Exhibit 10.5 Guarantee Agreement.
GUARANTEE AGREEMENT
THIS GUARANTEE AGREEMENT (the "Agreement") is dated as of July 28, 2004 by
and between CENTRAL FREIGHT LINES, INC., a Nevada corporation (the "Guarantor")
and SUNTRUST BANK, a Georgia banking corporation (the "Lender").
Reference is made to the First Amended and Restated Revolving Credit Loan
Agreement dated as of July 28, 2004 (as amended, supplemented or otherwise
modified from time to time, the "Credit Agreement"), between Central Freight
Lines, Inc., a Texas corporation (the "Borrower") and the Lender. Capitalized
terms used herein and not defined herein shall have the meanings assigned to
such terms in the Credit Agreement.
The Lender has agreed to make Loans to and issue Letters of Credit for the
account of the Borrower, pursuant to, and upon the terms and subject to the
conditions specified in, the Credit Agreement. The Borrower is a direct
wholly-owned Subsidiary of the Guarantor, and the Guarantor acknowledges that it
will derive substantial benefit from the making of the Loans and the issuance of
the Letters of Credit by the Lender. The obligations of the Lender to make Loans
and to issue Letters of Credit are conditioned on, among other things, the
execution and delivery by the Guarantor of this Agreement in the form hereof. As
consideration therefor and in order to induce the Lender to make Loans and to
issue Letters of Credit, the Guarantor is willing to execute this Guarantee
Agreement.
Accordingly, the parties hereto agree as follows:
SECTION 1. Guarantee. Guarantor unconditionally guarantees, as a primary
obligor and not merely as a surety, (a) the due and punctual payment of (i) the
principal of and premium, if any, and interest (including interest accruing
during the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding) on
the Loans, when and as due, whether at maturity, by acceleration, or otherwise,
(ii) each payment required to be made by the Borrower under the Credit Agreement
in respect of any Letter of Credit, when and as due, including payments in
respect of reimbursement or disbursements, interest thereon and obligations to
provide cash collateral, and (iii) all other monetary obligations, including
fees, costs, expenses and indemnities, whether primary, secondary, direct,
contingent, fixed or otherwise (including monetary obligations incurred during
the pendency of any bankruptcy, insolvency, receivership or other similar
proceeding, regardless of whether allowed or allowable in such proceeding), of
the Borrower to the Lender under the Credit Agreement and the other applicable
Loan Documents, (b) the due and punctual performance of all covenants,
agreements, obligations and liabilities of the Borrower under or pursuant to the
Credit Agreement and the other applicable Loan Documents; and (c) the due and
punctual payment and performance of all obligations of the Borrower, monetary or
otherwise, under each Hedging Agreement entered into with the Lender or an
Affiliate of Lender with respect to the Credit Agreement (all the monetary and
other obligations referred to in the preceding clauses (a) through (c) being
collectively called the "Obligations"). Guarantor further agrees that the
Obligations may be extended or renewed, in whole or in part, without notice to
or further assent from it, and that it will remain bound upon this Agreement
notwithstanding any extension or renewal of the Obligations.
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SECTION 2. Obligations Not Waived. To the fullest extent permitted by
applicable law, Guarantor waives presentment to, demand of payment from and
protest to the Borrower of the Obligations, and also waives notice of acceptance
of its guarantee and notice of protest for nonpayment. To the fullest extent
permitted by applicable law, the obligations of Guarantor hereunder shall not be
affected by (a) the failure of the Lender to assert any claim or demand or to
enforce or exercise any right or remedy against the Borrower or any other Loan
Party under the provisions of the Credit Agreement, any other Loan Document or
otherwise, (b) any rescission, waiver, amendment or modification of, or any
release from any of the terms or provisions of, this Agreement, any other Loan
Document, or any other agreement, including with respect to any other Loan
Party, or (c) the failure to perfect any security interest in, or the release
of, any of the security held by or on behalf of the Lender.
SECTION 3. Security. The Guarantor authorizes the Lender to (a) take and
hold security for payment of this Agreement and the Obligations and exchange,
enforce, waive and release any such security, (b) apply such security and direct
the order or manner of sale thereof as they in its discretion may determine and
(c) release or substitute any one or more endorsees, other guarantors of other
obligors.
SECTION 4. Guarantee of Payment. The Guarantor further agrees that its
guarantee constitutes a guarantee of payment when due and not of collection, and
waives any right to require that any resort be had by the Lender to any security
held for payment of the Obligations or to any balance of any deposit account or
credit on the books of the Lender in favor of the Borrower or any other person.
SECTION 5. No Discharge or Diminishment of Guarantee. The obligations of
the Guarantor hereunder shall not be subject to any reduction, limitation,
impairment or termination for any reason (other than the indefeasible payment in
full in cash of the Obligations), including any claim of waiver, release,
surrender, alteration or compromise of any of the Obligations, and shall not be
subject to any defense or setoff, counterclaim, recoupment or termination
whatsoever by reason of the invalidity, illegality or unenforceability of the
Obligations or otherwise. Without limiting the generality of the foregoing, the
obligations of the Guarantor hereunder shall not be discharged or impaired or
otherwise affected by the failure of the Lender to assert any claim or demand or
to enforce any remedy under the Credit Agreement, any other Loan Document or any
other agreement, by any waiver or modification of any provision of any thereof,
by any default, failure or delay, willful or otherwise, in the performance of
the Obligations, or by any other act or omission that may or might in any manner
or to the extent vary the risk of the Guarantor or that would otherwise operate
as a discharge of the Guarantor as a matter of law or equity (other than the
indefeasible payment in full in cash of all the Obligations).
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SECTION 6. Defenses of Borrower Waived. To the fullest extent permitted by
applicable law, the Guarantor waives any defense based on or arising out of any
defense of the Borrower or the unenforceability of the Obligations or any part
thereof from any cause, or the cessation from any cause of the liability of the
Borrower, other than the final and indefeasible payment in full in cash of the
Obligations. The Lender may, at its election, foreclose on any security held by
one or more of them by one or more judicial or nonjudicial sales, accept an
assignment of any such security in lieu of foreclosure, compromise or adjust any
part of the Obligations, make any other accommodation with the Borrower or any
other guarantor, without affecting or impairing in any way the liability of the
Guarantor hereunder except to the extent the Obligations have been fully,
finally and indefeasibly paid in cash. Pursuant to applicable law, the Guarantor
waives any defense arising out of any such election even though such election
operates, pursuant to applicable law, to impair or to extinguish any right of
reimbursement or subrogation or other right or remedy of such Guarantor against
the Borrower or any other Guarantor or guarantor, as the case may be, or any
security.
SECTION 7. Agreement to Pay; Subordination. In furtherance of the foregoing
and not in limitation of any other right that the Lender has at law or in equity
against the Guarantor by virtue hereof, upon the failure of the Borrower or any
other Loan Party to pay any Obligation when and as the same shall become due,
whether at maturity, by acceleration, after notice of prepayment or otherwise,
the Guarantor hereby promises to and will forthwith pay, or cause to be paid, to
the Lender in cash the amount of such unpaid Obligations. Upon payment by the
Guarantor of any sums to the Lender, all rights of the Guarantor against the
Borrower arising as a result thereof by way of right of subrogation,
contribution, reimbursement, indemnity or otherwise shall in all respects be
subordinate and junior in right of payment to the prior indefeasible payment in
full in cash of all the Obligations. In addition, any indebtedness of the
Borrower now or hereafter held by the Guarantor is hereby subordinated in right
of payment to the prior payment in full in cash of the Obligations. If any
amount shall erroneously be paid to the Guarantor on account of (i) such
subrogation, contribution, reimbursement, indemnity or similar right or (ii) any
such indebtedness of the Borrower, such amount shall be held in trust for the
benefit of the Lender and shall forthwith be paid to the Lender to be credited
against the payment of the Obligations, whether matured or unmatured, in
accordance with the terms of the Loan Documents.
SECTION 8. Information. The Guarantor assumes all responsibility for being
and keeping itself informed of the Borrower's financial condition and assets,
and of all other circumstances bearing upon the risk of nonpayment of the
Obligations and the nature, scope and extent of the risks that the Guarantor
assumes and incurs hereunder, and agrees that the Lender will not have any duty
to advise the Guarantor of information known to it regarding such circumstances
or risks.
SECTION 9. Representations and Warranties. The Guarantor represents and
warrants that all representations and warranties relating to it (as the entity
defined as "Holdings" in the Credit Agreement) contained in the Credit Agreement
are true and correct.
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SECTION 10. Incorporation by Reference of Article VII of the Credit
Agreement. Sections 7.1 through 7.11 of the Credit Agreement, are incorporated
herein by reference in their entirety with the same effect as if set forth in
full herein (with the defined terms used therein, including defined terms used
in other defined terms, having the meanings assigned to them in the Credit
Agreement, except that all references to the "Borrower" in the Credit Agreement
shall be deemed references to the Guarantor in this Agreement. It is agreed that
the purpose of the foregoing incorporation is to afford the Lender with respect
to the Obligations, substantially the protections afforded by the incorporated
provisions to the Lender under the Credit Agreement with respect to the
Borrower, and the provisions set forth or incorporated by reference in this
Section shall be construed accordingly.
SECTION 11. Termination. The guarantees made hereunder (a) shall terminate
when all the Obligations have been paid in full in cash and the Lender has no
further commitment to lend under the Credit Agreement, the LC Exposure has been
reduced to zero and the Lender has no further obligation to issue Letters of
Credit under the Credit Agreement and (b) shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof, of
any Obligation is rescinded or must otherwise be restored by Lender or Guarantor
upon the bankruptcy or reorganization of the Borrower, the Guarantor or
otherwise. In connection with the foregoing, the Lender shall execute and
deliver to Guarantor or Guarantor's designee, at Guarantor's expense, any
documents or instruments which Guarantor shall reasonably request from time to
time to evidence such termination and release.
SECTION 12. Binding Effect; Several Agreement; Assignments. Whenever in
this Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the permitted successors and assigns of such party; and all
covenants, promises and agreements by or on behalf of the Guarantor that are
contained in this Agreement shall bind and inure to the benefit of each party
hereto and their respective successors and assigns. This Agreement shall become
effective as to Guarantor when a counterpart hereof executed on behalf of
Guarantor shall have been delivered to the Lender, and a counterpart hereof
shall have been executed on behalf of the Lender, and thereafter shall be
binding upon Guarantor and the Lender and their respective successors and
assigns, and shall inure to the benefit of Guarantor, the Lender, and their
respective successors and assigns, except that Guarantor shall not have the
right to assign its rights or obligations hereunder or any interest herein (and
any such attempted assignment shall be void).
SECTION 13. Waivers; Amendment. (a) No failure or delay of the Lender in
exercising any power or right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise of any such right or power, or any
abandonment or discontinuance of steps to enforce such a right or power,
preclude any other or further exercise thereof or the exercise of any other
right or power. The rights and remedies of the Lender hereunder and under the
other Loan Documents are cumulative and are not exclusive of any rights or
remedies that they would otherwise have. No waiver of any provision of this
Agreement or consent to any departure by the Guarantor therefrom shall in any
event be effective unless the same shall be permitted by paragraph (b) below,
and then such waiver and consent shall be effective only in the specific
instance and for the purpose for which given. No notice or demand on the
Guarantor in any case shall entitle the Guarantor to any other or further notice
in similar or other circumstances.
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(b) Neither this Agreement nor any provision hereof may be waived, amended or
modified except pursuant to a written agreement entered into between the
Guarantor and the Lender.
SECTION 14. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF TENNESSEE.
SECTION 15. Notices. All communications and notices hereunder shall be in
writing and given as provided in Section 9.1 of the Credit Agreement.
SECTION 16. Survival of Agreement; Severability. (a) All covenants,
agreements representations and warranties made by the Guarantor herein and in
the certificates or other instruments prepared or delivered in connection with
or pursuant to this Agreement or the other Loan Documents shall be considered to
have been relied upon by the Lender and shall survive the making by the Lender
of the Loans and the issuance of the Letters of Credit by the Lender regardless
of any investigation made by Lender or on its behalf, and shall continue in full
force and effect as long as the principal of or any accrued interest on any Loan
or any other fee or amount payable under this Agreement or any other Loan
Document is outstanding and unpaid or the LC Exposure does not equal zero and as
long as the Commitment has not been terminated.
(b) In the event one or more of the provisions contained in this Agreement or in
any other Loan Document should be held invalid, illegal or unenforceable in any
respect, the validity, legality and enforceability of the remaining provisions
contained herein and therein shall not in any way be affected or impaired
thereby (it being understood that the invalidity of a particular provision in a
particular jurisdiction shall not in and of itself affect the validity of such
provision in any other jurisdiction). The parties shall endeavor in good-faith
negotiations to replace the invalid, illegal or unenforceable provisions with
valid provisions the economic effect of which comes as close as possible to that
of the invalid, illegal or unenforceable provisions.
SECTION 17. Counterparts. This Agreement may be executed in counterparts,
each of which shall constitute an original, but all of which when taken together
shall constitute a single agreement. Delivery of an executed signature page to
this Agreement by facsimile transmission shall be as effective as delivery of a
manually executed counterpart of this Agreement.
SECTION 18. Rules of Interpretation. The rules of interpretation specified
in Section 1.3 of the Credit Agreement shall be applicable to this Agreement.
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SECTION 19. Jurisdiction; Consent to Service of Process. (a) The Guarantor
hereby irrevocably and unconditionally submits, for itself and its property, to
the nonexclusive jurisdiction of any Chancery Court in Davidson County,
Tennessee State court or Federal court of the United States of America sitting
in the Middle District of Tennessee, and any appellate court from any thereof,
in any action or proceeding arising out of or relating to this Agreement or the
other Loan Documents, or for recognition or enforcement of any judgment, and
each of the parties hereto hereby irrevocably and unconditionally agrees that
all claims in respect of any such action or proceeding may be heard and
determined in such Tennessee State court or, to the extent permitted by law, in
such Federal court. Each of the parties hereto agrees that a final judgment in
any such action or proceeding shall be conclusive and may be enforced in other
jurisdictions by suit on the judgment or in any other manner provided by law.
Nothing in this Agreement shall affect any right that the Lender may otherwise
have to bring any action or proceeding relating to this Agreement or the other
Loan Documents against the Guarantor or its properties in the courts of any
jurisdiction.
(b) The Guarantor hereby irrevocably and unconditionally waives, to the fullest
extent it may legally and effectively do so, any objection that it may now or
hereafter have to the laying of venue of any suit, action or proceeding arising
out of or relating to this Agreement or the other Loan Documents in any
Tennessee State or Federal court as set forth herein. Each of the parties hereto
hereby irrevocably waives, to the fullest extent permitted by law, the defense
of an inconvenient forum to the maintenance of such action or proceeding in any
such court.
(c) Each party to this Agreement irrevocably consents to service of process in
the manner provided for notices in Section 15. Nothing in this Agreement will
affect the right of any party to this Agreement to serve process in any other
manner permitted by law.
SECTION 20. Waiver of Jury Trial. EACH PARTY HERETO HEREBY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION DIRECTLY OR INDIRECTLY ARISING OUT OF, UNDER
OR IN CONNECTION WITH THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS. EACH PARTY
HERETO (A) CERTIFIES THAT NO REPRESENTATIVE, AGENT OR ATTORNEY OF ANY OTHER
PARTY HAS REPRESENTED, EXPRESSLY OR OTHERWISE, THAT SUCH OTHER PARTY WOULD NOT,
IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER AND (B)
ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HERETO HAVE BEEN INDUCED TO ENTER
INTO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS, AS APPLICABLE, BY, AMONG OTHER
THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS IN THIS SECTION 20.
SECTION 21. Right of Setoff. If an Event of Default shall have occurred and
be continuing, Lender is hereby authorized at any time and from time to time, to
the fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held and
other Indebtedness at any time owing by such Lender to or for the credit or the
account of the Guarantor against any or all the obligations of the Guarantor now
or hereafter existing under this Agreement and the other Loan Documents held by
the Lender, irrespective of whether or not such Lender shall have made any
demand under this Agreement or any other Loan Document and although such
obligations may be unmatured. The rights of Lender under this Section 21 are in
addition to other rights and remedies (including other rights of setoff) which
Lender may have.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
CENTRAL FREIGHT LINES, INC., a Nevada corporation
By:
Name:
Title:
SUNTRUST BANK
By:
Name:
Title:
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