreement. After any retiring Agent's resignation hereunder as Agent, the
provisions of this ARTICLE VIII shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Agent under this Agreement.
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ARTICLE IX
MISCELLANEOUS
Section 9.1 PERFORMANCE BY AGENT AND THE BANKS. Should any covenant,
duty or agreement of Borrower or any other Company fail to be performed in
accordance with the terms of the Loan Papers, Agent or any Bank may, at its
option, perform, or attempt to perform, such covenant, duty or agreement on
behalf of any of the Companies. In such event, Borrower shall, at the request of
Agent, promptly pay any amount expended by Agent or any such Bank in such
performance or attempted performance to Agent, at Agent's principal office,
together with interest thereon at the Highest Lawful Rate from the date of such
expenditure by Agent or any such Bank until paid; provided that neither Agent
nor any Bank assumes or shall ever, except by its express written consent, have
any liability for the performance of any duties or obligations of Borrower or
any of the Companies hereunder, or under or in connection with all or any part
of the Collateral. Also in such event, Agent shall use its reasonable efforts to
promptly notify Borrower of Borrower's or any other Company's failure to so
perform, but Agent's failure to do so shall not result in any liability to it
hereunder or affect the rights of Agent or any Bank under this SECTION 9.1.
Section 9.2 WAIVERS. The acceptance by Agent or any Bank at any time
and from time to time of part payment on the Obligations shall not be deemed to
be a waiver of any Default then existing. No waiver by Agent or any Bank of any
Default shall be deemed to be a waiver of any other then existing or subsequent
Default. No delay or omission by Agent or any Bank in exercising any Right under
the Loan Papers shall impair such Right, or be construed as a waiver thereof or
any acquiescence therein, nor shall any single or partial exercise thereof, or
the exercise of any other Right, preclude other or further exercise thereof, or
the exercise of any other Right under the Loan Papers or otherwise.
Section 9.3 CUMULATIVE RIGHTS. All rights hereunder shall be cumulative
and in addition to all other rights granted to Agent or any Bank at Law, or in
equity, or otherwise, and may be exercised from time to time, and as often as
may be deemed expedient by Agent or any Bank, whether or not the Obligations are
due and payable and whether or not Agent or any Bank has taken other action in
connection with the Loan Papers.
Section 9.4 OTHER RIGHTS AND REMEDIES. Agent and any Bank may, as
between or among it and Borrower or any other Company, at any time and from time
to time, at its discretion and with or without valuable consideration, allow
substitution or withdrawal of Collateral without impairing or diminishing the
obligations of Borrower and the other Companies under the Loan Papers. The
exercise by Agent or any Bank of any right or remedy conferred on it by any
collateral agreement, mortgage, deed of trust, chattel mortgage, assignment or
other security instrument shall be wholly discretionary with it, and the
exercise or failure to exercise any such right or remedy shall in no way impair
or diminish the obligation of Borrower and the other Companies under the Loan
Papers. Neither Agent nor any Bank shall be liable for failure to use diligence
in the collection of the Obligations or in preserving the liability of any
Person liable on the Obligations, and Borrower and each other Company hereby
waive notice of nonpayment and diligence in bringing suits against any Person
liable on the Obligations, or any part thereof. Borrower and each other Company
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agree that Agent or any Bank, in its discretion as between or among it and
Borrower or any other Company, may: (i) bring suit against Borrower and the
other Companies jointly and severally or against any one or more of them; (ii)
compound or settle with any one or more of Borrower and the other Companies for
such consideration as it may deem proper; and (iii) release one or more of
Borrower and the other Companies from liability under all or any part of the
Obligations, and that no such action shall impair the rights of Agent or any
Bank to collect the Obligations (or any part thereof) from Borrower or any other
Company not so sued, compounded or settled with, or released.
Section 9.5 EXPENDITURES OF AGENT AND BANKS. Any sums spent by Agent or
any Bank pursuant to the exercise of any right provided herein shall become part
of the Obligations and shall bear interest at the Highest Lawful Rate from the
date spent until the date repaid by Borrower.
Section 9.6 FORM AND NUMBER OF DOCUMENTS. Each opinion, certificate,
resolution, deed of trust, mortgage, chattel mortgage, security agreement,
assignment, lease, agreement, document, instrument or other writing or evidence
to be furnished Agent or any Bank under any provision of this Agreement must be
in form and substance and in such number of counterparts as may be satisfactory
to Agent and its counsel and the Banks.
Section 9.7 ACCOUNTING TERMS. All accounting and financial terms used
herein, and the compliance with each covenant contained herein which relates to
accounting or financial matters, shall be determined in accordance with GAAP,
except to the extent that a deviation therefrom is expressly stated herein.
Section 9.8 MONEY. Unless stipulated otherwise, all references herein
to "DOLLARS," "$," "MONEY," "PAYMENTS," or other similar financial or monetary
terms, are references to currency of the United States of America.
Section 9.9 HEADINGS. The table of contents, headings, captions and
arrangements used in any of the Loan Papers are, unless specified otherwise, for
convenience only and shall not be deemed to limit, amplify or modify the terms
of the Loan Papers, nor affect the meaning thereof.
Section 9.10 ARTICLES, SECTIONS, EXHIBITS AND SCHEDULES. All references
to "Article," "Articles," "Section," "Sections," "Subsection" or "Subsections"
contained herein are, unless specifically indicated otherwise, references to
articles, sections and subsections of this Agreement. All references to
"Exhibits" and "Schedules" contained herein are references to exhibits or
schedules, as the case may be, attached hereto, all of which are made a part
hereof for all purposes, the same as if set forth herein verbatim, it being
understood that if any exhibit or schedule attached hereto, which is to be
executed and delivered, contains blanks, the same shall be completed correctly
and in accordance with the terms and provisions contained and as contemplated
herein prior to or at the time of the execution and delivery thereof.
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Section 9.11 NUMBER AND GENDER OF WORDS. Whenever herein the singular
number is used, the same shall include the plural where appropriate, and words
of any gender shall include each other gender where appropriate.
Section 9.12 BUSINESS DAY. As used herein, the expression (a)
"NONBUSINESS DAY" means each day upon which commercial banks in the State of
Texas are authorized by Law to remain closed, and (b) "BUSINESS DAY" means every
day which is not a Nonbusiness Day. In any case, except as may otherwise be
expressly provided herein to the contrary, where a payment of principal or
interest on the Obligations is due on a Nonbusiness Day, Borrower shall be
entitled to delay such payment until the next succeeding Business Day, but
interest shall continue to accrue until the payment is, in fact, made.
Section 9.13 NOTICES. All notices, requests and other communications to
any party hereunder and under the other Loan Papers (except as may be expressly
stated to the contrary therein) shall be in writing and shall be given to such
party at its address set forth on the signature pages hereof or such other
address as such party may hereafter specify for the purpose of notice to the
other party. Each such notice, request or other communication shall be effective
(i) if given by mail, forty-eight (48) hours after such communication is
deposited in the mail with first class postage prepaid, addressed as aforesaid
or (ii) if given by any other means, when delivered at the address specified in
this Section; provided that any communications to Agent or any Bank shall not be
deemed effective until actually received by it.
Section 9.14 PARTIES BOUND. This Agreement shall be binding upon, and
inure to the benefit of, Agent, the Banks, Borrower and the other Companies and
their respective successors and assigns; provided that Borrower and the other
Companies may not assign their rights or obligations under this Agreement
without the prior written consent of Agent and the Banks. Each corporation, firm
or other entity in which Borrower or any other Company hereafter acquires or
otherwise owns a direct or indirect controlling interest (a "NEW ENTITY") shall
automatically (unless otherwise agreed or determined unilaterally by Agent and
the Banks in writing) be and become a "subsidiary," as that term is used in this
Agreement, for all purposes, contemporaneously with such acquisition. Borrower
shall promptly, and in any event within ten (10) days, after such acquisition,
cause each New Entity to execute and deliver to Agent a Guaranty Agreement and a
letter in the form of EXHIBIT F (Agreement of New Entity Exhibit) attached
hereto. Borrower may thereafter request the Agent to release such New Entity
from this Agreement, but each such release shall be wholly discretionary with
Agent and the Banks. If Agent does, however, grant any such release or does not
require such New Entity to execute and deliver the aforesaid documents, such New
Entity shall thereafter, for the purposes of this Agreement, be treated as
though it were not a Subsidiary hereunder and not affiliated in any manner
whatsoever with Borrower or any other Company (except as may relate to such New
Entity's status as an "Affiliate" hereunder), except to the extent specifically
stated in such release or other agreement of Agent.
Section 9.15 EXCEPTIONS TO COVENANTS. The Companies shall not be deemed
to be permitted to take any action or fail to take any action which is permitted
or not prohibited by any of the covenants contained herein if such action or
omission would result in the breach of any other covenant contained herein or in
the other Loan Papers.
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Section 9.16 SUCCESSORS AND ASSIGNS.
(a) This Agreement shall be binding upon and inure to the benefit of
the parties hereto and their respective successors and assigns. Neither Borrower
nor any Company may assign or transfer any of its rights or obligations
hereunder without the prior written consent of the Agent and all of the Banks.
Any Bank may sell participations to one or more banks or other institutions in
or to all or a portion of its rights and obligations under the Loan Papers
(including, without limitation, all or a portion of its Commitment, the Loans
owing to it and its interest in the Letters of Credit which it has made or in
which it has a participating interest); provided, however, that (i) such Bank's
obligations under the Loan Papers (including, without limitation, its
Commitment) shall remain unchanged, (ii) such Bank shall remain solely
responsible to Borrower for the performance of such obligations, (iii) such Bank
shall remain the holder of its Notes and owner of its participation or other
interests in Letter of Credit Liabilities for all purposes of any Loan Paper,
(iv) Borrower shall continue to deal solely and directly with such Bank in
connection with such Bank's rights and obligations under the Loan Papers, and
(v) such Bank shall not sell a participation that conveys to the participant the
right to vote or give or withhold consents under any Loan Papers, other than the
right to vote upon or consent to (1) any increase of such Bank's Commitment, (2)
any reduction of the principal amount of, or interest to be paid on, the Loans
or other Obligations of such Bank, (3) any reduction of any commitment fee,
letter of credit fee, or other amount payable to such Bank under any Loan Paper,
or (4) any postponement of any date for the payment of any amount payable in
respect of the Loans or other Obligations of such Bank.
(b) Any Bank (the "Assigning Bank") may at any time assign to one or
more commercial banks, savings and loan association, savings bank, finance
company, insurance company, pension fund, mutual fund, or other financial
institution (whether a corporation, partnership, or other entity) (herein an
"Eligible Assignee") all, or a proportionate part of all, of its rights and
obligations under the Loan Papers (including, without limitation, its
obligations under Section 2.1 and its Loans and participation interests) (each
an "Assignee"); provided, however, that (i) each such assignment shall be of a
consistent, and not a varying, percentage of all of the Assigning Bank's rights
and obligations under the Loan Papers, (ii) except in the case of an assignment
of all of a Bank's rights and obligations under the Loan Papers, the amount of
the Commitment of the assigning Bank being assigned pursuant to each assignment
(determined as of the date of the Assignment and Acceptance with respect to such
assignment) shall in no event be less than Five Million Dollars ($5,000,000),
(iii) the parties to each such assignment shall execute and deliver to the Agent
for its acceptance and recording in the Register (as defined below), an
Assignment and Acceptance, together with the Notes subject to such assignment,
and a processing and recordation fee of Three Thousand Dollars ($3,000) payable
by the assignor or assignee (and not any Borrower); and (iv) Parent and Agent
must consent to such assignment, which consent shall not be unreasonably
withheld, with such consents to be evidenced by the Parent's and the Agent's
execution of the Assignment and Acceptance. Upon such execution, delivery,
acceptance, and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five (5)
Business Days after the execution thereof, or, if so specified in such
Assignment and Acceptance, the date of acceptance thereof by Agent, (x) the
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Assignee thereunder shall be a party hereto as a "Bank" and, to the extent that
rights and obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Bank hereunder
and under the Loan Papers and (y) the Assigning Bank shall, to the extent that
rights and obligations hereunder have been assigned by it pursuant to such
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Loan Papers (and, in the case of an Assignment and
Acceptance covering all or the remaining portion of a Bank's rights and
obligations under the Loan Papers, such Bank shall cease to be a party thereto).
(c) Agent shall maintain a copy of each Assignment and Acceptance
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Banks and the Commitments of, and principal amount of the
Loans owing to and Letters of Credit participated in by, each Bank from time to
time (the "Register"). The entries in the Register shall be conclusive and
binding for all purposes, absent manifest error, and Borrower, Agent, and the
Banks may treat each Person whose name is recorded in the Register as a Bank
hereunder for all purposes under the Loan Papers. The Register shall be
available for inspection by Parent or any Bank at any reasonable time and from
time to time upon reasonable prior notice.
(d) Upon its receipt of an Assignment and Acceptance executed by an
Assigning Bank and Assignee representing that it is an Eligible Assignee,
together with any Notes subject to such assignment, Agent shall, if such
Assignment and Acceptance has been completed and is in substantially the form of
EXHIBIT G hereto, (i) accept such Assignment and Acceptance, (ii) record the
information contained therein in the Register, and (iii) give prompt written
notice thereof to Parent. Within five (5) Business Days after its receipt of
such notice Borrower, at their expense, shall execute and deliver to Agent in
exchange for the surrendered Notes (including the Swingline Note, (if
applicable) new Revolving Credit Notes to the order of such Eligible Assignee in
an amount equal to the Commitment assumed by it pursuant to such Assignment and
Acceptance and, if the Assigning Bank has retained a Commitment, a Revolving
Credit Note to the order of the Assigning Bank in an amount equal to the
Commitment retained by it hereunder (each such promissory note shall constitute
a "Revolving Credit Note" for purposes of the Loan Papers). Such new Revolving
Credit Notes shall be in an aggregate principal amount of the surrendered
Revolving Credit Note, shall be dated the effective date of such Assignment and
Acceptance, and shall otherwise be in substantially the form of EXHIBIT C
hereto.
(e) Any Bank may, in connection with any assignment or participation or
proposed assignment or participation pursuant to this Section, disclose to the
assignee or participant or proposed assignee or participant, any information
relating to Borrower and the Companies furnished to such Bank by or on behalf of
such Company.
Section 9.17 EFFECT OF INVESTIGATIONS. All covenants, agreements,
undertakings, representations and warranties made in any of the Loan Papers
shall survive all closings under the Loan Papers and, except as otherwise
indicated, shall not be affected by any investigation made by any party.
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Section 9.18 GOVERNING LAW. THE LOAN PAPERS ARE BEING EXECUTED AND
DELIVERED, AND ARE INTENDED TO BE PERFORMED, IN THE STATE OF TEXAS, AND THE LAWS
OF SUCH STATE SHALL GOVERN THE VALIDITY, CONSTRUCTION, ENFORCEMENT AND
INTERPRETATION OF THE LOAN PAPERS, EXCEPT TO THE EXTENT OTHERWISE SPECIFIED IN
ANY OF THE LOAN PAPERS. CHAPTER 346 OF THE TEXAS FINANCE CODE SHALL NOT APPLY TO
THE REVOLVING CREDIT LOANS.
Section 9.19 MAXIMUM INTEREST RATE.
(a) No interest rate specified in this Agreement or any other Loan
Paper shall at any time exceed the Highest Lawful Rate. If at any time the
interest rate (the "CONTRACT RATE") for any Obligation shall exceed the Highest
Lawful Rate, thereby causing the interest accruing on such Obligation to be
limited to the Highest Lawful Rate, then any subsequent reduction in the
Contract Rate for such Obligation shall not reduce the rate of interest on such
Obligation below the Highest Lawful Rate until the aggregate amount of interest
accrued on such Obligation equals the aggregate amount of interest which would
have accrued on such Obligation if the Contract Rate for such Obligation had at
all times been in effect.
(b) Notwithstanding anything to the contrary contained in this
Agreement or the other Loan Papers, none of the terms and provisions of this
Agreement or the other Loan Papers shall ever be construed to create a contract
or obligation to pay interest at a rate in excess of the Highest Lawful Rate;
and neither any Agent nor any Bank shall ever charge, receive, take, collect,
reserve or apply, as interest on the Obligations, any amount in excess of the
Highest Lawful Rate. The parties hereto agree that any interest, charge, fee,
expense or other obligation provided for in this Agreement or in the other Loan
Papers which constitutes interest under applicable Law shall be, IPSO FACTO and
under any and all circumstances, limited or reduced to an amount equal to the
lesser of (i) the amount of such interest, charge, fee, expense or other
obligation that would be payable in the absence of this SECTION 9.19(b) or (ii)
an amount, which when added to all other interest payable under this Agreement
and the other Loan Papers, equals the Highest Lawful Rate. If, notwithstanding
the foregoing, any Agent or any Bank ever contracts for, charges, receives,
takes, collects, reserves or applies as interest any amount in excess of the
Highest Lawful Rate, such amount which would be deemed excessive interest shall
be deemed a partial payment or prepayment of principal of the Obligations and
treated hereunder as such; and if the Obligations, or applicable portions
thereof, are paid in full, any remaining excess shall promptly be paid to the
Borrower, Parent or Subsidiary (as appropriate). In determining whether the
interest paid or payable, under any specific contingency, exceeds the Highest
Lawful Rate, the parties hereto shall, to the maximum extent permitted by
applicable Law, (i) characterize any nonprincipal payment as an expense, fee or
premium rather than as interest, (ii) exclude voluntary prepayments and the
effects thereof, and (iii) amortize, prorate, allocate and spread in equal or
unequal parts the total amount of interest throughout the entire contemplated
term of the Obligations, or applicable portions thereof, so that the interest
rate does not exceed the Highest Lawful Rate at any time during the term of the
Obligations; PROVIDED THAT, if the unpaid principal balance is paid and
performed in full prior to the end of the full contemplated term thereof, and if
the interest received for the actual period of existence thereof exceeds the
Highest Lawful Rate, the Agent and/or the Banks, as appropriate, shall refund to
the applicable Person the amount of such excess and, in such event, the Agent
and the Banks shall not be subject to any penalties provided by any Laws for
contracting for, charging, receiving, taking, collecting, reserving or applying
interest in excess of the Highest Lawful Rate.
64
(c) Pursuant to Article 15.10(b) of Chapter 15, Subtitle 79, Revised
Civil Statutes of Texas 1925, as amended, each of the Borrower, the Parent and
the Subsidiaries agrees that such Chapter 15 (which regulates certain revolving
credit loan accounts and revolving tri-party accounts) shall not govern or in
any manner apply to the Obligations.
Section 9.20 INVALID PROVISIONS. If any provision of any of the Loan
Papers is held to be illegal, invalid or unenforceable under present or future
Laws effective during the term thereof, such provision shall be fully severable;
the appropriate Loan Papers shall be construed and enforced as if such illegal,
invalid or unenforceable provision had never comprised a part thereof; and the
remaining provisions thereof shall remain in full force and effect and shall not
be affected by the illegal, invalid or unenforceable provision or by its
severance therefrom. Furthermore, in lieu of such illegal, invalid or
unenforceable provision, there shall be added automatically as a part of such
Loan Papers a provision as similar in terms to such illegal, invalid or
unenforceable provision as may be possible and be legal, valid and enforceable.
Section 9.21 ENTIRETY AND AMENDMENTS. This Agreement embodies the
entire agreement between or among the parties relating to the subject matter
hereof, supersedes all prior term sheets, discussions, agreements and
understandings, if any, relating to the subject matter hereof, and, except as
provided below, neither this Agreement nor any provision hereof or of any of the
Loan Papers may be waived, amended or modified except by an agreement in writing
executed jointly by any authorized officer of each Company and each of the
Required Banks, and the same may be supplemented only by documents delivered or
to be delivered in accordance with the express terms hereof, PROVIDED HOWEVER,
that, without the prior written consent of each of the Banks, no such agreement
shall (i) amend, or in any manner change the manner of calculation of, the
Borrowing Base; (ii) change the principal amount of, or extend the maturity of
or any date for the payment of any principal of or interest on any Loan or
Letter of Credit, or waive or excuse any such payment or any part thereof, or
change the rate of interest on any Loan or Letter of Credit (other than any such
change in the rate of interest resulting from a change in the Base Rate in
accordance with the definition of such term), (iii) change or amend the
Commitment or obligations of any Bank, the provisions of this Section, or the
definition of the "Required Banks", (iv) waive any condition precedent to the
making of any Loan or the issuance of any Letter of Credit, (v) release any
Guaranty Agreement or any Collateral securing any of the Obligations, (vi)
change any fee payable to Agent or any Bank, or (vii) increase the Commitments;
PROVIDED, FURTHER, that no such agreement shall amend, modify or otherwise
affect the rights or duties of Agent hereunder without the prior written consent
of Agent. Each Bank and each holder of a Note shall be bound by any waiver,
amendment or modification authorized by this Section regardless of whether its
Note shall have been marked to make reference thereto, and any consent by any
Bank or holder of a Note pursuant to this Section shall bind any person
subsequently acquiring a Note from it, whether or not such Note shall have been
so marked.
Section 9.22 SURVIVAL OF REPRESENTATIONS. All representations and
warranties of Borrower and the other Companies contained in this Agreement shall
survive the making of the Loans, Advances and Letters of Credit herein
contemplated.
65
Section 9.23 SETOFF. In addition to, and without limitation of, any
rights of Agent and the Banks under applicable Law, if Borrower or any other
Company becomes insolvent or any Default occurs, Agent and the Banks may apply
any and all money or property held for or owed to any of the Companies against
the portion of the Obligations owed hereunder.
Section 9.24 MULTIPLE COUNTERPARTS. This Agreement may be executed in a
number of identical counterparts, each of which, for all purposes, is to be
deemed an original and all of which constitute, collectively, one agreement;
however, in making proof of this Agreement, it shall not be necessary to produce
or account for more than one such counterpart.
Section 9.25 TERM OF AGREEMENT. This Agreement shall continue until the
Notes and all other Obligations shall have each been paid and performed in full
and until all other liabilities and obligations of Borrower and the other
Companies under this Agreement and the other Loan Papers shall have been fully
satisfied and the Banks shall have no further obligation to make Loans or issue
Letters of Credit hereunder.
Section 9.26 NO ORAL AGREEMENTS. THIS AGREEMENT, TOGETHER WITH THE
OTHER LOAN PAPERS AS WRITTEN, REPRESENT THE FINAL AGREEMENTS AMONG AGENT, THE
BANKS, BORROWER AND THE OTHER COMPANIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN OR AMONG AGENT AND BORROWER OR ANY
OTHER COMPANY, OR BETWEEN OR AMONG ANY BANK AND BORROWER OR ANY OTHER COMPANY.
Section 9.27 AMENDMENT AND RESTATEMENT. This Agreement shall constitute
an amendment and restatement of, but not an extinguishment of the Obligations
(as defined in the Existing Agreement) outstanding under, the Existing
Agreement.
Section 9.28 AGREEMENT FOR BINDING ARBITRATION. The parties agree to be
bound by the terms and provisions of the Arbitration Program, a copy of which is
attached hereto as EXHIBIT H, and which is incorporated by reference herein and
is acknowledged as received by the parties pursuant to which any and all
disputes shall be resolved by mandatory binding arbitration upon the request of
any party.
66
EXECUTED as of the day and year first herein stated.
WELLS FARGO BANK (TEXAS), NATIONAL
ASSOCIATION
Individually and as Agent
By: /s/ Craig Scheef
---------------------------
Name: Craig Scheef
Title: Vice President
P.O. Box 650291
3rd Floor, Fountain Place
1445 Ross Avenue
Dallas, Texas 75202 (Street Address)
75265-0291 (P. 0. Address)
Fax: (214) 969-0370
APPLICABLE LENDING OFFICE:
-------------------------
201 3rd Street, 8th Floor
San Francisco, CA
67
CHASE BANK OF TEXAS, NATIONAL
ASSOCIATION
By: /s/ Bruce R. Bradford
--------------------------------
Name: Bruce R. Bradford
------------------------------
Title: Vice President
-----------------------------
ADDRESS FOR NOTICES AND APPLICABLE LENDING
OFFICE:
-------------------------------------------
P.O. Box 660197
5th Floor, Texas Commerce Tower
2200 Ross Avenue
Dallas, Texas
75201 (Street Address)
75266-0197 (P. 0. Address)
Fax:_______________________
FLEET NATIONAL BANK
By: /s/ Katherine Brand
--------------------------------
Name: Katherine Brand
Title: Vice President
ADDRESS FOR NOTICES AND APPLICABLE LENDING
OFFICE:
-------------------------------------------
100 Federal Street
1-15-3
Boston, MA 02110
69
FFE TRANSPORTATION SERVICES, INC.
By: /s/ Thomas G. Yetter
--------------------------------
Name: Thomas G. Yetter
------------------------------
Title: Vice President - Finance
-----------------------------
1145 Empire Central Place
Dallas, Texas 75247
FROZEN FOOD EXPRESS INDUSTRIES, INC.
By: /s/ Thomas G. Yetter
--------------------------------
Name: Thomas G. Yetter
------------------------------
Title: Treasurer
-----------------------------
1145 Empire Central Place
Dallas, Texas 75247
FFE, INC.
By: /s/ Thomas G. Yetter
--------------------------------
Name: Thomas G. Yetter
------------------------------
Title: Vice President
-----------------------------
1145 Empire Central Place
Dallas, Texas 75247
CONWELL CORPORATION
By: /s/ Thomas G. Yetter
--------------------------------
Name: Thomas G. Yetter
------------------------------
Title: Vice President
-----------------------------
1145 Empire Central Place
Dallas, Texas 75247
70
W & B REFRIGERATION SERVICE COMPANY
By: /s/ F. Dixon McElwee Jr.
--------------------------------
Name: F. Dixon McElwee Jr.
------------------------------
Title: Senior Vice President
-----------------------------
1145 Empire Central Place
Dallas, Texas 75247
LISA MOTOR LINES, INC.
By: /s/ Leonard W. Bartholomew
--------------------------------
Name: Leonard W. Bartholomew
------------------------------
Title: Secretary
-----------------------------
1145 Empire Central Place
Dallas, Texas 75247
FROZEN FOOD EXPRESS, INC.
By: /s/ F. Dixon McElwee Jr.
--------------------------------
Name: F. Dixon McElwee Jr.
------------------------------
Title: Senior Vice President
-----------------------------
1145 Empire Central Place
Dallas, Texas 75247
CONWELL CARTAGE, INC.
By: /s/ Leonard W. Bartholomew
--------------------------------
Name: Leonard W. Bartholomew
------------------------------
Title: Secretary
-----------------------------
1145 Empire Central Place
Dallas, Texas 75247
71
MIDDLETON TRANSPORTATION COMPANY
By: /s/ F. Dixon McElwee Jr.
--------------------------------
Name: F. Dixon McElwee Jr.
------------------------------
Title: Senior Vice President
-----------------------------
1145 Empire Central Place
Dallas, Texas 75247
COMPRESSORS PLUS, INC.
By: /s/ Leonard W. Bartholomew
--------------------------------
Name: Leonard W. Bartholomew
------------------------------
Title: Secretary
-----------------------------
1145 Empire Central Place
Dallas, Texas 75247
72