<PAGE>
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON D.C. 20549
FORM 10-Q
Quarterly Report Under Section 13 or 15(d)
of the Securities Exchange Act of 1934
For the quarter ended September 30, 1998
Commission File Number 0-15010
MARTEN TRANSPORT, LTD.
(Exact name of registrant as specified in its charter)
Delaware 39-1140809
-------- ----------
(State of incorporation) (I.R.S. Employer
Identification No.)
129 Marten Street, Mondovi, Wisconsin 54755
-------------------------------------------
(Address of principal executive offices)
715-926-4216
------------
(Registrant's telephone number)
Indicate by check mark whether the registrant (1) has filed all reports required
to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during
the preceding 12 months (or for such shorter period that the registrant was
required to file such reports), and (2) has been subject to such filing
requirements for the past 90 days.
Yes X No
----- -----
The number of shares outstanding of the registrant's Common Stock, par value
$.01 per share, was 4,477,645 as of November 10, 1998.
<PAGE>
PART I: FINANCIAL INFORMATION
Item 1. Financial Statements.
MARTEN TRANSPORT, LTD.
CONDENSED BALANCE SHEETS
(In thousands, except share information)
<TABLE>
<CAPTION>
September 30, December 31,
1998 1997
------------- -----------
(UNAUDITED)
<S> <C> <C>
ASSETS
Current assets:
Cash and cash equivalents . . . . . . . . . $ 2,158 $ 2,052
Receivables . . . . . . . . . . . . . . . . 21,014 18,872
Prepaid expenses. . . . . . . . . . . . . . 6,120 6,921
Deferred income taxes . . . . . . . . . . . 4,217 4,170
------------- -----------
Total current assets . . . . . . . . . 33,509 32,015
------------- -----------
Property and equipment:
Revenue equipment, building and land,
office equipment, and other . . . . . . . 164,822 155,051
Accumulated depreciation . . . . . . . . . (45,849) (42,375)
------------- -----------
Net property and equipment . . . . . . 118,973 112,676
Other assets . . . . . . . . . . . . . . . . . 746 575
------------- -----------
TOTAL ASSETS. . . . . . . . . . . $153,228 $145,266
------------- -----------
------------- -----------
LIABILITIES AND SHAREHOLDERS' INVESTMENT
Current liabilities:
Accounts payable and accrued liabilities. . $ 13,307 $ 13,045
Insurance and claims accruals . . . . . . . 11,079 11,638
Current maturities of long-term debt. . . . 22,823 21,628
------------- -----------
Total current liabilities. . . . . . . 47,209 46,311
Long-term debt, less current maturities . . . 29,829 30,663
Deferred income taxes. . . . . . . . . . . . . 24,538 22,588
------------- -----------
Total liabilities. . . . . . . . . . . 101,576 99,562
------------- -----------
Shareholders' investment:
Common stock, $.01 par value per
share, 10,000,000 shares authorized,
4,477,645 shares issued
and outstanding . . . . . . . . . . . . . 45 45
Additional paid-in capital. . . . . . . . . 9,934 9,934
Retained earnings . . . . . . . . . . . . . 41,673 35,725
------------- -----------
Total shareholders' investment . . . . 51,652 45,704
------------- -----------
TOTAL LIABILITIES AND
SHAREHOLDERS' INVESTMENT. . . . . $153,228 $145,266
------------- -----------
------------- -----------
</TABLE>
The accompanying notes are an integral part of these balance sheets.
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF INCOME
(In thousands, except share information)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1998 1997 1998 1997
---- ---- ---- ----
<S> <C> <C> <C> <C>
OPERATING REVENUE. . . . . . . . . . . . . . . . . . . $50,126 $44,676 $144,613 $127,046
------- ------- -------- --------
OPERATING EXPENSES:
Salaries, wages and benefits . . . . . . . . . . . . 14,803 13,086 43,763 38,294
Purchased transportation . . . . . . . . . . . . . . 12,297 9,746 34,845 25,765
Fuel and fuel taxes. . . . . . . . . . . . . . . . . 5,986 6,385 17,530 19,219
Supplies and maintenance . . . . . . . . . . . . . . 3,984 3,593 11,561 10,681
Depreciation . . . . . . . . . . . . . . . . . . . . 4,653 4,338 13,848 12,818
Operating taxes and licenses . . . . . . . . . . . . 874 928 2,730 2,585
Insurance and claims . . . . . . . . . . . . . . . . 996 779 2,816 2,746
Communications and utilities . . . . . . . . . . . . 659 547 1,842 1,589
Gain on disposition of revenue
equipment . . . . . . . . . . . . . . . . . . . . . (449) (54) (776) (163)
Other. . . . . . . . . . . . . . . . . . . . . . . . 1,210 1,155 3,704 3,462
------- ------- -------- --------
Total operating expenses . . . . . . . . . . . . 45,013 40,503 131,863 116,996
------- ------- -------- --------
OPERATING INCOME . . . . . . . . . . . . . . . . . . . 5,113 4,173 12,750 10,050
OTHER EXPENSES (INCOME):
Interest expense . . . . . . . . . . . . . . . . . . 1,014 1,039 3,008 3,118
Interest income and other. . . . . . . . . . . . . . (69) (72) (172) (133)
------- ------- -------- --------
INCOME BEFORE INCOME TAXES . . . . . . . . . . . . . . 4,168 3,206 9,914 7,065
PROVISION FOR INCOME TAXES . . . . . . . . . . . . . . 1,667 1,282 3,966 2,826
------- ------- -------- --------
NET INCOME . . . . . . . . . . . . . . . . . . . . . . $ 2,501 $ 1,924 $ 5,948 $ 4,239
------- ------- -------- --------
------- ------- -------- --------
BASIC EARNINGS PER COMMON SHARE. . . . . . . . . . . . $ 0.56 $ 0.43 $ 1.33 $ 0.95
------- ------- -------- --------
------- ------- -------- --------
DILUTED EARNINGS PER COMMON SHARE. . . . . . . . . . . $ 0.55 $ 0.43 $ 1.31 $ 0.95
------- ------- -------- --------
------- ------- -------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
MARTEN TRANSPORT, LTD.
CONDENSED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
<TABLE>
<CAPTION>
Nine Months
Ended September 30,
1998 1997
---- ----
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Operations:
Net income . . . . . . . . . . . . . . . . . . . . $ 5,948 $ 4,239
Adjustments to reconcile net
income to net cash flows
from operating activities:
Depreciation . . . . . . . . . . . . . . . . 13,848 12,818
Gain on disposition of revenue
equipment. . . . . . . . . . . . . . . . . (776) (163)
Deferred tax provision. . . . . . . . . . . . 1,903 444
Changes in other current
operating items. . . . . . . . . . . . . . (1,638) (863)
-------- --------
Net cash provided by
operating activities. . . . . . . . . . 19,285 16,475
-------- --------
CASH FLOWS FROM INVESTING ACTIVITIES:
Property additions:
Revenue equipment, net . . . . . . . . . . . . . . (18,996) (15,504)
Building and land, office equipment,
and other additions, net . . . . . . . . . . . . (373) (287)
Net change in other assets. . . . . . . . . . . . . . (171) (605)
-------- --------
Net cash used for investing
activities. . . . . . . . . . . . . . . (19,540) (16,396)
-------- --------
CASH FLOWS FROM FINANCING ACTIVITIES:
Issuance of common stock . . . . . . . . . . . . . . - 15
Long-term borrowings . . . . . . . . . . . . . . . . 19,939 17,244
Repayment of long-term borrowings. . . . . . . . . . (19,578) (17,933)
-------- --------
Net cash provided by (used for)
financing activities. . . . . . . . . . 361 (674)
-------- --------
INCREASE (DECREASE) IN CASH AND
CASH EQUIVALENTS . . . . . . . . . . . . . . . . . . 106 (595)
CASH AND CASH EQUIVALENTS:
Beginning of period. . . . . . . . . . . . . . . . . 2,052 3,028
-------- --------
End of period. . . . . . . . . . . . . . . . . . . . $ 2,158 $ 2,433
-------- --------
-------- --------
CASH PAID (RECEIVED) FOR:
Interest . . . . . . . . . . . . . . . . . . . . . . $ 3,049 $ 3,117
-------- --------
-------- --------
Income taxes . . . . . . . . . . . . . . . . . . . . $ 2,045 $ (135)
-------- --------
-------- --------
</TABLE>
The accompanying notes are an integral part of these statements.
<PAGE>
NOTES TO FINANCIAL STATEMENTS
(Unaudited)
(1) Financial Statements
The accompanying unaudited condensed financial statements have been prepared in
accordance with generally accepted accounting principles for interim financial
statements, and therefore do not include all information and disclosures
required by generally accepted accounting principles for complete financial
statements. In the opinion of management, such statements reflect all
adjustments (consisting of normal recurring adjustments) considered necessary to
fairly present our financial condition, results of operations and cash flows for
the interim periods presented. The results of operations for any interim period
do not necessarily indicate the results for the full year. The unaudited
interim financial statements should be read with reference to the financial
statements and notes to financial statements in our 1997 Annual Report on Form
10-K.
(2) Earnings Per Common Share
Basic and diluted earnings per common share were computed as follows:
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
(In thousands, except per-share amounts) 1998 1997(a) 1998 1997(a)
------ -------- ------ --------
<S> <C> <C> <C> <C>
Numerator:
Net income . . . . . . . . . . . . . . . . . . . . $2,501 $1,924 $5,948 $4,239
------ ------ ------ ------
Denominator:
Basic earnings per common share -
weighted-average shares . . . . . . . . . . . 4,478 4,440 4,478 4,439
Effect of dilutive stock options . . . . . . . . . 46 29 54 22
------ ------ ------ ------
Diluted earnings per common share -
weighted-average shares and
assumed conversions . . . . . . . . . . . . . 4,524 4,469 4,532 4,461
------ ------ ------ ------
------ ------ ------ ------
Basic earnings per common share. . . . . . . . . . . $ 0.56 $ 0.43 $ 1.33 $ 0.95
------ ------ ------ ------
------ ------ ------ ------
Diluted earnings per common share. . . . . . . . . . $ 0.55 $ 0.43 $ 1.31 $ 0.95
------ ------ ------ ------
------ ------ ------ ------
</TABLE>
The following options were outstanding, but were not included in the calculation
of diluted earnings per share because their exercise prices were greater than
the average market price of the common shares and, therefore, including the
options in the denominator would be antidilutive, or decrease the number of
weighted-average shares.
<TABLE>
<CAPTION>
Three Months Nine Months
Ended September 30, Ended September 30,
1998 1997(a) 1998 1997(a)
------ -------- ------ --------
<S> <C> <C> <C> <C>
Number of option shares . . . . . . . . . . . . . . 11,250 217,500 11,250 217,500
Weighted-average exercise price . . . . . . . . . . $ 17.25 $ 13.57 $ 17.25 $ 13.57
------- -------- ------- --------
------- -------- ------- --------
</TABLE>
(a) 1997 information has been retroactively adjusted to reflect a
three-for-two stock split effective for shareholders of record as of
December 15, 1997.
<PAGE>
(3) Accounting for Derivative Instruments and Hedging Activities
Statement of Financial Accounting Standards No. 133, "Accounting for
Derivative Instruments and Hedging Activities" (Statement No. 133) was issued
in June 1998, and is effective in our first quarter of 2000. Statement No.
133 requires companies to record the fair value of derivatives as either
assets or liabilities on the balance sheet. The accounting for gains or
losses from changes in the fair value of derivatives depends on the intended
use of the derivatives and whether the criteria for hedge accounting have
been satisfied. We have entered into commodity swap agreements to partially
hedge Marten's exposure to diesel fuel price fluctuations. Statement No. 133
is expected to have minimal impact on Marten's results of operations and
financial position because we do not hold significant derivative instruments as
of September 30, 1998.
<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations.
RESULTS OF OPERATIONS
Operating revenue for the third quarter of 1998 increased 12.2 percent over the
same period of 1997. Operating revenue for the first nine months of 1998
increased 13.8 percent over the same period last year. The primary reason for
these increases was the transportation of more freight associated with an
increase in our fleet, improved equipment utilization, and stronger customer
demand. Stronger customer demand also caused average freight rates to increase
in 1998. Our contracts with customers require fuel surcharges and rebates based
on significant fluctuations in the price of diesel fuel. Operating revenue in
the first nine months of 1998 was reduced by fuel rebates of $265,000 due to a
decrease in the price of diesel fuel. Operating revenue was increased by fuel
surcharges of $1,100,000 during the same period of 1997 due to an increase in
the price of diesel fuel. We expect operating revenue for the remainder of 1998
to exceed 1997 levels given planned revenue equipment additions.
Operating expenses for the third quarter of 1998 were 89.8 percent of operating
revenue, compared with 90.7 percent for the third quarter of 1997. This ratio
for the first nine months of 1998 was 91.2 percent, compared with 92.1 percent
for the same period of 1997. These improved ratios reflect more efficient
utilization of our revenue equipment. The transportation of additional freight
and expansion of our fleet caused most of the expense categories to increase in
1998. Purchased transportation expense significantly increased in 1998 due to a
continued increase in the number of independent contractor-owned vehicles in our
fleet. Our use of independent contractor-owned vehicles reduced the following
expenses relative to revenue since the independent contractors assume these
expenses: salaries, wages and benefits expense, fuel and fuel taxes expense,
and supplies and maintenance expense. A decrease in the price of diesel fuel in
1998 caused an additional decrease in our fuel and fuel taxes expense.
Insurance and claims expense in 1998 has been consistent with 1997 levels due to
continued favorable accident experience. We expect operating expenses as a
percent of revenue for the remainder of 1998 to remain at current levels.
Interest expense for the three-month and nine-month periods ended September 30,
1998, decreased from the same periods last year. This improvement was caused by
a decrease in our average long-term debt from 1997 to 1998. We expect interest
expense as a percent of revenue to remain at current levels.
We recorded net income of $2,501,000, or 55 cents per diluted share, for the
third quarter of 1998. This compares with net income of $1,924,000, or 43 cents
per diluted share, for the 1997 third quarter. Net income for the first nine
months of 1998 was $5,948,000, or $1.31 per diluted share, compared with net
income of $4,239,000, or 95 cents per diluted share, for the same period last
year. Earnings per share for 1997 have been retroactively adjusted to reflect a
three-for-two stock split effective for shareholders of record as of December
15, 1997. Continued increases in revenue, improved equipment utilization, and
expense control led to our improved results of operations.
In 1998, the Financial Accounting Standards Board issued Statement No. 133,
"Accounting for Derivative Instruments and Hedging Activities," as discussed in
Note 3 to the financial statements. This statement, effective in our first
quarter of 2000, is expected to have minimal impact on our results of operations
and financial position because we do not have significant derivative instruments
as of September 30, 1998.
<PAGE>
CAPITAL RESOURCES AND LIQUIDITY
Net cash flows from operations provided $19,285,000 during the first nine months
of 1998. Net cash of $19,540,000 was used to invest in property and equipment,
while financing activities provided $361,000 during this period. We continued
to update and expand our fleet in 1998 and 1997 by investing in new, more
efficient revenue equipment. We are committed to purchase approximately $5
million of new revenue equipment, net of trade-in allowances, during the fourth
quarter of 1998. We have paid, and expect to pay, for these purchases using
cash flow from operations and long-term debt.
Cash generated from operations historically has met Marten's working capital
needs despite a working capital deficit. The working capital deficit has been
caused by current maturities of long-term debt associated with additions to our
fleet. Subsequent to September 30, 1998, a substantial portion of these current
maturities has been replaced with non-current maturities associated with the
change in our long-term debt noted below. Our operating profits, short turnover
in accounts receivable and cash management practices allow us to effectively
meet our working capital requirements. Short-term borrowings have not been and
are not expected to be used to meet working capital needs. We believe our
liquidity will adequately satisfy expected near-term operating requirements.
In October 1998, we entered into agreements for $25 million in Series A Senior
Unsecured Notes and a $40 million unsecured committed credit facility. The
Senior Notes bear fixed interest at 6.78 percent and mature in October 2008.
The credit facility bears variable interest based on the London Interbank
Offered rate and matures in October 2001. The proceeds of these fundings have
been used to retire a substantial portion of existing long-term debt, and will
be used to invest in property and equipment and satisfy working capital
requirements.
IMPACT OF YEAR 2000
Computer programs have historically been written to abbreviate dates by using
two digits instead of four digits to identify a particular year. The so-called
"year 2000 problem" or "millennium bug" is the inability of computer software or
hardware to recognize or properly process dates ending in "00" and dates after
the year 2000. Significant attention is being focused as the year 2000
approaches on updating or replacing such software and hardware in order to avoid
system failures, miscalculations or business interruptions that might otherwise
result. Marten is taking the steps we believe are necessary to insure that this
potential problem does not adversely affect our operating results in the future.
We are continuing our as-yet incomplete assessment of the impact of the year
2000 problem.
Marten has reviewed its internal information systems and believes that the costs
and efforts to address the year 2000 problem will not be material to our
business, financial condition or results of operations, and may be resolved
through replacements and upgrades to our software or hardware. The year 2000
problem may, however, adversely impact Marten by affecting the business and
operations of parties with which we transact business, although we are unable to
precisely determine the likelihood or potential impact of any such event. There
can be no assurance that Marten will be able to effectively address year 2000
issues in a cost-efficient manner and without interruption to our business, or
that year 2000 problems encountered by our suppliers, customers or other parties
will not have a material impact on our business, financial condition and results
of operations.
Marten's state of readiness for the year 2000, our estimated costs associated
with year 2000 issues, the risks we face associated with year 2000 issues and
our year 2000 contingency plans are summarized below.
<PAGE>
STATE OF READINESS.
Internally, we have implemented a three-phase process to assess year 2000
compliance of our systems and remediate any material non-compliance. The phases
are (1) to identify and test our material computer software and hardware in
order to determine whether they are year 2000 compliant; (2) to correct or
replace those software or hardware systems in which we determine there is a
material problem with year 2000 compliance; and (3) to internally test the
corrected or upgraded systems in order to determine whether they are year 2000
compliant. We have completed all three phases with respect to most of our
material internally-written and purchased information technology ("IT") systems
and non-IT systems and believe the systems are year 2000 compliant. However,
Marten also utilizes a sales and marketing system, an insurance claims
management system and a maintenance tracking system, all of which are in the
second phase. We expect these three systems will be through phase three and
achieve year 2000 compliance in 1999.
Externally, we have implemented a three-phase process to assess year 2000
compliance of the systems of our vendors and third party servicers, and
remediate any material non-compliance. The phases are (1) to identify the
vendors and other third parties with whom we transact business and determine
whether they are significant to our business ("core" parties); (2) to contact
the vendors and other third parties with whom we do business by, among other
methods, sending them letters and questionnaires designed to solicit information
relating to the year 2000 problem; and (3) to evaluate the responses received
from the vendors and other third parties. The questionnaire we are using asks
vendors and other third parties such questions as (i) whether they have a
documented year 2000 compliance plan, (ii) whether they are aware of any year
2000 readiness issues that could affect Marten, (iii) whether, if such an issue
exists, they have plans in place to ensure compliance, (iv) what their target
date is for year 2000 compliance and (v) whether they have any contingency
plans. We have substantially completed all three phases with respect to core
parties. We plan to follow up during 1999 with our core vendors and third
parties with whom we do business, and update our information regarding the year
2000 problem. We are in the first and second phases with respect to non-core
parties, and anticipate completing all phases with respect to non-core parties
before the end of 1998.
COSTS ASSOCIATED WITH YEAR 2000 ISSUES.
We estimate that the future costs associated with implementing all phases of our
year 2000 assessment and resolving any year 2000 problems will be between
$100,000 and $200,000. This estimated range includes expenditures for both
repairs and upgrades. We believe that these costs, assuming this estimate is
accurate, would not have a material effect on our business, financial condition
and results of operations. We estimate our costs to date associated with year
2000 issues to be less than $25,000. We anticipate that cash flow from
operations will be used to pay the costs associated with our year 2000 problem.
All year 2000 costs are expensed as incurred.
RISKS ASSOCIATED WITH YEAR 2000 ISSUES.
We are unaware of any material risk to Marten associated with year 2000 issues
at the present time. We believe that the reasonably likely worst case year 2000
scenario is a decrease in the efficiency with which we procure and deliver
loads, and a decrease in the efficiency with which we receive payment for
services rendered. A decrease in efficiency, however, would not necessarily
result in a decrease in business. We expect that load procurement, load
delivery and billing all could be achieved through alternative methods within a
relatively short period of time. Any disruption, however, could result in some
lost revenue.
<PAGE>
We face the additional risk of experiencing an increase in claims and litigation
relating to the year 2000 problem because, among other reasons, there is no
uniform definition of year 2000 "compliance" and because all vendor and third
party situations cannot be anticipated, particularly those involving third party
products. Such claims, if successful, could have a material adverse effect on
future results. Moreover, the costs of defending Marten against such claims,
even if ultimately resolved in our favor, could have a material adverse effect
on future results.
CONTINGENCY PLANS.
We have not yet developed specific contingency plans for the millennium bug
because our assessment of year 2000 issues is incomplete. We generally expect
that our contingency plans will be to identify and have available to us
alternate vendors and service providers to decrease the impact on Marten if one
or more of the core parties with whom we do business suffers a significant year
2000 problem. We expect to have Marten's contingency plans complete before the
end of 1998.
FORWARD-LOOKING INFORMATION
This Quarterly Report on Form 10-Q contains certain forward-looking statements.
Any statements in this report that are not statements of historical fact may be
considered to be forward-looking statements. Written words such as "may,"
"will," "expect," "believe," "anticipate," "estimate" or "continue," or other
variations of these or similar words, identify forward-looking statements.
These statements by their nature involve substantial risks and uncertainties,
and actual results may differ materially, depending on a variety of factors.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
Not applicable.
<PAGE>
PART II. OTHER INFORMATION
ITEM 1. Legal Proceedings.
There are currently no material pending legal, governmental,
administrative or other proceedings to which we are a party or of
which any of our property is subject, and which are unreserved.
ITEM 2. Changes in Securities and Use of Proceeds.
None
ITEM 3. Defaults Upon Senior Securities.
None
ITEM 4. Submission of Matters to a Vote of Security Holders.
None
ITEM 5. Other Information.
None
ITEM 6. Exhibits and Reports on Form 8-K.
a) Exhibits
Item No. Item Method of Filing
-------- ---- ----------------
10.12 Note Purchase and Private
Shelf Agreement dated
October 30, 1998, between
the Company and The Prudential
Insurance Company of
America . . . . . . . . . . . . . Filed with this report
electronically.
10.13 Credit Agreement dated
October 30, 1998, between
the Company and U.S. Bank
National Association . . . . . . . Filed with this report
electronically.
27.1 Financial Data
Schedule . . . . . . . . . . . . . Filed with this report
electronically.
b) No reports on Form 8-K have been filed during the quarter
ended September 30, 1998.
<PAGE>
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned thereto duly authorized.
MARTEN TRANSPORT, LTD.
(Registrant)
Dated: November 12, 1998 By: /s/ Darrell D. Rubel
---------------------------------
Darrell D. Rubel
Executive Vice President and Treasurer
(Chief Financial Officer)
<PAGE>
MARTEN TRANSPORT, LTD.
EXHIBIT INDEX TO QUARTERLY REPORT
ON FORM 10-Q
For the Quarter Ended September 30, 1998
Item No. Item Method of Filing
- -------- ---- ----------------
10.12 Note Purchase and Private
Shelf Agreement dated
October 30, 1998, between
the Company and The Prudential
Insurance Company of
America . . . . . . . . . . . . . . . .Filed with this report
electronically.
10.13 Credit Agreement dated
October 30, 1998, between
the Company and U.S. Bank
National Association. . . . . . . . . .Filed with this report
electronically.
27.1 Financial Data
Schedule. . . . . . . . . . . . . . . .Filed with this report
electronically.
<PAGE>
MARTEN TRANSPORT, LTD.
129 MARTEN STREET
MONDOVI, WISCONSIN 54755
As of October 30, 1998
The Prudential Insurance Company
of America ("PRUDENTIAL")
Each Prudential Affiliate (as hereinafter
defined) which becomes bound by certain
provisions of this Agreement as hereinafter
provided (together with Prudential, the "PURCHASERS")
c/o Prudential Capital Group
Two Prudential Plaza
Suite 5600
Chicago, Illinois 60601
Ladies and Gentlemen:
The undersigned, MARTEN TRANSPORT, LTD., a Delaware
corporation (herein called the "COMPANY"), hereby agrees with you as set
forth below. Reference is made to paragraph 10 hereof for definitions of
capitalized terms used herein and not otherwise defined herein.
1. AUTHORIZATION OF ISSUE OF NOTES.
1A. AUTHORIZATION OF ISSUE OF SERIES A NOTES. The Company will
authorize the issue of its senior promissory notes (the "SERIES A NOTES") in
the aggregate principal amount of $25,000,000, to be dated the date of issue
thereof, to mature October 30, 2008, to bear interest on the unpaid balance
thereof from the date thereof until the principal thereof shall have become
due and payable at the rate of 6.78% per annum and on overdue principal,
Yield-Maintenance Amount and interest at the rate specified therein, and to
be substantially in the form of EXHIBIT A-1 attached hereto. The terms
"SERIES A NOTE" and "SERIES A NOTES" as used herein shall include each Series
A Note delivered pursuant to any provision of this Agreement and each Series
A Note delivered in substitution or exchange for any such Series A Note
pursuant to any such provision.
1B. AUTHORIZATION OF ISSUE OF SHELF NOTES. The Company will
authorize the issue of its additional senior promissory notes (the "SHELF
NOTES") in the aggregate principal amount of $15,000,000, to be dated the date
of issue thereof, to mature, in the case of each Shelf
1
<PAGE>
Note so issued, no more than 15 years after the date of original issuance
thereof, to have an average life, in the case of each Shelf Note so issued,
of no more than 10 years after the date of original issuance thereof, to bear
interest on the unpaid balance thereof from the date thereof at the rate per
annum, and to have such other particular terms, as shall be set forth, in the
case of each Shelf Note so issued, in the Confirmation of Acceptance with
respect to such Shelf Note delivered pursuant to paragraph 2B(5), and to be
substantially in the form of EXHIBIT A-2 attached hereto. The terms "SHELF
NOTE" and "SHELF NOTES" as used herein shall include each Shelf Note
delivered pursuant to any provision of this Agreement and each Shelf Note
delivered in substitution or exchange for any such Shelf Note pursuant to any
such provision. The terms "NOTE" and "NOTES" as used herein shall include
each Series A Note and each Shelf Note delivered pursuant to any provision of
this Agreement and each Note delivered in substitution or exchange for any
such Note pursuant to any such provision. Notes which have (i) the same
final maturity, (ii) the same principal prepayment dates, (iii) the same
principal prepayment amounts (as a percentage of the original principal
amount of each Note), (iv) the same interest rate, (v) the same interest
payment periods and (vi) the same date of issuance (which, in the case of a
Note issued in exchange for another Note, shall be deemed for these purposes
the date on which such Note's ultimate predecessor Note was issued), are
herein called a "SERIES" of Notes.
2. PURCHASE AND SALE OF NOTES.
2A. PURCHASE AND SALE OF SERIES A NOTES. The Company hereby
agrees to sell to Prudential and, subject to the terms and conditions herein
set forth, Prudential agrees to purchase from the Company $25,000,000
aggregate principal amount of Series A Notes at 100% of such aggregate
principal amount. On October 30, 1998 (herein called the "SERIES A CLOSING
DAY"), the Company will deliver to Prudential at the offices of Prudential
Capital Group, Two Prudential Plaza, Suite 5600, Chicago, Illinois 60601, one
or more Series A Notes registered in its name, evidencing the aggregate
principal amount of Series A Notes to be purchased by Prudential and in the
denomination or denominations specified with respect to Prudential in the
Purchaser Schedule attached hereto, against payment of the purchase price
thereof by transfer of immediately available funds for credit to the
account(s) designated by the Company pursuant to a disbursement direction
letter in the form of EXHIBIT E attached hereto.
2B. PURCHASE AND SALE OF SHELF NOTES.
2B(1). FACILITY. Prudential is willing to consider, in its sole
discretion and within limits which may be authorized for purchase by
Prudential from time to time, the purchase of Shelf Notes pursuant to this
Agreement. The willingness of Prudential to consider such purchase of Shelf
Notes is herein called the "FACILITY". At any time, the aggregate principal
amount of Shelf Notes stated in paragraph 1B, MINUS the aggregate principal
amount of Shelf Notes purchased and sold pursuant to this Agreement prior to
such time, MINUS the aggregate principal amount of Accepted Notes (as
hereinafter defined) which have not yet been purchased and sold hereunder
prior to such time, is herein called the "AVAILABLE FACILITY AMOUNT" at such
time. NOTWITHSTANDING THE WILLINGNESS OF PRUDENTIAL TO CONSIDER PURCHASES OF
SHELF NOTES, THIS AGREEMENT IS ENTERED INTO ON THE EXPRESS
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UNDERSTANDING THAT NEITHER PRUDENTIAL NOR ANY PRUDENTIAL AFFILIATE SHALL BE
OBLIGATED TO MAKE OR ACCEPT OFFERS TO PURCHASE SHELF NOTES, OR TO QUOTE
RATES, SPREADS OR OTHER TERMS WITH RESPECT TO SPECIFIC PURCHASES OF SHELF
NOTES, AND THE FACILITY SHALL IN NO WAY BE CONSTRUED AS A COMMITMENT BY
PRUDENTIAL OR ANY PRUDENTIAL AFFILIATE.
2B(2). ISSUANCE PERIOD. Shelf Notes may be issued and sold
pursuant to this Agreement until the earlier of (i) the third anniversary of
the date of this Agreement (or if such anniversary date is not a Business
Day, the Business Day next preceding such anniversary) and (ii) the thirtieth
day after Prudential shall have given to the Company, or the Company shall
have given to Prudential, a written notice stating that it elects to
terminate the issuance and sale of Shelf Notes pursuant to this Agreement (or
if such thirtieth day is not a Business Day, the Business Day next preceding
such thirtieth day). The period during which Shelf Notes may be issued and
sold pursuant to this Agreement is herein called the "ISSUANCE PERIOD".
2B(3). REQUEST FOR PURCHASE. The Company may from time to time
during the Issuance Period make requests for purchases of Shelf Notes (each
such request being herein called a "REQUEST FOR PURCHASE"). Each Request for
Purchase shall be made to Prudential by telecopier or overnight delivery
service, and shall (i) specify the aggregate principal amount of Shelf Notes
covered thereby, which shall not be less than $5,000,000 and not be greater
than the Available Facility Amount at the time such Request for Purchase is
made, (ii) specify the principal amounts, final maturities, principal
prepayment dates and amounts and interest payment periods (quarterly or
semi-annual in arrears) of the Shelf Notes covered thereby, (iii) specify the
use of proceeds of such Shelf Notes, (iv) specify the proposed day for the
closing of the purchase and sale of such Shelf Notes, which shall be a
Business Day during the Issuance Period not less than 10 days and not more
than 25 days after the making of such Request for Purchase, (v) specify the
number of the account and the name and address of the depository institution
to which the purchase prices of such Shelf Notes are to be transferred on the
Closing Day for such purchase and sale, (vi) certify that the representations
and warranties contained in paragraph 8 are true on and as of the date of
such Request for Purchase and that there exists on the date of such Request
for Purchase no Event of Default or Default, (vii) specify whether the fee to
be due pursuant to paragraph 2B(8)(ii) should be included in the rate quotes
Prudential may provide pursuant to paragraph 2B(4) or will be paid separately
by the Company on the Closing Day for such purchase and sale, and (viii) be
substantially in the form of EXHIBIT B attached hereto. Each Request for
Purchase shall be in writing and shall be deemed made when received by
Prudential.
2B(4). RATE QUOTES. Not later than five Business Days after the
Company shall have given Prudential a Request for Purchase pursuant to
paragraph 2B(3), Prudential may, but shall be under no obligation to, provide
to the Company by telephone or telecopier, in each case between 9:30 A.M. and
1:30 P.M. New York City local time (or such later time as Prudential may
elect) interest rate quotes for the several principal amounts, maturities,
principal prepayment schedules, and interest payment periods of Shelf Notes
specified in such Request for Purchase. Each quote shall represent the
interest rate per annum payable on the outstanding principal balance
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of such Shelf Notes at which Prudential or a Prudential Affiliate would be
willing to purchase such Shelf Notes at 100% of the principal amount thereof.
2B(5). ACCEPTANCE. Within the Acceptance Window, the Company may,
subject to paragraph 2B(6), elect to accept such interest rate quotes as to
not less than $5,000,000 aggregate principal amount of the Shelf Notes
specified in the related Request for Purchase. Such election shall be made
by an Authorized Officer of the Company notifying Prudential by telephone or
telecopier within the Acceptance Window that the Company elects to accept
such interest rate quotes, specifying the Shelf Notes which will in the
aggregate be not less than $5,000,000 in principal amount (each such Shelf
Note being herein called an "ACCEPTED NOTE") as to which such acceptance
(herein called an "ACCEPTANCE") relates. The day the Company notifies
Prudential of an Acceptance with respect to any Accepted Notes is herein
called the "ACCEPTANCE DAY" for such Accepted Notes. Any interest rate
quotes as to which Prudential does not receive an Acceptance within the
Acceptance Window shall expire, and no purchase or sale of Shelf Notes
hereunder shall be made based on such expired interest rate quotes. Subject
to paragraph 2B(6) and the other terms and conditions hereof, the Company
agrees to sell to Prudential or a Prudential Affiliate, and Prudential agrees
to purchase, or to cause the purchase by a Prudential Affiliate of, the
Accepted Notes at 100% of the principal amount of such Notes. As soon as
practicable following the Acceptance Day, the Company, Prudential and each
Prudential Affiliate which is to purchase any such Accepted Notes will
execute a confirmation of such Acceptance substantially in the form of
EXHIBIT C attached hereto (herein called a "CONFIRMATION OF ACCEPTANCE"). If
the Company should fail to execute and return to Prudential within three
Business Days following receipt thereof a Confirmation of Acceptance with
respect to any Accepted Notes, Prudential may at its election at any time
prior to its receipt thereof cancel the closing with respect to such Accepted
Notes by so notifying the Company in writing.
2B(6). MARKET DISRUPTION. Notwithstanding the provisions of
paragraph 2B(5), if Prudential shall have provided interest rate quotes
pursuant to paragraph 2B(4) and thereafter prior to the time an Acceptance
with respect to such quotes shall have been notified to Prudential in
accordance with paragraph 2B(5) the domestic market for U.S. Treasury
securities or derivatives shall have closed or there shall have occurred a
general suspension, material limitation, or significant disruption of trading
in securities generally on the New York Stock Exchange or in the domestic
market for U.S. Treasury securities or derivatives, then such interest rate
quotes shall expire, and no purchase or sale of Shelf Notes hereunder shall
be made based on such expired interest rate quotes. If the Company
thereafter notifies Prudential of the Acceptance of any such interest rate
quotes, such Acceptance shall be ineffective for all purposes of this
Agreement, and Prudential shall promptly notify the Company that the
provisions of this paragraph 2B(6) are applicable with respect to such
Acceptance.
2B(7). FACILITY CLOSINGS. Not later than 11:30 A.M. (New York City
local time) on the Closing Day for any Accepted Notes, the Company will
deliver to each Purchaser listed in the Confirmation of Acceptance relating
thereto at the offices of the Prudential Capital Group, Two Prudential Plaza,
Suite 5600, Chicago, Illinois 60601, Attention: Law Department, the Accepted
Notes to be purchased by such Purchaser in the form of one or more Notes in
authorized
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denominations as such Purchaser may request for each Series of Accepted Notes
to be purchased on the Closing Day, dated the Closing Day and registered in
such Purchaser's name (or in the name of its nominee), against payment of the
purchase price thereof by transfer of immediately available funds for credit
to the Company's account specified in the Request for Purchase of such Notes.
If the Company fails to tender to any Purchaser the Accepted Notes to be
purchased by such Purchaser on the scheduled Closing Day for such Accepted
Notes as provided above in this paragraph 2B(7), or any of the conditions
specified in paragraph 3 shall not have been fulfilled by the time required
on such scheduled Closing Day, the Company shall, prior to 1:00 P.M., New
York City local time, on such scheduled Closing Day notify Prudential (which
notification shall be deemed received by each Purchaser) in writing whether
(i) such closing is to be rescheduled (such rescheduled date to be a Business
Day during the Issuance Period not less than one Business Day and not more
than 10 Business Days after such scheduled Closing Day (the "RESCHEDULED
CLOSING DAY")) and certify to Prudential (which certification shall be for
the benefit of each Purchaser) that the Company reasonably believes that it
will be able to comply with the conditions set forth in paragraph 3 on such
Rescheduled Closing Day and that the Company will pay the Delayed Delivery
Fee in accordance with paragraph 2B(8)(iii) or (ii) such closing is to be
canceled. In the event that the Company shall fail to give such notice
referred to in the preceding sentence, Prudential (on behalf of each
Purchaser) may at its election, at any time after 1:00 P.M., New York City
local time, on such scheduled Closing Day, notify the Company in writing that
such closing is to be canceled. Notwithstanding anything to the contrary
appearing in this Agreement, the Company may not elect to reschedule a
closing with respect to any given Accepted Notes on more than one occasion,
unless Prudential shall have otherwise consented in writing.
2B(8). FEES.
2B(8)(i). STRUCTURING FEE. At the time of the execution and delivery
of this Agreement by the Company and Prudential, the Company will pay to
Prudential in immediately available funds a fee (herein called the
"STRUCTURING FEE") in the amount of $50,000.
2B(8)(ii). ISSUANCE FEE. The Company will pay to Prudential in
immediately available funds a fee (herein called the "ISSUANCE FEE") on each
Closing Day (other than the Series A Closing Day) in an amount equal to 0.15%
of the aggregate principal amount of Notes sold on such Closing Day, unless
the Company shall have requested pursuant to the applicable Request for
Purchase that such fee be included in the rate quotes Prudential may provide
pursuant to paragraph 2B(4).
2B(8)(iii). DELAYED DELIVERY FEE. If the closing of the purchase and
sale of any Accepted Note is delayed for any reason beyond the original
Closing Day for such Accepted Note, the Company will pay to Prudential (a) on
the Cancellation Date or actual closing date of such purchase and sale and
(b) if earlier than the Cancellation Date or actual closing date, the next
Business Day following 90 days after the Acceptance Day for such Accepted
Note and on each Business Day following 90 days after the prior payment
hereunder, a fee (herein called the "DELAYED DELIVERY FEE") calculated as
follows:
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(BEY - MMY) X DTS/360 X PA
where "BEY" means Bond Equivalent Yield, I.E., the bond equivalent yield per
annum of such Accepted Note; "MMY" means Money Market Yield, I.E., the yield
per annum on a commercial paper investment of the highest quality selected by
Prudential on the date Prudential receives notice of the delay in the closing
for such Accepted Note having a maturity date or dates the same as, or
closest to, the Rescheduled Closing Day or Rescheduled Closing Days (a new
alternative investment being selected by Prudential each time such closing is
delayed); "DTS" means Days to Settlement, I.E., the number of actual days
elapsed from and including the original Closing Day with respect to such
Accepted Note (in the case of the first such payment with respect to such
Accepted Note) or from and including the date of the next preceding payment
(in the case of any subsequent delayed delivery fee payment with respect to
such Accepted Note) to but excluding the date of such payment; and "PA" means
Principal Amount, I.E., the principal amount of the Accepted Note for which
such calculation is being made. In no case shall the Delayed Delivery Fee be
less than zero. Nothing contained herein shall obligate any Purchaser to
purchase any Accepted Note on any day other than the Closing Day for such
Accepted Note, as the same may be rescheduled from time to time in compliance
with paragraph 2B(7).
2B(8)(iv). CANCELLATION FEE. If the Company at any time notifies
Prudential in writing that the Company is canceling the closing of the
purchase and sale of any Accepted Note, or if Prudential notifies the Company
in writing under the circumstances set forth in the last sentence of
paragraph 2B(5) or the penultimate sentence of paragraph 2B(7) that the
closing of the purchase and sale of such Accepted Note is to be canceled, or
if the closing of the purchase and sale of such Accepted Note is not
consummated on or prior to the last day of the Issuance Period (the date of
any such notification, or the last day of the Issuance Period, as the case
may be, being herein called the "CANCELLATION DATE"), the Company will pay to
Prudential in immediately available funds an amount (the "CANCELLATION FEE")
calculated as follows:
PI X PA
where "PI" means Price Increase, I.E., the quotient (expressed in decimals)
obtained by dividing (a) the excess of the ask price (as determined by
Prudential) of the Hedge Treasury Note(s) on the Cancellation Date over the
bid price (as determined by Prudential) of the Hedge Treasury Notes(s) on the
Acceptance Day for such Accepted Note by (b) such bid price; and "PA" has the
meaning ascribed to it in paragraph 2B(8)(iii). The foregoing bid and ask
prices shall be as reported by Telerate Systems, Inc. (or, if such data for
any reason ceases to be available through Telerate Systems, Inc., any
publicly available source of similar market data). Each price shall be based
on a U.S. Treasury security having a par value of $100.00 and shall be
rounded to the second decimal place. In no case shall the Cancellation Fee
be less than zero.
3. CONDITIONS OF CLOSING. The obligation of any Purchaser to
purchase and pay for any Notes is subject to the satisfaction, on or before
the Closing Day for such Notes, of the following conditions:
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3A. CERTAIN DOCUMENTS. Such Purchaser shall have received the
following, each dated the date of the applicable Closing Day:
(i) This Agreement;
(ii) The Note(s) to be purchased by such Purchaser;
(iii) A favorable opinion of Oppenheimer Wolff & Donnelly
LLP, special counsel to the Company (or such other counsel designated by
the Company and acceptable to the Purchaser(s)) satisfactory to such
Purchaser and substantially in the form of EXHIBIT D-1 (in the case of
the Series A Notes) or D-2 (in the case of any Shelf Notes) attached
hereto and as to such other matters as such Purchaser may reasonably
request. The Company hereby directs each such counsel to deliver such
opinion, agrees that the issuance and sale of any Notes will constitute
a reconfirmation of such direction, and understands and agrees that each
Purchaser receiving such an opinion will and is hereby authorized to
rely on such opinion;
(iv) a Secretary's Certificate signed by the Secretary or
an Assistant Secretary and one other officer of the Company certifying,
among other things, (A) as to the names, titles and true signatures of
the officers of the Company authorized to sign this Agreement, the Notes
and the other documents to be delivered in connection with this
Agreement, (B) that attached as Exhibit A thereto is a true, accurate
and complete copy of the Certificate of Incorporation of the Company,
certified by the Secretary of State of Delaware as of a date not more
than five Business Days from the Closing Day, (C) that attached as
Exhibit B thereto is a true, accurate and complete copy of the Company's
Bylaws which were duly adopted and are presently in effect and have been
in effect immediately prior to and at all times since the adoption of
the resolutions referred to in clause (D) below, (D) that attached as
Exhibit C thereto is a true, accurate and complete copy of the
resolutions of the Company's Board of Directors (authorizing the
issuance and sale of the Notes and the execution, delivery and
performance of this Agreement) duly adopted by written action or at a
meeting of the Company's Board of Directors, and such resolutions have
not been rescinded, amended or modified and (E) that attached as Exhibit
D thereto are good standing certificates (or the equivalent thereof) for
the Company from the Secretary of State of Delaware and Wisconsin;
(v) an Officer's Certificate certifying that (A) the
representations and warranties contained in paragraph 8 shall be true on
and as of the Closing Day, except to the extent of changes caused by the
transactions herein contemplated; and (B) on the date of closing no
Event of Default or Default exists;
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(vi) certified copies of Requests for Information or
Copies (Form UCC-11) or equivalent reports listing all effective
financing statements which name the Company or any Subsidiary (under its
present name and previous names used in the last seven years) as debtor
and which are filed in the office of the Secretary of State of Wisconsin
together with copies of such financing statements;
(vii) a disbursement direction letter executed by the
Company in the form of EXHIBIT E attached hereto; and
(viii) Additional documents or certificates with respect to
legal matters or corporate or other proceedings related to the
transactions contemplated hereby as may be reasonably requested by such
Purchaser.
3B. OPINION OF PURCHASER'S SPECIAL COUNSEL. Such Purchaser
shall have received from Wiley S. Adams, Assistant General Counsel of
Prudential or such other counsel who is acting as special counsel for it in
connection with this transaction, a favorable opinion satisfactory to such
Purchaser as to such matters incident to the matters herein contemplated as
it may reasonably request.
3C. REPRESENTATIONS AND WARRANTIES; NO DEFAULT. The
representations and warranties contained in paragraph 8 shall be true on and
as of such Closing Day, except to the extent of changes caused by the
transactions herein contemplated; there shall exist on such Closing Day no
Event of Default or Default; and the Company shall have delivered to such
Purchaser an Officer's Certificate, dated such Closing Day, to both such
effects.
3D. PURCHASE PERMITTED BY APPLICABLE LAWS. The purchase of and
payment for the Notes to be purchased by such Purchaser on the terms and
conditions herein provided (including the use of the proceeds of such Notes
by the Company) shall not violate any applicable law or governmental
regulation (including, without limitation, Section 5 of the Securities Act or
Regulation U, T or X of the Board of Governors of the Federal Reserve System)
and shall not subject such Purchaser to any tax, penalty, liability or other
onerous condition under or pursuant to any applicable law or governmental
regulation, and such Purchaser shall have received such certificates or other
evidence as it may request to establish compliance with this condition.
3E. PAYMENT OF FEES. The Company shall have paid to Prudential
any fees due it pursuant to or in connection with this Agreement, including
any Structuring Fee due pursuant to paragraph 2B(8)(i), any Issuance Fee due
pursuant to paragraph 2B(8)(ii) and any Delayed Delivery Fee due pursuant to
paragraph 2B(8)(iii).
4. PREPAYMENTS. The Series A Notes and any Shelf Notes shall
be subject to required prepayment as and to the extent provided in paragraphs
4A and 4B, respectively. The Series A Notes and any Shelf Notes shall also
be subject to prepayment under the circumstances set forth in paragraph 4C.
Any prepayment made by the Company pursuant to any
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other provision of this paragraph 4 shall not reduce or otherwise affect its
obligation to make any required prepayment as specified in paragraph 4A or 4B.
4A. REQUIRED PREPAYMENTS OF SERIES A NOTES. Until the Series A
Notes shall be paid in full, the Company shall apply to the prepayment of the
Series A Notes, without Yield-Maintenance Amount, the sum of $3,571,428.57 on
October 30 of each year commencing on October 30, 2002 through and including
October 30, 2008 and such principal amounts of the Series A Notes, together
with interest thereon to the payment dates, shall become due on such payment
dates. Any remaining unpaid principal amount of the Series A Notes, together
with any accrued and unpaid interest, shall become due on the maturity date
of the Series A Notes.
4B. REQUIRED PREPAYMENTS OF SHELF NOTES. Each Series of Shelf
Notes shall be subject to required prepayments, if any, set forth in the
Notes of such Series.
4C. OPTIONAL PREPAYMENT WITH YIELD-MAINTENANCE AMOUNT. The
Notes of each Series shall be subject to prepayment, in whole or in part at
any time (in integral multiples of $100,000 and in a minimum amount of
$5,000,000), at the option of the Company, at 100% of the principal amount so
prepaid plus interest thereon to the prepayment date and the
Yield-Maintenance Amount, if any, with respect to each such Note. Any
partial prepayment of a Series of the Notes pursuant to this paragraph 4C
shall be applied in satisfaction of required payments of principal in inverse
order of their scheduled due dates.
4D. NOTICE OF OPTIONAL PREPAYMENT. The Company shall give the
holder of each Note of a Series to be prepaid pursuant to paragraph 4C
irrevocable written notice of such prepayment not less than 10 Business Days
prior to the prepayment date, specifying such prepayment date, the aggregate
principal amount of the Notes of such Series to be prepaid on such date, the
principal amount of the Notes of such Series held by such holder to be
prepaid on that date and that such prepayment is to be made pursuant to
paragraph 4C. Notice of prepayment having been given as aforesaid, the
principal amount of the Notes specified in such notice, together with
interest thereon to the prepayment date and together with the
Yield-Maintenance Amount, if any, herein provided, shall become due and
payable on such prepayment date. The Company shall, on or before the day on
which it gives written notice of any prepayment pursuant to paragraph 4C,
give telephonic notice of the principal amount of the Notes to be prepaid and
the prepayment date to each Significant Holder which shall have designated a
recipient for such notices in the Purchaser Schedule attached hereto or the
applicable Confirmation of Acceptance or by notice in writing to the Company.
4E. APPLICATION OF PREPAYMENTS. In the case of each prepayment
of less than the entire unpaid principal amount of all outstanding Notes of
any Series pursuant to paragraphs 4A, 4B or 4C, the amount to be prepaid
shall be applied pro rata to all outstanding Notes of such Series (including,
for the purpose of this paragraph 4E only, all Notes prepaid or otherwise
retired or purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates other than by prepayment pursuant to paragraph 4A,
4B or 4C) according to the respective unpaid principal amounts thereof.
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4F. NO ACQUISITION OF NOTES. The Company shall not, and shall
not permit any of its Subsidiaries or Affiliates to, prepay or otherwise
retire in whole or in part prior to their stated final maturity (other than
by prepayment pursuant to paragraphs 4A, 4B or 4C or upon exercise of the put
option pursuant to paragraph 5G, or upon acceleration of such final maturity
pursuant to paragraph 7A), or purchase or otherwise acquire, directly or
indirectly, Notes held by any holder. Any notes so prepaid or otherwise
retired or purchased or otherwise acquired by the Company or any of its
Subsidiaries or Affiliates shall not be deemed to be outstanding for any
purpose under this Agreement, except as provided in paragraph 4E.
5. AFFIRMATIVE COVENANTS. During the Issuance Period and so
long thereafter as any Note is outstanding and unpaid, the Company covenants
as follows:
5A. FINANCIAL STATEMENTS; NOTICE OF DEFAULTS. The Company
covenants that it will deliver to each Significant Holder in triplicate:
(i) as soon as practicable and in any event within 45
days after the end of each quarterly period (other than the last
quarterly period) in each fiscal year consolidated statements of income,
and cash flows and a consolidated statement of shareholders' equity of
the Company and its Subsidiaries for the period from the beginning of
the current fiscal year to the end of such quarterly period, and a
consolidated balance sheet of the Company and its Subsidiaries as at the
end of such quarterly period, setting forth in each case in comparative
form figures for the corresponding period in the preceding fiscal year,
all in reasonable detail and certified by an authorized financial
officer of the Company, subject to changes resulting from year-end
adjustments; PROVIDED, HOWEVER, that delivery pursuant to clause (iii)
below of copies of the Quarterly Report on From 10-Q of the Company for
such quarterly period filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this clause (i);
(ii) as soon as practicable and in any event within 90
days after the end of each fiscal year, consolidated statements of
income and cash flows and a consolidated statement of shareholders'
equity of the Company and its Subsidiaries for such year, and a
consolidated balance sheet of the Company and its Subsidiaries as at the
end of such year, setting forth in each case in comparative form
corresponding consolidated figures from the preceding annual audit, all
in reasonable detail and satisfactory in form to the Required Holder(s)
and, reported on by independent public accountants of recognized
national standing selected by the Company whose report shall be without
limitation as to scope of the audit and satisfactory in substance to the
Required Holder(s); PROVIDED, HOWEVER, that delivery pursuant to clause
(iii) below of copies of the Annual Report on Form 10-K of the Company
for such fiscal year filed with the Securities and Exchange Commission
shall be deemed to satisfy the requirements of this clause (ii);
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(iii) promptly upon transmission thereof, copies of all
such financial statements, proxy statements, notices and reports as it
shall send to its public stockholders and copies of all registration
statements (without exhibits) and all reports which it files with the
Securities and Exchange Commission (or any governmental body or agency
succeeding to the functions of the Securities and Exchange Commission);
(iv) promptly upon receipt thereof, a copy of each other
report submitted to the Company or any Subsidiary by independent
accountants in connection with any annual, interim or special audit made
by them of the books of the Company or any Subsidiary; and
(v) with reasonable promptness, such other information
as such holder may reasonably request.
Together with each delivery of financial statements required by clauses (i)
and (ii) above, the Company will deliver to each Significant Holder an
Officer's Certificate demonstrating (with computations in reasonable detail)
compliance by the Company and its Subsidiaries with the provisions of
paragraph 6 and stating that there exists no Event of Default or Default, or,
if any Event of Default or Default exists, specifying the nature and period
of existence thereof and what action the Company proposes to take with
respect thereto.
The Company also covenants that immediately after any
Responsible Officer obtains knowledge of an Event of Default or Default, it
will deliver to each Significant Holder an Officer's Certificate specifying
the nature and period of existence thereof and what action the Company
proposes to take with respect thereto.
5B. INFORMATION REQUIRED BY RULE 144A. The Company covenants
that it will, upon the request of the holder of any Note, provide such
holder, and any qualified institutional buyer designated by such holder, such
financial and other information as such holder may reasonably determine to be
necessary in order to permit compliance with the information requirements of
Rule 144A under the Securities Act in connection with the resale of Notes,
except at such times as the Company is subject to and in compliance with the
reporting requirements of section 13 or 15(d) of the Exchange Act. For the
purpose of this paragraph 5B, the term "QUALIFIED INSTITUTIONAL BUYER" shall
have the meaning specified in Rule 144A under the Securities Act.
5C. INSPECTION OF PROPERTY. The Company covenants that it will
permit any Person designated by any Significant Holder in writing, at such
Significant Holder's expense, to visit and inspect any of the properties of
the Company and its Subsidiaries, to examine the corporate books and
financial records of the Company and its Subsidiaries and make copies thereof
or extracts therefrom and to discuss the affairs, finances and accounts of
any of such corporations with the principal officers of the Company and,
after the occurrence and during the continuance of an Event of Default, its
independent public accountants, all at such reasonable times and as often as
such Significant Holder may reasonably request.
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5D. COVENANT TO SECURE NOTES EQUALLY. The Company covenants
that, if it or any Subsidiary shall create or assume any Lien upon any of its
property or assets, whether now owned or hereafter acquired, other than Liens
permitted by the provisions of paragraph 6B(1) (unless prior written consent
to the creation or assumption thereof shall have been obtained pursuant to
paragraph 11C), it will make or cause to be made effective provision whereby
the Notes will be secured by such Lien equally and ratably with any and all
other Debt thereby secured so long as any such other Debt shall be so secured.
5E. COMPLIANCE WITH LAWS. The Company covenants that it shall,
and shall cause each Subsidiary to, comply with all applicable laws, rules,
regulations, decrees and orders of all federal, state, local or foreign
courts or governmental agencies, authorities, instrumentalities or regulatory
bodies the noncompliance with which could be reasonably expected to result in
a material adverse effect on the business, assets, operations or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole.
5F. MAINTENANCE OF INSURANCE. The Company covenants that it and
each Subsidiary will maintain, with financially sound and reputable insurers,
insurance in such amounts with deductibles and self insurance and against
such liabilities and hazards as customarily is maintained by the other
companies operating similar businesses. Together with each delivery of
financial statements under paragraph 5A, the Company will, upon the request
of any Significant Holder, deliver an Officer's Certificate specifying the
details of such insurance in effect.
5G. CHANGE IN CONTROL PUT OPTION. The Company covenants that
within three Business Days after any Responsible Officer shall obtain
knowledge of the occurrence of a Change in Control Event, the Company shall
provide each holder of Notes written notice thereof, describing in reasonable
detail the facts and circumstances constituting such Change in Control Event.
Following the occurrence of any Change in Control Event, if at any time
prior to 15 Business Days after receipt of notice thereof, the holder of any
Note requests in writing that the Company purchase the Note(s) held by such
holder, the Company shall, on the 20th Business Day after such receipt of
such notice, purchase (and each such holder thereof shall sell) such Note(s)
at a purchase price equal to the aggregate outstanding principal amount
thereof, together with interest thereon to the date of purchase and the
Yield-Maintenance Amount, if any, with respect thereto. No holder of any
Note to be sold pursuant to this paragraph 5G shall be required to make any
representation or warranty in connection with such sale, other than with
respect to its ownership of its Note.
6. NEGATIVE COVENANTS. During the Issuance Period and so long
thereafter as any Note or other amount due hereunder is outstanding and
unpaid, the Company covenants as follows:
6A. MINIMUM INTEREST COVERAGE RATIO. The Company covenants that
it will not permit the ratio of EBITDA to Consolidated interest expense of
the Company and its Subsidiaries calculated on a rolling four quarter basis
to be less than 4.00 to 1.00 at any time.
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6B. LIEN, DEBT AND OTHER RESTRICTIONS. The Company will not and
will not permit any Subsidiary to:
6B(1). LIENS. Create, assume or suffer to exist any Lien upon any
of its properties or assets, whether now owned or hereafter acquired (whether
or not provision is made for the equal and ratable securing of the Notes in
accordance with the provisions of paragraph 5D), EXCEPT:
(i) Liens for taxes, assessments or other governmental
charges not yet due or which are being actively contested in good faith
by appropriate proceedings,
(ii) Liens incidental to the conduct of its business or
the ownership of its property and assets which were not incurred in
connection with the borrowing of money or the obtaining of an advance or
credit, and which do not in the aggregate materially detract from the
value of its property or assets or materially impair the use thereof in
the operation of its business,
(iii) Liens on property or assets of a Subsidiary to
secure obligations of such Subsidiary to the Company or to a
Wholly-Owned Subsidiary,
(iv) Liens in existence on the date hereof and
identified on Schedule 6B(1) hereto securing Debt not in excess of
$15,000,000, but excluding any renewal, extension or increase thereof
after the date hereof,
(v) Liens securing judgments not in excess of $2,000,000
to the extent that the period for appeal of such judgments shall not
have expired or to the extent that such judgment shall have been stayed
or otherwise postponed; and
(vi) other Liens (including Liens consisting of
Capitalized Lease Obligations) provided however that Priority Debt at no
time exceeds 15% of Consolidated Net Worth;
6B(2). DEBT. Create, incur, assume or suffer to exist any Debt,
EXCEPT:
(i) Debt of any Subsidiary owing to the Company or a
Wholly-Owned Subsidiary, and
(ii) other Debt of the Company or Subsidiaries, so long
as (a) Priority Debt at no time exceeds 15% of Consolidated Net Worth
except to the extent otherwise contemplated by paragraph 6B(1)(iv), and
(b) the ratio (expressed as a percentage) of Consolidated Debt of the
Company and its Subsidiaries to Consolidated Adjusted Gross Worth does
not exceed 55% at any time;
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6B(3). MERGER AND CONSOLIDATION. Merge or consolidate with or into
any other Person, EXCEPT that:
(i) any Subsidiary may merge or consolidate with or into
the Company, PROVIDED that the Company is the continuing or surviving
corporation,
(ii) any Subsidiary may merge or consolidate with or into
a Wholly-Owned Subsidiary, and
(iii) the Company may merge with any other solvent
corporation, so long as the Company shall be the continuing or surviving
corporation, PROVIDED that no Default or Event of Default exists or
would exist immediately after giving effect to any such merger;
6B(4). TRANSFER OF ASSETS. Transfer any of its assets EXCEPT that:
(i) the Company and Subsidiaries may sell or exchange
assets (including used equipment) in the ordinary course of business,
(ii) any Subsidiary may Transfer assets to the Company or
a Wholly-Owned Subsidiary, and
(iii) the Company or any Subsidiary may otherwise Transfer
assets, PROVIDED that after giving effect thereto the sum of such other
assets Transferred in any fiscal year did not, as a whole (a) contribute
more than 10% of Consolidated Net Income of the Company and its
Subsidiaries (before extraordinary gains or losses) for any of the three
most recently ended fiscal years or (b) constitute more than 10% of
Consolidated total assets of the Company and its Subsidiaries as of the
beginning of such fiscal year;
6B(5). SALE OR DISCOUNT OF RECEIVABLES. Sell with recourse, or
discount or otherwise sell for less than the face value thereof, or subject
to a Lien, any of its notes or accounts receivable other than receivables
which are doubtful in accordance with generally accepted accounting
principles;
6B(6). ISSUANCE OF STOCK BY SUBSIDIARIES. Permit any Subsidiary to
issue, sell or dispose of any shares of its stock of any class except to the
Company or a Wholly-Owned Subsidiary, and except that any Subsidiary which
does not own any shares of stock of any other Subsidiary may issue to Persons
other than the Company or another Subsidiary shares of stock of a class which
has no priority over any other class as to dividends or in liquidation if,
after giving effect thereto, the issuing corporation shall continue to be a
Subsidiary and no Default or Event of Default would exist; or
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6B(7). RELATED PARTY TRANSACTIONS. Directly or indirectly,
purchase, acquire or lease any property from, or sell, transfer or lease any
property to, or otherwise deal with, in the ordinary course of business or
otherwise, any Related Party; PROVIDED that the foregoing shall not prohibit
transactions which are engaged in the ordinary course of business and are on
terms demonstrably no less favorable to the Company or a Subsidiary (as the
case may be) than would be available in an "arm's-length" transaction.
7. EVENTS OF DEFAULT.
7A. ACCELERATION. If any of the following events shall occur
and be continuing for any reason whatsoever (and whether such occurrence
shall be voluntary or involuntary or come about or be effected by operation
of law or otherwise):
(i) the Company defaults in the payment of any principal
of, or Yield- Maintenance Amount payable with respect to, any Note when
the same shall become due, either by the terms thereof or otherwise as
herein provided; or
(ii) the Company defaults in the payment of any interest
on any Note for more than 10 days after the date due; or
(iii) the Company or any Subsidiary defaults (whether as
primary obligor or as guarantor or other surety) in any payment of
principal of or interest on any other obligation for money borrowed (or
any Capitalized Lease Obligation, any obligation under a conditional
sale or other title retention agreement, any obligation issued or
assumed as full or partial payment for property whether or not secured
by a purchase money mortgage or any obligation under notes payable or
drafts accepted representing extensions of credit) beyond any period of
grace provided with respect thereto, or the Company or any Subsidiary
fails to perform or observe any other agreement, term or condition
contained in any agreement under which any such obligation is created
(or if any other event thereunder or under any such agreement shall
occur and be continuing) and the effect of such failure or other event
is to cause, or to permit the holder or holders of such obligation (or a
trustee on behalf of such holder or holders) to cause, such obligation
to become due (or to be repurchased by the Company or any Subsidiary)
prior to any stated maturity, PROVIDED that the aggregate amount of all
obligations as to which such a payment default shall occur and be
continuing or such a failure or other event causing or permitting
acceleration (or resale to the Company or any Subsidiary) shall occur
and be continuing exceeds $5,000,000; or
(iv) any representation or warranty made by the Company
herein or by the Company or any of its officers in any writing furnished
in connection with or pursuant to this Agreement shall be false in any
material respect on the date as of which made; or
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(v) the Company fails to perform or observe any
agreement contained in paragraph 5G or 6; or
(vi) the Company fails to perform or observe any other
agreement, term or condition contained herein and such failure shall not
be remedied within 30 days after any Responsible Officer obtains actual
knowledge thereof; or
(vii) the Company or any Subsidiary makes an assignment
for the benefit of creditors or is generally not paying its debts as
such debts become due; or
(viii) any decree or order for relief in respect of the
Company or any Subsidiary is entered under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of
debt, dissolution or liquidation or similar law, whether now or
hereafter in effect (herein called the "BANKRUPTCY LAW"), of any
jurisdiction; or
(ix) the Company or any Subsidiary petitions or applies
to any tribunal for, or consents to, the appointment of, or taking
possession by, a trustee, receiver, custodian, liquidator or similar
official of the Company or any Subsidiary, or of any substantial part of
the assets of the Company or any Subsidiary, or commences a voluntary
case under the Bankruptcy Law of the United States or any proceedings
(other than proceedings for the voluntary liquidation and dissolution of
a Subsidiary) relating to the Company or any Subsidiary under the
Bankruptcy Law of any other jurisdiction; or
(x) any such petition or application is filed, or any
such proceedings are commenced, against the Company or any Subsidiary
and the Company or such Subsidiary by any act indicates its approval
thereof, consent thereto or acquiescence therein, or an order, judgment
or decree is entered appointing any such trustee, receiver, custodian,
liquidator or similar official, or approving the petition in any such
proceedings, and such order, judgment or decree remains unstayed and in
effect for more than 30 days; or
(xi) any order, judgment or decree is entered in any
proceedings against the Company decreeing the dissolution of the Company
and such order, judgment or decree remains unstayed and in effect for
more than 60 days: or
(xii) any order, judgment or decree is entered in any
proceedings against the Company or any Subsidiary decreeing a split-up
of the Company or such Subsidiary which requires the divestiture of
assets representing a substantial part, or the divestiture of the stock
of a Subsidiary whose assets represent a substantial part, of the
consolidated assets of the Company and its Subsidiaries (determined in
accordance with generally accepted accounting principles) or which
requires the
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divestiture of assets, or stock of a Subsidiary, which shall have
contributed a substantial part of the consolidated net income of the
Company and its Subsidiaries (determined in accordance with generally
accepted accounting principles) for any of the three fiscal years then
most recently ended, and such order, judgment or decree remains unstayed
and in effect for more than 60 days; or
(xiii) one or more final judgments in an aggregate amount
in excess of $2,000,000 is rendered against the Company or any
Subsidiary and, within 60 days after entry thereof, any such judgment is
not discharged or execution thereof stayed pending appeal, or within 60
days after the expiration of any such stay, such judgment is not
discharged; or
(xiv) the Company or any ERISA Affiliate, in its capacity
as an employer under a Multiemployer Plan, makes a complete or partial
withdrawal from such Multiemployer Plan resulting in the incurrence by
such withdrawing employer of a withdrawal liability in an amount
exceeding $1,000,000;
then (a) if such event is an Event of Default specified in clause (i) or (ii)
of this paragraph 7A, any holder of any Note may at its option during the
continuance of such Event of Default, by notice in writing to the Company,
declare all of the Notes held by such holder to be, and all of the Notes held
by such holder shall thereupon be and become, immediately due and payable at
par together with interest accrued thereon, without presentment, demand,
protest or notice of any kind, all of which are hereby waived by the Company,
(b) if such event is an Event of Default specified in clause (viii), (ix) or
(x) of this paragraph 7A with respect to the Company, all of the Notes at the
time outstanding shall automatically become immediately due and payable
together with interest accrued thereon and together with the
Yield-Maintenance Amount, if any, with respect to each Note, without
presentment, demand, protest or notice of any kind, all of which are hereby
waived by the Company, and (c) with respect to any event constituting an
Event of Default, the Required Holder(s) of the Notes of any Series may at
its or their option during the continuance of such Event of Default, by
notice in writing to the Company, declare all of the Notes of such Series to
be, and all of the Notes of such Series shall thereupon be and become,
immediately due and payable together with interest accrued thereon and
together with the Yield-Maintenance Amount, if any, with respect to each Note
of such Series, without presentment, demand, protest or notice of any kind,
all of which are hereby waived by the Company.
7B. RESCISSION OF ACCELERATION. At any time after any or all of
the Notes of any Series shall have been declared immediately due and payable
pursuant to paragraph 7A, the Required Holder(s) of the Notes of such Series
may, by notice in writing to the Company, rescind and annul such declaration
and its consequences if (i) the Company shall have paid all overdue interest
on the Notes of such Series, the principal of and Yield-Maintenance Amount,
if any, payable with respect to any Notes of such Series which have become
due otherwise than by reason of such declaration, and interest on such
overdue interest and overdue principal and Yield-Maintenance Amount at the
rate specified in the Notes of such Series, (ii) the Company shall not have
paid any amounts which have become due solely by reason of such declaration,
(iii) all Events
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of Default and Defaults, other than non-payment of amounts which have become
due solely by reason of such declaration, shall have been cured or waived
pursuant to paragraph 11C, and (iv) no judgment or decree shall have been
entered for the payment of any amounts due pursuant to the Notes of such
Series or this Agreement. No such rescission or annulment shall extend to or
affect any subsequent Event of Default or Default or impair any right arising
therefrom.
7C. NOTICE OF ACCELERATION OR RESCISSION. Whenever any Note
shall be declared immediately due and payable pursuant to paragraph 7A or any
such declaration shall be rescinded and annulled pursuant to paragraph 7B,
the Company shall forthwith give written notice thereof to the holder of each
Note of each Series at the time outstanding.
7D. OTHER REMEDIES. If any Event of Default or Default shall
occur and be continuing, the holder of any Note may proceed to protect and
enforce its rights under this Agreement and such Note by exercising such
remedies as are available to such holder in respect thereof under applicable
law, either by suit in equity or by action at law, or both, whether for
specific performance of any covenant or other agreement contained in this
Agreement or in aid of the exercise of any power granted in this Agreement.
No remedy conferred in this Agreement upon the holder of any Note is intended
to be exclusive of any other remedy, and each and every such remedy shall be
cumulative and shall be in addition to every other remedy conferred herein or
now or hereafter existing at law or in equity or by statute or otherwise.
8. REPRESENTATIONS, COVENANTS AND WARRANTIES. The Company
represents, covenants and warrants as follows (all references to "Subsidiary"
and "Subsidiaries" in this paragraph 8 shall be deemed omitted if the Company
has no Subsidiaries at the time the representations herein are made or
repeated):
8A. ORGANIZATION; SUBSIDIARY PREFERRED STOCK. The Company is a
corporation duly organized and existing in good standing under the laws of
the State of Delaware, each Subsidiary is duly organized and existing in good
standing under the laws of the jurisdiction in which it is incorporated, and
the Company has and each Subsidiary has the corporate power to own its
respective property and to carry on its respective business as now being
conducted. No Subsidiary has outstanding any shares of stock of a class
which has priority over any other class as to dividends or in liquidation.
As of the Series A Closing Day, the Company has no Subsidiaries.
8B. FINANCIAL STATEMENTS. The Company has furnished each
Purchaser of any Note with the following financial statements, identified by
a principal financial officer of the Company: (i) a consolidated balance
sheet of the Company and its Subsidiaries as at December 31 in each of the
three fiscal years of the Company most recently completed prior to the date
as of which this representation is made or repeated to such Purchaser (other
than fiscal years completed within 90 days prior to such date for which
audited financial statements have not been released) and consolidated
statements of income and cash flows and a consolidated statement of
shareholders' equity of the Company and its Subsidiaries for each such year,
all reported on by Arthur Andersen L.L.P. (or such other nationally
recognized independent public accountants as may be subsequently selected by
the Company with respect to fiscal years ending after the date hereof) and
(ii)
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consolidated balance sheet of the Company and its Subsidiaries as at the end
of the quarterly period (if any) most recently completed prior to such date
and after the end of such fiscal year (other than quarterly periods completed
within 45 days prior to such date for which financial statements have not
been released) and the comparable quarterly period in the preceding fiscal
year and consolidated statements of income and cash flows and a consolidated
statement of shareholders' equity for the periods from the beginning of the
fiscal years in which such quarterly periods are included to the end of such
quarterly periods, prepared by the Company. Such financial statements
(including any related schedules and/or notes) are true and correct in all
material respects (subject, as to interim statements, to the absence of
footnotes and changes resulting from audits and year-end adjustments), have
been prepared in accordance with generally accepted accounting principles
consistently followed throughout the periods involved and show all
liabilities, direct and contingent, of the Company and its Subsidiaries
required to be shown in accordance with such principles. The balance sheets
fairly present the condition of the Company and its Subsidiaries as at the
dates thereof, and the statements of income, stockholders' equity and cash
flows fairly present the results of the operations of the Company and its
Subsidiaries and their cash flows for the periods indicated. There has been
no material adverse change in the business, property or assets, condition
(financial or otherwise), operations or prospects of the Company and its
Subsidiaries taken as a whole since the end of the most recent fiscal year
for which such audited financial statements have been furnished.
8C. ACTIONS PENDING. There is no action, suit, investigation or
proceeding pending or, to the knowledge of the Company, threatened against
the Company or any of its Subsidiaries, or any properties or rights of the
Company or any of its Subsidiaries, by or before any court, arbitrator or
administrative or governmental body which could be reasonably expected to
result in any material adverse change in the business, property or assets,
condition (financial or otherwise) or operations of the Company and its
Subsidiaries taken as a whole.
8D. OUTSTANDING LIENS AND DEBT. Neither the Company nor any of
its Subsidiaries has outstanding any Liens or Debt except as respectively
permitted by paragraphs 6B(1) and 6B(2). There exists no default under the
provisions of any instrument evidencing such Debt or of any agreement
relating thereto.
8E. TITLE TO PROPERTIES. The Company has and each of its
Subsidiaries has good and indefeasible title to its respective real
properties (other than properties which it leases) and good title to all of
its other respective properties and assets, including the properties and
assets reflected in the most recent audited balance sheet referred to in
paragraph 8B (other than properties and assets disposed of in the ordinary
course of business) or as permitted under paragraph 6B(4), subject to no Lien
of any kind except Liens permitted by paragraph 6B(1). All leases necessary
in any material respect for the conduct of the respective businesses of the
Company and its Subsidiaries are valid and subsisting and are in full force
and effect.
8F. TAXES. The Company has and each of its Subsidiaries has filed
all federal, state and other income tax returns which, to the best knowledge of
the officers of the Company and its Subsidiaries, are required to be filed, and
each has paid all taxes as shown on such returns and on
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all assessments received by it to the extent that such taxes have become due,
except such taxes as are being contested in good faith by appropriate
proceedings for which adequate reserves have been established in accordance
with generally accepted accounting principles.
8G. CONFLICTING AGREEMENTS AND OTHER MATTERS. Neither the
Company nor any of its Subsidiaries is a party to any contract or agreement
or subject to any charter or other corporate restriction which materially and
adversely affects its business, property or assets, condition (financial or
otherwise) or operations. Neither the execution nor delivery of this
Agreement or the Notes, nor the offering, issuance and sale of the Notes, nor
fulfillment of nor compliance with the terms and provisions hereof and of the
Notes will conflict with, or result in a breach of the terms, conditions or
provisions of, or constitute a default under, or result in any violation of,
or result in the creation of any Lien upon any of the properties or assets of
the Company or any of its Subsidiaries pursuant to, the charter or by-laws of
the Company or any of its Subsidiaries, any award of any arbitrator or any
agreement (including any agreement with stockholders), instrument, order,
judgment, decree, statute, law, rule or regulation to which the Company or
any of its Subsidiaries is subject except that the Credit Agreement between
U.S. Bank National Association and the Company dated as of October 30, 1998
may require in certain circumstances the granting of Liens which may not be
permitted by this Agreement. The Company acknowledges that notwithstanding
the foregoing disclosure the granting of any such Liens in contravention of
the terms hereof will constitute an Event of Default hereunder and the
holder(s) of the Notes would be entitled to exercise their rights and
remedies. Neither the Company nor any of its Subsidiaries is a party to, or
otherwise subject to any provision contained in, any instrument evidencing
Indebtedness of the Company or such Subsidiary, any agreement relating
thereto or any other contract or agreement (including its charter) which
limits the amount of, or otherwise imposes restrictions on the incurring of,
Debt of the Company of the type to be evidenced by the Notes except as set
forth in the agreements listed in SCHEDULE 8G attached hereto (as such
Schedule 8G may have been modified from time to time by written supplements
thereto delivered by the Company and accepted in writing by Prudential).
8H. OFFERING OF NOTES. Neither the Company nor any agent acting
on its behalf has, directly or indirectly, offered the Notes or any similar
security of the Company for sale to, or solicited any offers to buy the Notes
or any similar security of the Company from, or otherwise approached or
negotiated with respect thereto with, any Person other than institutional
investors, and neither the Company nor any agent acting on its behalf has
taken or will take any action which would subject the issuance or sale of the
Notes to the provisions of Section 5 of the Securities Act or to the
provisions of any securities or Blue Sky law of any applicable jurisdiction.
8I. USE OF PROCEEDS. The proceeds of the Series A Notes will be
used to retire existing indebtedness. The Company is not engaged
principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying "margin stock"
(within the meaning of Regulation U of the Board of Governors of the Federal
Reserve System), and the aggregate market value of all "margin stock" owned
by the Company and its Subsidiaries does not exceed 25% of the aggregate
value of the assets thereof, as determined by any reasonable method. Neither
the Company nor any agent acting on its behalf has taken or will
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take any action which might cause this Agreement or the Notes to violate
Regulation U, Regulation T or any other regulation of the Board of Governors
of the Federal Reserve System or to violate the Exchange Act, in each case as
in effect now or as the same may hereafter be in effect.
8J. ERISA. No accumulated funding deficiency (as defined in
section 302 of ERISA and section 412 of the Code), whether or not waived,
exists with respect to any Plan (other than a Multiemployer Plan). No
liability to the PBGC has been or is expected by the Company or any ERISA
Affiliate to be incurred with respect to any Plan (other than a Multiemployer
Plan) by the Company, any Subsidiary or any ERISA Affiliate which is or would
be materially adverse to the business, property or assets, condition
(financial or otherwise) or operations of the Company and its Subsidiaries
taken as a whole. Neither the Company, any Subsidiary nor any ERISA
Affiliate has incurred or presently expects to incur any withdrawal liability
under Title IV of ERISA with respect to any Multiemployer Plan which is or
would be materially adverse to the business, property or assets, condition
(financial or otherwise) or operations of the Company and its Subsidiaries
taken as a whole. The execution and delivery of this Agreement and the
issuance and sale of the Notes will be exempt from or will not involve any
transaction which is subject to the prohibitions of section 406 (a) of ERISA
and will not involve any transaction in connection with which a tax could be
imposed pursuant to section 4975(c)(1)(A), (B), (C), or (D) of the Code. The
representation by the Company in the next preceding sentence is made in
reliance upon and subject to the accuracy of the representation of each
Purchaser in paragraph 9B as to the source of funds to be used by it to
purchase any Notes and based upon applicable law in existence and in effect
on the date of this Agreement or the date this representation is remade.
8K. GOVERNMENTAL CONSENT. Neither the nature of the Company or
of any Subsidiary, nor any of their respective businesses or properties, nor
any relationship between the Company or any Subsidiary and any other Person,
nor any circumstance in connection with the offering, issuance, sale or
delivery of the Notes is such as to require any authorization, consent,
approval, exemption or any action by or notice to or filing with any court or
administrative or governmental body (other than routine filings after the
Closing Day for any Notes with the Securities and Exchange Commission and/or
state Blue Sky authorities) in connection with the execution and delivery of
this Agreement, the offering, issuance, sale or delivery of the Notes or
fulfillment of or compliance with the terms and provisions hereof or of the
Notes.
8L. ENVIRONMENTAL COMPLIANCE. The Company and its Subsidiaries
and all of their respective properties and facilities have complied at all
times and in all respects with all foreign, federal, state, local and
regional statutes, laws, ordinances and judicial or administrative orders,
judgments, rulings and regulations relating to protection of the environment
EXCEPT, in any such case, where failure to comply would not result in a
material adverse effect on the business, condition (financial or otherwise)
or operations of the Company and its Subsidiaries taken as a whole.
8M. REGULATORY STATUS. Neither the Company nor any Subsidiary is
(i) an "Investment company" or a company "controlled" by an "investment company"
within the
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meaning of the Investment Company Act of 1940, as amended, (ii) a "holding
company" or a "subsidiary company" or an "affiliate" of a "holding company"
or a "subsidiary company" of a "holding company", within the meaning of the
Public Utility Act of 1935, as amended, or (iii) a "public utility" within
the meaning of the Federal Power Act, as amended.
8N. SECTION 144A. The Notes are not of the same class as
securities, if any, of the Company listed on a national securities exchange
registered under Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system.
8O. ABSENCE OF FINANCING STATEMENTS, ETC. Except with respect
to Liens permitted by paragraph 6B(1) hereof, there is no financing
statement, security agreement, chattel mortgage, real estate mortgage or
other document filed or recorded with any filing records, registry or other
public office, that purports to cover, affect or give notice of any present
or possible future Lien on, or security interest in, any assets or property
of the Company or any of its Subsidiaries or any rights relating thereto.
8P. DISCLOSURE. Neither this Agreement nor any other document,
certificate or statement furnished to any Purchaser by or on behalf of the
Company in connection herewith contains any untrue statement of a material
fact or omits to state a material fact necessary in order to make the
statements contained herein and therein not misleading. There is no fact
peculiar to the Company or any of its Subsidiaries which materially adversely
affects or in the future may (so far as the Company can now foresee)
materially adversely affect the business, property or assets, condition
(financial or otherwise) or operations of the Company or any of its
Subsidiaries and which has not been set forth in this Agreement.
8Q. HOSTILE TENDER OFFERS. None of the proceeds of the sale of
any Notes will be used to finance a Hostile Tender Offer.
9. REPRESENTATIONS OF THE PURCHASERS.
Each Purchaser represents as follows:
9A. NATURE OF PURCHASE. Such Purchaser is an "accredited
investor" (as defined in Rule 501 of Regulation D promulgated under the
Securities Act) and is not acquiring the Notes purchased by it hereunder with
a view to or for sale in connection with any distribution thereof within the
meaning of the Securities Act, provided that the disposition of such
Purchaser's property shall at all times be and remain within its control.
9B. SOURCE OF FUNDS. The source of the funds being used by such
Purchaser to pay the purchase price of the Notes being purchased by such
Purchaser hereunder constitutes assets allocated to: (i) the "insurance
company general account" of such Purchaser (as such term is defined under
Section V of the United States Department of Labor's Prohibited Transaction
Class Exemption ("PTCE") 95-60), and as of the date of the purchase of the
Notes such Purchaser satisfies all of the applicable requirements for relief
under Sections I and IV of PTCE 95-60, (ii) a
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separate account maintained by such Purchaser in which no employee benefit
plan, other than employee benefit plans identified on a list which has been
furnished by such Purchaser to the Company, participates to the extent of 10%
or more and, other than with respect to those Plans identified on such list,
applicable requirements for relief under PTCE 90-1 are met or (iii) an
investment fund, the assets of which do not include any assets of any
employee benefit plan. For the purpose of this paragraph 9B, the terms
"SEPARATE ACCOUNT" and "EMPLOYEE BENEFIT PLAN" shall have the respective
meanings specified in section 3 of ERISA.
10. DEFINITIONS; ACCOUNTING MATTERS. For the purpose of this
Agreement, the terms defined in paragraphs 10A and 10B (or within the text of
any other paragraph) shall have the respective meanings specified therein and
all accounting matters shall be subject to determination as provided in
paragraph 10C.
10A. YIELD-MAINTENANCE TERMS.
"Called Principal" shall mean, with respect to any Note, the
principal of such Note that is to be prepaid pursuant to paragraph 4C, is put
to the Company pursuant to paragraph 5G or is declared to be immediately due
and payable pursuant to paragraph 7A, as the context requires.
"DISCOUNTED VALUE" shall mean, with respect to the Called
Principal of any Note, the amount obtained by discounting all Remaining
Scheduled Payments with respect to such Called Principal from their
respective scheduled due dates to the Settlement Date with respect to such
Called Principal, in accordance with accepted financial practice and at a
discount factor (as converted to reflect the periodic basis on which interest
on such Note is payable, if payable other than on a semi-annual basis) equal
to the Reinvestment Yield with respect to such Called Principal.
"Reinvestment Yield" shall mean, with respect to the Called
Principal of any Note, the yield to maturity implied by (i) 0.75% over the
yields reported, as of 10:00 A.M. (New York City local time) on the Business
Day next preceding the Settlement Date with respect to such Called Principal,
on the display designated as "Page 678" on the Telerate Service (or such
other display as may replace page 678 on the Telerate Service) for actively
traded U.S. Treasury securities having a maturity equal to the Remaining
Average Life of such Called Principal as of such Settlement Date, or if such
yields shall not be reported as of such time or the yields reported as of
such time shall not be ascertainable, (ii) the Treasury Constant Maturity
Series yields reported, for the latest day for which such yields shall have
been so reported as of the Business Day next preceding the Settlement Date
with respect to such Called Principal, in Federal Reserve Statistical Release
H.15 (519) (or any comparable successor publication) for actively traded U.S.
Treasury securities having a constant maturity equal to the Remaining Average
Life of such Called Principal as of such Settlement Date. Such implied yield
shall be determined, if necessary, by (a) converting U.S. Treasury bill
quotations to bond-equivalent yields in accordance with accepted financial
practice and (b) interpolating linearly between yields reported for various
maturities.
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"REMAINING AVERAGE LIFE" shall mean, with respect to the
Called Principal of any Note, the number of years (calculated to the nearest
one-twelfth year) obtained by dividing (i) such Called Principal into (ii)
the sum of the products obtained by multiplying (a) each Remaining Scheduled
Payment of such Called Principal (but not of interest thereon) by (b) the
number of years (calculated to the nearest one-twelfth year) which will
elapse between the Settlement Date with respect to such Called Principal and
the scheduled due date of such Remaining Scheduled Payment.
"REMAINING SCHEDULED PAYMENTS" shall mean, with respect to
the Called Principal of any Note, all payments of such Called Principal and
interest thereon that would be due on or after the Settlement Date with
respect to such Called Principal if no payment of such Called Principal were
made prior to its scheduled due date.
"SETTLEMENT DATE" shall mean, with respect to the Called
Principal of any Note, the date on which such Called Principal is to be
prepaid pursuant to paragraph 4C, is put to the Company pursuant to paragraph
5G or is declared to be immediately due and payable pursuant to paragraph 7A,
as the context requires.
"YIELD-MAINTENANCE AMOUNT" shall mean, with respect to any
Note, an amount equal to the excess, if any, of the Discounted Value of the
Called Principal of such Note over the sum of (i) such Called Principal plus
(ii) interest accrued thereon as of (including interest due on) the
Settlement Date with respect to such Called Principal. The Yield-Maintenance
Amount shall in no event be less than zero.
10B. OTHER TERMS.
"ACCEPTANCE" shall have the meaning specified in paragraph
2B(5).
"ACCEPTANCE DAY" shall have the meaning specified in
paragraph 2B(5).
"ACCEPTANCE WINDOW" shall mean, with respect to any interest
rate quote made by Prudential pursuant to paragraph 2B(4), the time period
designated by Prudential during which the Company may elect to accept such
interest rate quote as to not less than $5,000,000 in aggregate principal
amount of Shelf Notes specified in the related Request for Purchase.
"ACCEPTED NOTE" shall have the meaning specified in
paragraph 2B(5).
"AFFILIATE" shall mean any Person directly or indirectly
controlling, controlled by, or under direct or indirect common control with,
the Company, except a Subsidiary. A Person shall be deemed to control a
corporation if such Person possesses, directly or indirectly, the power to
direct or cause the direction of the management and policies of such
corporation, whether through the ownership of voting securities, by contract
or otherwise.
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"AUTHORIZED OFFICER" shall mean (i) in the case of the
Company, its chief executive officer, its chief financial officer, any vice
president of the Company designated as an "Authorized Officer" of the Company
in the Information Schedule attached hereto or any vice president of the
Company designated as an "Authorized Officer" of the Company for the purpose
of this Agreement in an Officer's Certificate executed by the Company's chief
executive officer or chief financial officer and delivered to Prudential, and
(ii) in the case of Prudential, any officer of Prudential designated as its
"Authorized Officer" in the Information Schedule or any officer of Prudential
designated as its "Authorized Officer" for the purpose of this Agreement in a
certificate executed by one of its Authorized Officers. Any action taken
under this Agreement on behalf of the Company by any individual who on or
after the date of this Agreement shall have been an Authorized Officer of the
Company and whom Prudential in good faith believes to be an Authorized
Officer of the Company at the time of such action shall be binding on the
Company even though such individual shall have ceased to be an Authorized
Officer of the Company, and any action taken under this Agreement on behalf
of Prudential by any individual who on or after the date of this Agreement
shall have been an Authorized Officer of Prudential and whom the Company in
good faith believes to be an Authorized Officer of Prudential at the time of
such action shall be binding on Prudential even though such individual shall
have ceased to be an Authorized Officer of Prudential.
"AVAILABLE FACILITY AMOUNT" shall have the meaning specified
in paragraph 2B(1).
"BANKRUPTCY LAW" shall have the meaning specified in clause
(viii) of paragraph 7A.
"BUSINESS DAY" shall mean any day other than (i) a Saturday
or a Sunday, (ii) a day on which commercial banks in New York City are
required or authorized to be closed and (iii) for purposes of paragraph 2B(3)
hereof only, a day on which The Prudential Insurance Company of America is
not open for business.
"CANCELLATION DATE" shall have the meaning specified in
paragraph 2B(8)(iv).
"CANCELLATION FEE" shall have the meaning specified in
paragraph 2B(8)(iv).
"Capitalized Lease Obligation" shall mean any rental
obligation which, under generally accepted accounting principles, is or will
be required to be capitalized on the books of the Company or any Subsidiary,
taken at the amount thereof accounted for as indebtedness (net of interest
expenses) in accordance with such principles.
"CHANGE IN CONTROL EVENT" shall mean the acquisition,
through purchase or otherwise (including the agreement to act in concert
without anything more), by any Person or group of Persons (other than one or
more of Randy Marten, his spouse and their descendants and
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estates thereof and trusts of which any of the foregoing are jointly or
severally sole beneficiaries) acting in concert, directly or indirectly, in
one or more transactions, of (i) beneficial ownership or control of
securities representing more than 50% of the combined voting power of the
Company's Voting Stock or (ii) substantially all of the assets of the Company
and its Subsidiaries taken as a whole.
"CLOSING DAY" shall mean, with respect to the Series A
Notes, the Series A Closing Day and, with respect to any Accepted Note, the
Business Day specified for the closing of the purchase and sale of such
Accepted Note in the Request for Purchase of such Accepted Note, PROVIDED
that (i) if the Company and the Purchaser which is obligated to purchase such
Accepted Note agree on an earlier Business Day for such closing, the "CLOSING
DAY" for such Accepted Note shall be such earlier Business Day, and (ii) if
the closing of the purchase and sale of such Accepted Note is rescheduled
pursuant to paragraph 2B(7), the Closing Day for such Accepted Note, for all
purposes of this Agreement except references to "original Closing Day" in
paragraph 2B(8)(iii), shall mean the Rescheduled Closing Day with respect to
such Accepted Note.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended.
"COMPETITOR" shall mean and include any Person which has
the following Standard Industrial Classification Code ("SIC Codes"): 4213.
"CONFIDENTIAL INFORMATION" shall mean any non-public or
proprietary information delivered or made available by or on behalf of the
Company or any Subsidiary to a Purchaser or a Transferee (as the case may
be), including without limitation any non-public information obtained
pursuant to paragraph 5A or 5C, in connection with or pursuant to this
Agreement which is proprietary in nature, but in no event shall include
information (i) which was publicly known or otherwise known to such Purchaser
or Transferee (as the case may be) at the time of disclosure (except pursuant
to disclosure in connection with this Agreement), (ii) which subsequently
becomes publicly known through no act or omission by such Purchaser or
Transferee (as the case may be), or (iii) which otherwise becomes known to
such Purchaser or Transferee, other than through disclosure by the Company or
from a Person obligated not to disclose under this Agreement.
"CONFIRMATION OF ACCEPTANCE" shall have the meaning
specified in paragraph 2B(5).
"CONSOLIDATED" shall mean the consolidation of the accounts
of the Company and its Subsidiaries in accordance with generally accepted
accounting principles including principles of consolidation.
"CONSOLIDATED ADJUSTED GROSS WORTH" shall mean the sum of
(i) Consolidated Net Worth, (ii) consolidated deferred income taxes and (iii)
Consolidated Debt.
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"CONSOLIDATED DEBT" shall mean the Debt of the Company and
all Subsidiaries after giving effect to intercompany eliminations arising
from the consolidation of financial statements in accordance with generally
accepted accounting principles.
"CONSOLIDATED GROSS WORTH" shall mean the Consolidated Net
Worth plus Consolidated Debt.
"CONSOLIDATED NET INCOME" shall mean, with respect to any
period, the net income of the Company and its Subsidiaries determined on a
consolidated basis in accordance with generally accepted accounting
principles, excluding extraordinary gains and losses and non-cash charges.
"CONSOLIDATED NET WORTH" shall mean, as of any time of
determination thereof, the sum of (i) the par value (or value stated on the
books of the Company) of the capital stock of all classes of the Company,
plus (or minus in the case of a surplus deficit) (ii) the amount of the
consolidated surplus, whether capital or earned, of the Company and its
Subsidiaries after subtracting therefrom the aggregate of treasury stock and
any other contra-equity accounts including, without limitation, minority
interests; all determined in accordance with generally accepted accounting
principles.
"DEBT" shall mean and include, (i) any obligation which
under generally accepted accounting principles is shown on the balance sheet
as a liability (including capitalized lease obligations) but excluding: (a)
reserves for deferred income taxes, (b) reserves for employee
retirement-related benefits, (c) other reserves to the extent that such
reserves do not constitute an obligation; and (d) current liabilities other
than current maturities of Debt (ii) indebtedness which is secured by any
Lien on property owned by the Company or any Subsidiary; (iii) Guarantees in
connection with the obligations, stock or dividends of any Person.
"DELAYED DELIVERY FEE" shall have the meaning specified in
paragraph 2B(8)(iii).
"EBITDA" shall mean, with respect to the Company and its
Subsidiaries on a consolidated basis, the sum of (i) Consolidated Net Income,
(ii) income tax expense (iii) interest expense, (iv) depreciation expense and
(v) amortization expense, all determined in accordance with generally
accepted accounting principles.
"ERISA" shall mean the Employee Retirement Income Security
Act of 1974, as amended.
"ERISA AFFILIATE" shall mean any corporation which is a
member of the same controlled group of corporations as the Company within the
meaning of section 414(b) of the Code, or any trade or business which is
under common control with the Company within the meaning of section 414(c) of
the Code.
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"EVENT OF DEFAULT" shall mean any of the events specified in
paragraph 7A, provided that there has been satisfied any requirement in
connection with such event for the giving of notice, or the lapse of time, or
the happening of any further condition, event or act, and "DEFAULT" shall
mean any of such events, whether or not any such requirement has been
satisfied.
"EXCHANGE ACT" shall mean the Securities Exchange Act of
1934, as amended.
"FACILITY" shall have the meaning specified in paragraph
2B(1).
"GUARANTEE" shall mean, with respect to any Person, any
direct or indirect liability, contingent or otherwise, of such Person with
respect to any indebtedness, lease, dividend or other obligation of another,
including, without limitation, any such obligation directly or indirectly
guaranteed, endorsed (otherwise than for collection or deposit in the
ordinary course of business) or discounted or sold with recourse by such
Person, or in respect of which such Person is otherwise directly or
indirectly liable, including, without limitation, any such obligation in
effect guaranteed by such Person through any agreement (contingent or
otherwise) to purchase, repurchase or otherwise acquire such obligation or
any security therefor, or to provide funds for the payment or discharge of
such obligation (whether in the form of loans, advances, stock purchases,
capital contributions or otherwise), or to maintain the solvency or any
balance sheet or other financial condition of the obligor of such obligation,
or to make payment for any products, materials or supplies or for any
transportation or service, regardless of the non-delivery or non-furnishing
thereof, in any such case if the purpose or intent of such agreement is to
provide assurance that such obligation will be paid or discharged, or that
any agreements relating thereto will be complied with, or that the holders of
such obligation will be protected against loss in respect thereof. The
amount of any Guarantee shall be equal to the outstanding principal amount of
the obligation guaranteed or such lesser amount to which the maximum exposure
of the guarantor shall have been specifically limited.
"HEDGE TREASURY NOTE(s)" shall mean, with respect to any
Accepted Note, the United States Treasury Note or Notes whose duration (as
determined by Prudential) most closely matches the duration of such Accepted
Note.
"HOSTILE TENDER OFFER" shall mean, with respect to the use
of proceeds of any Note, any offer to purchase, or any purchase of, shares of
capital stock of any corporation or equity interests in any other entity, or
securities convertible into or representing the beneficial ownership of, or
rights to acquire, any such shares or equity interests, if such shares,
equity interests, securities or rights are of a class which is publicly
traded on any securities exchange or in any over-the-counter market, other
than purchases of such shares, equity interests, securities or rights
representing less than 5% of the equity interests or beneficial ownership of
such corporation or other entity for portfolio investment purposes, and such
offer or purchase has not been duly approved by the board of directors of
such corporation or the equivalent governing body of such other entity prior
to the date on which the Company makes the Request for Purchase of such Note.
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"INCLUDING" shall mean, unless the context clearly requires
otherwise, "including without limitation".
"INSTITUTIONAL INVESTOR" shall mean any insurance company,
bank, finance company, mutual fund, registered money or asset manager,
savings and loan association, credit union, registered investment advisor,
pension fund, investment company, licensed broker or dealer, "qualified
institutional buyer" (as such term is defined under Rule 144A promulgated
under the Securities Act, or any successor law, rule or regulation) or
"accredited investor" (as such term is defined under Regulation D promulgated
under the Securities Act, or any successor law, rule or regulation).
"ISSUANCE PERIOD" shall have the meaning specified in
paragraph 2B(2).
"Lien" shall mean any mortgage, pledge, security interest,
encumbrance, lien (statutory or otherwise) or charge of any kind (including
any agreement to give any of the foregoing, any conditional sale or other
title retention agreement, any lease in the nature thereof, and the filing of
or agreement to give any financing statement under the Uniform Commercial
Code of any jurisdiction) or any other type of preferential arrangement for
the purpose, or having the effect, of protecting a creditor against loss or
securing the payment or performance of an obligation.
"MULTIEMPLOYER PLAN" shall mean any Plan which is a
"multiemployer plan" (as such term is defined in section 4001(a)(3) of ERISA.
"NOTES" shall have the meaning specified in paragraph 1B.
"OFFICER'S CERTIFICATE" shall mean a certificate signed in
the name of the Company by an Authorized Officer of the Company.
"PERSON" shall mean and include an individual, a
partnership, a joint venture, a corporation, a trust, an unincorporated
organization and a government or any department or agency thereof.
"PLAN" shall mean any employee pension benefit plan (as such
term is defined in section 3 of ERISA) which is or has been established or
maintained, or to which contributions are or have been made, by the Company
or any ERISA Affiliate.
"PRIORITY DEBT" shall mean the sum of (i) Debt of the
Company which is secured by a Lien and (ii) Debt of any Subsidiary
(including, but not limited to, any Debt of a Subsidiary which consists of a
Guarantee of Debt of the Company), excluding however Debt of Subsidiaries
owing to the Company or any Wholly-Owned Subsidiary.
"PRUDENTIAL" shall mean The Prudential Insurance Company of
America.
"PRUDENTIAL AFFILIATE" shall mean any Affiliate of
Prudential.
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"PURCHASERS" shall mean Prudential with respect to the
Series A Notes and, with respect to any Accepted Notes, Prudential and/or the
Prudential Affiliate(s), which are purchasing such Accepted Notes.
"RELATED PARTY" shall mean (i) any Significant Stockholder,
(ii) all persons to whom any Significant Stockholder is related by blood,
adoption or marriage and (iii) all Affiliates of the foregoing Persons.
"REQUEST FOR PURCHASE" shall have the meaning specified in
paragraph 2B(3).
"Required Holder(s)" shall mean the holder or holders of at
least 51% of the aggregate principal amount of the Notes or of a Series of
Notes, as the context may require, from time to time outstanding.
"RESCHEDULED CLOSING DAY" shall have the meaning specified
in paragraph 2B(7).
"RESPONSIBLE OFFICER" shall mean the chief executive
officer, chief operating officer, chief financial officer or chief accounting
officer of the Company, general counsel of the Company or any other officer
of the Company involved principally in its financial administration or its
controllership function.
"SECURITIES ACT" shall mean the Securities Act of 1933, as
amended.
"SERIES" shall have the meaning specified in paragraph 1B.
"SERIES A CLOSING DAY" shall have the meaning specified in
paragraph 2A.
"SERIES A NOTE(s)" shall have the meaning specified in
paragraph 1A.
"SHELF NOTES" shall have the meaning specified in paragraph
1B.
"SIGNIFICANT HOLDER" shall mean (i) Prudential, so long as
Prudential or any Prudential Affiliate shall hold (or be committed under
this Agreement to purchase) any Note, and (ii) any other holder of at least
10% of the aggregate principal amount of the Notes from time to time
outstanding.
"SIGNIFICANT STOCKHOLDER" shall mean and include any Person
who owns, beneficially or of record, directly or indirectly, at any time
during any year with respect to which a computation is being made, either
individually or together with all persons to whom such Person is related by
blood, adoption or marriage, 5% or more of the Voting Stock of the Company.
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"STRUCTURING FEE" shall have the meaning specified in
paragraph 2B(8)(i).
"SUBSIDIARY" shall mean any corporation of which at least
51% of the total combined voting power of all classes of Voting Stock of
which shall, at the time as of which any determination is being made, be
owned by the Company either directly or through Subsidiaries.
"TRANSFER" shall mean, with respect to any item, the sale,
exchange, conveyance, lease, transfer or other disposition of such item.
"TRANSFEREE" shall mean any direct or indirect transferee of
all or any part of any Note purchased by any Purchaser under this Agreement.
"VOTING STOCK" shall mean, with respect to any corporation,
any shares of stock of such corporation whose holders are entitled under
ordinary circumstances to vote for the election of directors of such
corporation (irrespective of whether at the time stock of any other class or
classes shall have or might have voting power by reason of the happening of
any contingency).
"WHOLLY-OWNED SUBSIDIARY" shall mean any Subsidiary all of
the stock of every class of which is, at the time as of which any
determination is being made, owned by the Company either directly or through
a wholly-owned Subsidiary.
10C. ACCOUNTING PRINCIPLES, TERMS AND DETERMINATIONS. All
references in this Agreement to "generally accepted accounting principles"
shall be deemed to refer to generally accepted accounting principles in
effect in the United States at the time of application thereof. Unless
otherwise specified herein, all accounting terms used herein shall be
interpreted, all determinations with respect to accounting matters hereunder
shall be made, and all unaudited financial statements and certificates and
reports as to financial matters required to be furnished hereunder shall be
prepared, in accordance with generally accepted accounting principles applied
on a basis consistent with the most recent audited financial statements
delivered pursuant to clause (ii) of paragraph 5A or, if no such statements
have been so delivered, the most recent audited financial statements referred
to in clause (i) of paragraph 8B. Any reference herein to any specific law,
statute, rule or regulation shall refer to such law, statute, rule or
regulation as the same may be may be modified, amended or replaced from time
to time.
11. MISCELLANEOUS.
11A. NOTE PAYMENTS. The Company agrees that, so long as any
Purchaser shall hold any Note, it will make payments of principal of,
interest on, and any Yield-Maintenance Amount payable with respect to, such
Note, which comply with the terms of this Agreement, by wire transfer of
immediately available funds for credit (not later than 12:00 noon, New York
City local time, on the date due) to (i) the account or accounts of such
Purchaser specified in the Purchaser Schedule attached hereto in the case of
any Series A Note, (ii) the account or accounts of such Purchaser specified
in the Confirmation of Acceptance with respect to such Note in the case of
any Shelf Note or (iii) such other account or accounts in the United States
as such Purchaser may
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from time to time designate in writing, notwithstanding any contrary
provision herein or in any Note with respect to the place of payment. Each
Purchaser agrees that, before disposing of any Note, it will make a notation
thereon (or on a schedule attached thereto) of all principal payments
previously made thereon and of the date to which interest thereon has been
paid. The Company agrees to afford the benefits of this paragraph 11A to any
Transferee which shall have made the same agreement as the Purchasers have
made in this paragraph 11A.
11B. EXPENSES. The Company agrees, whether or not the
transactions contemplated hereby shall be consummated, to pay, and save
Prudential, each Purchaser and any Transferee harmless against liability for
the payment of, all out-of-pocket expenses arising in connection with such
transactions, including (i) all document production and duplication charges
and the fees and expenses of any special counsel engaged by the Purchasers or
any Transferee in connection with this Agreement, the transactions
contemplated hereby and any subsequent proposed modification of, or proposed
consent under, this Agreement, whether or not such proposed modification
shall be effected or proposed consent granted, and (ii) the costs and
expenses, including attorneys' fees, incurred by any Purchaser or any
Transferee in enforcing (or determining whether or how to enforce) any rights
under this Agreement or the Notes or in responding to any subpoena or other
legal process or informal investigative demand issued in connection with this
Agreement or the transactions contemplated hereby or by reason of any
Purchaser's or any Transferee's having acquired any Note, including without
limitation costs and expenses incurred in any bankruptcy case. The
obligations of the Company under this paragraph 11B shall survive the
transfer of any Note or portion thereof or interest therein by any Purchaser
or any Transferee and the payment of any Note.
11C. CONSENT TO AMENDMENTS. This Agreement may be amended, and the
Company may take any action herein prohibited, or omit to perform any act herein
required to be performed by it, if the Company shall obtain the written consent
to such amendment, action or omission to act, of the Required Holder(s) of the
Notes of each Series except that, (i) with the written consent of the holders of
all Notes of a particular Series, and if an Event of Default shall have occurred
and be continuing, of the holders of all Notes of all Series, at the time
outstanding (and such written consents), the Notes of such Series may be amended
or the provisions thereof waived to change the maturity thereof, to change or
affect the principal thereof, or to change or affect the rate or time of payment
of interest on or any Yield-Maintenance Amount payable with respect to the Notes
of such Series, (ii) without the written consent of the holder or holders of all
Notes at the time outstanding, no amendment to or waiver of the provisions of
this Agreement shall change or affect the provisions of paragraph 7A or this
paragraph 11C insofar as such provisions relate to proportions of the principal
amount of the Notes of any Series, or the rights of any individual holder of
Notes, required with respect to any declaration of Notes to be due and payable
or with respect to any consent, amendment, waiver or declaration, (iii) with the
written consent of Prudential (and without the consent of any other holder of
the Notes) the provisions of paragraph 2B may be amended or waived (except
insofar as any such amendment or waiver would affect any rights or obligations
with respect to the purchase and sale of Notes which shall have become Accepted
Notes prior to such amendment or waiver), and (iv) with the written consent of
all of the Purchasers which shall have become obligated to purchase Accepted
Notes of any Series (and not
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without the written consent of all such Purchasers), any of the provisions of
paragraphs 2B and 3 may be amended or waived insofar as such amendment or
waiver would affect only rights or obligations with respect to the purchase
and sale of the Accepted Notes of such Series or the terms and provisions of
such Accepted Notes. Each holder of any Note at the time or thereafter
outstanding shall be bound by any consent authorized by this paragraph 11C,
whether or not such Note shall have been marked to indicate such consent, but
any Notes issued thereafter may bear a notation referring to any such
consent. No course of dealing between the Company and the holder of any Note
nor any delay in exercising any rights hereunder or under any Note shall
operate as a waiver of any rights of any holder of such Note. As used herein
and in the Notes, the term "THIS AGREEMENT" and references thereto shall mean
this Agreement as it may from time to time be amended or supplemented.
11D. FORM, REGISTRATION, TRANSFER AND EXCHANGE OF NOTES; LOST
NOTES. The Notes are issuable as registered notes without coupons in
denominations of at least $1,000,000, except as may be necessary to reflect
any principal amount not evenly divisible by $1,000,000. The Company shall
keep at its principal office a register in which the Company shall provide
for the registration of Notes and of transfers of Notes. Upon surrender for
registration of transfer of any Note at the principal office of the Company,
the Company shall, at its expense, execute and deliver one or more new Notes
of like tenor and of a like then aggregate outstanding principal amount,
registered in the name of such transferee or transferees. At the option of
the holder of any Note, such Note may be exchanged for other Notes of like
tenor and of any authorized denominations, of a like aggregate principal
amount, upon surrender of the Note to be exchanged at the principal office of
the Company. Whenever any Notes are so surrendered for exchange, the Company
shall, at its expense, execute and deliver the Notes which the holder making
the exchange is entitled to receive. Each prepayment of principal payable on
each prepayment date upon each new Note issued upon any such transfer or
exchange shall be in the same proportion to the unpaid principal amount of
such new Note as the prepayment of principal payable on such date on the Note
surrendered for registration of transfer or exchange bore to the unpaid
principal amount of such Note. No reference need be made in any such new
Note to any prepayment or prepayments of principal previously due and paid
upon the Note surrendered for registration of transfer or exchange. Every
Note surrendered for registration of transfer or exchange shall be duly
endorsed, or be accompanied by a written instrument of transfer duly
executed, by the holder of such Note or such holder's attorney duly
authorized in writing. Any Note or Notes issued in exchange for any Note or
upon transfer thereof shall carry the rights to unpaid interest and interest
to accrue which were carried by the Note so exchanged or transferred, so that
neither gain nor loss of interest shall result from any such transfer or
exchange. Upon receipt of written notice from the holder of any Note of the
loss, theft, destruction or mutilation of such Note and, in the case of any
such loss, theft or destruction, upon receipt of such holder's unsecured
indemnity agreement, or in the case of any such mutilation upon surrender and
cancellation of such Note, the Company will make and deliver a new Note, of
like tenor, in lieu of the lost, stolen, destroyed or mutilated Note.
11E. PERSONS DEEMED OWNERS; PARTICIPATIONS. Prior to due
presentment for registration of transfer, the Company may treat the Person in
whose name any Note is registered as the owner and holder of such Note for
the purpose of receiving payment of principal of and interest
33
<PAGE>
on, and any Yield-Maintenance Amount payable with respect to, such Note and
for all other purposes whatsoever, whether or not such Note shall be overdue,
and the Company shall not be affected by notice to the contrary. Subject to
the preceding sentence, the holder of any Note may from time to time grant
participations in all or any part of such Note to any Person on such terms
and conditions as may be determined by such holder in its sole and absolute
discretion.
11F. SURVIVAL OF REPRESENTATIONS AND WARRANTIES; ENTIRE
AGREEMENT. All representations and warranties contained herein or made in
writing by or on behalf of the Company in connection herewith shall survive
the execution and delivery of this Agreement and the Notes, the transfer by
any Purchaser of any Note or portion thereof or interest therein and the
payment of any Note, and may be relied upon by any Transferee, regardless of
any investigation made at any time by or on behalf of any Purchaser or any
Transferee. Subject to the preceding sentence, this Agreement and the Notes
embody the entire agreement and understanding between the parties hereto with
respect to the subject matter hereof and supersede all prior agreements and
understandings relating to such subject matter.
11G. SUCCESSORS AND ASSIGNS. All covenants and other agreements
in this Agreement contained by or on behalf of any of the parties hereto
shall bind and inure to the benefit of the respective successors and assigns
of the parties hereto (including, without limitation, any Transferee) whether
so expressed or not.
11H. INDEPENDENCE OF COVENANTS. All covenants hereunder shall be
given independent effect so that if a particular action or condition is
prohibited by any one of such covenants, the fact that it would be permitted
by an exception to, or otherwise be in compliance within the limitations of,
another covenant shall not avoid (i) the occurrence of a Default or Event of
Default if such action is taken or such condition exists or (ii) in any way
prejudice an attempt by the holder of any Note to prohibit through equitable
action or otherwise the taking of any action by the Company or any Subsidiary
which would result in a Default or Event of Default.
11I. NOTICES. All written communications provided for hereunder
(other than communications provided for under paragraph 2) shall be sent by
first class mail or nationwide overnight delivery service (with charges prepaid)
and (i) if to any Purchaser, addressed as specified for such communications in
the Purchaser Schedule attached hereto (in the case of the Series A Notes) or
the Purchaser Schedule attached to the applicable Confirmation of Acceptance (in
the case of any Shelf Notes) or at such other address as any such Purchaser
shall have specified to the Company in writing, (ii) if to any other holder of
any Note, addressed to it at such address as it shall have specified in writing
to the Company or, if any such holder shall not have so specified an address,
then addressed to such holder in care of the last holder of such Note which
shall have so specified an address to the Company and (iii) if to the Company,
addressed to it at MARTEN TRANSPORT, LTD., 129 Marten Street, Mondovi, Wisconsin
54755, Attention: Chief Financial Officer, PROVIDED, HOWEVER, that any such
communication to the Company may in addition, at the option of the Person
sending such communication, be delivered by any other means either to the
Company at its address specified above or to any Authorized Officer of the
Company. Any communication pursuant to paragraph 2 shall be made by the method
specified for such
34
<PAGE>
communication in paragraph 2, and shall be effective to create any rights or
obligations under this Agreement only if, in the case of a telephone
communication, an Authorized Officer of the party conveying the information
and of the party receiving the information are parties to the telephone call,
and in the case of a telecopier communication, the communication is signed by
an Authorized Officer of the party conveying the information, addressed to
the attention of an Authorized Officer of the party receiving the
information, and in fact received at the telecopier terminal the number of
which is listed for the party receiving the communication in the Information
Schedule or at such other telecopier terminal as the party receiving the
information shall have specified in writing to the party sending such
information.
11J. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of
principal of or interest on, or Yield-Maintenance Amount payable with respect
to, any Note that is due on a date other than a Business Day shall be made on
the next succeeding Business Day. If the date for any payment is extended to
the next succeeding Business Day by reason of the preceding sentence, the
period of such extension shall not be included in the computation of the
interest payable on such Business Day.
11K. SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such
jurisdiction, be ineffective to the extent of such prohibition or
unenforceability without invalidating the remaining provisions hereof, and
any such prohibition or unenforceability in any jurisdiction shall not
invalidate or render unenforceable such provision in any other jurisdiction.
11L. DESCRIPTIVE HEADINGS. The descriptive headings of the
several paragraphs of this Agreement are inserted for convenience only and do
not constitute a part of this Agreement.
11M. SATISFACTION REQUIREMENT. If any agreement, certificate or
other writing, or any action taken or to be taken, is by the terms of this
Agreement required to be satisfactory to any Purchaser, to any holder of
Notes or to the Required Holder(s), the determination of such satisfaction
shall be made by such Purchaser, such holder or the Required Holder(s), as
the case may be, in the sole and exclusive judgment (exercised in good faith)
of the Person or Persons making such determination.
11N. GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND
ENFORCED IN ACCORDANCE WITH, AND THE RIGHTS OF THE PARTIES SHALL BE GOVERNED
BY, THE INTERNAL LAW OF THE STATE OF ILLINOIS.
11O. SEVERALTY OF OBLIGATIONS. The sales of Notes to the
Purchasers are to be several sales, and the obligations of Prudential and the
Purchasers under this Agreement are several obligations. No failure by
Prudential or any Purchaser to perform its obligations under this Agreement
shall relieve any other Purchaser or the Company of any of its obligations
hereunder, and neither Prudential nor any Purchaser shall be responsible for
the obligations of, or any action taken or omitted by, any other such Person
hereunder.
35
<PAGE>
11P. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be an original, but all of which
together shall constitute one instrument.
11Q. CONFIDENTIALITY PROVISIONS. Each Purchaser (and each
Transferee by its acceptance of an interest in any Note) agrees, so long as
no Event of Default is continuing under paragraphs 7A(i), (ii), (viii), (ix)
or (x), that it will use its best efforts to hold in confidence and not
disclose any Confidential Information without the prior written consent of
the Company which consent shall not be unreasonably denied; provided,
however, that nothing contained herein shall prevent the holder of any Note
from delivering copies of any financial statements and other documents
delivered to such holder, and disclosing any other information disclosed to
such holder, by the Company or any Subsidiary in connection with or pursuant
to this Agreement to (i) such holder's directors, officers, employees, agents
and professional consultants, (ii) any other holder of any Note, (iii) any
Institutional Investor to which such holder offers to sell such Note or any
part thereof, (iv) any Institutional Investor to which such holder sells or
offers to sell a participation in all or any part of such Note, (v) any
Institutional Investor from which such holder offers to purchase any security
of the Company, (vi) any federal or state regulatory authority having
jurisdiction over such holder, (vii) the National Association of Insurance
Commissioners or any similar organization or (viii) any other Person which is
not a Competitor to which such delivery or disclosure may be reasonably
necessary or appropriate (a) in compliance with any law, rule, regulation or
order applicable to such holder, (b) in response to any subpoena or other
legal process or investigative demand, (c) in connection with any litigation
in connection with this Agreement to which such holder is a party or (d) in
order to protect such holder's investment and enforce the rights of such
holder under this Agreement; and provided further that after notice to the
Company the holders of the Notes shall be free to correct any false or
misleading information which may become public concerning their relationship
to the Company or any of its Subsidiaries. Each Purchaser and each Transferee
may in good faith conclusively rely on a certificate of a proposed purchaser
of the Note(s) addressed and delivered to the Company and such Purchaser or
Transferee to the effect that such proposed purchaser of the Note(s) is not a
Competitor, provided that the Company has not, by written notice to such
Purchaser or Transferee delivered within five Business Days after the
Company's receipt of such certificate, objected to such reliance on the
grounds that the Company in good faith reasonably believes such proposed
purchaser of the Note(s) is a Competitor.
11R. TRANSFER RESTRICTIONS. Each holder of a Note agrees that it
will not sell, assign or otherwise transfer a Note (i) so long as no Event of
Default is continuing under paragraphs 7A(i), (ii), (viii), (ix) or (x), to
any Person who is a Competitor (determined in accordance with the last
sentence of paragraph 11Q), or (ii) to any Person who is not a United States
Person unless the transferee represents and warrants to such holder that, as
of the date of proposed transfer, it is entitled to receive interest payments
without withholding or deduction of any taxes and such transferee executes
and delivers to such holder on or before the date of transfer, a United
States Internal Revenue Service Form 1001 or 4224, or any successor to either
such forms, as appropriate, properly completed and claiming complete
exemption from withholding and deduction of all United States Federal income
taxes. As used herein "UNITED STATES PERSON"
36
<PAGE>
means any citizen, national or resident of the United States, any corporation
or other entity created or organized in or under the laws of the United
States or any political subdivision thereof, or any estate or trust that, in
the case of any such estate or trust, is not subject to withholding of United
States Federal income taxes or other taxes on payment of interest or fees
hereunder.
[SIGNATURES ON FOLLOWING PAGE]
37
<PAGE>
11S. BINDING AGREEMENT. When this Agreement is executed and
delivered by the Company and Prudential, it shall become a binding agreement
between the Company and Prudential. This Agreement shall also inure to and
each such Purchaser shall be bound by this Agreement to the extent provided
in such Confirmation of Acceptance.
Very truly yours,
MARTEN TRANSPORT, LTD.
By:
--------------------------------
Name: Darrel D. Rubel
Title: Executive Vice President
and Chief Financial Officer
The foregoing Agreement is
hereby accepted as of the
date first above written.
THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA
By:
-----------------------------
Vice President
38
<PAGE>
EXHIBIT A-1
[FORM OF SERIES A NOTE]
MARTEN TRANSPORT, LTD.
6.78% SENIOR SERIES A NOTE DUE OCTOBER 30, 2008
No. 1998 R-A1 Chicago, Illinois
$25,000,000 October 30, 1998
FOR VALUE RECEIVED, the undersigned, MARTEN TRANSPORT, LTD., (herein
called the "Company"), a corporation organized and existing under the laws of
the State of Delaware, hereby promises to pay to THE PRUDENTIAL INSURANCE
COMPANY OF AMERICA, or registered assigns, the principal sum of TWENTY-FIVE
MILLION DOLLARS on October 30, 2008, with interest (computed on the basis of
a 360-day year--30-day month) (a) on the unpaid balance thereof at the rate
of 6.78% per annum from the date hereof, payable on each January 30, April
30, July 30 and October 30, in each year, commencing on January 30, 1999,
until the principal hereof shall have become due and payable, and (b) on any
overdue payment (including any overdue prepayment) of principal, any overdue
payment of Yield-Maintenance Amount and any overdue payment of interest,
payable quarterly as aforesaid (or, at the option of the registered holder
hereof, on demand), at a rate per annum from time to time equal to the
greater of (i) 8.78% or (ii) 2.00% over the rate of interest publicly
announced by Morgan Guaranty Trust Company of New York from time to time in
New York City as its Prime Rate.
Payments of principal, Yield-Maintenance Amount, if any, and interest
are to be made at the main office of Bank of New York in New York City or at
such other place as the holder hereof shall designate to the Company in
writing, in lawful money of the United States of America.
This Note is one of a series of Senior Notes (herein called the "Notes")
issued pursuant to a Note Purchase and Private Shelf Agreement, dated as of
October 30, 1998 (herein called the "Agreement"), between the Company, on the
one hand, and The Prudential Insurance Company of America, and each
Prudential Affiliate which becomes party thereto, on the other hand, and is
entitled to the benefits thereof. As provided in the Agreement, this Note is
subject to prepayment, in whole or from time to time in part, in certain
cases without Yield-Maintenance Amount and in other cases with the
Yield-Maintenance Amount specified in the Agreement.
A-1-1
<PAGE>
This Note is a registered Note and, as provided in the Agreement, upon
surrender of this Note for registration of transfer, duly endorsed, or
accompanied by a written instrument of transfer duly executed, by the
registered holder hereof or such holder's attorney duly authorized in
writing, a new Note for the then outstanding principal amount will be issued
to, and registered in the name of, the transferee. Prior to due presentment
for registration of transfer, the Company may treat the person in whose name
this Note is registered as the owner hereof for the purpose of receiving
payment and for all other purposes, and the Company shall not be affected by
any notice to the contrary.
In case an Event of Default shall occur and be continuing, the principal
of this Note may be declared or otherwise become due and payable in the
manner and with the effect provided in the Agreement.
Capitalized terms used and not otherwise defined herein shall have the
meanings (if any) provided in the Agreement.
This Note is intended to be performed in the State of Illinois and shall
be construed and enforced in accordance with the internal law of such State.
MARTEN TRANSPORT, LTD.
By:
----------------------------------
Title:
--------------------------------
A-1-2
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of October 30, 1998, is by and between
MARTEN TRANSPORT, LTD., a Delaware corporation (the "Borrower"), the banks
which are signatories hereto (individually, a "Bank" and, collectively, the
"Banks") and U.S. BANK NATIONAL ASSOCIATION, a national banking association,
one of the Banks, as agent for the Banks (in such capacity, the "Agent").
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
Section 1.1 DEFINED TERMS. As used in this Agreement the following
terms shall have the following respective meanings (and such meanings shall
be equally applicable to both the singular and plural form of the terms
defined, as the context may require):
"ADJUSTED EURODOLLAR RATE": With respect to each Interest
Period applicable to a Eurodollar Rate Advance, the rate (rounded
upward, if necessary, to the next one hundredth of one percent)
determined by dividing the Eurodollar Rate for such Interest Period by
1.00 minus the Eurodollar Reserve Percentage.
"ADMINISTRATIVE FEE": As defined in Section 2.16.
"ADVANCE": Any portion of the outstanding Revolving Loans by a
Bank as to which one of the available interest rate options and, if
pertinent, an Interest Period, is applicable. An Advance may be a
Eurodollar Rate Advance or a Reference Rate Advance.
"AFFILIATE": When used with reference to any Person, (a) each
Person that, directly or indirectly, controls, is controlled by or is
under common control with, the Person referred to, (b) each Person which
beneficially owns or holds, directly or indirectly, five percent or more
of any class of voting stock of the Person referred to (or if the Person
referred to is not a corporation, five percent or more of the equity
interest), (c) each Person, five percent or more of the voting stock (or
if such Person is not a corporation, five percent or more of the equity
interest) of which is beneficially owned or held, directly or
indirectly, by the Person referred to, and (d) each of such Person's
officers, directors, joint venturers and partners. The term control
(including the terms
-1-
<PAGE>
"controlled by" and "under common control with") means the possession,
directly, of the power to direct or cause the direction of the
management and policies of the Person in question.
"AGENT": As defined in the opening paragraph hereof.
"AGGREGATE REVOLVING COMMITMENT AMOUNTS": As of any date, the
sum of the Revolving Commitment Amounts of all the Banks.
"APPLICABLE LENDING OFFICE": For each Bank and for each type
of Advance, the office of such Bank identified as such Bank's Applicable
Lending Office on the signature pages hereof or such other domestic or
foreign office of such Bank (or of an Affiliate of such Bank) as such
Bank may specify from time to time, by notice given pursuant to Section
9.4, to the Agent and the Borrower as the office by which its Advances
of such type are to be made and maintained.
"APPLICABLE MARGIN": With respect to Eurodollar Rate Advances,
the rate per annum corresponding with the Cash Flow Leverage Ratio as of
the last day of the preceding fiscal quarter:
<TABLE>
<CAPTION>
Cash Flow Leverage Ratio Applicable Margin
------------------------------------------------------------------------
<S> <C>
GREATER THAN 3.00 1.250%
GREATER THAN 2.25 and LESS THAN OR EQUAL TO 3.00 1.000%
GREATER THAN 1.75 and LESS THAN OR EQUAL TO 2.25 0.750%
GREATER THAN 1.00 and LESS THAN OR EQUAL TO 1.75 0.625%
LESS THAN OR EQUAL TO 1.00 0.500%
</TABLE>
"ARRANGEMENT FEE": As defined in Section 3.1(e).
"BANK": As defined in the opening paragraph hereof.
"BOARD": The Board of Governors of the Federal Reserve System
or any successor thereto.
"BORROWER": As defined in the opening paragraph hereof.
"BORROWER LOAN DOCUMENTS": This Agreement and the Revolving
Notes.
"BORROWING BASE": As determined in accordance with the formula
set forth in EXHIBIT 1.1B hereto.
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<PAGE>
"BORROWING BASE CERTIFICATE": A certificate in the form of
EXHIBIT 1.1C hereto.
"BORROWING BASE DEFICIENCY": At the time of any determination,
the amount, if any, by which Total Revolving Outstandings exceed the
Borrowing Base.
"BUSINESS DAY": Any day (other than a Saturday, Sunday or
legal holiday in the State of Minnesota) on which national banks are
permitted to be open in Minneapolis, Minnesota.
"CAPITAL EXPENDITURES": For any period, the sum of all amounts
that would, in accordance with GAAP, be included as additions to
property, plant and equipment on a consolidated statement of cash flows
for the Borrower during such period, in respect of (a) the acquisition,
construction, improvement, replacement or betterment of land, buildings,
machinery, equipment or of any other fixed assets or leaseholds, (b) to
the extent related to and not included in (a) above, materials and
contract labor (excluding expenditures properly chargeable to repairs or
maintenance in accordance with GAAP), and (c) other capital expenditures
and other uses recorded as capital expenditures or similar terms having
substantially the same effect.
"CAPITALIZED LEASE": A lease of (or other agreement conveying
the right to use) real or personal property with respect to which at
least a portion of the rent or other amounts thereon constitute
Capitalized Lease Obligations.
"CAPITALIZED LEASE OBLIGATIONS": As to any Person, the
obligations of such Person to pay rent or other amounts under a lease of
(or other agreement conveying the right to use) real or personal
property which obligations are required to be classified and accounted
for as a capital lease on a balance sheet of such Person under GAAP
(including Statement of Financial Accounting Standards No. 13 of the
Financial Accounting Standards Board), and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized
amount thereof, determined in accordance with GAAP (including such
Statement No. 13).
"CASH FLOW LEVERAGE RATIO": For any period of determination,
the ratio of
(a) the sum (without duplication) of (i) the
aggregate principal amount of all outstanding Capitalized Lease
Obligations
-3-
<PAGE>
of the Borrower and the Subsidiaries, (ii) that portion of
Total Liabilities bearing interest determined as of the last
day of that period, (iii) the stated amount of all Letters of
Credit as of the last day of that period, plus (iv) an amount
equal to seven times transportation equipment operating lease
expense for such period,
to
(b) EBITDAR determined for said period on a
consolidated basis in accordance with GAAP.
"CHANGE OF CONTROl": The occurrence, after the Closing Date,
of any of the following circumstances: (a) any Person or two or more
Persons acting in concert acquiring beneficial ownership (within the
meaning of Rule 13d-3 of the Securities and Exchange Commission under
the Securities Exchange Act of 1934), directly or indirectly, of
securities of the Borrower (or other securities convertible into such
securities) representing 10% or more of the combined voting power of all
securities of the Borrower entitled to vote in the election of
directors, and such percentage of voting power is equal to or greater
than the aggregate direct and indirect percentage of voting power held
by the Roger Marten estate or heirs, or (b) during any period of up to
twelve consecutive months, whether commencing before or after the
Closing Date, individuals who at the beginning of such twelve-month
period were directors of the Borrower ceasing for any reason to
constitute a majority of the Board of Directors of the Borrower (other
than by reason of death, disability or scheduled retirement), or (c) a
"Change in Control Event" (as defined in the Senior Unsecured Note
Documents occurs.
"CLOSING DATE": Any Business Day between the date of this
Agreement and November 30, 1998 selected by the Borrower for the making
of the first Revolving Loans hereunder; provided, that all the
conditions precedent to the obligation of the Banks to make such Loans,
as set forth in Article III, have been, or, on such Closing Date, will
be, satisfied. The Borrower shall give the Agent not less than three
Business Days prior notice of the day selected as the Closing Date.
"CODE": The Internal Revenue Code of 1986, as amended.
"CONTINGENT OBLIGATION": With respect to any Person at the
time of any determination, without duplication, any obligation,
contingent or otherwise, of such Person guaranteeing or having the
economic effect of guaranteeing any Indebtedness of any other Person
(the "primary
-4-
<PAGE>
obligor") in any manner, whether directly or otherwise: (a) to purchase
or pay (or advance or supply funds for the purchase or payment of) such
Indebtedness or to purchase (or to advance or supply funds for the
purchase of) any direct or indirect security therefor, (b) to purchase
property, securities or services for the purpose of assuring the owner
of such Indebtedness of the payment of such Indebtedness, (c) to
maintain working capital, equity capital or other financial statement
condition of the primary obligor so as to enable the primary obligor to
pay such Indebtedness or otherwise to protect the owner thereof against
loss in respect thereof, or (d) entered into for the purpose of assuring
in any manner the owner of such Indebtedness of the payment of such
Indebtedness or to protect the owner against loss in respect thereof;
provided, that the term "Contingent Obligation" shall not include
endorsements for collection or deposit, in each case in the ordinary
course of business. The amount of any such Contingent Obligation shall
be determined in accordance with GAAP.
"CURRENT LIABILITIES": As of any date, the consolidated
current liabilities of the Borrower, determined in accordance with GAAP.
"DEFAULT": Any event which, with the giving of notice (whether
such notice is required under Section 7.1, or under some other provision
of this Agreement, or otherwise) or lapse of time, or both, would
constitute an Event of Default.
"EBITDA": For any period of determination, the consolidated
net income of the Borrower (excluding non-operating gains or losses and
noncash charges), before deductions for income taxes, Interest Expense,
depreciation and amortization, all as determined in accordance with GAAP.
"EBITDAR": For any period of determination, EBITDA plus
transportation equipment operating lease expense during such period.
"EBITR": For any period of determination, the consolidated net
income of the Borrower (excluding non-operating gains or losses and
noncash charges) before deductions for income tax and Interest Expense,
plus transportation equipment operating lease expense during such period.
"ERISA": The Employee Retirement Income Security Act of 1974,
as amended.
-5-
<PAGE>
"ERISA AFFILIATE": Any trade or business (whether or not
incorporated) that is a member of a group of which the Borrower is a
member and which is treated as a single employer under Section 414 of
the Code.
"EURODOLLAR BUSINESS DAY": A Business Day which is also a day
for trading by and between banks in United States dollar deposits in the
interbank Eurodollar market and a day on which banks are open for
business in New York City.
"EURODOLLAR RATE": With respect to each Interest Period
applicable to a Eurodollar Rate Advance, the average offered rate for
deposits in United States dollars (rounded upward, if necessary, to the
nearest 1/16 of 1%) for delivery of such deposits on the first day of
such Interest Period, for the number of days in such Interest Period,
which appears on the Reuters Screen LIBO page as of 10:00 a.m., London
time (or such other time as of which such rate appears) two Eurodollar
Business Days prior to the first day of such Interest Period, or the
rate for such deposits determined by the Agent at such time based on
such other published service of general application as shall be selected
by the Agent for such purpose; provided, that in lieu of determining the
rate in the foregoing manner, the Agent may determine the rate based on
rates at which United States dollar deposits are offered to the Agent in
the interbank Eurodollar market at such time for delivery in Immediately
Available Funds on the first day of such Interest Period in an amount
approximately equal to the Advance by the Agent to which such Interest
Period is to apply (rounded upward, if necessary, to the nearest 1/16 of
1%). "Reuters Screen LIBO page" means the display designated as page
"LIBO" on the Reuters Monitor Money Rate Screen (or such other page as
may replace the LIBO page on such service for the purpose of displaying
London interbank offered rates of major banks for United States dollar
deposits).
"EURODOLLAR RATE ADVANCE": An Advance with respect to which
the interest rate is determined by reference to the Adjusted Eurodollar
Rate.
"EURODOLLAR RESERVE PERCENTAGE": As of any day, that
percentage (expressed as a decimal) which is in effect on such day, as
prescribed by the Board for determining the maximum reserve requirement
(including any basic, supplemental or emergency reserves) for a member
bank of the Federal Reserve System, with deposits comparable in amount
to those held by the Agent, in respect of "Eurocurrency Liabilities" as
such term is defined in Regulation D of the Board. The rate of interest
-6-
<PAGE>
applicable to any outstanding Eurodollar Rate Advances shall be adjusted
automatically on and as of the effective date of any change in the
Eurodollar Reserve Percentage.
"EVENT OF DEFAULT": Any event described in Section 7.1.
"EXISTING U.S. BANK DEBT": Indebtedness of the Borrower owed
to U.S. Bank as of the date of this Agreement and described on
SCHEDULE 6.13, in the approximate aggregate outstanding amount of $8.5
million.
"FEE LETTER": The letter between U.S. Bank and the Borrower
dated the Closing Date.
"GAAP": Generally accepted accounting principles set forth in
the opinions and pronouncements of the Accounting Principles Board of
the American Institute of Certified Public Accountants and statements
and pronouncements of the Financial Accounting Standards Board or in
such other statements by such other entity as may be approved by a
significant segment of the accounting profession, which are applicable
to the circumstances as of any date of determination.
"HOLDING ACCOUNT": A deposit account belonging to the Agent
for the benefit of the Banks into which the Borrower may be required to
make deposits pursuant to the provisions of this Agreement, such account
to be under the sole dominion and control of the Agent and not subject
to withdrawal by the Borrower, with any amounts therein to be held for
application toward payment of any outstanding Letters of Credit when
drawn upon. The Holding Account shall be a money market savings account
or substantial equivalent (or other appropriate investment medium as the
Borrower may from time to time request and to which the Agent in its
sole discretion shall have consented) and shall bear interest in
accordance with the terms of similar accounts held by the Agent for its
customers.
"IMMEDIATELY AVAILABLE FUNDS": Funds with good value on the
day and in the city in which payment is received.
"INDEBTEDNESS": With respect to any Person at the time of any
determination, without duplication, all obligations, contingent or
otherwise, of such Person which in accordance with GAAP should be
classified upon the balance sheet of such Person as liabilities, but in
any event including: (a) all obligations of such Person for borrowed
money, (b) all obligations of such Person evidenced by bonds,
debentures, notes or
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other similar instruments, (c) all obligations of such Person upon which
interest charges are customarily paid or accrued, (d) all obligations of
such Person under conditional sale or other title retention agreements
relating to property purchased by such Person, (e) all obligations of
such Person issued or assumed as the deferred purchase price of property
or services, (f) all obligations of others secured by any Lien on
property owned or acquired by such Person, whether or not the
obligations secured thereby have been assumed, (g) all Capitalized Lease
Obligations of such Person, (h) all obligations of such Person in
respect of interest rate protection agreements, (i) all obligations of
such Person, actual or contingent, as an account party in respect of
letters of credit or bankers' acceptances, (j) all obligations of any
partnership or joint venture as to which such Person is or may become
personally liable, and (k) all Contingent Obligations of such Person.
"INTEREST COVERAGE RATIO": For any period of determination,
the ratio of (a) EBITR, to (b) Interest Expense plus transportation
equipment operating lease expense, in each case determined for said
period in accordance with GAAP.
"INTEREST EXPENSE": For any period of determination, the
aggregate consolidated amount, without duplication, of interest paid,
accrued or scheduled to be paid in respect of any Indebtedness of the
Borrower, including (a) all but the principal component of payments in
respect of conditional sale contracts, Capitalized Leases and other
title retention agreements, (b) commissions, discounts and other fees
and charges with respect to letters of credit and bankers' acceptance
financings and (c) net costs under interest rate protection agreements,
in each case determined in accordance with GAAP.
"INTEREST PERIOD": With respect to each Eurodollar Rate
Advance, the period commencing on the date of such Advance or on the
last day of the immediately preceding Interest Period, if any,
applicable to an outstanding Advance and ending one, two, three or six
months thereafter, as the Borrower may elect in the applicable notice of
borrowing, continuation or conversion; PROVIDED THAT:
(a) Any Interest Period that would otherwise end on a
day which is not a Eurodollar Business Day shall be extended to
the next succeeding Eurodollar Business Day unless such
Eurodollar Business Day falls in another calendar month, in
which case such Interest Period shall end on the next preceding
Eurodollar Business Day;
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(b) Any Interest Period that begins on the last
Eurodollar Business Day of a calendar month (or a day for which
there is no numerically corresponding day in the calendar month
at the end of such Interest Period) shall end on the last
Eurodollar Business Day of a calendar month; and
(c) Any Interest Period that would otherwise end
after the Revolving Commitment Ending Date shall end on the
Revolving Commitment Ending Date.
"INVESTMENT": The acquisition, purchase, making or holding of
any stock or other security, any loan, advance, contribution to capital,
extension of credit (except for trade and customer accounts receivable
for inventory sold or services rendered in the ordinary course of
business and payable in accordance with customary trade terms), any
acquisitions of real or personal property (other than real and personal
property acquired in the ordinary course of business) and any purchase
or commitment or option to purchase stock or other debt or equity
securities of or any interest in another Person or any integral part of
any business or the assets comprising such business or part thereof.
The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any
adjustments for increases or decreases in value, or write-ups,
write-downs or write-offs with respect to such Investment.
"LETTER OF CREDIT": An irrevocable letter of credit issued by
the Agent pursuant to this Agreement for the account of the Borrower.
"LETTER OF CREDIT FEE": As defined in Section 2.16.
"LETTER OF CREDIT SUBLIMIT": $4,000,000.
"LIEN": With respect to any Person, any security interest,
mortgage, pledge, lien, charge, encumbrance, title retention agreement
or analogous instrument or device (including the interest of each lessor
under any Capitalized Lease), in, of or on any assets or properties of
such Person, now owned or hereafter acquired, whether arising by
agreement or operation of law.
"LOAN DOCUMENTS": This Agreement, the Revolving Notes and the
Guaranties.
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"MAJORITY BANKS": At any time, Banks holding at least 66 2/3%
of the aggregate unpaid principal amount of the Revolving Notes or, if
no Revolving Loans are at the time outstanding hereunder, Banks holding
at least 66 2/3% of the Aggregate Revolving Commitment Amounts.
"MULTIEMPLOYER PLAN": A multiemployer plan, as such term is
defined in Section 4001 (a) (3) of ERISA, which is maintained (on the
Closing Date, within the five years preceding the Closing Date, or at
any time after the Closing Date) for employees of the Borrower or any
ERISA Affiliate.
"NOTE PURCHASE AGREEMENT": The Note Purchase and Private
Shelf Agreement dated October 30, 1998, for $25,000,000 6.78% Series A
Senior Notes due October 30, 2008 and $15,000,000 Private Shelf
Facility, between the Borrower and The Prudential Insurance Company of
America and each Prudential Affiliate (as defined therein) which becomes
a Purchaser (as defined therein) thereunder.
"OBLIGATIONS": The Borrower's obligations, without
duplication, in respect of the due and punctual payment of principal and
interest on the Revolving Notes and Unpaid Drawings when and as due,
whether by acceleration or otherwise and all fees (including Revolving
Commitment Fees), expenses, indemnities, reimbursements and other
obligations of the Borrower under this Agreement or any other Borrower
Loan Document, in all cases whether now existing or hereafter arising or
incurred.
"PBGC": The Pension Benefit Guaranty Corporation, established
pursuant to Subtitle A of Title IV of ERISA, and any successor thereto
or to the functions thereof.
"PERSON": Any natural person, corporation, partnership,
limited partnership, limited liability company, joint venture, firm,
association, trust, unincorporated organization, government or
governmental agency or political subdivision or any other entity,
whether acting in an individual, fiduciary or other capacity.
"PLAN": Each employee benefit plan (whether in existence on
the Closing Date or thereafter instituted), as such term is defined in
Section 3 of ERISA, maintained for the benefit of employees, officers or
directors of the Borrower or of any ERISA Affiliate.
"PROHIBITED TRANSACTION": The respective meanings assigned to
such term in Section 4975 of the Code and Section 406 of ERISA.
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"REFERENCE RATE": The rate of interest from time to time
publicly announced by the Agent as its "reference rate." The Agent may
lend to its customers at rates that are at, above or below the Reference
Rate. For purposes of determining any interest rate hereunder or under
any other Loan Document which is based on the Reference Rate, such
interest rate shall change as and when the Reference Rate shall change.
"REFERENCE RATE ADVANCE": An Advance with respect to which the
interest rate is determined by reference to the Reference Rate.
"REGULATORY CHANGE": Any change after the Closing Date in
federal, state or foreign laws or regulations or the adoption or making
after such date of any interpretations, directives or requests applying
to a class of banks including any Bank under any federal, state or
foreign laws or regulations (whether or not having the force of law) by
any court or governmental or monetary authority charged with the
interpretation or administration thereof.
"REPORTABLE EVENT": A reportable event as defined in Section
4043 of ERISA and the regulations issued under such Section, with
respect to a Plan, excluding, however, such events as to which the PBGC
by regulation has waived the requirement of Section 4043(a) of ERISA
that it be notified within 30 days of the occurrence of such event,
PROVIDED that a failure to meet the minimum funding standard of Section
412 of the Code and of Section 302 of ERISA shall be a Reportable Event
regardless of the issuance of any waiver in accordance with Section
412(d) of the Code.
"RESTRICTED PAYMENTS": With respect to the Borrower,
collectively, all dividends or other distributions of any nature (cash,
securities other than common stock of the Borrower, assets or
otherwise), and all payments on any class of equity securities
(including warrants, options or rights therefor) issued by the Borrower,
whether such securities are authorized or outstanding on the Closing
Date or at any time thereafter and any redemption or purchase of, or
distribution in respect of, any of the foregoing, whether directly or
indirectly.
"REVOLVING COMMITMENT": With respect to a Bank, the agreement
of such Bank to make Revolving Loans to the Borrower in an aggregate
principal amount outstanding at any time not to exceed such Bank's
Revolving Commitment Amount upon the terms and subject to the conditions
and limitations of this Agreement.
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"REVOLVING COMMITMENT AMOUNT": With respect to a Bank,
initially the amount set opposite such Bank's name on the signature page
hereof as its Revolving Commitment Amount, but as the same may be
reduced from time to time pursuant to Section 2.13.
"REVOLVING COMMITMENT ENDING DATE": As defined in Section 2.19.
"REVOLVING COMMITMENT FEES": As defined in Section 2.15.
"REVOLVING LOAN": As defined in Section 2.1.
"REVOLVING LOAN DATE": The date of the making of any Revolving
Loans hereunder.
"REVOLVING NOTE": A promissory note of the Borrower in the
form of EXHIBIT 1.1A hereto.
"REVOLVING PERCENTAGE": With respect to any Bank, the
percentage equivalent of a fraction, the numerator of which is the
Revolving Commitment Amount of such Bank and the denominator of which is
the Aggregate Revolving Commitment Amounts.
"SENIOR UNSECURED NOTE DOCUMENTS": Collectively, (i) the Note
Purchase Agreement; (ii) the Series A Notes (as defined in the Note
Purchase Agreement) issued under the Note Purchase Agreement; and (iii)
any Shelf Notes (as defined in the Note Purchase Agreement) issued
under the Note Purchase Agreement.
"SUBORDINATED DEBT": Any Indebtedness of the Borrower, now
existing or hereafter created, incurred or arising, which is
subordinated in right of payment to the payment of the Obligations in a
manner and to an extent (a) that Majority Banks have approved in writing
prior to the creation of such Indebtedness, or (b) as to any
Indebtedness of the Borrower existing on the date of this Agreement,
that Majority Banks have approved as Subordinated Debt in a writing
delivered by Majority Banks to the Borrower on or prior to the Closing
Date.
"SUBSIDIARY": Any corporation or other entity of which
securities or other ownership interests having ordinary voting power for
the election of a majority of the board of directors or other Persons
performing similar functions are owned by the Borrower either directly
or through one or more Subsidiaries.
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"TANGIBLE NET WORTH ": As of any date of determination, the
sum of the amounts set forth on the consolidated balance sheet of the
Borrower as the sum of the common stock, preferred stock, additional
paid-in capital and retained earnings of the Borrower (excluding
treasury stock), less the book value of all intangible assets of the
Borrower and its Subsidiaries, including all such items as goodwill,
trademarks, trade names, service marks, copyrights, patents, licenses,
unamortized debt discount and expenses and the excess of the purchase
price of the assets of any business acquired by the Borrower or any of
its Subsidiaries over the book value of such assets.
"TERMINATION DATE": The earliest of (a) the Revolving
Commitment Ending Date, (b) the date on which the Revolving Commitments
are terminated pursuant to Section 7.2 hereof or (c) the date on which
the Revolving Commitment Amounts are reduced to zero pursuant to
Section 2.13 hereof.
"TOTAL LIABILITIES": At the time of any determination, the
amount, on a consolidated basis, of all items of Indebtedness of the
Borrower and its Subsidiaries that would constitute "liabilities" for
balance sheet purposes in accordance with GAAP.
"TOTAL REVOLVING OUTSTANDINGS": As of any date of
determination, the sum of (a) the aggregate unpaid principal balance of
Revolving Loans outstanding on such date, (b) the aggregate maximum
amount available to be drawn under Letters of Credit outstanding on such
date and (c) the aggregate amount of Unpaid Drawings on such date.
"UNPAID DRAWING": As defined in Section 2.11.
"UNUSED REVOLVING COMMITMENT": With respect to any Bank as of
any date of determination, the amount by which such Bank's Revolving
Commitment Amount exceeds such Bank's Revolving Percentage of the Total
Revolving Outstandings on such date.
"U.S. BANK": U.S. Bank National Association in its capacity as
one of the Banks hereunder.
Section 1.2 ACCOUNTING TERMS AND CALCULATIONS. Except as may be
expressly provided to the contrary herein, all accounting terms used herein
shall be interpreted and all accounting determinations hereunder shall be
made in accordance with GAAP. To the extent any change in GAAP affects any
computation or determination required to be made pursuant to this Agreement,
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such computation or determination shall be made to account for such change in
GAAP.
Section 1.3 COMPUTATION OF TIME PERIODS. In this Agreement, in the
computation of a period of time from a specified date to a later specified
date, unless otherwise stated the word "from" means "from and including" and
the word "to" or "until" each means "to but excluding."
Section 1.4 OTHER DEFINITIONAL TERMS. The words "hereof", "herein"
and "hereunder" and words of similar import when used in this Agreement shall
refer to this Agreement as a whole and not to any particular provision of
this Agreement. References to Sections, Exhibits, schedules and like
references are to this Agreement unless otherwise expressly provided. The
words "include," "includes" and "including" shall be deemed to be followed by
the phrase "without limitation." Unless the context in which used herein
otherwise clearly requires, "or" has the inclusive meaning represented by the
phrase "and/or."
ARTICLE II
TERMS OF THE CREDIT FACILITIES
PART A -- TERMS OF LENDING
Section 2.1 THE REVOLVING COMMITMENTS. On the terms and subject to
the conditions hereof, each Bank severally agrees to make loans (each, a
"Revolving Loan" and, collectively, the "Revolving Loans") to the Borrower on
a revolving basis at any time and from time to time from the Closing Date to
the Termination Date, during which period the Borrower may borrow, repay and
reborrow in accordance with the provisions hereof, provided, that no
Revolving Loan will be made in any amount which, after giving effect thereto,
would cause the Total Revolving Outstandings to exceed the lesser of (i) the
Aggregate Revolving Commitment Amounts, or (ii) the Borrowing Base.
Revolving Loans hereunder shall be made by the several Banks ratably in the
proportion of their respective Revolving Commitment Amounts. Revolving Loans
may be obtained and maintained, at the election of the Borrower but subject
to the limitations hereof, as Reference Rate Advances or Eurodollar Rate
Advances or any combination thereof. Notwithstanding any provision hereof,
this Agreement and the Revolving Commitments shall terminate and the Banks
shall have no obligation hereunder if the initial Revolving Loans hereunder
have not been made by November 30, 1998, provided, however, that the
obligations of the Borrower under Section 9.2 shall survive any such
termination.
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Section 2.2 PROCEDURE FOR REVOLVING LOANS. Any request by the
Borrower for Revolving Loans hereunder shall be in writing or by telephone
and must be given so as to be received by the Agent not later than 12:00 noon
(Minneapolis time) two Eurodollar Business Days prior to the requested
Revolving Loan Date if the Revolving Loans (or any portion thereof) are
requested as Eurodollar Rate Advances and not later than 1:00p.m.
(Minneapolis time) on the requested Revolving Loan Date if the Revolving
Loans are requested as Reference Rate Advances. Each request for Revolving
Loans hereunder shall be irrevocable and shall be deemed a representation by
the Borrower that on the requested Revolving Loan Date and after giving
effect to the requested Revolving Loans the applicable conditions specified
in Article III have been and will be satisfied. Each request for Revolving
Loans hereunder shall specify (i) the requested Revolving Loan Date, (ii) the
aggregate amount of Revolving Loans to be made on such date which shall be in
a minimum amount of $100,000 or, if more, an integral multiple thereof, (iii)
whether such Revolving Loans are to be funded as Reference Rate Advances or
Eurodollar Rate Advances (and, if such Revolving Loans are to be made with
more than one applicable interest rate choice, specifying the amount to which
each interest rate choice is applicable) and (iv) in the case of Eurodollar
Rate Advances, the duration of the initial Interest Period applicable
thereto. The Agent may rely on any telephone request for Revolving Loans
hereunder which it believes in good faith to be genuine; and the Borrower
hereby waives the right to dispute the Agent's record of the terms of such
telephone request. The Agent shall promptly notify each other Bank of the
receipt of such request, the matters specified therein, and of such Bank's
ratable share of the requested Revolving Loans. On the date of the requested
Revolving Loans, each Bank shall provide its share of the requested Revolving
Loans to the Agent in Immediately Available Funds not later than 2:00 p.m.,
Minneapolis time. Unless the Agent determines that any applicable condition
specified in Article III has not been satisfied, the Agent will make
available to the Borrower at the Agent's principal office in Minneapolis,
Minnesota in Immediately Available Funds not later than 2:00p.m. (Minneapolis
time) on the requested Revolving Loan Date the amount of the requested
Revolving Loans. If the Agent has made a Revolving Loan to the Borrower on
behalf of a Bank but has not received the amount of such Revolving Loan from
such Bank by the time herein required, such Bank shall pay interest to the
Agent on the amount so advanced at the overnight Federal Funds rate from the
date of such Revolving Loan to the date funds are received by the Agent from
such Bank, such interest to be payable with such remittance from such Bank of
the principal amount of such Revolving Loan (provided, however, that the
Agent shall not make any Revolving Loan on behalf of a Bank if the Agent has
received prior notice from such Bank that it will not make such Revolving
Loan). If the Agent does not receive payment from such Bank by the next
Business Day after the date of any Revolving Loan, the Agent shall be
entitled
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to recover such Revolving Loan, with interest thereon at the rate (or rates)
then applicable to the such Revolving Loan (but not including any funding
losses with respect to such Revolving Loan that is a Eurodollar Rate
Advance), on demand, from the Borrower, without prejudice to the Agent's and
the Borrower's rights against such Bank. If such Bank pays the Agent the
amount herein required with interest at the overnight Federal Funds rate
before the Agent has recovered from the Borrower, such Bank shall be entitled
to the interest payable by the Borrower with respect to the Revolving Loan in
question accruing from the date the Agent made such Revolving Loan. Not more
than nine Revolving Loans may be outstanding at any time during the term of
this Agreement.
Section 2.3 REVOLVING NOTES. The Advances of each Bank shall be
evidenced by a single Revolving Note payable to the order of such Bank in a
principal amount equal to such Bank's Revolving Commitment Amount originally
in effect. Upon receipt of each Bank's Revolving Note from the Borrower, the
Agent shall mail such Revolving Note to such Bank. Each Bank shall enter in
its ledgers and records the amount of each Revolving Loan, the various
Advances made, converted or continued and the payments made thereon, and each
Bank is authorized by the Borrower to enter on a schedule attached to its
Revolving Note a record of such Revolving Loans, Advances and payments;
provided, however that the failure by any Bank to make any such entry or any
error in making such entry shall not limit or otherwise affect the obligation
of the Borrower hereunder and on the Revolving Notes, and, in all events, the
principal amounts owing by the Borrower in respect of the Revolving Notes
shall be the aggregate amount of all Revolving Loans made by the Banks less
all payments of principal thereof made by the Borrower.
Section 2.4 CONVERSIONS AND CONTINUATIONS. On the terms and subject
to the limitations hereof, the Borrower shall have the option at any time and
from time to time to convert all or any portion of the Advances into
Reference Rate Advances or Eurodollar Rate Advances, or to continue a
Eurodollar Rate Advance as such; provided, however that a Eurodollar Rate
Advance may be converted or continued only on the last day of the Interest
Period applicable thereto and no Advance may be converted to or continued as
a Eurodollar Rate Advance if a Default or Event of Default has occurred and
is continuing on the proposed date of continuation or conversion. Advances
may be converted to, or continued as, Eurodollar Rate Advances only in
integral multiples, as to the aggregate amount of the Advances of all Banks
so converted or continued, of $100,000 or, if larger, in integral multiples
of $100,000. The Borrower shall give the Agent written notice of any
continuation or conversion of any Advances and such notice must be given so
as to be received by the Agent not later than 12:00 noon (Minneapolis time)
two Eurodollar Business Days prior to
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requested date of conversion or continuation in the case of the continuation
of, or conversion to, Eurodollar Rate Advances and on the date of the
requested conversion to Reference Rate Advances. Each such notice shall
specify (a) the amount to be continued or converted, (b) the date for the
continuation or conversion (which must be (i) the last day of the preceding
Interest Period for any continuation or conversion of Eurodollar Rate
Advances, and (ii) a Eurodollar Business Day in the case of continuations as
or conversions to Eurodollar Rate Advances and a Business Day in the case of
conversions to Reference Rate Advances), and (c) in the case of conversions
to or continuations as Eurodollar Rate Advances, the Interest Period
applicable thereto. Any notice given by the Borrower under this Section
shall be irrevocable. If the Borrower shall fail to notify the Agent of the
continuation of any Eurodollar Rate Advances within the time required by this
Section, such Advances shall, on the last day of the Interest Period
applicable thereto, automatically be converted into Reference Rate Advances
of the same principal amount. All conversions and continuation of Advances
must be made uniformly and ratably among the Banks. (E.g., when continuing a
two-month Eurodollar Rate Advance of one Bank to a three-month Eurodollar
Rate Advance, the Borrower must simultaneously continue all two-month
Eurodollar Rate Advances of all Banks having Interest Periods ending on the
date of continuation as three-month Eurodollar Rate Advances.)
Section 2.5 INTEREST RATES, INTEREST PAYMENTS AND DEFAULT INTEREST.
Interest shall accrue and be payable on the Revolving Loans as follows:
2.5(a) Subject to paragraph (c) below, each Eurodollar Rate
Advance shall bear interest on the unpaid principal amount thereof
during the Interest Period applicable thereto at a rate per annum equal
to the sum of (i) the Adjusted Eurodollar Rate for such Interest Period,
plus (ii) the Applicable Margin.
2.5(b) Subject to paragraph (c) below, each Reference Rate
Advance shall bear interest on the unpaid principal amount thereof at a
varying rate per annum equal to the Reference Rate.
2.5(c) Upon the occurrence of any Event of Default, each Advance
shall, at the option of the Majority Banks, bear interest until paid in
full (i) during the balance of any Interest Period applicable to such
Advance, at a rate per annum equal to the sum of the rate applicable to
such Advance during such Interest Period plus 2.0%, and (ii) otherwise,
at a rate per annum equal to the Reference Rate plus 2.0%.
2.5(d) Interest shall be payable (i) with respect to each
Eurodollar Rate Advance having an Interest Period of three months or
less, on the
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last day of the Interest Period applicable thereto; (ii) with respect to
any Eurodollar Rate Advance having an Interest Period greater than three
months, on the last day of the Interest Period applicable thereto and on
each day that would have been the last day of the Interest Period for
such Advance had successive Interest Periods of three months duration
been applicable to such Advance; (iii) with respect to any Reference
Rate Advance, on the last day of each month; (iv) with respect to all
Advances, upon any permitted prepayment (on the amount prepaid); and (E)
with respect to all Advances, on the Termination Date; provided that
interest under Section 2.5 (c) shall be payable on demand.
2.5(e) Interest on all or a portion (in increments of not less
than $5,000,000) of the Revolving Notes may be converted at the request
of the Borrower and with the consent and approval of all of the Banks to
a fixed rate per annum from the conversion date (which shall be a date
on which no Eurodollar Rate Advances are outstanding with respect to the
portion being so converted) to a Business Day not later than the
Termination Date, which fixed rate per annum shall be determined by the
Banks, in which case the Banks and the Borrower will enter such
amendments as the Banks and the Agent deem reasonably necessary to
effect such conversion.
Section 2.6 REPAYMENT. The unpaid principal amount of all Advances,
together with all accrued and unpaid interest thereon, shall be due and payable
on the Termination Date.
Section 2.7 PREPAYMENTS.
2.7(a) MANDATORY PAYMENTS. If at any time a Borrowing Base
Deficiency exists, the Borrower shall immediately pay on the principal
of the Advances an amount equal to such Borrowing Base Deficiency. Any
such payments shall be applied first against Reference Rate Advances and
then to Eurodollar Rate Advances in order starting with the Eurodollar
Rate Advances having the shortest time to the end of the applicable
Interest Period. Amounts paid on the Advances under this paragraph (a)
shall be for the account of each Bank in proportion to its share of
outstanding Revolving Loans. If, after paying all outstanding Advances,
a Borrowing Base Deficiency still exists, the Borrower shall pay into
the Holding Account an amount equal to the amount of the remaining
Borrowing Base Deficiency.
2.7(b) OTHER MANDATORY PREPAYMENTS. If at any time Total
Revolving Outstandings exceed the Aggregate Revolving Commitment
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Amounts, the Borrower shall immediately repay to the Agent for the
account of the Banks the amount of such excess. Any such payments shall
be applied first against Reference Rate Advances and then to Eurodollar
Rate Advances in order starting with the Eurodollar Rate Advances having
the shortest time to the end of the applicable Interest Period. If,
after payment of all outstanding Advances, the Total Revolving
Outstandings still exceed the Aggregate Revolving Commitment Amounts,
the remaining amount paid by the Borrower shall be placed in the Holding
Account.
2.7(c) OPTIONAL PREPAYMENTS. The Borrower may prepay
Reference Rate Advances, in whole or in part, at any time, without
premium or penalty. Any such prepayment must be accompanied by accrued
and unpaid interest on the amount prepaid. Each partial prepayment
shall be in an aggregate amount for all the Banks of $100,000 or an
integral multiple thereof. Except upon an acceleration following an
Event of Default or upon termination of the Revolving Commitments in
whole, the Borrower may pay Eurodollar Rate Advances only on the last
day of the Interest Period applicable thereto. Amounts paid (unless
following an acceleration or upon termination of the Revolving
Commitments in whole) or prepaid on Advances under this paragraph (c)
may be reborrowed upon the terms and subject to the conditions and
limitations of this Agreement. Amounts paid or prepaid on the Advances
under this paragraph (c) shall be for the account of each Bank in
proportion to its share of outstanding Revolving Loans.
PART B -- TERMS OF THE LETTER OF CREDIT FACILITY
Section 2.8 LETTERS OF CREDIT. Upon the terms and subject to the
conditions of this Agreement, the Agent agrees to issue Letters of Credit for
the account of the Borrower from time to time between the Closing Date and
the Termination Date in such amounts as the Borrower shall request up to an
aggregate amount at any time outstanding not exceeding the Letter of Credit
Sublimit; provided that no Letter of Credit will be issued in any amount
which, after giving effect to such issuance, would cause Total Revolving
Outstandings to exceed the lesser of (a) the Aggregate Revolving Commitment
Amounts, or (b) the Borrowing Base.
Section 2.9 PROCEDURES FOR LETTERS OF CREDIT. Each request for a
Letter of Credit shall be made by the Borrower in writing, by telex,
facsimile transmission or electronic conveyance received by the Agent by 2:00
p.m., Minneapolis time, on a Business Day which is not less than one Business
Day preceding the requested date of issuance (which shall also be a Business
Day).
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Each request for a Letter of Credit shall be deemed a representation by the
Borrower that on the date of issuance of such Letter of Credit and after
giving effect thereto the applicable conditions specified in Article III have
been and will be satisfied. The Agent may require that such request be made
on such letter of credit application and reimbursement agreement form as the
Agent may from time to time specify, along with satisfactory evidence of the
authority and incumbency of the officials of the Borrower making such
request. The Agent shall promptly notify the other Banks of the receipt of
the request and the matters specified therein. On the date of each issuance
of a Letter of Credit the Agent shall send notice to the other Banks of such
issuance, accompanied by a copy of the Letter or Letters of Credit so issued.
Section 2.10 TERMS OF LETTERS OF CREDIT. Letters of Credit shall be
issued in support of obligations of the Borrower. All Letters of Credit must
expire not later than the Business Day preceding the Revolving Commitment
Ending Date. No Letter of Credit may have a term longer than twelve months.
Section 2.11 AGREEMENT TO REPAY LETTER OF CREDIT DRAWINGS. If the
Agent has received documents purporting to draw under a Letter of Credit that
the Agent believes conform to the requirements of the Letter of Credit, or if
the Agent has decided that it will comply with the Borrower's written or oral
request or authorization to pay a drawing on any Letter of Credit that the
Agent does not believe conforms to the requirements of the Letter of Credit,
it will notify the Borrower of that fact. The Borrower shall reimburse the
Agent by 9:30 a.m. (Minneapolis time) on the day on which such drawing is to
be paid in Immediately Available Funds in an amount equal to the amount of
such drawing. Any amount by which the Borrower has failed to reimburse the
Agent for the full amount of such drawing by 10:00 a.m. on the date on which
the Agent in its notice indicated that it would pay such drawing, until
reimbursed from the proceeds of Loans pursuant to Section 2.14 or out of
funds available in the Holding Account, is an "Unpaid Drawing."
Section 2.12 OBLIGATIONS ABSOLUTE. The obligation of the Borrower
under Section 2.11 to repay the Agent for any amount drawn on any Letter of
Credit and to repay the Banks for any Revolving Loans made under Section 2.14
to cover Unpaid Drawings shall be absolute, unconditional and irrevocable,
shall continue for so long as any Letter of Credit is outstanding
notwithstanding any termination of this Agreement, and shall be paid strictly
in accordance with the terms of this Agreement, under all circumstances
whatsoever, including without limitation the following circumstances:
2.12(a) Any lack of validity or enforceability of any Letter
of Credit;
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2.12(b) The existence of any claim, setoff, defense or other
right which the Borrower may have or claim at any time against any
beneficiary, transferee or holder of any Letter of Credit (or any Person
for whom any such beneficiary, transferee or holder may be acting), the
Agent or any Bank or any other Person, whether in connection with a
Letter of Credit, this Agreement, the transactions contemplated hereby,
or any unrelated transaction; or
2.12(c) Any statement or any 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.
Neither the Agent nor any Bank nor officers, directors or employees of any
thereof shall be liable or responsible for, and the obligations of the Borrower
to the Agent and the Banks shall not be impaired by:
(i) The use which may be made of any Letter of Credit or for
any acts or omissions of any beneficiary, transferee or holder thereof
in connection therewith;
(ii) The validity, sufficiency or genuineness of documents,
or of any endorsements thereon, even if such documents or endorsements
should, in fact, prove to be in any or all respects invalid,
insufficient, fraudulent or forged;
(iii) The acceptance by the Agent of documents that appear on
their face to be in order, without responsibility for further
investigation, regardless of any notice or information to the contrary;
or
(iv) Any other action of the Agent in making or failing to
make payment under any Letter of Credit if in good faith and in
conformity with U.S. or foreign laws, regulations or customs applicable
thereto.
Notwithstanding the foregoing, the Borrower shall have a claim against the
Agent, and the Agent shall be liable to the Borrower, to the extent, but only
to the extent, of any direct, as opposed to consequential, damages suffered
by the Borrower which the Borrower proves were caused by the Agent's willful
misconduct or gross negligence in determining whether documents presented
under any Letter of Credit comply with the terms thereof.
PART C -- GENERAL
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Section 2.13 OPTIONAL REDUCTION OF REVOLVING COMMITMENT AMOUNTS OR
TERMINATION OF REVOLVING COMMITMENTS. The Borrower may, at any time, upon
not less than two Business Days prior written notice to the Agent, reduce the
Revolving Commitment Amounts, ratably, with any such reduction in a minimum
aggregate amount for all the Banks of $1,000,000, or, if more, in an integral
multiple of $1,000,000; PROVIDED, HOWEVER, that the Borrower may not at any
time reduce the Aggregate Revolving Commitment Amounts below the Total
Revolving Outstandings. The Borrower may, at any time when there are no
Letters of Credit outstanding, upon not less than two Business Days prior
written notice to the Agent, terminate the Revolving Commitments in their
entirety. Upon termination of the Revolving Commitments pursuant to this
Section, the Borrower shall pay to the Agent for the account of the Banks the
full amount of all outstanding Advances, all accrued and unpaid interest
thereon, all unpaid Revolving Commitment Fees accrued to the date of such
termination, any indemnities payable with respect to Advances pursuant to
Section 2.25 and all other unpaid obligations of the Borrower to the Agent
and the Banks hereunder.
Section 2.14 LOANS TO COVER UNPAID DRAWINGS. Whenever any Unpaid
Drawing exists for which there are not then funds in the Holding Account to
cover the same, the Agent shall give the other Banks notice to that effect,
specifying the amount thereof, in which event each Bank is authorized (and
the Borrower does here so authorize each Bank) to, and shall, make a
Revolving Loan (as a Reference Rate Advance) to the Borrower in an amount
equal to such Bank's Revolving Percentage of the amount of the Unpaid
Drawing. The Agent shall notify each Bank by 11:00 a.m. (Minneapolis time)
on the date such Unpaid Drawing occurs of the amount of the Revolving Loan to
be made by such Bank. Notices received after such time shall be deemed to
have been received on the next Business Day. Each Bank shall then make such
Revolving Loan (regardless of noncompliance with the applicable conditions
precedent specified in Article III hereof and regardless of whether an Event
of Default then exists) and each Bank shall provide the Agent with the
proceeds of such Revolving Loan in Immediately Available Funds, at the office
of the Agent, not later than 2:00 p.m. (Minneapolis time) on the day on which
such Bank received such notice (or, in the case of notices received after
11:00 a.m., Minneapolis time, is deemed to have received such notice). The
Agent shall apply the proceeds of such Revolving Loans directly to reimburse
itself for such Unpaid Drawing. If any portion of any such amount paid to
the Agent should be recovered by or on behalf of the Borrower from the Agent
in bankruptcy, by assignment for the benefit of creditors or otherwise, the
loss of the amount so recovered shall be ratably shared between and among the
Banks in the manner contemplated by Section 8.10 hereof. If at the time the
Banks make funds available to the Agent pursuant to the provisions of this
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Section, the applicable conditions precedent specified in Article III shall
not have been satisfied, the Borrower shall pay to the Agent for the account
of the Banks interest on the funds so advanced at a floating rate per annum
equal to the sum of the Reference Rate plus two percent (2.00%). If for any
reason any Bank is unable to make a Revolving Loan to the Borrower to
reimburse the Agent for an Unpaid Drawing, then such Bank shall immediately
purchase from the Agent a risk participation in such Unpaid Drawing, at par,
in an amount equal to such Bank's Revolving Percentage of the Unpaid Drawing.
Section 2.15 REVOLVING COMMITMENT FEE. The Borrower shall pay to the
Agent for the account of each Bank fees (the "Revolving Commitment Fees") in
an amount determined by applying the applicable rate per annum set forth
below corresponding to the Cash Flow Leverage Ratio of the Borrower as at end
of the preceding quarter to the average daily Unused Revolving Commitment of
such Bank for the period from the Closing Date to the Termination Date. Such
Revolving Commitment Fees are payable in arrears quarterly on the last day of
each fiscal quarter and on the Termination Date.
<TABLE>
<CAPTION>
Cash Flow Leverage Ratio Rate Per annum
------------------------------------------------------------------
<S> <C>
GREATER THAN 3.00 0.300%
GREATER THAN 2.25 and LESS THAN OR EQUAL TO 3.00 0.250%
GREATER THAN 1.75 and LESS THAN OR EQUAL TO 2.25 0.200%
GREATER THAN 1.00 and LESS THAN OR EQUAL TO 1.75 0.150%
LESS THAN OR EQUAL TO 1.00 0.125%
</TABLE>
Section 2.16 LETTER OF CREDIT FEES AND ADMINISTRATIVE FEES. For each
Letter of Credit issued, the Borrower shall pay to the Agent for the account
of the Banks, in advance payable on the date of issuance, a fee (a "Letter of
Credit Fee") in an amount determined by applying the applicable per annum
rate set forth below (corresponding to the Borrower's Cash Flow Leverage
Ratio as of the Borrower as at the end of the preceding quarter) to the
original face amount of the Letter of Credit for the period from the date of
issuance to the scheduled expiration date of such Letter of Credit.
<TABLE>
<CAPTION>
Cash Flow Leverage Ratio Applicable Margin
------------------------------------------------------------------
<S> <C>
GREATER THAN 3.00 1.250%
GREATER THAN 2.25 and LESS THAN OR EQUAL TO 3.00 1.000%
GREATER THAN 1.75 and LESS THAN OR EQUAL TO 2.25 0.750%
GREATER THAN 1.00 and LESS THAN OR EQUAL TO 1.75 0.625%
LESS THAN OR EQUAL TO 1.00 0.500%
</TABLE>
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In addition to the Letter of Credit Fee, the Borrower shall pay to the
Agent, on demand, all issuance, amendment, drawing and other fees regularly
charged by the Agent to its letter of credit customers and all out-of-pocket
expenses incurred by the Agent in connection with the issuance, amendment,
administration or payment of any Letter of Credit, and a fronting fee for
each Letter of Credit issued equal to 10 basis points of the stated amount of
the Letter of Credit as of the date of issuance.
The Borrower shall pay to the Agent an annual administrative fee (the
"Administrative Fee") equal to the lesser of (a) $5,000 for each Bank (other
than U.S, Bank), and (b) $10,000, payable quarterly in advance, commencing on
the date on which the first such Bank becomes a party hereto.
Section 2.17 COMPUTATION. Revolving Commitment Fees and Letter of
Credit Fees and interest on Advances shall be computed on the basis of actual
days elapsed (or, in the case of Letter of Credit Fees which are paid in
advance, actual days to elapse) and a year of 360 days.
Section 2.18 PAYMENTS. Payments and prepayments of principal of, and
interest on, the Revolving Notes and all fees, expenses and other obligations
under this Agreement payable to the Agent or the Banks shall be made without
setoff or counterclaim in Immediately Available Funds not later than 1:00p.m.
(Minneapolis time) on the dates called for under this Agreement and the
Revolving Notes to the Agent at its main office in Minneapolis, Minnesota.
Funds received after such time shall be deemed to have been received on the
next Business Day. The Agent will promptly distribute in like funds to each
Bank its ratable share of each such payment of principal, interest, Revolving
Commitment Fees and Letter of Credit Fees received, by the Agent for the
account of the Banks. Whenever any payment to be made hereunder or on the
Revolving Notes shall be stated to be due on a day which is not a Business
Day, such payment shall be made on the next succeeding Business Day and such
extension of time, in the case of a payment of principal, shall be included
in the computation of any interest on such principal payment.
Section 2.19 REVOLVING COMMITMENT ENDING DATE. The "Revolving
Commitment Ending Date" is December 31, 2001.
Section 2.20 USE OF LOAN PROCEEDS. The proceeds of the Revolving Loans
shall be used for the Borrower's general business purposes in a manner not in
conflict with any of the Borrower's covenants in this Agreement.
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Section 2.21 INTEREST RATE NOT ASCERTAINABLE, ETC. If, on or prior to
the date for determining the Adjusted Eurodollar Rate in respect of the
Interest Period for any Eurodollar Rate Advance, any Bank determines (which
determination shall be conclusive and binding, absent error) that:
2.12(a) deposits in dollars (in the applicable amount) are not
being made available to such Bank in the relevant market for such
Interest Period, or
2.12(b) the Adjusted Eurodollar Rate will not adequately and
fairly reflect the cost to such Bank of funding or maintaining
Eurodollar Rate Advances for such Interest Period,
such Bank shall forthwith give notice to the Borrower and the other Banks of
such determination, whereupon the obligation of such Bank to make or
continue, or to convert any Advances to, Eurodollar Rate Advances shall be
suspended until such Bank notifies the Borrower and the Agent that the
circumstances giving rise to such suspension no longer exist. While any such
suspension continues, all further Advances by such Bank shall be made as
Reference Rate Advances. No such suspension shall affect the interest rate
then in effect during the applicable Interest Period for any Eurodollar Rate
Advance outstanding at the time such suspension is imposed.
Section 2.22 INCREASED COST. If any Regulatory Change:
2.22(a) shall subject any Bank (or its Applicable Lending
Office) to any tax, duty or other charge with respect to its Eurodollar
Rate Advances, its Revolving Note or its obligation to make Eurodollar
Rate Advances or shall change the basis of taxation of payment to any
Bank (or its Applicable Lending Office) of the principal of or interest
on its Eurodollar Rate Advances or any other amounts due under this
Agreement in respect of its Eurodollar Rate Advances or its obligation
to make Eurodollar Rate Advances (except for changes in the rate of tax
on the overall net income of such Bank or its Applicable Lending Office
imposed by the jurisdiction in which such Bank's principal office or
Applicable Lending Office is located); or
2.22(b) shall impose, modify or deem applicable any reserve,
special deposit or similar requirement (including, without limitation,
any such requirement imposed by the Board, but excluding with respect
to any Eurodollar Rate Advance any such requirement to the extent
included in calculating the applicable Adjusted Eurodollar Rate) against
assets of, deposits with or for the account of, or credit extended by,
any
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Bank's Applicable Lending Office or against Letters of Credit issued by
the Agent or shall impose on any Bank (or its Applicable Lending Office)
or the interbank Eurodollar market any other condition affecting its
Eurodollar Rate Advances, its Revolving Note or its obligation to make
Eurodollar Rate Advances or affecting any Letter of Credit;
and the result of any of the foregoing is to increase the cost to such Bank
(or its Applicable Lending Office) of making or maintaining any Eurodollar
Rate Advance or issuing or maintaining any Letter of Credit, or to reduce the
amount of any sum received or receivable by such Bank (or its Applicable
Lending Office) under this Agreement or under its Revolving Note, then,
within 30 days after demand by such Bank (with a copy to the Agent), the
Borrower shall pay to such Bank such additional amount or amounts as will
compensate such Bank for such increased cost or reduction. Each Bank will
promptly notify the Borrower and the Agent of any event of which it has
knowledge, occurring after the date hereof, which will entitle such Bank to
compensation pursuant to this Section and will designate a different
Applicable Lending Office if such designation will avoid the need for, or
reduce the amount of, such compensation and will not, in the judgment of such
Bank, be otherwise disadvantageous to such Bank. If any Bank fails to give
such notice within 45 days after it obtains knowledge of such an event, such
Bank shall, with respect to compensation payable pursuant to this Section,
only be entitled to payment under this Section for costs incurred from and
after the date 45 days prior to the date that such Bank does give such
notice. A certificate of any Bank claiming compensation under this Section,
setting forth the additional amount or amounts to be paid to it hereunder and
stating in reasonable detail the basis for the charge and the method of
computation, shall be conclusive in the absence of error. In determining
such amount, any Bank may use any reasonable averaging and attribution
methods. Failure on the part of any Bank to demand compensation for any
increased costs or reduction in amounts received or receivable with respect
to any Interest Period shall not constitute a waiver of such Bank's rights to
demand compensation for any increased costs or reduction in amounts received
or receivable in any subsequent Interest Period.
Section 2.23 ILLEGALITY. If any Regulatory Change shall make it
unlawful or impossible for any Bank to make, maintain or fund any Eurodollar
Rate Advances, such Bank shall notify the Borrower and the Agent, whereupon the
obligation of such Bank to make or continue, or to convert any Advances to,
Eurodollar Rate Advances shall be suspended until such Bank notifies the
Borrower and the Agent that the circumstances giving rise to such suspension no
longer exist. Before giving any such notice, such Bank shall designate a
different Applicable Lending Office if such designation will avoid the need for
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giving such notice and will not, in the judgment of such Bank, be otherwise
disadvantageous to such Bank. If such Bank determines that it may not
lawfully continue to maintain any Eurodollar Rate Advances to the end of the
applicable Interest Periods, all of the affected Advances shall be
automatically converted to Reference Rate Advances as of the date of such
Bank's notice, and upon such conversion the Borrower shall indemnify such
Bank in accordance with Section 2.25.
Section 2.24 CAPITAL ADEQUACY. In the event that any Regulatory Change
reduces or shall have the effect of reducing the rate of return on any Bank's
capital or the capital of its parent corporation (by an amount such Bank
deems material) as a consequence of its Revolving Commitment and/or Advances
and/or any Letters of Credit or any Bank's obligations to make Advances to
cover Letters of Credit to a level below that which such Bank or its parent
corporation could have achieved but for such Regulatory Change (taking into
account such Bank's policies and the policies of its parent corporation with
respect to capital adequacy), then the Borrower shall, within 30 days after
written notice and demand from such Bank (with a copy to the Agent), pay to
such Bank additional amounts sufficient to compensate such Bank or its parent
corporation for such reduction. If any Bank fails to give such notice within
45 days after it obtains knowledge of such an event, such Bank shall, with
respect to compensation payable pursuant to this Section, only be entitled to
payment under this Section for diminished returns as a result of such
reduction for the period from and after the date 45 days prior to the date
that such Bank does give such notice. Any determination by such Bank under
this Section and any certificate as to the amount of such reduction given to
the Borrower by such Bank shall be final, conclusive and binding for all
purposes, absent error.
Section 2.25 FUNDING LOSSES; EURODOLLAR RATE ADVANCES. The Borrower
shall compensate each Bank, upon its written request, for all losses,
expenses and liabilities (including any interest paid by such Bank to lenders
of funds borrowed by it to make or carry Eurodollar Rate Advances to the
extent not recovered by such Bank in connection with the re-employment of
such funds and including loss of anticipated profits) which such Bank may
sustain: (i) if for any reason, other than a default by such Bank, a funding
of a Eurodollar Rate Advance does not occur on the date specified therefor in
the Borrower's request or notice as to such Advance under Section 2.2 or 2.4,
or (ii) if, for whatever reason (including, but not limited to, acceleration
of the maturity of Advances following an Event of Default), any repayment of
a Eurodollar Rate Advance, or a conversion pursuant to Section 2.23, occurs
on any day other than the last day of the Interest Period applicable thereto. A
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Bank's request for compensation shall set forth the basis for the amount
requested and shall be final, conclusive and binding, absent error.
Section 2.26 DISCRETION OF BANKS AS TO MANNER OF FUNDING. Each Bank
shall be entitled to fund and maintain its funding of Eurodollar Rate
Advances in any manner it may elect, it being understood, however, that for
the purposes of this Agreement all determinations hereunder (including, but
not limited to, determinations under Section 2.25) shall be made as if such
Bank had actually funded and maintained each Eurodollar Rate Advances during
the Interest Period for such Advance through the purchase of deposits having
a maturity corresponding to the last day of the Interest Period and bearing
an interest rate equal to the Eurodollar Rate for such Interest Period.
ARTICLE III
CONDITIONS PRECEDENT
Section 3.1 CONDITIONS OF INITIAL TRANSACTION. The making of the
initial Revolving Loans and the issuance of the initial Letter of Credit
shall be subject to the prior or simultaneous fulfillment of the following
conditions:
3.1(a) DOCUMENTS. The Agent shall have received the following
in sufficient counterparts (except for the Revolving Notes) for each Bank:
(i) A Revolving Note drawn to the order of each Bank
executed by a duly authorized officer (or officers) of the
Borrower and dated the Closing Date.
(ii) A copy of the corporate resolution of the
Borrower authorizing the execution, delivery and performance of
the Borrower Loan Documents, certified as of the Closing Date
by the Secretary or an Assistant Secretary of the Borrower.
(iii) An incumbency certificate showing the names and
titles and bearing the signatures of the officers of the
Borrower authorized to execute the Borrower Loan Documents and
to request Revolving Loans, Letters of Credit and conversions
and continuations of Advances hereunder, certified as of the
Closing Date by the Secretary or an Assistant Secretary of the
Borrower.
(iv) A copy of the Certificate of Incorporation of the
Borrower with all amendments thereto, certified by the
appropriate
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governmental official of the jurisdiction of its incorporation
as of a date not more than fifteen days prior to the Closing
Date.
(v) A certificate of good standing for the Borrower
in the jurisdiction of its incorporation (Delaware) and in the
States of Wisconsin, California, Georgia and Oregon, certified
by the appropriate governmental officials as of a date not more
than fifteen days prior to the Closing Date.
(vi) A copy of the bylaws of the Borrower, certified
as of the Closing Date by the Secretary or an Assistant
Secretary of the Borrower.
(vii) Copies of current UCC, judgments and tax lien
searches against the Borrower in the State of Delaware,
Wisconsin, California, Oregon and Georgia.
(viii) A certificate dated the Closing Date of the chief
executive officer or chief financial officer of the Borrower
certifying as to the matters set forth in Sections 3.2 (a) and
3.2 (b) below.
(ix) The initial Borrowing Base Certificate required
under Section 5.1.
(x) A copy of each of the executed Senior Unsecured
Note Documents, certified as true and correct
copies by an officer of the Borrower.
3.1(b) OPINION. The Borrower and its Subsidiaries shall have
requested Oppenheimer Wolff & Donnelly LLP, its counsel, to prepare a
written opinion, addressed to the Banks and dated the Closing Date,
covering the matters set forth in EXHIBIT 3.1(A) hereto, and such
opinion shall have been delivered to the Agent in sufficient
counterparts for each Bank.
3.1(c) COMPLIANCE. The Borrower shall have performed and
complied with all agreements, terms and conditions contained in this
Agreement required to be performed or complied with by the Borrower
prior to or simultaneously with the Closing Date and no Default or Event
of Default shall have occurred and be continuing.
3.1(d) OTHER MATTERS. All corporate and legal proceedings
relating to the Borrower and all instruments and agreements in
connection with
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<PAGE>
the transactions contemplated by this Agreement shall be satisfactory in
scope, form and substance to the Agent, the Banks and the Agent's
special counsel, and the Agent shall have received all information and
copies of all documents, including records of corporate proceedings, as
any Bank or such special counsel may reasonably have requested in
connection therewith, such documents where appropriate to be certified
by proper corporate or governmental authorities.
3.1(e) FEES AND EXPENSES. The Agent shall have received for
itself and for the account of the Banks all fees and other amounts due
and payable by the Borrower on or prior to the Closing Date, including
the reasonable fees and expenses of counsel to the Agent payable
pursuant to Section 9.2, and the Agent shall have received for its own
account the arrangement fee (the "Arrangement Fee") set forth in the Fee
Letter.
Section 3.2 CONDITIONS PRECEDENT TO ALL LOANS AND LETTERS OF CREDIT.
The obligation of the Banks to make any Revolving Loans hereunder (including the
initial Revolving Loans) and of the Agent to issue each Letter of Credit
(including the initial Letter of Credit) shall be subject to the fulfillment of
the following conditions:
3.2(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties contained in Article IV shall be true and correct on and as of
the Closing Date and on the date of each Revolving Loan or the date of
issuance of each Letter of Credit, with the same force and effect as if
made on such date.
3.2(b) NO DEFAULT. No Default or Event of Default shall have
occurred and be continuing on the Closing Date and on the date of each
Revolving Loan or the date of issuance of each Letter of Credit or will
exist after giving effect to the Loans made on such date or the Letter of
Credit so issued.
3.2(c) NOTICES AND REQUESTS. The Agent shall have received the
Borrower's request for such Revolving Loans as required under Section 2.2
or its application for such Letters of Credit specified under Section
2.9.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
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To induce the Banks to enter into this Agreement and to make Revolving
Loans hereunder and to induce the Agent to issue Letters of Credit, the
Borrower represents and warrants to the Banks:
Section 4.1 ORGANIZATION, STANDING, ETC. The Borrower is a
corporation duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted, to
enter into this Agreement and to issue the Revolving Notes and to perform its
obligations under the Borrower Loan Documents. Each Subsidiary is a
corporation duly incorporated and validly existing and in good standing under
the laws of the jurisdiction of its incorporation and has all requisite
corporate power and authority to carry on its business as now conducted.
Each of the Borrower and the Subsidiaries (a) holds all certificates of
authority, licenses and permits necessary to carry on its business as
presently conducted in each jurisdiction in which it is carrying on such
business, except where the failure to hold such certificates, licenses or
permits would not have a material adverse effect on the business, operations,
property, assets or condition, financial or otherwise, of the Borrower and
the Subsidiaries taken as a whole, and (b) is duly qualified and in good
standing as a foreign corporation in each jurisdiction in which the character
of the properties owned, leased or operated by it or the business conducted
by it makes such qualification necessary and the failure so to qualify would
permanently preclude the Borrower or such Subsidiary from enforcing its
rights with respect to any assets or expose the Borrower or such Subsidiary
to any liability, which in either case would be material to the Borrower and
the Subsidiaries taken as a whole.
Section 4.2 AUTHORIZATION AND VALIDITY. The execution, delivery and
performance by the Borrower of the Borrower Loan Documents have been duly
authorized by all necessary corporate action by the Borrower, and this
Agreement constitutes, and the Revolving Notes and other Borrower Loan
Documents when executed will constitute, the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance
with their respective terms, subject to limitations as to enforceability
which might result from bankruptcy, insolvency, moratorium and other similar
laws affecting creditors' rights generally and subject to limitations on the
availability of equitable remedies.
Section 4.3 NO CONFLICT; NO DEFAULT. The execution, delivery and
performance by the Borrower of the Borrower Loan Documents will not (a)
violate any provision of any law, statute, rule or regulation or any order,
writ, judgment, injunction, decree, determination or award of any court,
governmental agency or arbitrator presently in effect having applicability to
the
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<PAGE>
Borrower, (b) violate or contravene any provision of the Articles of
Incorporation or bylaws of the Borrower, or (c) result in a breach of or
constitute a default under any indenture, loan or credit agreement or any
other agreement, lease or instrument to which the Borrower is a party or by
which it or any of its properties may be bound in which the consequences of
such default or violation could have a material adverse effect on the
business, operations, properties, assets or condition (financial or
otherwise) of the Borrower and its Subsidiaries taken as a whole, or result
in the creation of any Lien thereunder. Neither the Borrower nor any
Subsidiary is in default under or in violation of any such law, statute, rule
or regulation, order, writ, judgment, injunction, decree, determination or
award or any such indenture, loan or credit agreement or other agreement,
lease or instrument in any case in which the consequences of such default or
violation could have a material adverse effect on the business, operations,
properties, assets or condition (financial or otherwise) of the Borrower and
its Subsidiaries taken as a whole.
Section 4.4 GOVERNMENT CONSENT. No order, consent, approval,
license, authorization or validation of, or filing, recording or registration
with, or exemption by, any governmental or public body or authority is
required on the part of the Borrower or its Subsidiaries to authorize, or is
required in connection with the execution, delivery and performance of, or
the legality, validity, binding effect or enforceability of, the Loan
Documents.
Section 4.5 FINANCIAL STATEMENTS AND CONDITION. The Borrower's
audited consolidated financial statements as at December 31, 1997 and its
unaudited financial statements as at June 30, 1998, as heretofore furnished to
the Banks, have been prepared in accordance with GAAP on a consistent basis
(except for the absence of footnotes and subject to year-end audit
adjustments as to the interim statements) and fairly present the financial
condition of the Borrower and its Subsidiaries as at such dates and the
results of their operations and changes in financial position for the
respective periods then ended. As of the dates of such financial statements,
neither the Borrower nor any Subsidiary had any material obligation,
contingent liability, liability for taxes or long-term lease obligation which
is not reflected in such financial statements or in the notes thereto. Since
December 31, 1997, there has been no material adverse change in the business,
operations, property, assets or condition, financial or otherwise, of the
Borrower and its Subsidiaries taken as a whole.
Section 4.6 LITIGATION. There are no actions, suits or proceedings
pending or, to the knowledge of the Borrower, threatened against or affecting
the Borrower or any Subsidiary or any of their properties before any court or
arbitrator, or any governmental department, board, agency or other
instrumentality which, if determined adversely to the Borrower or such
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<PAGE>
Subsidiary, could reasonably be expected to have a material adverse effect on
the business, operations, property or condition (financial or otherwise) of
the Borrower and the Subsidiaries taken as a whole or on the ability of the
Borrower or any Subsidiary to perform its obligations under the Loan
Documents.
Section 4.7 ENVIRONMENTAL, HEALTH AND SAFETY LAWS. There does not
exist any violation by the Borrower or any Subsidiary of any applicable
federal, state or local law, rule or regulation or order of any government,
governmental department, board, agency or other instrumentality relating to
environmental, pollution, health or safety matters which could reasonably be
expected to impose a material liability on the Borrower or a Subsidiary or to
require a material expenditure by the Borrower or such Subsidiary to cure.
Neither the Borrower nor any Subsidiary has received any notice to the effect
that any part of its operations or properties is not in material compliance
with any such law, rule, regulation or order or notice that it or its
property is the subject of any governmental investigation evaluating whether
any remedial action is needed to respond to any release of any toxic or
hazardous waste or substance into the environment, which non-compliance or
remedial action could reasonably be expected to have a material adverse
effect on the business, operations, properties, assets or condition
(financial or otherwise) of the Borrower and its Subsidiaries taken as a
whole. The Borrower does not have knowledge that it or its property or any
Subsidiary or the property of any Subsidiary will become subject to
environmental laws or regulations during the term of this Agreement,
compliance with which could reasonably be expected to require Capital
Expenditures which would have a material adverse effect on the business,
operations, properties, assets or condition (financial or otherwise) of the
Borrower and its Subsidiaries taken as a whole.
Section 4.8 ERISA. Each Plan is in substantial compliance with all
applicable requirements of ERISA and the Code and with all material
applicable rulings and regulations issued under the provisions of ERISA and
the Code setting forth those requirements. No Reportable Event has occurred
and is continuing with respect to any Plan. All of the minimum funding
standards applicable to such Plans have been satisfied and there exists no
event or condition which would reasonably be expected to result in the
institution of proceedings to terminate any Plan under Section 4042 of ERISA.
With respect to each Plan subject to Title IV of ERISA, as of the most
recent valuation date for such Plan, the present value (determined on the
basis of reasonable assumptions employed by the independent actuary for such
Plan and previously furnished in writing to the Banks) of such Plan's
accumulated benefit obligations did not exceed the fair market value of such
Plan's assets by more than $50,000.
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Section 4.9 FEDERAL RESERVE REGULATIONS. Neither the Borrower nor
any Subsidiary is engaged principally or as one of its important activities
in the business of extending credit for the purpose of purchasing or carrying
margin stock (as defined in Regulation U of the Board). The value of all
margin stock owned by the Borrower does not constitute more than 25% of the
value of the assets of the Borrower.
Section 4.10 TITLE TO PROPERTY; LEASES; LIENS; SUBORDINATION. Each
of the Borrower and the Subsidiaries has (a) good and marketable title to its
real properties and (b) good and sufficient title to, or valid, subsisting
and enforceable leasehold interest in, its other material properties,
including all real properties, other properties and assets, referred to as
owned by the Borrower and its Subsidiaries in the most recent financial
statement referred to in Section 4.5 (other than property disposed of since
the date of such financial statements except as allowed under Section 6.2.
None of such properties is subject to a Lien, except as allowed under Section
6.14. The Borrower has not subordinated any of its rights under any
obligation owing to it to the rights of any other person.
Section 4.11 TAXES. Each of the Borrower and the Subsidiaries has
filed all federal, state and local tax returns required to be filed and has
paid or made provision for the payment of all taxes due and payable pursuant
to such returns and pursuant to any assessments made against it or any of its
property and all other taxes, fees and other charges imposed on it or any of
its property by any governmental authority (other than taxes, fees or charges
the amount or validity of which is currently being contested in good faith by
appropriate proceedings and with respect to which reserves in accordance with
GAAP have been provided on the books of the Borrower). No tax Liens have
been filed and no material claims are being asserted with respect to any such
taxes, fees or charges. The charges, accruals and reserves on the books of
the Borrower in respect of taxes and other governmental charges are adequate
and the Borrower knows of no proposed material tax assessment against it or
any Subsidiary or any basis therefor.
Section 4.12 TRADEMARKS, PATENTS. Each of the Borrower and the
Subsidiaries possesses or has the right to use all of the patents,
trademarks, trade names, service marks and copyrights, and applications
therefor, and all technology, know-how, processes, methods and designs used
in or necessary for the conduct of its business, without known conflict with
the rights of others.
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Section 4.13 BURDENSOME RESTRICTIONS. Neither the Borrower nor any
Subsidiary is a party to or otherwise bound by any indenture, loan or credit
agreement or any lease or other agreement or instrument or subject to any
charter, corporate or partnership restriction which would foreseeably have a
material adverse effect on the business, properties, assets, operations or
condition (financial or otherwise) of the Borrower or such Subsidiary or on
the ability of the Borrower or any Subsidiary to carry out its obligations
under any Loan Document.
Section 4.14 FORCE MAJEURE. Since the date of the most recent
financial statement referred to in Section 4.5, the business, properties and
other assets of the Borrower and the Subsidiaries have not been materially
and adversely affected in any way as the result of any fire or other
casualty, strike, lockout, or other labor trouble, embargo, sabotage,
confiscation, condemnation, riot, civil disturbance, activity of armed forces
or act of God.
Section 4.15 INVESTMENT COMPANY ACT. Neither the Borrower nor any
Subsidiary is an "investment company" or a company "controlled" by an
investment company within the meaning of the Investment Company Act of 1940,
as amended.
Section 4.16 PUBLIC UTILITY HOLDING COMPANY ACT. Neither the
Borrower nor any Subsidiary is a "holding company" or a "subsidiary company"
of a holding company or an "affiliate" of a holding company or of a
subsidiary company of a holding company within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
Section 4.17 RETIREMENT BENEFITS. Except as required under Section
4980B of the Code, Section 601 of ERISA or applicable state law, neither the
Borrower nor any Subsidiary is obligated to provide post-retirement medical
or insurance benefits with respect to employees or former employees in an
aggregate amount exceeding $50,000.
Section 4.18 FULL DISCLOSURE. Subject to the following sentence,
neither the financial statements referred to in Section 4.5 nor any other
certificate, written statement, exhibit or report furnished by or on behalf
of the Borrower in connection with or pursuant to this Agreement contains any
untrue statement of a material fact or omits to state any material fact
necessary in order to make the statements contained therein not misleading.
Certificates or statements furnished by or on behalf of the Borrower to the
Banks consisting of projections or forecasts of future results or events have
been prepared in good faith and based on good faith estimates and
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assumptions of the management of the Borrower, and the Borrower has no reason
to believe that such projections or forecasts are not reasonable.
Section 4.19 SUBSIDIARIES. The Borrower has no Subsidiaries.
ARTICLE V
AFFIRMATIVE COVENANTS
Until any obligation of the Banks hereunder to make the Revolving
Loans and of the Agent to issue Letters of Credit shall have expired or been
terminated and the Revolving Notes and all of the other Obligations have been
paid in full and all outstanding Letters of Credit shall have expired or the
liability of the Agent thereon shall have otherwise been discharged, unless
the Majority Banks shall otherwise consent in writing:
Section 5.1 FINANCIAL STATEMENTS AND REPORTS. The Borrower will
furnish to the Banks:
5.1(a) As soon as available and in any event within 90 days
after the end of each fiscal year of the Borrower, the consolidated
financial statements of the Borrower and the Subsidiaries consisting of
at least statements of income, cash flow and changes in stockholders'
equity, and a consolidated balance sheet as at the end of such year,
setting forth in each case in comparative form corresponding figures
from the previous annual audit, certified without qualification by
Arthur Andersen, LLP or other independent certified public accountants
of recognized national standing selected by the Borrower and acceptable
to the Agent, together with (a) form 10K filed with the Securities and
Exchange Commission, and (b) any management letters, management reports
or other supplementary comments or reports to the Borrower or its board
of directors furnished by such accountants.
5.1(b) Together with the audited financial statements required
under Section 5.1 (a), a statement by the accounting firm performing
such audit to the effect that it has reviewed this Agreement and that in
the course of performing its examination nothing came to its attention
that caused it to believe that any Default or Event of Default exists
under Sections 6.7, 6.10, 6.12, 6.13, 6.15, 6.16, 6.17 or 6.18, or, if
such Default or Event of Default exists, describing its nature.
5.1(c) As soon as available and in any event within 45 days
after the end of each fiscal quarter, unaudited consolidated statements
of
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income, cash flow and changes in stockholders' equity for the Borrower
and the Subsidiaries for such quarter and for the period from the
beginning of such fiscal year to the end of such quarter, and a
consolidated balance sheet of the Borrower as at the end of such
quarter, setting forth in comparative form figures for the corresponding
period for the preceding fiscal year, accompanied by a certificate
signed by the chief financial officer of the Borrower stating that such
financial statements present fairly the financial condition of the
Borrower and the Subsidiaries and that the same have been prepared in
accordance with GAAP (except for the absence of footnotes and subject to
year-end audit adjustments as to the interim statements), together with
form 10Q filed with the Securities and Exchange Commission.
5.1(d) As soon as practicable and in any event within 45 days
after the end of each of the first three fiscal quarters of each fiscal
year, a Compliance Certificate in the form attached hereto as EXHIBIT
5.1(d) signed by the chief financial officer of the Borrower
demonstrating in reasonable detail compliance (or noncompliance, as the
case may be) with these Sections: 6.16, 6.17 and 6.18, as at the end of
such quarter and stating that as at the end of such quarter there did
not exist any Default or Event of Default or, if such Default or Event
of Default existed, specifying the nature and period of existence
thereof and what action the Borrower proposes to take with respect
thereto.
5.1(e) As soon as practicable and in any event within fifteen
days after the end of each month, a Borrowing Base Certificate signed by
the chief financial officer of the Borrower, reporting the Borrowing
Base as of the last day of the month just ended.
5.1(f) As soon as practicable and in any event within 90 days
after the beginning of each fiscal year of the Borrower, statements of
forecasted consolidated income for the Borrower and the Subsidiaries for
each fiscal quarter in such fiscal year and each fiscal year thereafter
to the Termination Date and a forecasted consolidated balance sheet of
the Borrower and the Subsidiaries, together with supporting assumptions,
as at the end of each fiscal year, all in reasonable detail and
reasonably satisfactory in scope to Majority Banks.
5.1(g) Immediately upon any officer of the Borrower becoming
aware of any Default or Event of Default, a notice describing the nature
thereof and what action the Borrower proposes to take with respect
thereto.
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5.1(h) Immediately upon any officer of the Borrower becoming
aware of the occurrence, with respect to any Plan, of any Reportable
Event or any Prohibited Transaction which could reasonably be expected
to result in a material excise tax or civil penalty payable directly or
indirectly by the Borrower or otherwise have a material adverse effect,
a notice specifying the nature thereof and what action the Borrower
proposes to take with respect thereto, and, when received, copies of any
notice from PBGC of intention to terminate or have a trustee appointed
for any Plan.
5.1(i) Promptly upon the mailing or filing thereof, copies of
all financial statements, reports and proxy statements mailed to the
Borrower's shareholders, and copies of all registration statements,
periodic reports and other documents filed with the Securities and
Exchange Commission (or any successor thereto) or any national
securities exchange.
5.1(j) From time to time, such other information regarding the
business, operation and financial condition of the Borrower and the
Subsidiaries as any Bank may reasonably request.
Section 5.2 CORPORATE EXISTENCE. The Borrower will maintain, and
cause each Subsidiary to maintain, its corporate existence in good standing
under the laws of its jurisdiction of incorporation and its qualification to
transact business in each jurisdiction where failure so to qualify would
permanently preclude the Borrower or such Subsidiary from enforcing its
rights with respect to any material asset or would expose the Borrower or
such Subsidiary to any material liability; provided, however, that nothing
herein shall prohibit the merger or liquidation of any Subsidiary allowed
under Section 6.1.
Section 5.3 INSURANCE. The Borrower shall maintain, and shall cause
each Subsidiary to maintain, with financially sound and reputable insurance
companies such insurance as may be required by law and such other insurance
in such amounts and against such hazards as is customary in the case of
reputable firms engaged in the same or similar business and similarly
situated. Such insurance policies may be subject to deductibles and
self-insurance as is customary in the case of reputable firms engaged in the
same or similar business and similarly situated.
Section 5.4 PAYMENT OF TAXES AND CLAIMS. The Borrower shall file,
and cause each Subsidiary to file, all tax returns and reports which are
required by law to be filed by it and will pay, and cause each Subsidiary to
pay, before they become delinquent all taxes, assessments and governmental
charges and levies
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imposed upon it or its property and all claims or demands of any kind
(including but not limited to those of suppliers, mechanics, carriers,
warehouses, landlords and other like Persons) which, if unpaid, might result
in the creation of a Lien upon its property; provided that the foregoing
items need not be paid if they are being contested in good faith by
appropriate proceedings, and as long as the Borrower's or such Subsidiary's
title to its property is not materially adversely affected, its use of such
property in the ordinary course of its business is not materially interfered
with and adequate reserves with respect thereto have been set aside on the
Borrower's or such Subsidiary's books in accordance with GAAP.
Section 5.5 INSPECTION. The Borrower shall permit any Person
designated by the Agent or the Majority Banks to visit and inspect any of the
properties, corporate books and financial records of the Borrower and the
Subsidiaries, to examine and to make copies of the books of accounts and
other financial records of the Borrower and the Subsidiaries, and to discuss
the affairs, finances and accounts of the Borrower and the Subsidiaries with,
and to be advised as to the same by, its officers at such reasonable times
and intervals as the Agent or the Majority Banks may designate. So long as
no Event of Default exists, the expenses of the Agent or the Banks for such
visits, inspections and examinations shall be at the expense of the Agent and
the Banks, but any such visits, inspections and examinations made while any
Event of Default is continuing shall be at the expense of the Borrower.
Section 5.6 MAINTENANCE OF PROPERTIES. The Borrower will maintain,
and cause each Subsidiary to maintain its properties used or useful in the
conduct of its business in good condition, repair and working order, and
supplied with all necessary equipment, and make all necessary repairs,
renewals, replacements, betterments and improvements thereto, all as may be
necessary so that the business carried on in connection therewith may be
properly and advantageously conducted at all times.
Section 5.7 BOOKS AND RECORDS. The Borrower will keep, and will cause
each Subsidiary to keep, adequate and proper records and books of account in
which full and correct entries will be made of its dealings, business and
affairs.
Section 5.8 COMPLIANCE. The Borrower will comply, and will cause each
Subsidiary to comply, in all material respects with all laws, rules,
regulations, orders, writs, judgments, injunctions, decrees or awards to
which it may be subject; provided, however, that failure so to comply shall
not be a breach of this covenant if such failure does not have, or is not
reasonably expected to have, a materially adverse effect on the properties,
business, prospects or condition (financial or otherwise) of the Borrower or
such Subsidiary and the
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Borrower or such Subsidiary is acting in good faith and with reasonable
dispatch to cure such noncompliance.
Section 5.9 NOTICE OF LITIGATION. The Borrower will give prompt
written notice to the Agent of the commencement of any action, suit or
proceeding before any court or arbitrator or any governmental department,
board, agency or other instrumentality affecting the Borrower or any
Subsidiary or any property of the Borrower or a Subsidiary or to which the
Borrower or a Subsidiary is a party in which an adverse determination or
result could reasonably be expected to have a material adverse effect on the
business, operations, property or condition (financial or otherwise) of the
Borrower and the Subsidiaries taken as a whole or on the ability of the
Borrower or any Subsidiary to perform its obligations under this Agreement
and the other Loan Documents, stating the nature and status of such action,
suit or proceeding.
Section 5.10 ERISA. The Borrower will maintain, and cause each
Subsidiary to maintain, each Plan in compliance with all material applicable
requirements of ERISA and of the Code and with all applicable rulings and
regulations issued under the provisions of ERISA and of the Code and will not
and not permit any of the ERISA Affiliates to (a) engage in any transaction
in connection with which the Borrower or any of the ERISA Affiliates would be
subject to either a civil penalty assessed pursuant to Section 502(i) of
ERISA or a tax imposed by Section 4975 of the Code, in either case in an
amount exceeding $50,000, (b) fail to make full payment when due of all
amounts which, under the provisions of any Plan, the Borrower or any ERISA
Affiliate is required to pay as contributions thereto, or permit to exist any
accumulated funding deficiency (as such term is defined in Section 302 of
ERISA and Section 412 of the Code), whether or not waived, with respect to
any Plan in an aggregate amount exceeding $50,000 or (c) fail to make any
payments in an aggregate amount exceeding $50,000 to any Multiemployer Plan
that the Borrower or any of the ERISA Affiliates may be required to make
under any agreement relating to such Multiemployer Plan or any law pertaining
thereto.
Section 5.11 ENVIRONMENTAL MATTERS; REPORTING. The Borrower will
observe and comply with, and cause each Subsidiary to observe and comply with,
all laws, rules, regulations and orders of any government or government agency
relating to health, safety, pollution, hazardous materials or other
environmental matters to the extent non-compliance could result in a material
liability or otherwise have a material adverse effect on the Borrower and the
Subsidiaries taken as a whole. The Borrower will give the Agent prompt written
notice of any violation as to any environmental matter by the Borrower or any
Subsidiary and of the commencement of any judicial or administrative proceeding
relating to health, safety or environmental matters (a) in which an
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adverse determination or result could reasonably be expected to result in the
revocation of or have a material adverse effect on any operating permits, air
emission permits, water discharge permits, hazardous waste permits or other
permits held by the Borrower or any Subsidiary which are material to the
operations of the Borrower or such Subsidiary, or (b) which will or threatens
to impose a material liability on the Borrower or such Subsidiary to any
Person or which will require a material expenditure by the Borrower or such
Subsidiary to cure any alleged problem or violation.
Section 5.12 YEAR 2000. The Borrower will (a) review and assess its
business operations, equipment and machinery and computer systems and
applications to address the "year 2000 problem" (that is, that computer
applications and other equipment used by the Borrower, directly or indirectly
through third parties, may be unable to properly perform date-sensitive
functions before, during and after January 1, 2000); (b) develop a plan and a
contingency plan which will include expense estimates to address the year
2000 problem and to remediate any material year 2000 problem; and (c)
substantially complete implementation of the plan and remediation of material
year 2000 problems by December 31, 1998, and testing thereof by July 1, 1999.
Section 5.13 OPERATING ACCOUNTS. The Borrower shall maintain all of its
and its Subsidiaries' material operating accounts (e.g., checking accounts,
savings and investment accounts, cash management accounts) with U.S. Bank or
its affiliates.
Section 5.14 FURTHER ASSURANCES. The Borrower shall promptly correct
any defect or error that may be discovered in any Loan Document or in the
execution, acknowledgment or recordation thereof. Promptly upon request by
the Agent or the Majority Banks, the Borrower also shall do, execute,
acknowledge, deliver, record, re-record, file, re-file, register and
re-register, any and all deeds, conveyances, mortgages, deeds of trust, trust
deeds, assignments, estoppel certificates, financing statements and
continuations thereof, notices of assignment, transfers, certificates,
assurances and other instruments as the Agent or the Majority Banks may
reasonable require from time to time in order: (a) to carry out more
effectively the purposes of the Loan Documents; (b) to perfect and maintain
the validity, effectiveness and priority of any security interests intended
now or hereafter to be created by the Loan Documents; and (c) to better
assure, convey, grant, assign, transfer, preserve, protect and confirm unto
the Banks the rights granted now or hereafter intended to be granted to the
Banks under any Loan Document or under any other instrument executed in
connection with any Loan Document or that the Borrower may be or become bound
to convey, mortgage or assign to the Agent
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for the benefit of the Banks in order to carry out the intention or
facilitate the performance of the provisions of any Loan Document. The
Borrower shall furnish to the Banks evidence satisfactory to the Majority
Banks of every such recording, filing or registration.
ARTICLE VI
NEGATIVE COVENANTS
Until any obligation of the Banks hereunder to make the Revolving Loans
and of the Agent to issue Letters of Credit shall have expired or been
terminated and the Revolving Notes and all of the other Obligations have been
paid in full and all outstanding Letters of Credit shall have expired or the
liability of the Agent thereon shall have otherwise been discharged, unless
the Majority Banks shall otherwise consent in writing:
Section 6.1 MERGER. The Borrower will not merge or consolidate or
enter into any analogous reorganization or transaction with any Person or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution) or permit any Subsidiary to do any of the foregoing; PROVIDED,
HOWEVER, any Subsidiary may be merged with or liquidated into the Borrower or
any wholly-owned Subsidiary if the Borrower or such wholly-owned Subsidiary
is the surviving corporation.
Section 6.2 DISPOSITION OF ASSETS. The Borrower will not, and will
not permit any Subsidiary to, directly or indirectly, sell, assign, lease,
convey, transfer or otherwise dispose of (whether in one transaction or a
series of transactions) any property (including accounts and notes
receivable, with or without recourse) or enter into any agreement to do any
of the foregoing, except:
6.2(a) dispositions of inventory, or used, worn-out or surplus
equipment, all in the ordinary course of business;
6.2(b) the sale of equipment to the extent that such equipment
is exchanged for credit against the purchase price of similar
replacement equipment, or the proceeds of such sale are applied with
reasonable promptness to the purchase price of such replacement
equipment; and
6.2(c) other dispositions of property during each fiscal year
of the Borrower which, in the aggregate, either (i)did not contribute
more than 10% of the consolidated net income of the Borrower and its
Subsidiaries (before extraordinary gains or losses) for any of the three
most recently ended fiscal years, or (ii) did not constitute more than 5%
of the total
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consolidated assets of the Company and its Subsidiaries as shown on its
balance sheet as at the end of its most recent prior fiscal year.
Section 6.3 PLANS. The Borrower will not permit, and will not allow
any Subsidiary to permit, any event to occur or condition to exist which
would permit any Plan to terminate under any circumstances which would cause
the Lien provided for in Section 4068 of ERISA to attach to any assets of the
Borrower or any Subsidiary; and the Borrower will not permit, as of the most
recent valuation date for any Plan subject to Title IV of ERISA, the present
value (determined on the basis of reasonable assumptions employed by the
independent actuary for such Plan and previously furnished in writing to the
Banks) of such Plan's projected benefit obligations to exceed the fair market
value of such Plan's assets by more than $50,000.
Section 6.4 CHANGE IN NATURE OF BUSINESS. The Borrower will not, and
will not permit any Subsidiary to, make any material change in the nature of
the business of the Borrower or such Subsidiary, as carried on at the date
hereof, or to enter into any new lines of business other than those engaged
in at the date hereof.
Section 6.5 SUBSIDIARIES. After the date of this Agreement, the
Borrower will not, and will not permit any Subsidiary to, form or acquire any
corporation which would thereby become a Subsidiary.
Section 6.6 NEGATIVE PLEDGES; SUBSIDIARY RESTRICTIONS. Except for the
Senior Unsecured Note Documents, the Borrower will not, and will not permit
any Subsidiary to, enter into any agreement, bond, note or other instrument
with or for the benefit of any Person other than the Banks which would (i)
prohibit the Borrower or such Subsidiary from granting, or otherwise limit
the ability of the Borrower or such Subsidiary to grant, to the Banks any
Lien on any assets or properties of the Borrower or such Subsidiary, or (ii)
require the Borrower or such Subsidiary to grant a Lien to any other Person
if the Borrower or such Subsidiary grants any Lien to the Banks. Except for
the Senior Unsecured Note Documents and this Agreement, the Borrower will not
permit any Subsidiary to place or allow any restriction, directly or
indirectly, on the ability of such Subsidiary to (a) pay dividends or any
distributions on or with respect to such Subsidiary's capital stock or (b)
make loans or other cash payments to the Borrower.
Notwithstanding the above, in the event that the Borrower or any
Subsidiary creates or assumes any Lien upon any of its property or assets,
whether now owned or hereafter acquired, other than Liens permitted by
Section 6.14, the Borrower will make or cause to be made effective provisions
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whereby the Obligations hereunder will be secured by such Lien equally and
ratably with any and all other Indebtedness thereby secured so long as such
other Indebtedness shall be so secured.
Section 6.7 RESTRICTED PAYMENTS. The Borrower will not make any
Restricted Payments, except that during any fiscal year of the Borrower, the
Borrower may pay dividends or make distributions on or with respect to its
capital stock in an aggregate amount not exceeding 25% of the Borrower's
total consolidated net income as shown on its audited income statement for
its most recent prior fiscal year.
Section 6.8 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any Subsidiary to, enter into any transaction with any
Affiliate of the Borrower, except upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary than would obtain in a
comparable arm's-length transaction with a Person not an Affiliate.
Section 6.9 ACCOUNTING CHANGES AND MANAGEMENT CHANGES. The Borrower
will not, and will not permit any Subsidiary to, make any significant change
in accounting treatment or reporting practices, except as required by GAAP,
or change its fiscal year or the fiscal year of any Subsidiary. The Borrower
will provide to the Agent written notice of any change of management of the
Borrower.
Section 6.10 CAPITAL EXPENDITURES. The Borrower will not, and will not
permit any Subsidiary to, make Capital Expenditures for non-revenue
generating capital assets in an amount exceeding $5 million on a consolidated
basis in any fiscal year.
Section 6.11 SUBORDINATED DEBT. The Borrower will not, and will not
permit any Subsidiary to (a) make any scheduled payment of the principal of
or interest on any Subordinated Debt which would be prohibited by the terms
of such Subordinated Debt and any related subordination agreement; (b)
directly or indirectly make any prepayment on or purchase, redeem or defease
any Subordinated Debt or offer to do so (whether such prepayment, purchase or
redemption, or offer with respect thereto, is voluntary or mandatory); (c)
amend or cancel the subordination provisions applicable to any Subordinated
Debt; (d) take or omit to take any action if as a result of such action or
omission the subordination of such Subordinated Debt, or any part thereof, to
the Obligations might be terminated, impaired or adversely affected; or (e)
omit to give the Agent prompt notice of any notice received from any holder
of Subordinated Debt, or any trustee therefor, or of any default under any
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agreement or instrument relating to any Subordinated Debt by reason whereof
such Subordinated Debt might become or be declared to be due or payable.
Section 6.12 INVESTMENTS. The Borrower will not, and will not permit
any Subsidiary to, acquire for value, make, have or hold any Investments,
except:
6.12(a) Investments existing on the date of this Agreement.
6.12(b) Reasonable travel advances to management personnel,
employees and sales agents and representatives in the ordinary course of
business.
6.12(c) Investments in readily marketable direct obligations
issued or guaranteed by the United States or any agency thereof and
supported by the full faith and credit of the United States.
6.12(d) Certificates of deposit or bankers' acceptances issued
by any commercial bank organized under the laws of the United States or
any State thereof which has (i) combined capital and surplus of at least
$100,000,000, and (ii) a credit rating with respect to its unsecured
indebtedness from a nationally recognized rating service that is
satisfactory to the Agent.
6.12(e) Commercial paper given the highest rating by a
nationally recognized rating service.
6.12(f) Repurchase agreements relating to securities issued or
guaranteed as to principal and interest by the United States of America.
6.12(g) Other readily marketable Investments in debt
securities which are reasonably acceptable to the Majority Banks.
6.12(h) Notes, chattel paper or other forms of seller-financed
installment sales of tractors and trailers in the ordinary course of
business and permitted by Section 6.2(c) which in the aggregate does not
exceed $3,000,000 at any time (valued at the outstanding principal
amount plus accrued interest as of the date of any determination).
6.12(i) Any other Investment, including acquisitions of real
estate and equipment not in the ordinary course of business, if the
aggregate consideration therefor does not exceed $100,000.
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Any Investments under clauses (c), (d), (e) or (f) above must mature within
one year of the acquisition thereof by the Borrower or a Subsidiary.
Section 6.13 INDEBTEDNESS. The Borrower will not, and will not permit
any Subsidiary to, incur, create, issue, assume or suffer to exist any
Indebtedness, except:
6.13(a) The Obligations.
6.13(b) Current Liabilities, other than for borrowed money,
incurred in the ordinary course of business.
6.13(c) Indebtedness existing on the date of this Agreement and
disclosed on SCHEDULE 6.13 hereto, but not including any extension or
refinancing thereof.
6.13(d) Indebtedness which, at the time of determination, does
not exceed the difference (but not less than zero) between (i) 15% of
consolidated net worth of the Borrower and its Subsidiaries, and (ii) the
aggregate balance of Indebtedness under Section 6.13(c) outstanding as of
the date of determination.
Section 6.14 LIENS. The Borrower will not, and will not permit any
Subsidiary to, create, incur, assume or suffer to exist any Lien, or enter
into, or make any commitment to enter into, any arrangement for the
acquisition of any property through conditional sale, lease-purchase or other
title retention agreements, with respect to any property now owned or
hereafter acquired by the Borrower or a Subsidiary, except:
6.14(a) Any Liens which may hereafter be granted to the Agent
and the Banks to secure the Obligations.
6.14(b) Liens existing on the date of this Agreement and
disclosed on SCHEDULE 6.14 hereto.
6.14(c) Liens securing Indebtedness under Section 6.13(d).
6.14(d) Deposits or pledges to secure payment of workers'
compensation, unemployment insurance, old age pensions or other social
security obligations, in the ordinary course of business of the Borrower
or a Subsidiary.
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6.14(e) Liens for taxes, fees, assessments and governmental
charges not delinquent or to the extent that payment therefor shall not
at the time be required to be made in accordance with the provisions of
Section 5.4.
6.14(f) Liens of carriers, warehousemen, mechanics and
materialmen, and other like Liens arising in the ordinary course of
business, for sums not due or to the extent that payment therefor shall
not at the time be required to be made in accordance with the provisions
of Section 5.4.
6.14(g) Liens incurred or deposits or pledges made or
given in connection with, or to secure payment of, indemnity,
performance or other similar bonds.
6.14(h) Liens arising solely by virtue of any statutory
or common law provision relating to banker's liens, rights of set-off or
similar rights and remedies as to deposit accounts or other funds
maintained with a creditor depository institution; PROVIDED THAT (i)
such deposit account is not a dedicated cash collateral account and is
not subject to restriction against access by the Borrower or a
Subsidiary in excess of those set forth by regulations promulgated by
the Board, and (ii) such deposit account is not intended by the Borrower
or any Subsidiary to provide collateral to the depository institution.
6.14(i) Encumbrances in the nature of zoning restrictions,
easements and rights or restrictions of record on the use of real
property and landlord's Liens under leases on the premises rented, which
do not materially detract from the value of such property or impair the
use thereof in the business of the Borrower or a Subsidiary.
Section 6.15 CONTINGENT LIABILITIES. The Borrower will not, and will
not permit any Subsidiary to, be or become liable on any Contingent
Obligations, except Contingent Obligations existing on the date of this
Agreement and described on SCHEDULE 6.15, or which, if deemed to be
Indebtedness, would not cause a Default or Event of Default under any other
covenant contained in this Article VI.
Section 6.16 TANGIBLE NET WORTH. The Borrower will not permit its
Tangible Net Worth to be less than $45,000,000 at any time during the fiscal
quarter ending December 31, 1998, which $45,000,000 shall be cumulatively
increased at the beginning of each fiscal quarter thereafter by an amount
equal to 50% of the consolidated net income of the Borrower (if a positive
number) as
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shown on its income statement for the immediately preceding fiscal quarter.
(No adjustments shall be made for net losses.)
Section 6.17 INTEREST COVERAGE RATIO. The Borrower will not permit the
Interest Coverage Ratio, as of the last day of any fiscal quarter, for the
four consecutive fiscal quarters ending on that date to be less than 2.25 to
1.0.
Section 6.18 CASH FLOW LEVERAGE RATIO. The Borrower will not permit
the Cash Flow Leverage Ratio, as of the last day of any fiscal quarter for
the four consecutive fiscal quarters ending on that date to be more than 3.25
to 1.0.
Section 6.19 LOAN PROCEEDS. The Borrower will not, and will not
permit any Subsidiary to, use any part of the proceeds of any Revolving Loan
or Advances directly or indirectly, and whether immediately, incidentally or
ultimately, (a) to purchase or carry margin stock (as defined in Regulation U
of the Board) or to extend credit to others for the purpose of purchasing or
carrying margin stock or to refund Indebtedness originally incurred for such
purpose or (b) for any purpose which entails a violation of, or which is
inconsistent with, the provisions of Regulations G, U or X of the Board.
Section 6.20 SENIOR UNSECURED NOTE DOCUMENTS.
6.20(a) The Borrower will not enter into any amendment of the
Senior Unsecured Note Documents affecting any material terms of the
Notes (as defined in the Note Purchase Agreement) or covenants, and will
provide to the Agent a prior copy of any notice or confirmation
(including the Borrower's election to issue "Shelf Notes" thereunder)
given by the Borrower to the lender(s) thereunder, and a copy of any
waiver by the lender(s) thereunder promptly upon receipt.
6.20(b) None of such Notes, including the Shelf Notes, shall
be secured by any assets of the Borrower or any of its Subsidiaries. If
the Borrower elects to issue any such Shelf Notes, the payment terms
(other than interest rate and term) of such Shelf Notes shall be
substantially the same as the terms of the "Series A Notes" issued under
the Note Purchase Agreement, and the term thereof shall be within the
limits therefor set forth in the Note Purchase Agreement.
6.20(c) The Borrower will not optionally prepay (or purchase,
defease or otherwise retire) all or any portion of such Notes while any
of its Obligations under this Agreement remain outstanding.
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ARTICLE VII
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events shall constitute an Event of Default:
7.1(a) The Borrower shall fail to make when due, whether by
acceleration or otherwise, any payment of principal of or interest on
any Revolving Note or any other Obligation, required to be made to the
Agent or any Bank pursuant to this Agreement.
7.1(b) Any representation or warranty made by or on behalf of
the Borrower, any Subsidiary or any Related Person in this Agreement or
any other Loan Document or by or on behalf of the Borrower, any
Subsidiary or any Related Person in any certificate, statement, report
or document herewith or hereafter furnished to any Bank or the Agent
pursuant to this Agreement or any other Loan Document shall prove to
have been false or misleading in any material respect on the date as of
which the facts set forth are stated or certified.
7.1(c) The Borrower shall fail to comply with Sections 5.2 or
5.3 hereof or any Section of Article VI hereof.
7.1(d) The Borrower shall fail to comply with any other
agreement, covenant, condition, provision or term contained in this
Agreement (other than those hereinabove set forth in this Section 7.1)
and such failure to comply shall continue for 30 calendar days after
whichever of the following dates is the earliest: (i) the date the
Borrower gives notice of such failure to the Banks, (ii) the date the
Borrower should have given notice of such failure to the Banks pursuant
to Section 5.1, or (iii) the date the Agent or any Bank gives notice of
such failure to the Borrower.
7.1(e) The Borrower or any Subsidiary shall become insolvent or
shall generally not pay its debts as they mature or shall apply for,
shall consent to, or shall acquiesce in the appointment of a custodian,
trustee or receiver of the Borrower or such Subsidiary or for a
substantial part of the property thereof or, in the absence of such
application, consent or acquiescence, a custodian, trustee or receiver
shall be appointed for the Borrower or a Subsidiary or for a substantial
part of the property thereof and shall not be discharged within 45 days,
or the Borrower or any Subsidiary shall make an assignment for the
benefit of creditors.
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7.1(f) Any bankruptcy, reorganization, debt arrangement or
other proceedings under any bankruptcy or insolvency law shall be
instituted by or against the Borrower or any Subsidiary, and, if
instituted against the Borrower or any Subsidiary, shall have been
consented to or acquiesced in by the Borrower or such Subsidiary, or
shall remain undismissed for 30 days, or an order for relief shall have
been entered against the Borrower or such Subsidiary.
7.1(g) Any dissolution or liquidation proceeding not permitted
by Section 6.1 shall be instituted by or against the Borrower or a
Subsidiary, and, if instituted against the Borrower or any Subsidiary,
shall be consented to or acquiesced in by the Borrower or such
Subsidiary or shall remain for 60 days undismissed.
7.1(h) A judgment or judgments for the payment of money in
excess of the sum of $1,000,000 in the aggregate shall be rendered
against the Borrower or a Subsidiary and either (i) the judgment
creditor executes on such judgment or (ii) such judgment remains unpaid
or undischarged for more than 60 days from the date of entry thereof or
such longer period during which execution of such judgment shall be
stayed during an appeal from such judgment.
7.1(i) The maturity of any material Indebtedness of the
Borrower (other than Indebtedness under this Agreement) or a Subsidiary
shall be accelerated, or the Borrower or a Subsidiary shall fail to pay
any such material Indebtedness when due (after the lapse of any
applicable grace period) or, in the case of such Indebtedness payable on
demand, when demanded (after the lapse of any applicable grace period),
or any event shall occur or condition shall exist and shall continue for
more than the period of grace, if any, applicable thereto and shall have
the effect of causing, or permitting the holder of any such Indebtedness
or any trustee or other Person acting on behalf of such holder to cause,
such material Indebtedness to become due prior to its stated maturity or
to realize upon any collateral given as security therefor. For purposes
of this Section, Indebtedness of the Borrower or a Subsidiary shall be
deemed "material" if it exceeds $5,000,000 as to any item of
Indebtedness or in the aggregate for all items of Indebtedness with
respect to which any of the events described in this Section 7.1(j) has
occurred.
7.1(j) Any execution or attachment shall be issued whereby any
substantial part of the property of the Borrower or any Subsidiary shall
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be taken or attempted to be taken and the same shall not have been
vacated or stayed within 30 days after the issuance thereof.
Section 7.2 REMEDIES. If (a) any Event of Default described in
Sections 7.1(f), (g) or (h) shall occur with respect to the Borrower, the
Revolving Commitments shall automatically terminate and the Revolving Notes
and all other Obligations shall automatically become immediately due and
payable, and the Borrower shall without demand pay into the Holding Account
an amount equal to the aggregate face amount of all outstanding Letters of
Credit; or (b) any other Event of Default shall occur and be continuing,
then, upon receipt by the Agent of a request in writing from the Majority
Banks, the Agent shall take any of the following actions so requested: (i)
declare the Revolving Commitments terminated, whereupon the Revolving
Commitments shall terminate, (ii) declare the outstanding unpaid principal
balance of the Revolving Notes, the accrued and unpaid interest thereon and
all other Obligations to be forthwith due and payable, whereupon the
Revolving Notes, all accrued and unpaid interest thereon and all such
Obligations shall immediately become due and payable, in each case without
presentment, demand, protest or other notice of any kind, all of which are
hereby expressly waived, anything in this Agreement or in the Notes to the
contrary notwithstanding, and (iii) demand that the Borrower pay into the
Holding Account an amount equal to the aggregate face amount of all
outstanding Letters of Credit. Upon the occurrence of any of the events
described in clause (a) of the preceding sentence, or upon the occurrence of
any of the events described in clause (b) of the preceding sentence when so
requested by the Majority Banks, the Agent may exercise all rights and
remedies under any of the Loan Documents, and enforce all rights and remedies
under any applicable law.
Section 7.3 OFFSET. In addition to the remedies set forth in Section
7.2, upon the occurrence of any Event of Default and thereafter while the
same be continuing, the Borrower hereby irrevocably authorizes each Bank to
set off any Obligations owed to such Bank against all deposits and credits of
the Borrower with, and any and all claims of the Borrower against, such Bank.
Such right shall exist whether or not such Bank shall have made any demand
hereunder or under any other Loan Document, whether or not the Obligations,
or any part thereof, or deposits and credits held for the account of the
Borrower is or are matured or unmatured, and regardless of the existence or
adequacy of any collateral, guaranty or any other security, right or remedy
available to such Bank or the Banks. Each Bank agrees that, as promptly as
is reasonably possible after the exercise of any such setoff right, it shall
notify the Borrower of its exercise of such setoff right; provided, however,
that the failure of such Bank to provide such notice shall not affect the
validity of the exercise of such
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setoff rights. Nothing in this Agreement shall be deemed a waiver or
prohibition of or restriction on any Bank to all rights of banker's Lien,
setoff and counterclaim available pursuant to law.
ARTICLE VIII
THE AGENT
The following provisions shall govern the relationship of the Agent with
the Banks.
Section 8.1 APPOINTMENT AND AUTHORIZATION. Each Bank appoints and
authorizes the Agent to take such action as agent on its behalf and to
exercise such respective powers under the Loan Documents as are delegated to
the Agent by the terms thereof, together with such powers as are reasonably
incidental thereto. Neither the Agent nor any of its directors, officers or
employees shall be liable for any action taken or omitted to be taken by it
under or in connection with the Loan Documents, except for its own gross
negligence or willful misconduct. The Agent shall act as an independent
contractor in performing its obligations as Agent hereunder and nothing
herein contained shall be deemed to create any fiduciary relationship among
or between the Agent, the Borrower or the Banks.
Section 8.2 NOTE HOLDERS. The Agent may treat the payee of any
Revolving Note as the holder thereof until written notice of transfer shall
have been filed with it, signed by such payee and in form satisfactory to the
Agent.
Section 8.3 CONSULTATION WITH COUNSEL. The Agent may consult with
legal counsel selected by it and shall not be liable for any action taken or
suffered in good faith by it in accordance with the advice of such counsel.
Section 8.4 LOAN DOCUMENTS. The Agent shall not be under a duty to
examine or pass upon the validity, effectiveness, genuineness or value of any
of the Loan Documents or any other instrument or document furnished pursuant
thereto, and the Agent shall be entitled to assume that the same are valid,
effective and genuine and what they purport to be.
Section 8.5 U.S. BANK AND AFFILIATES. With respect to its Revolving
Commitment and the Revolving Loan made by it, U.S. Bank shall have the same
rights and powers under the Loan Documents as any other Bank and may exercise
the same as though it were not the Agent consistent with the terms thereof,
and U.S. Bank and its Affiliates may accept deposits from, lend
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money to and generally engage in any kind of business with the Borrower as if
it were not the Agent.
Section 8.6 ACTION BY AGENT. Except as may otherwise be expressly
stated in this Agreement, the Agent shall be entitled to use its discretion
with respect to exercising or refraining from exercising any rights which may
be vested in it by, or with respect to taking or refraining from taking any
action or actions which it may be able to take under or in respect of, the
Loan Documents. The Agent shall be required to act or to refrain from acting
(and shall be fully protected in so acting or refraining from acting) upon
the instructions of the Majority Banks, and such instructions shall be
binding upon all holders of Revolving Notes; provided, however, that the
Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to the Loan Documents or applicable
law. The Agent shall incur no liability under or in respect of any of the
Loan Documents by acting upon any notice, consent, certificate, warranty or
other paper or instrument believed by it to be genuine or authentic or to be
signed by the proper party or parties and to be consistent with the terms of
this Agreement.
Section 8.7 CREDIT ANALYSIS. Each Bank has made, and shall continue
to make, its own independent investigation or evaluation of the operations,
business, property and condition, financial and otherwise, of the Borrower in
connection with entering into this Agreement and has made its own appraisal
of the creditworthiness of the Borrower. Except as explicitly provided
herein, the Agent has no duty or responsibility, either initially or on a
continuing basis, to provide any Bank with any credit or other information
with respect to such operations, business, property, condition or
creditworthiness, whether such information comes into its possession on or
before the first Event of Default or at any time thereafter.
Section 8.8 NOTICES OF EVENT OF DEFAULT, ETC. In the event that the
Agent shall have acquired actual knowledge of any Event of Default or
Default, the Agent shall promptly give notice thereof to the Banks.
Section 8.9 INDEMNIFICATION. Each Bank agrees to indemnify the Agent,
as Agent (to the extent not reimbursed by the Borrower), ratably according to
such Bank's share of the aggregate Revolving Commitment Amounts 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 or incurred by the Agent in any way relating
to or arising out of the Loan Documents or any action taken or omitted by the
Agent under the Loan Documents, provided that no Bank shall be liable for any
portion of such liabilities, obligations, losses, damages, penalties,
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actions, judgments, suits, costs, expenses or disbursements resulting from
the Agent's gross negligence or willful misconduct. No payment by any Bank
under this Section shall relieve the Borrower of any of its obligations under
this Agreement.
Section 8.10 PAYMENTS AND COLLECTIONS. All funds received by the
Agent in respect of any payments made by the Borrower on the Revolving Notes,
Revolving Commitment Fees or Letter of Credit Fees shall be distributed
forthwith by the Agent among the Banks, in like currency and funds as
received, ratably according to each Bank's Revolving Percentage. After any
Event of Default has occurred, all funds received by the Agent, whether as
payments by the Borrower or as realization on collateral or on any
Guaranties, shall (except as may otherwise be required by law) be distributed
by the Agent in the following order: (a) first to the Agent or any Bank who
has incurred unreimbursed costs of collection with respect to any Obligations
hereunder, ratably to the Agent and each Bank in the proportion that the
costs incurred by the Agent or such Bank bear to the total of all such costs
incurred by the Agent and all Banks; (b) next to the Agent for the account of
the Banks (in accordance with their respective Revolving Percentages) for
application on the Revolving Notes; (c) next to the Agent for the account of
the Banks (in accordance with their respective Revolving Percentages) for any
unpaid Revolving Commitment Fees or Letter of Credit Fees owing by the
Borrower hereunder; and (d) last to the Agent to be held in the Holding
Account to cover any outstanding Letters of Credit.
Section 8.11 SHARING OF PAYMENTS. If any Bank shall receive and
retain any payment, voluntary or involuntary, whether by setoff, application
of deposit balance or security, or otherwise, in respect of Indebtedness
under this Agreement or the Revolving Notes in excess of such Bank's share
thereof as determined under this Agreement, then such Bank shall purchase
from the other Banks for cash and at face value and without recourse, such
participation in the Revolving Notes held by such other Banks as shall be
necessary to cause such excess payment to be shared ratably as aforesaid with
such other Banks; provided, that if such excess payment or part thereof is
thereafter recovered from such purchasing Bank, the related purchases from
the other Banks shall be rescinded ratably and the purchase price restored as
to the portion of such excess payment so recovered, but without interest.
Subject to the participation purchase obligation above, each Bank agrees to
exercise any and all rights of setoff, counterclaim or banker's lien first
fully against any Revolving Notes and participations therein held by such
Bank, next to any other Indebtedness of the Borrower to such Bank arising
under or pursuant to this Agreement and to any participations held by such
Bank in
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Indebtedness of the Borrower arising under or pursuant to this Agreement, and
only then to any other Indebtedness of the Borrower to such Bank.
Section 8.12 ADVICE TO BANKS. The Agent shall forward to the Banks
copies of all notices, financial reports and other communications received
hereunder from the Borrower by it as Agent, excluding, however, notices,
reports and communications which by the terms hereof are to be furnished by
the Borrower directly to each Bank.
Section 8.13 RESIGNATION. If at any time U.S. Bank shall deem it
advisable, in its sole discretion, it may submit to each of the Banks and the
Borrower a written notification of its resignation as Agent under this
Agreement, such resignation to be effective upon the appointment of a
successor Agent, but in no event later than 30 days from the date of such
notice. Upon submission of such notice, the Majority Banks may appoint a
successor Agent.
ARTICLE IX
MISCELLANEOUS
Section 9.1 MODIFICATIONS. Notwithstanding any provisions to the
contrary herein, any term of this Agreement may be amended with the written
consent of the Borrower; provided that no amendment, modification or waiver
of any provision of this Agreement or any other Loan Document or consent to
any departure therefrom by the Borrower or other party thereto shall in any
event be effective unless the same shall be in writing and signed by the
Majority Banks, and then such amendment, modification, waiver or consent
shall be effective only in the specific instance and for the purpose for
which given. (The Agent may enter into amendments or modifications of, and
grant consents and waivers to departure from the provisions of, those Loan
Documents to which the Banks are not signatories without the Banks joining
therein, PROVIDED the Agent has first obtained the separate prior written
consent to such amendment, modification, consent or waiver from the Majority
Banks.) Notwithstanding the forgoing, no such amendment, modification,
waiver or consent shall:
9.1(a) Reduce the rate or extend the time of payment of
interest thereon, or reduce the amount of the principal thereof, or
modify any of the provisions of any Revolving Note with respect to the
payment or repayment thereof, without the consent of the holder of each
Revolving Note so affected; or
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9.1(b) Increase the amount or extend the time of any Revolving
Commitment of any Bank, without the consent of such Bank; or
9.1(c) Reduce the rate or extend the time of payment of any fee
payable to a Bank, without the consent of the Bank affected; or
9.1(d) Amend the definition of Majority Banks or otherwise
reduce the percentage of the Banks required to approve or effectuate any
such amendment, modification, waiver, or consent, without the consent of
all the Banks; or
9.1(e) Amend any of the foregoing Sections 9.1 (a) through (e)
or this Section 9.1(f) without the consent of all the Banks; or
9.1(f) Amend any provision of this Agreement relating to the
Agent in its capacity as Agent without the consent of the Agent; or
9.1(g) Amend any provision of this Agreement relating to the
issuance of Letters of Credit without the consent of the Agent.
Section 9.2 EXPENSES. Whether or not the transactions contemplated
hereby are consummated, the Borrower agrees to reimburse the Agent upon demand
for all reasonable out-of-pocket expenses paid or incurred by the Agent
(including filing and recording costs and fees and expenses of Dorsey & Whitney
LLP, counsel to the Agent) in connection with the negotiation, preparation,
approval, review, execution, delivery, administration, amendment, modification
and interpretation of this Agreement and the other Loan Documents and any
commitment letters relating thereto. The Borrower shall also reimburse the
Agent and each Bank upon demand for all reasonable out-of-pocket expenses
(including expenses of legal counsel) paid or incurred by the Agent or any Bank
in connection with the collection and enforcement of this Agreement and any
other Loan Document. The obligations of the Borrower under this Section shall
survive any termination of this Agreement.
Section 9.3 WAIVERS, ETC. No failure on the part of the Agent or the
holder of a Revolving Note to exercise and no delay in exercising any power
or right hereunder or under any other Loan Document shall operate as a waiver
thereof; nor shall any single or partial exercise of any power or right
preclude any other or further exercise thereof or the exercise of any other
power or right. The remedies herein and in the other Loan Documents provided
are cumulative and not exclusive of any remedies provided by law.
Section 9.4 NOTICES. Except when telephonic notice is expressly
authorized by this Agreement, any notice or other communication to any party
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in connection with this Agreement shall be in writing and shall be sent by
manual delivery, telegram, telex, facsimile transmission, overnight courier
or United States mail (postage prepaid) addressed to such party at the
address specified on the signature page hereof, or at such other address as
such party shall have specified to the other party hereto in writing. All
periods of notice shall be measured from the date of delivery thereof if
manually delivered, from the date of sending thereof if sent by telegram,
telex or facsimile transmission, from the first Business Day after the date
of sending if sent by overnight courier, or from four days after the date of
mailing if mailed; provided, however, that any notice to the Agent or any
Bank under Article II hereof shall be deemed to have been given only when
received by the Agent or such Bank.
Section 9.5 TAXES. The Borrower agrees to pay, and save the Agent and
the Banks harmless from all liability for, any stamp or other taxes which may
be payable with respect to the execution or delivery of this Agreement or the
issuance of the Revolving Notes, which obligation of the Borrower shall
survive the termination of this Agreement.
Section 9.6 SUCCESSORS AND ASSIGNS; DISPOSITION OF LOANS; TRANSFEREES.
This Agreement shall be binding upon and inure to the benefit of the parties
hereto and their respective successors and assigns, except that the Borrower may
not assign its rights or delegate its obligations hereunder or under any other
Borrower Loan Document without the prior written consent of all the Banks. Each
Bank may at any time sell, assign, transfer, grant participations in, or
otherwise dispose of any portion (in a minimum amount of $10,000,000) of its
Revolving Commitments, the Revolving Loans and/or Advances (each such interest
so disposed of being herein called a "Transferred Interest") to banks or other
financial institutions ("Transferees"); PROVIDED, HOWEVER, that a Bank may
dispose of a Transferred Interest only with the consents of the Agent and the
Borrower (which consents shall not be unreasonably withheld) and only upon
payment to the Agent by the parties to such disposition of a processing and
recording fee in the amount of $3,000 for each party. The Borrower agrees that
each Transferee shall be entitled to the benefits of Sections 2.22, 2.23, 2.24,
2.25, 9.2 and 9.7 with respect to its Transferred Interest and that each
Transferee may exercise any and all rights of banker's Lien, setoff and
counterclaim as if such Transferee were a direct lender to the Borrower. If any
Bank makes any assignment to a Transferee, then upon notice to the Borrower such
Transferee, to the extent of such assignment (unless otherwise provided
therein), shall become a "Bank" hereunder and shall have all the rights and
obligations of such Bank hereunder and such Bank shall be released from its
duties and obligations under this Agreement to the extent of such assignment.
Notwithstanding the sale by any Bank of any participation hereunder, (a) no
participant shall be deemed to be or have the
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rights and obligations of a Bank hereunder except that any participant shall
have a right of setoff under Section 7.3 as if it were such Bank and the
amount of its participation were owing directly to such participant by the
Borrower and (b) such Bank shall not in connection with selling any such
participation condition such Bank's rights in connection with consenting to
amendments or granting waivers concerning any matter under any Loan Document
upon obtaining the consent of such participant other than on matters relating
to (i) any reduction in the amount of any principal of, or the amount of or
rate of interest on, any Revolving Note or Advance in which such
participation is sold, (ii) any postponement of the date fixed for any
payment of principal of or interest on any Revolving Note or Advance in which
such participation is sold, or (iii) the release of any guaranty. No Bank
shall be permitted to enter into any assignment or participation with any
Transferee who is not a United States Person unless such Transferee
represents and warrants to such Bank that, as at the date of such assignment
of participation, it is entitled to receive interest payments without
withholding or deduction of any taxes and such Transferee executes and
delivers to such Bank on or before the date of execution and delivery of
documentation of such participation or assignment, a United States Internal
Revenue Service Form1001 or 4224, or any successor to either of such forms,
as appropriate, properly completed and claiming complete exemption from
withholding and deduction of all federal income taxes. A "United States
Person" means any citizen, national or resident of the United States, any
corporation or other entity created or organized in or under the laws of the
United States or any political subdivision hereof or any estate or trust, in
each case that is not subject to withholding of United States federal income
taxes or other taxes on payment of interest, principal or fees hereunder..
Section 9.7 CONFIDENTIALITY OF INFORMATION. The Agent and each Bank
shall use reasonable efforts to assure that information about the Borrower and
its operations, affairs and financial condition, not generally disclosed to the
public or to trade and other creditors, which is furnished to the Agent or such
Bank pursuant to the provisions hereof is used only for the purposes of this
Agreement and any other relationship between any Bank and the Borrower and shall
not be divulged to any Person other than the Banks, their Affiliates and their
respective officers, directors, employees and agents, except: (a) to their
attorneys and accountants, (b) in connection with the enforcement of the rights
of the Banks hereunder and under the Revolving Notes and the Guaranties or
otherwise in connection with applicable litigation, (c) in connection with
assignments and participations and the solicitation of prospective assignees and
participants referred to in the immediately preceding Section, and (d) as may
otherwise be required or requested by any regulatory authority having
jurisdiction over any Bank or by any applicable law, rule, regulation or
judicial process, the opinion of such Bank's counsel concerning the making of
such
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<PAGE>
disclosure to be binding on the parties hereto. No Bank shall incur any
liability to the Borrower by reason of any disclosure permitted by this
Section 9.7.
Section 9.8 GOVERNING LAW AND CONSTRUCTION. THE VALIDITY,
CONSTRUCTION AND ENFORCEABILITY OF THIS AGREEMENT AND THE REVOLVING NOTES
SHALL BE GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA, WITHOUT
GIVING EFFECT TO CONFLICT OF LAWS PRINCIPLES THEREOF, BUT GIVING EFFECT TO
FEDERAL LAWS OF THE UNITED STATES APPLICABLE TO NATIONAL BANKS. Whenever
possible, each provision of this Agreement and the other Loan Documents and
any other statement, instrument or transaction contemplated hereby or
thereby or relating hereto or thereto shall be interpreted in such manner as
to be effective and valid under such applicable law, but, if any provision of
this Agreement, the other Loan Documents or any other statement, instrument
or transaction contemplated hereby or thereby or relating hereto or thereto
shall be held to be prohibited or invalid under such applicable law, such
provision shall be ineffective only to the extent of such prohibition or
invalidity, without invalidating the remainder of such provision or the
remaining provisions of this Agreement, the other Loan Documents or any other
statement, instrument or transaction contemplated hereby or thereby or
relating hereto or thereto.
Section 9.9 CONSENT TO JURISDICTION. AT THE OPTION OF THE AGENT, THIS
AGREEMENT AND THE OTHER BORROWER LOAN DOCUMENTS MAY BE ENFORCED IN ANY
FEDERAL COURT OR MINNESOTA STATE COURT SITTING IN HENNEPIN COUNTY, MINNESOTA;
AND THE BORROWER CONSENTS TO THE JURISDICTION AND VENUE OF ANY SUCH COURT AND
WAIVES ANY ARGUMENT THAT VENUE IN SUCH FORUMS IS NOT CONVENIENT. IN THE
EVENT THE BORROWER COMMENCES ANY ACTION IN ANOTHER JURISDICTION OR VENUE
UNDER ANY TORT OR CONTRACT THEORY ARISING DIRECTLY OR INDIRECTLY FROM THE
RELATIONSHIP CREATED BY THIS AGREEMENT, THE AGENT AT ITS OPTION SHALL BE
ENTITLED TO HAVE THE CASE TRANSFERRED TO ONE OF THE JURISDICTIONS AND VENUES
ABOVE-DESCRIBED, OR IF SUCH TRANSFER CANNOT BE ACCOMPLISHED UNDER APPLICABLE
LAW, TO HAVE SUCH CASE DISMISSED WITHOUT PREJUDICE.
Section 9.10 WAIVER OF JURY TRIAL. EACH OF THE BORROWER , THE AGENT
AND THE BANKS IRREVOCABLY WAIVES ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY
LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
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<PAGE>
Section 9.11 SURVIVAL OF AGREEMENT. All representations, warranties,
covenants and agreement made by the Borrower herein or in the other Borrower
Loan Documents and in the certificates or other instruments prepared or
delivered in connection with or pursuant to this Agreement or any other Loan
Document shall be deemed to have been relied upon by the Banks and shall
survive the making of the Revolving Loans by the Banks and the execution and
delivery to the Banks by the Borrower of the Revolving Notes, regardless of
any investigation made by or on behalf of the Banks, and shall continue in
full force and effect as long as any Obligation is outstanding and unpaid and
so long as the Revolving Commitments have not been terminated; provided,
however, that the obligations of the Borrower under Section 9.2, 9.5 and 9.12
shall survive payment in full of the Obligations and the termination of the
Revolving Commitments.
Section 9.12 INDEMNIFICATION. The Borrower hereby agrees to defend,
protect, indemnify and hold harmless the Agent and the Banks and their
respective Affiliates and the directors, officers, employees, attorneys and
agents of the Agent and the Banks and their respective Affiliates (each of
the foregoing being an "Indemnitee" and all of the foregoing being
collectively the "Indemnitees") from and against any and all claims, actions,
damages, liabilities, judgments, costs and expenses (including all reasonable
fees and disbursements of counsel which may be incurred in the investigation
or defense of any matter) imposed upon, incurred by or asserted against any
Indemnitee, whether direct, indirect or consequential and whether based on
any federal, state, local or foreign laws or regulations (including
securities laws, environmental laws, commercial laws and regulations), under
common law or on equitable cause, or on contract or otherwise:
(a) by reason of, relating to or in connection with the
execution, delivery, performance or enforcement of any Loan Document,
any commitments relating thereto, or any transaction contemplated by any
Loan Document; or
(b) by reason of, relating to or in connection with any
credit extended or used under the Loan Documents or any act done or
omitted by any Person, or the exercise of any rights or remedies
thereunder, including the acquisition of any collateral by the Banks by
way of foreclosure of the Lien thereon, deed or bill of sale in lieu of
such foreclosure or otherwise;
provided, however, that the Borrower shall not be liable to any Indemnitee
for any portion of such claims, damages, liabilities and expenses resulting
from such Indemnitee's gross negligence or willful misconduct. In the event
this
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<PAGE>
indemnity is unenforceable as a matter of law as to a particular matter or
consequence referred to herein, it shall be enforceable to the full extent
permitted by law.
This indemnification applies, without limitation, to any act,
omission, event or circumstance existing or occurring on or prior to the
later of the Termination Date or the date of payment in full of the
Obligations, including specifically Obligations arising under clause (b) of
this Section. The indemnification provisions set forth above shall be in
addition to any liability the Borrower may otherwise have. Without prejudice
to the survival of any other obligation of the Borrower hereunder the
indemnities and obligations of the Borrower contained in this Section shall
survive the payment in full of the other Obligations.
Section 9.13 CAPTIONS. The captions or headings herein and any table
of contents hereto are for convenience only and in no way define, limit or
describe the scope or intent of any provision of this Agreement.
Section 9.14 ENTIRE AGREEMENT. This Agreement and the other Borrower
Loan Documents and the Fee Letter embody the entire agreement and
understanding between the Borrower, the Agent and the Banks with respect to
the subject matter hereof and thereof. This Agreement supersedes all prior
agreements and understandings relating to the subject matter hereof. Nothing
contained in this Agreement or in any other Loan Document, expressed or
implied, is intended to confer upon any Persons other than the parties hereto
any rights, remedies, obligations or liabilities hereunder or thereunder.
Section 9.15 COUNTERPARTS. This Agreement may be executed in any
number of counterparts, all of which taken together shall constitute one and
the same instrument, and any of the parties hereto may execute this Agreement
by signing any such counterpart.
Section 9.16 BORROWER ACKNOWLEDGEMENTS. The Borrower hereby
acknowledges that (a) it has been advised by counsel in the negotiation,
execution and delivery of this Agreement and the other Loan Documents, (b)
neither the Agent nor any Bank has any fiduciary relationship to the Borrower,
the relationship being solely that of debtor and creditor, (c) no joint venture
exists between the Borrower and the Agent or any Bank, and (d) neither the Agent
nor any Bank undertakes any responsibility to the Borrower to review or inform
the Borrower of any matter in connection with any phase of the business or
operations of the Borrower and the Borrower shall rely entirely upon its own
judgment with respect to its business, and any review, inspection
-61-
<PAGE>
or supervision of, or information supplied to, the Borrower by the Agent or
any Bank is for the protection of the Banks and neither the Borrower nor any
third party is entitled to rely thereon.
Section 9.17 RELEASE OF LIENS ON EXISTING U.S. BANK DEBT. The Bank
agrees, at the request and sale cost of the Borrower, to release its Liens
securing the Existing U.S. Bank Debt, including the execution of any UCC
termination statements or other releases prepared by the Borrower.
(REMAINDER OF PAGE INTENTIONALLY LEFT BLANK)
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first above written.
MARTEN TRANSPORT LTD.
By
Its
Address for Borrower:
129 Marten Street
Mondovi, Wisconsin 54755
STATE OF )
) ss.
COUNTY OF )
On this _______ day of ________________, 1998, before me, the
undersigned, a Notary Public, appeared _________________________, who being
by me duly sworn, did say that he is the ____________________ of MARTEN
TRANSPORT LTD. and that the foregoing instrument was signed on behalf of the
corporation by authority of its Board of Directors, and said officer
acknowledged the foregoing instrument to be executed for the purposes therein
stated and as the free act and deed of the corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
- ---------------------------------------------------------------------------
Notary Public
REVOLVING COMMITMENT U.S. BANK NATIONAL Amount:
ASSOCIATION -------------------
- -------------------
$40,000,000 In its individual corporate
capacity and as Agent
By
Its
Address:
601 Second Avenue South
Minneapolis, MN 55402-4302
-63-
<PAGE>
Attention: Michael J. Reymann
MPFP 0510
-64-
<PAGE>
EXHIBIT 1.1A TO
CREDIT AGREEMENT
REVOLVING NOTE
$40,000,000
October 30, 1998
Minneapolis, Minnesota
FOR VALUE RECEIVED, MARTEN TRANSPORT LTD., a Delaware corporation,
hereby promises to pay to the order of U.S. Bank National Association (the
"Bank") at the main office of U.S. Bank National Association in Minneapolis,
Minnesota, in lawful money of the United States of America in Immediately
Available Funds (as such term and each other capitalized term used herein are
defined in the Credit Agreement hereinafter referred to) on the Revolving
Commitment Ending Date, the principal amount of FORTY MILLION AND NO/100
DOLLARS ($40,000,000) or, if less, the aggregate unpaid principal amount of
the Revolving Loans made by the Bank under the Credit Agreement, and to pay
interest (computed on the basis of actual days elapsed and a year of 360
days) in like funds on the unpaid principal amount hereof from time to time
outstanding at the rates and times set forth in the Credit Agreement.
This note is one of the Revolving Notes referred to in the Credit
Agreement dated as of October 30, 1998 (as the same may hereafter be from
time to time amended, restated or otherwise modified, the "Credit Agreement")
among the undersigned, the Bank and the other banks named therein. This note
is subject to certain permissive and mandatory prepayments and its maturity
is subject to acceleration, in each case upon the terms provided in said
Credit Agreement.
In the event of default hereunder, the undersigned agrees to pay all
costs and expenses of collection, including reasonable attorneys' fees. The
undersigned waives demand, presentment, notice of nonpayment, protest, notice
of protest and notice of dishonor.
THE VALIDITY, CONSTRUCTION AND ENFORCEABILITY OF THIS NOTE SHALL BE
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF MINNESOTA WITHOUT GIVING EFFECT
TO THE CONFLICT OF LAWS
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<PAGE>
PRINCIPLES THEREOF, BUT GIVING EFFECT TO FEDERAL LAWS OF THE UNITED STATES
APPLICABLE TO NATIONAL BANKS.
MARTEN TRANSPORT LTD.
By
Its
STATE OF )
) ss.
COUNTY OF )
On this _______ day of ________________, 1998, before me, the
undersigned, a Notary Public, appeared _________________________, who being
by me duly sworn, did say that he is the ____________________ of MARTEN
TRANSPORT LTD. and that the foregoing instrument was signed on behalf of the
corporation by authority of its Board of Directors, and said officer
acknowledged the foregoing instrument to be executed for the purposes therein
stated and as the free act and deed of the corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my notarial
seal the day and year last above written.
- ---------------------------------------------------------------------------
Notary Public
-66-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONDENSED STATEMENTS OF INCOME AND THE CONDENSED BALANCE SHEETS AND IS QUALIFIED
IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 9-MOS
<FISCAL-YEAR-END> DEC-31-1998
<PERIOD-START> JAN-01-1998
<PERIOD-END> SEP-30-1998
<CASH> 2,158,000
<SECURITIES> 0
<RECEIVABLES> 21,014,000
<ALLOWANCES> 0
<INVENTORY> 0
<CURRENT-ASSETS> 33,509,000
<PP&E> 164,822,000
<DEPRECIATION> 45,849,000
<TOTAL-ASSETS> 153,228,000
<CURRENT-LIABILITIES> 47,209,000
<BONDS> 29,829,000
0
0
<COMMON> 45,000
<OTHER-SE> 51,607,000
<TOTAL-LIABILITY-AND-EQUITY> 153,228,000
<SALES> 144,613,000
<TOTAL-REVENUES> 144,613,000
<CGS> 0
<TOTAL-COSTS> 131,863,000
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 3,008,000
<INCOME-PRETAX> 9,914,000
<INCOME-TAX> 3,966,000
<INCOME-CONTINUING> 5,948,000
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 5,948,000
<EPS-PRIMARY> 1.33<F1>
<EPS-DILUTED> 1.31<F1>
<FN>
<F1>Our board of directors authorized a three-for-two stock split of our common
stock, $.01 par value, effective for shareholders of record as of December 15,
1997. The financial data schedule for the nine month period ended September 30,
1997, has not been restated to reflect the stock split.
</FN>
</TABLE>
